How Dru Lee Keeps His 3% by Signing the Listing Before Discussing Buyer Agent Pay

Dru Lee00:04

Are you prepared to sign? As a real estate agent, I’ve gotta look at you as an individual and say, “All right, is it worth my time? Are you the type of client that’s my ideal client, or are you going to be high hassle, high demand?” And then as a pricing strategy and combined with your motivation, do I believe this is something that will eventually sell?

00:22Here’s my personal philosophy. Number one, do I wanna work with you or do I like you? Number two, do you have a strong enough need to sell, and is there a timeframe in mind that you need to do so? ‘Cause then it’s gonna warrant making sense. My number one job is to get the appointment, which is a negotiation.

00:38My number two, if we’re talking about sellers, is to get you to sign.

Dru Lee01:36

Hey, thanks for having me.

Dru Lee01:44

I appreciate that. My background was I was prior military, and when I was getting out of the military, my very first real estate agent outsold me on the idea of becoming one himself.

01:54And he said, “You should get a real estate license,” and this was back in 2003. And I said no several times before finally saying yes. And so now I’ve been in the real estate business, in dog years, I’m like 1,000. And so I’ve been in the business since 2003, and then I’ve been professional coaching.

02:16I started traveling around the country doing a program teaching sales skills in 2009 and started coaching real estate professionals and sales professionals pretty much ever since, on either a one-to-one or a group basis.

Dru Lee02:37

2003.

02:37Yes. Now when I talk about 2008, now that there are actually movies about it, I feel like I’m an old veteran telling war stories around, “Oh, back in… The short sale.” You’ve probably seen the movie The Big Short, or in different aspects.

02:56There’s been a lot of changes, and anyone who’s been from that era to 2020, every shift and every economic shift has created a whole new series of challenges and a series of opportunities that now we find ourselves having to navigate as professionals. And for me, that starts with every single conversation that we have and how do you view it?

03:24Do you view it as, my goal is to get an appointment, my goal is to get a listing, my goal is to find a buyer, my goal is to get an offer? When do you start believing and understanding that the moment you pick up the phone, you’re in a negotiation? The question is, are you gonna win, from getting them to agree to meet with you, to getting them to agree to send you a referral or a contact or somebody that is interested in buying, selling, or investing in your product or your service in some way, and are you good at it?

03:57What I notice is a lot of real estate professionals pride themselves on being great negotiators. But yet when you ask them, “Okay, so tell me about your negotiating.” “Well, when we get an offer,” or, “When I’m showing a house,” or, “When I’m receiving offers.” And we tend to think in this one-dimensional box, that we’re negotiating with other real estate professionals.

04:20You’re in a negotiation from the moment they answer the phone to the moment you get in their door, and especially now in an ever-changing environment of real estate commissions, it’s obviously a hot topic. The negotiation is in every single phase, all the way till we’re sitting at a closing table and you’re happy either getting keys or giving your keys away.

Dru Lee05:18

I appreciate it.

05:19That’s a great question. Number one is, first, let’s get in our own head, between the left and right ear, fundamentally, what’s changed? Rules are changing. Compensation agreements are changing, how they’re distributed, how they’re advertised. There are a lot of changes, but if I compare what’s different and what’s the same, there are still more similarities.

05:41There are still gonna be buyers that need our services, sellers who need our services, and at the end of the day, everything that drives price is either directed to value or everything that drives price is directed to demand. There is still a very, very high demand for the services and there’s still a very high demand for our need as real estate professionals.

06:04So, how do we go out there and talk to a prospective buyer and seller and display that value? First, what do they need? What does this person need? When I’ve done scripts and role play with real estate agents, I’m often fascinated: how are you finding what their need is, first off, of why are we meeting to begin with?

06:25Do they have a need to buy or sell? Think about today, and if you’ve been selling for a while, why are most people buying and selling in today’s market? We know interest rates have gone from high twos, low threes, and they have doubled in a year and a half. So, what would cause somebody to move, give that up at this day and age?

06:48Two things. It’s either a luxury item and there’s not a financial necessity tied to it. They’ve got cash. They wanna buy something. They wanna sell something. They’re looking at getting out their equity of a property, but it’s a complete luxury. I don’t mean as a luxury property, it’s a luxury item or a luxury decision.

