3 Ways to Make More Money Without Selling More Homes - [Part 1]
3 Ways to Make More Money Without Selling Homes - Part 1
As a real estate agent, there are three main ways you can make more money for yourself:
- Sell more homes
- Sell higher priced homes
- Increase your per-transaction income
What’s exciting about this is that at least two of those options provide you with the opportunity to make more money without selling more homes.
In fact, I’m going to show you how to make more money in the next twelve months even if you sell the exact same number of homes this year as you did last year.
There’s no smoke and mirrors and it’s all legal, ethical and moral.
The best part is, if you’re willing to work hard at it and improve your skill set, you can even bring in extra income before you sell more homes.
It’s pretty exciting and it can mean a lot in terms of growing your business.
There are three specific ways to accomplish that goal:
- Administrative processing fees
- Capturing vendor income
- Increasing your commission per transaction for listings and buyers
Because I want to give you all the information and detail - including language for your paperwork and the scripts that go along with them - I’m going to do a three-part blog series and handle each one of them individually.
In today’s post, I’m going to discuss how to easily and effectively collect administrative or transaction processing fees.
Administrative or Transaction fee: Let’s face it, there’s a lot more that goes into selling a home than just putting seller and buyer together to consummate a transaction.
There’s a significant amount of work that goes on behind the scenes to make sure that
- The transaction goes smoothly
- All the I’s are dotted and the T’s are crossed
- The transaction closes on time
- Your client doesn’t overpay for the home or services they are getting
- Walks away with the right amount of money when selling a home
On average, it takes 6 to 8 hours of your time to successfully close a transaction and that’s if everything goes as planned.
But how often does that happen?
Without a shadow of a doubt, transaction processing is a vital function of the entire sales process and it takes time and money to make it happen.
In fact, it’s so important, that transaction processing technology ranks in the top three technologies where agents invest their money each year.
Most importantly, though, is that processing a transaction is work that happens over and above the sales and negotiation process.
As a result, a fee can be charged to offset the time, energy and money that’s invested in making the transaction happen behind the scenes.
Now, I hear quite often that agents are concerned about asking for an administrative processing fee because they are a violation of RESPA rules.
That’s not true.
They are only a violation of RESPA rules if 1) they are unearned, meaning you charged the fee and actually did no work to earn them and 2) if they are charged and then split with someone who is not a party to the transaction or as a “kickback” for sending the client your way.
In short, if you provide the service of processing a transaction and keep the money for your business and team, you are well within the law in collecting a fee.
Make it part of your normal listing and buying process
In addition to doing things by the book, it’s important that you make the collection of administrative processing fees a normal part of how you do business.
To do this, you will want to have the language about how to collect the fee put into your listing and buyer agreements well before you slide it across the table for your prospect to sign.
It should be entered in - typed in, if you will - with any other standard information that you put into the agreement prior to presenting it to your prospect.
You don’t want it to look like it was something you thought up 10 minutes before you met with them.
Executed properly, collecting an administrative or transaction processing fee can add as much as 10% to your total income in a real estate transaction.
The language itself is pretty simple:
For sellers: “Seller to pay $X towards the internal processing and handling of their transaction. Fee is considered to be earned when paid and is non-refundable.”
For buyers: “Buyer to pay $X towards the internal processing and handling of their transaction. Fee is considered to be earned when paid and is non-refundable. Buyer gives agent permission to ask seller to pay administrative fee on buyer’s behalf at the time an offer is presented. In the event seller is unwilling or unable to pay the fee, buyer will make payment at closing of a transaction.”
Again, it’s fairly simple language and easy to execute.
Here’s the best part, if you articulate that you and your company bring a tremendous amount of value to the table in helping your clients achieve their real estate goals, you’ll rarely get an objection from your prospects when presenting it to them.
At most, you’ll get a question like: “What’s this fee for?”.
Your answer at this point will be very direct and to the point: “It’s an administrative processing fee that goes towards the internal processing of your entire real estate transaction. We’ve got an entire process dedicated to making sure that all the I’s are dotted and T’s are crossed for your entire transaction to make sure that you close on time, have less stress to deal with and to ensure that you don’t lose money in your real estate transaction.”
If you say this and do so with confidence and authority, that should handle it well enough for your prospect to feel that your fee has merit and to get your agreement signed.
The important thing to remember here is that in most cases, you will be the biggest barrier to getting your listing or buyer agreement signed with the fee included.
Your prospects will only question cost in the absence of value.
If you do a great presentation and back it with confidence and authority as I mentioned earlier, you should have little to no trouble getting a signature on your agreement that gives you the ability to collect the fee.
Now, the price point in your marketplace will dictate what a reasonable fee is in your area. That said, you don’t get what you deserve in real estate, you only get what you can negotiate.
And to that end, what you collect, as long as it is reasonable based upon the fees you provide, will depend largely on your ability to articulate enough value to justify the fee.
Administrative or Transaction processing fees are neither new to the real estate industry, nor are they hard to collect when positioned properly.
Take the time to update your paperwork, right now, with the proper language to collect the fee.
Then, make sure you present it as part of your compensation arrangement with your clients.
Don’t give yourself a way out and make it happen.
It’s way easier to collect than you think and it will bring more money to your bottom line - money you can use to pay bills, generate more leads or do anything else you’d like.
Be on the lookout for my next post about making more money without selling more homes. We’ll be talking about how to generate vendor income for your business.