Are You Leaving Money on the Table? The Importance of Regular Contract Renegotiation for Realtors

The real estate market is constantly evolving and subject to frequent changes, which makes it essential for realtors to regularly review and reconsider their brokerage agreements. Unfortunately, many agents miss out on valuable opportunities and potential income simply because they neglect to revisit these contracts over time. You negotiate for a living so why haven’t you renegotiated that commission split agreement you signed when you first joined your brokerage?

Understanding Your Current Contract

Before you even think about renegotiating, take the time to thoroughly review and fully understand your current contract. Carefully go through it line by line, paying special attention to details such as commission splits, any applicable fees, and all performance-related clauses. This deep understanding will help you make informed decisions during the renegotiation process.

For example, if your contract states a 70/30 commission split but your sales volume has greatly increased, you might be able to negotiate a better split. Regularly reviewing your contract helps spot outdated terms that no longer fit your business.

Assessing Your Performance

When was the last time you truly looked at your performance as a realtor? Check your sales, customer ratings, and market position. If you've steadily grown sales or kept high client ratings, like a 95% satisfaction score or you sold 15 homes last year as opposed to 8 the year before, you’ve helped your brokerage succeed. Use this data to ask for better commission, lower fees, or extra support.

Industry Trends and Market Conditions

Real estate markets shift quickly, affecting brokerage pay structures. Tracking industry trends gives you an edge in renegotiations. If peers switch brokers for better terms, it may be time to reconsider your own deal. New realtors can typically expect the commission split with their brokerage to be 50/50 where their more experienced colleagues could be working with a 70/30, 80/20 or even a 90/10 split.

The Value of Open Communication

Renegotiation doesn't need to be a fight. Talking openly with your brokerage can build a better relationship. Come to the discussion ready to work together, thank them for their support and clearly state what you need in order to grow your business.

Go into the negotiation prepared with an information package for your broker highlighting your year-over-year growth, successes you’ve had over the last 12 months, educational courses you’ve taken and any community initiatives you’ve implemented to demonstrate your commitment to your farm area, or client base. SHOW, don’t TELL them what you’ve accomplished that warrants a better commission split.

Good relationships help everyone. Happy realtors make happy clients, which means a successful brokerage which benefits everyone who works there.

Seeking Professional Advice

If contract negotiations seem overwhelming, ask experienced real estate professionals or colleagues for help. Their knowledge can give you new ideas and better strategies. Expert advice can also explain confusing legal terms and protect your interests, making negotiations easier and more successful.

Know Your Worth

As a realtor, failing to carefully review your brokerage contract can ultimately cost you a significant amount of money. It is essential to take important steps such as regularly evaluating your results, thoroughly understanding every detail of your contract, and staying informed about ongoing market changes. Maintaining clear and open communication, along with seeking expert advice when necessary, can greatly enhance your negotiation outcomes. Having a well-constructed contract is a crucial foundation for achieving lasting success and maximizing your earnings as a realtor.

One last thing to consider…

You negotiate every day on behalf of your clients and work hard to get them the best price and terms on their home purchase or sale. Isn’t it time you put those skills to work for yourself?

Here’s to closing deals and opening doors!