07:07You can do whatever you want whenever you want. Great. Good for you. The majority of people are making decisions and they have a need. There’s something going on in their life, a life-altering event that is pushing this decision to purchase or decision to sell. In that negotiation, are you finding out what it is?

07:27“Hey, what has us talking today? What’s important about making this move or considering the value of your home? When you sell or if you sell, where will you go? When would that be? What matters to you about that?” We wanna get as much information as we possibly can, and one of the keys to becoming a great negotiator is to learn when to stop talking.

Dru Lee07:54

We’re often taught, and I’ve trained coaches over the years, we’re often taught to ask open-ended questions. You wanna become a better negotiator, ask open-ended questions that do not turn into multiple choice questions. I find myself guilty of this sometimes. I’ll ask a question, “Hey, where are you moving?”

08:17And before they have a chance to finish their full response, I’m saying, “Hey, this or this?” And then you take a great question and you turn it into a multiple choice question. Ask a great question, stop talking. See how long they continue before you end and you ask your next question. One great way to do this, one of my partners taught me, you grab a blank sheet of paper and a Sharpie pen, and you say, “Do you mind if I take notes?

08:50I wanna make sure I don’t miss anything that you’re gonna share with me. If it’s okay, I’d like to take notes.” And if we’re in a physical presence, then you can actually see I’m taking notes, which allows me two things: allows me to listen, actually take notes, keep them talking, and limit my interruptions until I’m ready for my next question.

09:14Now, as I’ve learned where they’re going, when they wanna be there, what’s important about that, what they wanna make on their home, then we’re gonna eventually move into, all right, at what point in time do I know I’m the right agent for you? A lot of real estate agents make the mistake of going on an appointment without having all of the facts they need, really arming themselves and coming in with all of their tools or their guns loaded.

09:39What I mean by that is, all right, what are all of the objections, conditions, the conversation points, the stumbling blocks, or the potential landmines that I may be walking into when I’m meeting with you today? So for example, other than agreeing on a list price, is there anything else we really need to discuss before we list your home this afternoon? You might say, “Well, I’m not listing my home this afternoon,” or, “I wanna know what your commissions are,” or, “I wanna know what your success rate is,” or, “I’m meeting with other real estate agents,” or, “I’m not quite su-” Perfect.

10:13Okay. Other than that, is there anything else that would stop us from working together today? I may wanna delay that appointment. This is sometimes where people go, “Well, will you send me over your information? Will you send me a pre-listing packet? Will you let me know what your commissions are?” You have to first sell them on you, then sell them on the value you’re gonna bring.

10:36If you send somebody your listing presentation, you send them your commissions, you send them your history, you’ve actually given away what leverage you do have of why we’re meeting in the first place. That’s exactly what I wanna talk about when I meet you this afternoon. Is 1:00 good? Is 5:00 still better?

10:54When would be a great time for you? And then let the uncomfortable silence do the heavy lifting.

Dru Lee11:22

That’s exactly right. There’s a term in old school negotiation, whoever talks first loses. So when is a great time to come over this afternoon? Put that on them. That’s something I’m excited to share with you when we talk about compensation and how do we increase the demand for your home, thus helping you get the most amount of money.

11:46I’m looking forward to sharing that with you. Will you send it over? Well, that’s exactly why I really wanna walk you through it. It makes sense for you, and this is just too valuable to send you and then, hey, you either read through or skim through. This is important, and I know getting the most amount of money for your home matters to you.

12:02So you not only tell them what we’re gonna meet about, you remind them of why this matters.

Dru Lee12:15

Well, the number one reason you wanna find out what you’re running into is because, one, I have to know, can I overcome these objections?

12:23Is there something I need to learn, write down, prepare for, better prepare for going in? Or is there a condition that they are laying out that I’m not gonna be able to overcome? A condition may be, no matter what you say, no matter what you do, I am going to meet with other real estate agents before making a decision.

12:42If there’s nothing I can say that’s gonna change your mind and you’re in a fixed mindset, well, then I might as well be the last real estate agent to meet with you. I mean, that’s gonna make the most amount of sense. I wanna be the last person, therefore the only person that you meet with. Does that make sense?

Dru Lee13:08

So just out of curiosity, no matter what I say, there’s nothing I could prompt you with, there’s nothing I could offer, there’s nothing I would say that would encourage you to go ahead and list with me this afternoon.

