We recently came across this great article from Kimberly Mackey, Sales & Management Consultant & Trainer for builders and developers.

I Was Wrong! There, I Said It. (and you may be making the same mistake.)

Anyone who knows me, knows that it is hard for me to admit when I am wrong and yet, here I am announcing it to the world. Why would I do that?  Well, I believe this particular error deserves to be shared because I know many of you who are innocently making the same mistake.

During all my years as an On-site Agent for builders, and then later as a Vice-president of Sales and Marketing, I thought General Real Estate Agents should be incentivized with “Bonuses” rather than” Commissions”.  “Bonuses” are generally paid to the sales agent without the office split being taken out of it or for some, they receive a higher split on “Bonus Dollars” versus “Commission Dollars”.  Those dollars sometimes require a franchise fee deduction (if applicable), but even so the net to the sales agent on Bonus Dollars is much higher than it would be for Commission Dollars.

I always structured any additional general real estate incentives as Bonus Dollars because I believed that would drive more Realtors® into my communities with their buyers.  While it was somewhat successful, what I didn’t know was that if I structured those same Bonus Dollars a bit differently, WOW what a huge difference that would have made.

Now that I have had the opportunity to run the Builder Relations Department for Prudential Tropical Realty where we have successfully partnered with 26 Home Builders around the Tampa Bay Market, I have learned a few things about this Bonus versus Commission issue.

Being a good partner to the General Real Estate community means more than just being a partner to a handful of Preferred Realtors® or Realtor® VIP’s.  It means reaching out to the Brokerages themselves, talking to them about their needs, and figuring out a way for everyone to work together toward the common goal of helping prospective buyers find that “One & Only Home” right now.

In order to achieve broad level changes in these relationships that in many cases have been developing over years and years, we have to start at the top, between Builder Management and Brokers/Owners.  You see, paying a Bonus encourages 1 or 2 Realtors® to show your homes and your communities.  BUT, paying a higher Commission Percentage instead (when you are already budgeting incentive dollars) will encourage the Broker/Owner to also become your champion.  The Broker/Owner can affect tens or even hundreds of Realtors®, rather than just the few you would have been able to reach on your own.

Of course, just passively raising your Commission Percentage is not going to help you a whole lot unless you communicate that to the General Real Estate Community. Besides sending flyers and sending E-blasts I encourage that your on-site schedule presentations at our General Real Estate Offices.  This can be particularly effective if your on-site agent “sells the sizzle”.  More on that in a later message.

As I said before, being a good partner with your market’s brokerages involves having the Builder’s Management Team sit down with the Brokers/Owners and find out what they need and how you can best help.  Talk to them about the additional Commission you are paying instead of Bonuses so they now have some benefit too and I just bet you that you will see your Broker/Realtor® Relations start to soar. Because now you will have a relationship and relationships, lead to partnerships, which leads to  that particular Broker/Owner being your champion who will influence, promote, and encourage their teams to show your homes whenever possible. And don’t worry about those individual Real Estate Agents being upset because you are paying a higher commission, rather than a bonus.  I have yet to hear a complaint about making higher commissions!  And now instead of just the WIN/WIN, you can go for the WIN/WIN/WIN.

Kimberly Mackey, MCSP, CMP, Realtor®, is the founder of Creative Sales Solutions, and has been called a rising star in the Homebuilder’s World for her reputation as someone with real world SOLUTIONS in a competitive and rapidly changing sales environment, SOLUTIONS like “50 Sales per Year before Any Walk-in Traffic”. She is a published author of many Sales and Leadership articles and a keynote speaker with over a decade and a half of experience as an executive in the residential home building and real estate industry. She has experience working with Builders and Developers of all sizes –from the local/regional companies to the publicly traded nationals. She also works with Realtors® and Brokers from across the country and is the architect and director of the highly successful Preferred Builder Partnership program with Prudential Tropical Realty where she has increased new home builder sales by over 200% in this large General Real Estate firm.