DO BROKERS NEED INCENTIVES?

It is estimated that 99% of commercial real estate brokers are compensated on a commission basis. That's certainly been the case for me for the duration of my 36 year career. If we don't sell, we don't eat. On the surface, that fact would appear to be enough to motivate me to get out of bed in the morning and go find someone to talk to. It has been said that if we are not face to face with a prospect, we are unemployed. Most people don't pursue a career that is strictly commission based because they prefer the security of a weekly/monthly paycheck. That regular paycheck certainly makes it easy to budget and plan your finances. When you know how much is coming in and when it will arrive, there's a warm fuzzy feeling of comfort that comes over you that eventually you just take for granted. Not so for the commission salespeople! We often don't know when or where our next dollar is coming from. What other incentives would a person need to be motivated to get out there and work?
Many successful commercial real estate brokers focus their business model on obtaining quality properties to sell or lease..."listings" we call them. You've no doubt heard the term. I don't particularly like the term..."listing". Sounds like a boat that's ready to capsize. But I have learned to live with it. People hire me and my firm to represent them exclusively in the marketing of their property or asset. I become their agent so this is also called an "agency" agreement or exclusive right to sell or lease. I enter into a listing agreement knowing that there is a reasonable probability that the property will sell or lease at some point during the term of the agreement. That probability depends upon a number of factors, the most important of which is the seller's or landlord's MOTIVATION. If they just want to "test the market", their motivation is low. If they are going to lose the property in a foreclosure if it doesn't sell, their motivation is high. The location and condition of the property are also factors that directly relate to probability.
Successfully marketing the property or space becomes the primary task of the broker. Getting from the listing process to the closing table is the objective because it is only at the closing table or lease consummation that we get paid. We do all our work upfront ("on the come") and get paid only if we are successful. Attorneys don't work that way, doctors and accountants don't either. I hope this isn't boring you...I'm getting to my point. In order to sell or lease a property once, we have to make TWO sales...we have to sell the property to the other brokers and then they have to sell it to their prospects. Leveraging the marketing process by getting other brokers to be aware of, knowledgeable and excited about your property is a huge part of marketing. The other brokers have numerous properties that they can choose to show to their clients or prospects. My job is to get their attention via my marketing program so that they will show yours.
To do this we often need to offer extra incentives. When a seller tries to beat me down and get me to reduce my commission, he isn't thinking about the ramifications of that. Instead of asking me to offer "less" commission to a cooperating broker for the pleasure of showing this one property, the seller should pony up and offer "MORE" than a "competitive" commission as an incentive for a broker to show that seller's property. There, I said it. In other words, you should find a way to appeal to a broker's sense of GREED (brokers are not greedy but they do have to feed their families) to give your property the best chance of selling. A larger than "competitive" commission rate can get the broker's attention. That is what marketing is all about. Some smart sellers offer brokers other "spiffs" to get their attention. I was enticed this week by one who offered me a trip to Hawaii if I leased his 15000 sf industrial condo. You may not believe this but I've had building owners hand me a $50 or $100 bill just to show up and PREVIEW the building at a broker's Open House tour for a group of industrial buildings. They are trying to get me to NOTICE their building above others they are competing with. The strategy works!
Understand that I am not advocating for more of a commission for ME in this discussion. I am suggesting that if you are selling or leasing a property, that you strongly consider allowing your marketing representative to offer a BONUS to the cooperating brokerage community. It is my contention that such an incentive will lead to more exposure which translates to more showings and a faster sale or lease. In a market where supply grossly overshadows demand and showings and offers are few and far between, it behooves all sellers and landlords to understand what makes the world go round in the commercial real estate brokerage business. Providing the brokerage community some creative incentives could make all the difference between selling, leasing or lingering on the market for a long time.