13:18Is that correct?

Dru Lee13:30

That actually is gonna make the most amount of sense. Did you interview multiple agents the first time, or did you interview one?

Dru Lee13:41

Just that one person. So this time you wanna make sure you get it right, correct?

Dru Lee13:46

I’m gonna encourage you to do exactly that. So why don’t we do this? It makes the most sense that I know I’m the right agent for you, so when is a great time for me to be the last person you interview and last person you meet with? And then you’re prepared to make a decision having seen what everybody can offer at that point.

Dru Lee14:04

Perfect. Now, there’s a reason I’m doing this, ’cause what I’m doing that’s very subtle is I’m questioning how committed are you to meeting with other agents, and if I don’t believe you’re going to change, I don’t want you to change your decision. Matter of fact, I’m gonna reinforce this is a great choice you’re currently making.

14:26You should go ahead and meet with other agents. Don’t change that decision, because I feel like you’re pretty committed to it at this point. Now, if you said, “You know what? I’m really looking for somebody who is going to offer us a discount service, or they’re going to give us the most amount of money, they believe they could sell it for the highest price,” then I may change my decision, say, “You know what?

14:46Then why don’t we go ahead and meet?” Because at that point, I don’t believe you’re 100% committed that you’re gonna meet with other agents first. Where I learned this is actually being a home investor, more than even a coach or a salesperson. I used to make the mistake, when I would go in as an investor and I’m looking to buy your home, of making you an offer.

15:08What I learned later is, well, it didn’t really matter what I offered, because you were not prepared to make a decision at that time. You were either shopping other investors, you were considering selling it with a real estate agent or listing it yourself, and I was here in good faith to make a deal, and you were actually a shopper, not a seller, not a buyer. Where that approach changed is, “Hey, if we can agree today, are you prepared to sign the agreement, sell your home, list with me, sign the buyer agreement,” et cetera.

15:40You first gotta find out, are they in the framework of actually making a choice, making a decision? Now, once you’ve said yes, “If what you say makes sense this afternoon, I’d absolutely list my home with you.” “Perfect. I look forward to meeting with you then. We’ll go over step by step exactly what we can do to either help you get sold or how I could potentially buy your home and help you out with a fast or a quick exit.”

Dru Lee16:35

I may actually break rapport by pushing you too far. Whereas, hey, we’ve got a great rapport right now. You’ve already made a decision. I might as well reinforce that decision and stay in a good conversation, knowing that I’m gonna get my shot, too.

16:48And then at that time, “So is there anything that we haven’t discussed or we need to, and are you prepared to make a decision today?” Where I find most agents stumble is when they get the tough question: What do you charge? What should we offer? Especially in the changing environment of real estate commissions.

17:05What I wanna know is, hey, if we can agree today, this afternoon, when we meet tomorrow, Friday, whenever it is that we connect, are you prepared at that time, if we reach a decision and we reach an agreement, to list with me, hire me as your real estate agent? I don’t wanna offer this, I do wanna offer this, I’m willing to, or will you do it at a discount?

17:29Are you prepared to sign? As a real estate agent, here’s my key. I’ve gotta look at you as an individual and say, “All right. Is it worth my time?” Are you the type of client that’s my ideal client, or are you going to be high hassle, high demand? And then as a pricing strategy and combined with your motivation, do I believe this is something that will eventually sell?

17:53Here’s my personal philosophy, you may apply it too. Number one, do I wanna work with you? Do I like you? Number two, do you have a strong enough need to sell, and is there a timeframe in mind that you need to do so? ‘Cause then it’s gonna warrant making sense. I don’t believe I can ever negotiate commission, which means perhaps offer a buyer agent or offer more to a buyer agent.

18:18I don’t believe I can ever get a price adjustment if I don’t first get the listing. My number one job is to get the appointment, which is a negotiation. My number two, if we’re talking about sellers, is to get you to sign, because then I can go from there. I can get a price adjustment if I have a listing.

18:34I can get perhaps an increase in what we’re offering if you choose to start low or not at all in the changing market. I can always come back and say, “Hey, I’m noticing our showings, they’re not where we want them to be. It’s also obvious that since we’ve listed your home, here’s how many other properties have come on the market since then.

