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Hi everyone, Darren Hunter here. If you're in the business of signing up new property management clients, you’ve probably heard the line, “But the other agent is cheaper.”
I understand how frustrating that can be. Today, I want to share a script that will not only help you handle this objection, but also make you welcome cheaper agents in your market.
First, I need to lay out some foundational principles before we dive into the script. Please don’t skip ahead—you need to understand the reasoning behind it to fully appreciate the power of this approach.
When an owner asks, “But the other agent is cheaper,” they’re stepping into the ‘negotiation zone’.
In real estate, your fees are perceived as negotiable. The same owner wouldn’t go to a supermarket or a fast-food drive-thru and ask for a discount by saying, “The other place is cheaper.”
But in real estate, they feel comfortable asking because it’s expected. Often, they’ve done a quick price check with one or two cheaper agents to use as leverage, like a loaded gun, to pressure you into lowering your fees.
However, their intention to go with the cheaper agent is usually not as solid as it seems.
Most property owners don’t realise that agents price themselves based on their perceived worth in the market.
We’ve done secret shopping across 1,300 agencies in Australia and New Zealand, and I’ve just checked the Sydney Inner West market as an example. In this area, agents charge anywhere from 4% to 8%.
Now, why such a wide range? It’s because each agent prices themselves based on what they believe they are worth compared to their competitors. No one prices themselves lower than what they believe they are worth.
This leads us to what I call the Law of the Fee Lid. Agents charge the highest fee they believe they can get in their market. If they believed they could charge more, they would.
Likewise, if an agent is pricing themselves cheaper than you, it’s because they don’t believe their service is worth as much as yours.
They know what you charge—they’ve likely secret-shopped you just as you’ve done with them.
They’ve made a deliberate choice to price lower because they know they can’t compete with you on service.
Their fee tells you what they think of themselves, compared with you! Their fee is a ‘self-rating’ scorecard!
Now that you understand the foundation, let’s dive into the script. This one is from the PM Fee Script Secrets book, found on page 109.
Script: "Mr. Smith, we are aware of the fees other agents are charging, and they are aware of ours too. Everyone in the market knows what each other is charging—agents check each other out all the time. But despite knowing our fees, those other agents have adjusted and discounted their fees because they know they cannot compete with us on service.
If they felt their service was as good as ours, they would be charging the same. But they aren’t, because they’ve self-rated their value with their lower fees. That’s why you need to be careful—lower fees usually come with lower service levels."
This script highlights a simple truth: agents charge according to their perceived value.
If they felt they were as good as you, they’d charge the same fee as you!
I hope this has been an empowering moment for you.
The market dictates fees based on perceived value, and cheaper agents know they can't compete on service, which is why they undercut on price. Use this script with confidence and remember that your value is reflected in your fee.
For more scripts like this, make sure to get your copy of the PM Fee Script Secrets book. It’s free—you just cover the shipping. You can grab it at IGTCentral.com.
Thanks for your time, and take care!
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