Real Estate Consulting

<p> Hi All, </p> <p> I haven&#39;t seen any recent discussions and was wondering how things are going. Is there anything new going on in the world of consulting? Is anyone having any luck at this in their business? Just touching base. </p> <p> Cathy Costner </p> <p> </p>

<p> In my discussions with brokers and managers, the topic of allowed activities usually comes up at some point. By allowed activities, I am referring to the chasm between traditional real estate business practices (full service - percentage of sales price fees) and other forms of income - such as consulting fees. Often the discussion is centered around the usual resistance of the brokerage to allow any fee model that does not conform to the traditional one. </p> <p> What is the reality in your business? Does your broker allow business based on bundles or even hourly activities? If you are the broker, would this pose problems for you? How would you overcome this?<br /> <br /> Beyond this, I would like to pose a few more questions to the group: </p> <p> 1. Does the real estate business model need to change? </p> <p> 2. What would those changes look like?<br /> <br /> 3. What would your ideal brokerage look like? What types of benefits, business structures, compensation and the like would appeal to you? </p> <p> I know, these are wide open questions, but I think this could be a great idea sharing opportunity. Chime in. We would love to hear your ideas. </p> <p> JackH </p>

<p> An article on the Inman News Service this morning, written by Kelle Sparta discusses the relative merits of developing a business model in which you simply start charging for each service that you provide. It also leads to charging an up-front retainer fee for buyers and sellers.<br /> <br /> Now, I am really oversimplifying here, so you might want to read the article for yourselves if you are an Inman subscriber. What I want to point out, though, is that there is some logic here and there can also be a lot of problems raised in just going after a fee-for-services approach.<br /> <br /> First problem: I have not researched other states yet, but I know that California only allows reatiner fees to be collected under very strict conditions. You must first submit the contract to the state for their approval, then you must abide by it to the letter, otherwise you can get into some serious hot water. This is seen as an attempt to stem the flood of mortgage scammers out there.<br /> <br /> Next problem: How do you convince a buyer to pay you for showings on a per-showing basis. Doesn&#39;t this reward the agent who shows the bad houses first?<br /> <br /> There are many more problems, but these are a start.<br /> <br /> Should we be paid for our hard work and skills? I think we should. But is it really wise to forego our current business model to make a complete shift to another one? I don&#39;t think so. And if we do, is fee-for-services really the best approach? You decide.<br /> <br /> I feel strongly that we should adapt - not morph. In adapting, we take what works, add to it what might enhance our business, work with it, make modifications then lock it in. In this sense, I favor an adaptation that adds client choices to the mix. We can educate clients about what it is we can do for them, and usually do for them, in a typical transaction. We help them understand how much time and skill every task usually takes. This is a great way to justify our value proposition, isn&#39;t it?<br /> <br /> We can then be open to any discussions the client initiates that would indicate that they would like a different relationship - say a serious discussion on fee discounting or any hint that they might want to be deeply involved in the activities. We have probably all had those clients who hinted at FSBO, or that they might be happier with a company that rebates them commissions based on the work that the client will do.<br /> <br /> Now we can be flexible. We can be secure in knowing that the client is educated on the risks and skills involved in every task - secure because we educated them! If the client chooses to work on a non-traditional agreement, we can be flexible enough to make that happen.<br /> <br /> So, now, I would like to hear from you. What do you feel about making a major move into what is called &quot;fee-for-services&quot; vs adapting and becoming flexible through a client-education, informed choice model?<br /> <br /> Jack H </p> <p> <em><strong>Copyright, 2009, Jack Harper, All Rights Reserved</strong></em> </p>

