I recently created a poll posing the question,
"As a Negotiator in Property or in Sales based roles you rarely get the best of both worlds, what do you prefer?"
Higher Basic/Lower Commission
Lower Basic/Higher Commission
Results are below.
Traditionally Estate Agency in London has been a heavily commission lead profession. With the high fee's on offer for getting deals over the line with high value properties, it makes sense to incentivize people to do more deals. It adds a competitive edge against other negotiators within the office, which ultimately can make you more competitive against other companies working in your market.
As a recruiter for Residential Estate Agency, however, often the stumbling block for people getting into the industry or making the next move is the basic salary. It seems a more poignant question now more than ever due to the cost of living crisis, with people seeking out financial security just to pay the bills.
I started out in Estate Agency before moving into recruitment at a large corporate firm and my basic salary was a whopping £12k per year. While it was a bit terrifying if you were having a slower month, the pure excitement from doing a deal, especially if it was a high fee made it very rewarding and I enjoyed having the target in front of me to do as many deals as possible.
It was 3.5 years ago that I started out in agency and it feels that perhaps the consensus is shifting because in London now if you have a month without commission, it simply isn't feasible to live off a £12k salary for a month.
The results of the poll were as follows. The poll received 162 votes, a relatively small number, I found the results interesting though, because it was enough of a sample to get a feel for the sentiment out there as many of the voters were property negotiators. 60% voted in favour of Higher Basic/Lower Commission and 40% voted in favour of Lower Basic/Higher Commission.
These results may come as a surprise to some but not to others. I asked some of the voters why they voted the way they did, here are what some of them said about wanting a higher basic:
A Sales Negotiator said, "I’ve been recently looking at mortgages and they mainly take into account the basic. Plus I’m the sort of person that would rather know what they are earning monthly instead of the change each month."
Another Sales Negotiator at a corporate agent in London said "I think, personally, with such fluctuations in the market and interest rates, it can become a tough environment to get deals across the line. I would rather have the security of still bringing home a decent pay check each month to cater for that, than be reliant on a higher commission."
Voters on the other side of the debate had this to say, one Lettings Negotiator at a mid-sized London Agency said, "Voting swung that way purely on confidence, if you’re a Negotiator always in the top 50%, why would you want your potential higher commission spent on propping up other people’s basic when they’re not performing."
Another Negotiator added "My vote was swung due to the belief of commission being an effective method of motivation, since there is a direct link between monetary reward and employee performance. I believe this is vital in any sales role, for both the employers and employees."
Furthermore this property professional said: "I believe lower basic and higher comms gives you more potential to increase your earnings. At the end of the day the harder you work the more you make with commission."
Both sides make valid points and the best working model is certainly a good debate. The consequences of having a tricky month are perhaps more difficult than ever now if you have a bad month. However, you can't take away that incentive from those who really back themselves as sales people and want to chase uncapped high reward commission targets.
Let me know what you think! Thanks for reading.