How to increase deal velocity in a slower market.

CRE Success Principle: When asset values and transaction volumes are already under pressure, accepting a lower commission rate magnifies the problem. Believe in the value you deliver and be willing to walk away from clients who only select an agent based on their fee.

Right now, many commercial real estate businesses are dealing with three challenges:

Higher interest rates are placing asset values under pressure.
Transaction volumes are lower due to a gap between sellers and buyers.
And clients are pushing harder on fees as everyone seeks to reduce costs.

When those three forces combine, revenue can quickly start moving in the wrong direction.

The question is therefore simple: how do you maintain momentum when the market slows?

Stand Firm on Your Value

Fee erosion is one of the biggest silent killers of agent income.

A small reduction in commission may not look significant at first glance. But when a fee drops from 2 percent to 1.8 percent, that is actually a 10 percent reduction in your income from that transaction.

And when asset values are already falling, the impact becomes even bigger.

That is why agents need to have conviction in the value of the service they provide. The goal is not to compete on price. The goal is to win clients who recognise the difference in execution and outcomes.

Increase the Size of the Deals You Pursue

If you are already winning a high percentage of listings in your current market segment, there may be an opportunity to move up.

Higher value assets mean higher commissions and a larger opportunity pool.

Often, growth is not about doing more deals. It is more about doing better deals.

Focus on Deal Velocity and Conversion

Momentum in commercial real estate comes from turning listings into transactions.

That means faster systems, stronger buyer databases, better marketing, and educating vendors about what represents a good offer in the current market.

When you improve conversion and shorten transaction timelines, production increases.

If you want more strategies like this to help you win more listings and close more deals, listen to episode 261 of Commercial Real Estate Leadership.

Episode transcript:

There are three big issues going on in commercial real estate agency businesses right now from a transaction’s perspective.

One is that there is asset price deflation as yields decompress. The value of the assets being sold is less, which means that the commission earned is also less.

We also have lower transaction volumes, which of course means that there are less deals being done.

And in some cases, there are also clients who are looking for a discount on the commission that they are willing to pay for the services.

So, we are dealing with all of these impacts: lower asset values, less commission being paid, and less deals being done.

So, I think it's timely for us to do an episode talking about ways that you can increase your production to make sure that you don't fall behind in the current cost of living crisis.

All right, here we go.

Welcome to episode 261 of Commercial Real Estate Leadership. My name is Darren Krakowiak. My job is to help you lead better, grow faster, and stress less by hosting today's episode of the show, which is the second in a four-part series covering the topics of leadership, leverage, and agency growth.

And at the top of the episode, you heard the intro, which could have been recorded today, even though it comes from about three years ago talking about the rising cost of living, which is still a topic that people are talking about.

We thought it was over in 2025, but it's rearing its ugly head again in 2026 with everything that's going on in the world.

Fee compression is something which is an ongoing challenge for service providers, particularly in our industry.

When we think about the threat of disintermediation and look at the share prices of some of the world's biggest commercial real estate firms based on the threat of artificial intelligence, we've got transaction values that are still under pressure, particularly in certain asset classes and markets.

So, in today's episode, I want to cover some strategies to combat fee erosion. I want to talk about how you can stand strong against market challenges and also turbocharge your deal velocity.

So, this is really about the importance of conversion: turning more of the listings that are on your books into deals, harnessing the power of existing clients, existing relationships that you have, and also expanding your business smartly with actionable steps that are going to help you scale effectively.

That's what we're talking about in today's episode. Hope you enjoy it.

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Let's get into today's episode.

This is all about things that you can do to overcome the rising cost of living, because that is a real thing.

You know that I got the renewal for my Costco membership, and I think my wife uses that one, but I get the renewal bill for the membership and they put it up by 18%.

I'm like, “Man, this cost of living increased. Crisis thing is real. Even Costco is putting up their membership price.”

But anyway, let's talk about ways that we can overcome this issue.

And the first way is something I mentioned at the top of the show, which is fee erosion.

I think we need to just stand a little bit more steady and push back a little bit on this fee erosion that's happening in some markets.

Because when we accept, let's say, a 20-basis point decrease in our fee, so let's say the fee goes from 2% to 1.8%, we might go, “Oh, it's only 0.2%. That's not much.”