<p> I will post here some brief excerpts from my book, &quot;Read This Book; if You Plan to Stay in Real Estate&quot;<br /> <br /> Please feel free to comment and add yout thoughts. </p> <p> <b><i>Changing the Consumer&#39;s Mindset and Our Own Business Plan</i></b> </p> <p> <b><font face="Times New Roman">The traditional &quot;contingent&quot; model places all of the risk of sale in the hands of the listing broker. If the property does not sell, then the broker does not get paid - regardless of whether the broker has invested significant time and money in an effort to sell the home. The outcome is almost entirely beyond the control of the broker.</font></b> </p> <p> <b><font face="Times New Roman">Consumers believe that we sell every listing we get and we get every listing we seek. Nothing could be further from reality. While it is true that in certain markets, such as the one seen in the first half of the 2000&#39;s, listings sold with little effort in many market areas. &quot;Get a listing-get a check.&quot; Remember? I can testify, however, that even in such heady times there were plenty of listings that didn&#39;t sell or sold after many marketing dollars were invested. Also, competition was stiff and commissions were the first thing to be reduced in the competitive arena. So, agents did not get every listing they tried to get and not every listing sold. Magnify that in a down, or even a buyer&#39;s market. Agents invest much time, talent and money in getting listings and getting them sold. Many listings in this market expire - leaving the agent holding the bag for the investment.</font></b> </p> <p> <b><font face="Times New Roman">In the traditional model, all of the risk of sale or no sale is shouldered by the broker. This forces the broker to charge typically high fees for those transactions that actually do close. They must make up their investment on the clients whose trust in them leads to a sale. This is true with most contingent fee arrangements - including attorney fees.</font></b> </p> <p> <b><font face="Times New Roman">In contrast, <b>the consultant is paid for services rendered whether or not there is a close of escrow.</b> The risk is either shifted to the client or shared between the client and the consultant. As a result, the consultant can and usually does charge a much reduced fee in recognition of the reduced risk.</font></b> </p> <p> <b><i>What If The Client Just Needs Help?</i></b> </p> <p> <b><font face="Times New Roman">There are many instances where the real estate consumer might need a skilled professional&#39;s assistance outside a sale or purchase:</font></b> </p> <div style="margin-left: 4em"> <p> <b><font face="Times New Roman"><font face="Symbol">·</font></font></b> <font face="Times New Roman"><font face="Times New Roman">Refinance appraisal support</font></font> </p> <p> <b><font face="Times New Roman"><font face="Symbol">·</font></font></b> <font face="Times New Roman"><font face="Times New Roman">Pre-foreclosure lender negotiations</font></font> </p> <p> <b><font face="Times New Roman"><font face="Symbol">·</font></font></b> <font face="Times New Roman"><font face="Times New Roman">Investment Analysis and ROI calculations</font></font> </p> <p> <b><font face="Times New Roman"><font face="Symbol">·</font></font></b> <font face="Times New Roman"><font face="Times New Roman">Tax Abatement support (e.g. supporting data for submission to assessor)</font></font> </p> <p> <b><font face="Times New Roman"><font face="Symbol">·</font></font></b> <font face="Times New Roman"><font face="Times New Roman">Remain and Remodel or Move Analysis</font></font> </p> <p> <b><font face="Times New Roman"><font face="Times New Roman">These are just a few of the many hundreds of ways we could help our clients without the need to be selling or buying a home. Sadly, the current traditional business model prevents this from becoming an income-generating opportunity, As a result, many Realtors don&#39;t do it-or do it with less than 100% mindshare.</font></font></b> </p> <p> <b><font face="Times New Roman"><font face="Times New Roman">In the Consulting Business Model, we will easily reach an agreement with the client to perform these and other tasks on an hourly fee basis. We will have an immediate financial gain on the successful completion of the task, so we will naturally have a total focus and a business-logical reason to do the best job we can. It will likely lead to more and referred business.</font></font></b> </p> <p> <b><font face="Times New Roman"><font face="Times New Roman">Jack Harper</font></font></b> </p> <p> <b><font face="Times New Roman"><i><font face="Times New Roman" size="2"><font face="Times New Roman" size="2">Copyright 2008, 2009 Jack Harper, All Rights Reserved</font></font></i></font></b> </p> </div>