18:56Doesn’t it make the most amount of sense that now we reconsider offering more to a buyer agent and offering and advertising seller concessions to make this a more intriguing or more interesting property?”

19:11I

19:11can’t do that if I don’t first have a listing.

Dru Lee19:33

Sure. My number one job is to help you and get you a five-star service, so I appreciate you saying that, and I absolutely respect the decision. Now, do you wanna get the absolute most amount of money for your home?

Dru Lee19:47

Okay. If demand goes down for your home, what do you think’s gonna happen to price?

Dru Lee20:01

I appreciate that. I wouldn’t want that either. And if I am you, then I wanna drive the most amount of demand for your home, which is what we’re gonna do. Now, you have a choice. You can have one real estate agent, one real estate team, however many people I have working in my organization or partners or my brokerage, for example, or you can have thousands of real estate agents looking at your home, looking at your property.

20:22Which would you prefer, and which do you think is gonna drive the most amount of demand for your home?

Dru Lee20:29

Then if that’s the case, then I would offer a real estate commission.

Dru Lee20:45

Oh, we absolutely can. We can work around that in a number of ways. Currently, what’s really changed is not that they’re not being paid, it’s who they’re being paid by. And if you’re not offering a compensation, what you’re relying on is that buyer is going to choose to pay their real estate agent.

21:00And when was the last time you bought a house?

Dru Lee21:05

About 10 years ago. Do you remember what the closing costs were at that time?

Dru Lee21:11

What if I told you they dramatically increased due to the cost of insurance, due to the cost of taxes, and essentially the property values as they’ve increased?

21:20Essentially, that’s gonna drive up even more of those costs to a buyer, and now if we add that real estate commission on top of that buyer’s cost, it could actually price them out of the home. And we want the most amount of buyers in this pool potentially vying or bidding on your home, driving the price up.

Dru Lee21:39

So based on that, which is gonna be the best decision? Hire me and I get thousands of real estate agents to work for you by offering a compensation, or we take it at this rate. I charge 3%. Now, real estate agents, here’s the disclaimer. Charge whatever you charge, whatever your brokers charge, all right?

21:57That’s just a generalized statement. For me, I charge 3%. For you as a seller, what would you suggest or what would you like to offer? If the number is zero, I’m gonna take your listing. If the number’s one, I’m gonna take your listing. If the number’s two, I’m gonna take your listing. No matter your number, I got my 3%.

22:16What I’m going to encourage is, in order to get the most amount of money for your home, we are driving the most demand for your home. Number one, I wanna make sure you chose me, which, as you said from the very beginning, “Hey, I’ve decided you’re gonna be a great agent, I wanna hire you.” What we’re negotiating now is, are we gonna offer a commission to the buyers?

Dru Lee22:43

Perfect. We’ll get your home listed, and let’s see how the showing feedback works after the first week on the market, and we’ll reevaluate in our weekly touches. How does that sound?

Dru Lee22:54

Perfect. Sign here on my e-signature, or in my physical copy, ’cause I’m old school, of a listing agreement.

23:02Let’s go ahead and sign here. Let’s sign now.

Dru Lee23:06

Now, a week from now, a month from now, if your home is still on the market, I have a price adjustment strategy that I can come to. I also have a, “It just doesn’t seem like we’re getting the viewership, or we’re getting the showings,” and as we discussed in our first meeting, that could be due to the fact we’re only offering 1%.

23:25Are you open to the idea of we offer 2, 3%? And that now gives me two strategies. I not only have just the price adjustment and reduce the price, reduce the price, reduce the price. I also have a, what if we did this? What if we raised the commission, then we reduce the price? What if we raise the compensation, then we reduce the price?

23:45Now I have a multi-tiered approach, which isn’t now, “Well, what else can you do to get my home sold?”

Dru Lee23:56

Perfect. I just took a listing.

Dru Lee24:34

And I appreciate that. What I really want everyone to hear is I got the deal first. I negotiated second. If you took one thing out of this entire call, write that down. Get the deal first, negotiate second.

Dru Lee25:01

Hey, you can Instagram me at coachdrulee, or you can find me at coachdrulee.com.

25:07You can actually set up a free call, a free consultation at any point in time. I do business strategy calls. And join me anytime you see me on a webinar. Love to help.