But that's actually a 10% decrease in your fee, right? That represents 10% of the total amount you would be paid.

And sometimes I see much bigger decreases being accepted, like from 2.5% to 2%. That's a 25% decrease in your fee. And when you're also dealing with lower asset prices, then that's going to have an even bigger impact.

I think we need to be a little bit more confident in the quality of the services that we're offering, that we are differentiated from our competitors.

And that if a client decides to leave us to get themselves a better deal on the commission, then we, one, want to consider if maybe they're not the best client to continue serving if that's all they care about. But two, we should have real confidence that the difference that we are insisting on charging for our fees versus our competitors actually represents value.

And that the clients that recognize the importance of value, if they can see that the quality of the service, the outcome that's achieved, the work that has been done by our competitors isn't up to the same standard, then it will be a no-brainer for them to come back.

As opposed to us just dropping our fee and continuing to provide the same level of service but not being compensated for it.

The next thing I wanted to mention was just this idea about increasing deal size.

And when we're in a market where the prices are actually deflating, then there is an opportunity potentially to start moving up into higher-valued assets, a bracket which is above the bracket that we're currently in.

And the way I like to think about this and advise clients and members to think about it is that if you've got a pretty good, solid, consistent win rate in the area of the market that you are currently targeting, let's say it's at 80%, so 80% of the opportunities that you have a legitimate interest in or that you actively pursue you get, then you're pretty much dominating your market.

And there might be an opportunity for you to start just pushing up a little bit and start to increase the value of the assets that you are selling.

And that, of course, will result in an increase in the amount of revenue that you do, not only because you'll be working at a bigger pool, but also the pool that you're working in will have higher asset values.

Another thing that you can look to do is just to do deals faster. So, this is a velocity of transactions.

And I think this will work for you if you've got a lot of leads that you can handle, you can just decide to move transactions through your team, through your process faster.

This will involve you needing to outsource, potentially to hire people, so get some people to do more of the grunt work for you, or people who can help you win more of the work or handle more of those projects while you go out and win more of the work.

It's going to mean that you're going to need to have better systems to be able to control the amount of velocity and deals that you've got going.

The better the system is, the faster that you can actually handle that work and get, say, something from an authority signed to something listed online.

How can you get that from, say, six days to maybe three days, for example? How can you utilize technology? How can you reduce time on market by properly educating your vendors about what represents a good offer?

How can you reduce the length of marketing campaigns overall? Can you be conducting better marketing, or can you secure a higher amount of vendor-paid advertising so properties come off the market faster than they would otherwise?

Maybe it's about you working the listing a little bit harder and having the team, having the processes in place so you're not so reliant just on inquiry that comes in.

But you've also got a process, a system, a way to also contact potential buyers or a hot list of buyers that you can generate demand for and be able to put attractive offers in front of the vendors sooner.

And I think when you start to do some of these things, it's also going to lead to more of your listings actually turning into deals.

Because not only do we want to do bigger deals, not only do we want to do deals faster, not only do we want to be paid more on a percentage basis for the fees that we're doing, but I think we also want to make sure that the listings that we win do actually turn into deals.

So, making sure, again, that our clients understand and have been educated on what is acceptable in the current market, that we're doing fantastic marketing, and that we are generating more offers for the listings is going to help us achieve that outcome.

There's a few other things that you can be doing, and I just want to highlight a couple of them now, and then I'll talk to you more about ways that we can help you to actually action a few of these strategies.

The first one is to make sure that we're doing more work with existing clients, more exclusive work.

Or can we do more repeat business? That's going to help us get more deal velocity.

Can we be referred work by existing clients? That's going to bring us more opportunities, in particular more of the opportunities that we want to be working on.

Perhaps it's about pushing into new markets. I mentioned before increasing the average transaction size or moving outside of your current bracket. Well, maybe it's also about pushing into different sectors or different geographies.

And of course, when we talk about deal velocity, I mentioned a little bit about it. It's going to require you to hire more people.

I think the more that you are able to engage the services of whether it's someone on the outside of your firm, outsourcing, or that you can delegate work which is below your pay grade, we've talked about many times on the show, well, that means you're going to have more time to be able to go out there and win more work.

That is our episode for today. Thank you so much for listening, and I will speak to you soon.