<div> In the past few years, I moved from management of one large office in one city to management of a large office in another town. I had been managing the first one for several years. I might be hinting at my own version of the aging process, but I had more than one occasion when I was commuting where I found myself half of the way to the old office and had to turn around and redirect my car toward the new one!<br /> <br /> <br /> </div> <div> We have all heard about instances similar to this. Sometimes we find ourselves near our destination and we don&#39;t have a clear memory of the trip to get there. We are, it seems, traveling on autopilot. Muscle memory takes over and we repeat patterns automatically, without having to be too aware of each turn.<br /> <br /> <br /> </div> <div> I have noticed a similar phenomenon in our transition from traditional practice to one of pure consulting. I have been performing the same way for some 25 years now and I have what seems to be a mountain of automatic activities and reactions to requests that are some sort of knee-jerk reactions based on many years practice.<br /> <br /> <br /> As an example, one of my websites is based on a template available through a service. These can be a great way to get additional sites up and working in a hurry and without too much investment. Unfortunately, though, they are cookie-cutter by their nature. I needed to go through the site word-by-word to remove any references to the old way of doing business.<br /> <br /> </div> <div> About three weeks into it, I got a request for a FREE CMA from my website! I must have missed that particular page. Well, this is about as far away from our new business model as it gets. I was stunned. It looked like I had to go back to the old way, for a day. I made the offer through the website, now I had to deliver - much to my chagrin. I sent a reply message to the person and found the email address was bogus. That was probably the only time I can recall that I was happy about a bogus lead form.<br /> <br /> </div> <div> This was an in-your-face example of a backward slip. But there are so many times when I have experienced many more subtle opportunities to slip. We get calls from buyers who happened to see our sign, or our ads. They want us to start the search for their next dream house right away. They are ready, willing and able to buy right now! I find that our agents, in the excitement of a seemingly real lead, have a tendency to slip back into old thinking. &quot;Sure, I will search the MLS right away and call you back. . .&quot;<br /> <br /> </div> <div> Hey, we all want to make an income, so it is natural to go into hyperspace and turn on all automatic tools to get us going. But we are doing exactly what our business charter is designed to eliminate - we are working for free!<br /> <br /> <br /> </div> <div> Will we be able to change overnight? Probably not. But we need to constantly reinforce our purpose in our minds. We need to establish new &quot;muscle memory&quot; that will soon give us a new knee-jerk reaction. We will start to operate automatically as consultants. It will take time and commitment, but we are ready. Are you? </div> <div> <b><i>Copyright ©, Jack Harper, 2008, all rights reserved.</i></b> </div>

<p> Now that we have a pretty good sized group, let&#39;s take advantage of that. One way will be to get some feedback from those of you who are walking the walk and actually providing services on a consulting basis.<br /> <br /> If you have provided consulting services, don&#39;t be shy. Tell us about it. How did it work for you, for your clients?<br /> <br /> If you are not yet providing services on a consulting basis, what is holding you back? What is your plan to go forward?<br /> <br /> If you are not sure - let&#39;s talk about that too. Just reply to this message and we will be on the road to working together. </p> <p> Best </p> <p> JackH </p>

<div> <b><a><em>The Zero Value Equation</em></a></b> </div> <p> § Competition is a good thing.<br /> o keeps competitors on their best behavior<br /> o keeps prices within reason<br /> <br /> § Abundance is a good thing.<br /> o Supply and demand rules the day<br /> o Consumers are empowered<br /> o Prices usually drop to attract consumers to brands<br /> <br /> § Price wars usually end in collapse<br /> o Discount as a business plan only works until everyone does it<br /> o When everyone discounts, profit margins erode<br /> o When profits erode enough, collapse follows as a result of competitive discounting. Prices usually erode to the point where you are losing money on every transaction just to attract the cash flow.<br /> <br /> The above can apply regardless of market conditions. When all competitors have either embraced or been forced into discount as a business model, all competitors risk their future. Surely you have heard the old adage &quot;Yes, I am losing money on each one, but I will make it up in quantities.&quot; Losing money is losing money - regardless of the volume. Increased volume just means you will lose even more.<br /> <br /> <a><em><strong>Copyright© 2008, Jack Harper, All Rights Reserved</strong></em></a> </p>

<p> Buzzword of the year - <b><i>Transparency</i></b> </p> <p> <b>So why is this word important? What makes it seemingly relevant to today&#39;s real estate experience? It is so critical because we have practiced the opposite for so long. We have offered consumers something we called &quot;full service&quot; for as long as any of us can remember. But, by the way, we rarely told them what this &quot;full service&quot; included! Thus, we practiced <u>unintentional deception</u>. No, we didn&#39;t lie. No, we never set out to deceive anyone. It is just that we assumed that everyone knew what full service entailed.</b> </p> <p> <b>A problem was that most consumers never knew going into a transaction what would happen between posting in the MLS and getting the closing check or the keys to their new home. We practiced unintentional deception. Consumers generally think that we do far less than we really do for our fees. &quot;If you don&#39;t tell me what I am paying for, I am not very thrilled about giving up my money.&quot; Yet we have unknowingly asked consumers to do exactly that.</b> </p> <p> <b>What constitutes full service varies greatly from one professional to the next. One might include staging, another might not. One might include mail campaigns and Internet promotion, another might not. Some may include all closing services, others may charge extra. Whatever you include or exclude, one thing is clear: consumers probably don&#39;t know what to expect. Yes, sometimes we offer them a written marketing plan. Sometimes we give them a written &quot;what to expect&quot; brochure. Usually, though, they neither understand this nor have a clear fix on what they are paying for.</b> </p> <p> <b>Add to this confusion the reality that we, as competing professionals, often give services away in the hope of winning the &quot;deal&quot; from others. These &quot;freebies&quot; are sometimes services that are outside the normal: staging, landscaping, interior repair and refurbish are all things I have seen given as free services, even thought they were never part of the &quot;standard&quot; set of services in our area. This tends to tell the consumer two things:</b> </p> <div style="margin-left: 4em"> <p> <b>1. These are valueless services</b> </p> <p> <b>2. These are what we normally pay for.</b> </p> </div> <p> <b>They are valueless simply because we are willing to do them for free. I believe that free services are always seen as having a value equal to what the consumer pays for them.</b> </p> <p> <b>They become viewed as services that are assumed to be integral to our offering, simply because we make such a big deal about them. &quot;They must be standard.&quot; We know, by the way, that these services are <u>not</u> part of the usual, and are not critical parts of what we do. They were &quot;invented&quot; often to inflate our individual offering to put us just a little ahead of the pack. We place so much importance on them in our competitive plan that consumers sometimes think of these as our service offering - missing the real important issues like marketing, negotiation, contracts, disclosures, inspections, closings, and so much more. So, listening to us puff about these &quot;put me first&quot; ancillary services and not hearing much about our critical services, it is small wonder why consumers might sometimes think we are overpaid.</b> </p> <p> <b>So, back to transparency. It is high time to educate ourselves and our clients as to what it is we do for a living. And, by the way, how we do this education will speak volumes about how professional we are. Do it right and you are viewed as a true professional, skilled in all aspects of residential real state business. Do it some other way and you can be seen to be like just another discount shop - giving away services but never really performing to the consumer&#39;s expectation. They don&#39;t understand what you do and you don&#39;t understand what they expect.</b> </p> <p> <b><i>What do we mean by transparency? It is simply the method of doing business that gives the consumer a clear understanding of all the things you will do for them and the costs associated with those services. It is allowing the consumer to understand these services in such a manner as to empower them to make correct choices about the services that they will want or need. It is then structuring the business agreement in such a way as to spell out in clear terms the expectations of both the professional and the consumer, transparently.</i></b> </p> <p> <b><i>Then, you must perform to expectations.</i></b> </p> <p> <b><font face="Calibri" size="3"><font face="Calibri" size="3">Jack Harper</font></font></b><br /> <strong><em>Copyright 2008, Jack Harper, All Rights Reserved</em></strong><br /> <a href="http://www.clientchoicerealty.com">www.clientchoicerealty.com</a> </p>

<p> Do any Real Estate Consultants in CA have a DRE approved&quot; Fee for Services Menu&quot; they would be willing to share? I want to submit mine to the DRE but would rather start from an already preapproved template. </p> <p> </p> <p> thanks<br /> Mario Bertacco, Broker<br /> SoCo Real Estate, Inc<br /> Sonoma County, CA<br /> www.SoCoRealEstate.com </p> <p> </p>

<p> Hi </p> <p> I have been licensed for 2 years but actually have done very few transactions. My background is in accounting and I like the Consulting Business Model. I do analyse things a good bit. </p> <p> I have always wondered why we have to put a list price for the house in the listing agreement right up front. Especially when working under the counsulting model where all services are selected. </p> <p> In order to come up with the amount to list the property for you have to do a CMA and know what the sellers reasons for selling are. You are doing work for free up front. It seems like a better way would be have a contract to perform specific services first and then if you will be listing the house, the listing agreement would then be completed. I know part of the problem is that the paperwork is still based on the traditional ways. </p> <p> My question is how do you deal with the Listing Agreement when using the Consultant Model? </p>

<p> This might be filed under the &quot;is he nuts?&quot; category, but my wife and partner, Sue, and I have had an epiphany of sorts. We live in Brentwood CA (no, not the suburb of LA where OJ lived, but the one in No. CA). Our town is one of the worst hit areas in the country for foreclosures. On my street alone (not a bad neighborhood, on the golf course, great views) we have seen seven foreclosures so far out of only 23 homes!<br /> <br /> These homes are being lost by folks who were caught up in the loan debacle - unable to refinance to a better loan and lender not willing to easily modify to a lower rate to allow people stay in their homes. The homes are mostly worth less right now than the owners paid for and likely owe on them. So, sadly, they need to leave their homes to the lenders.<br /> <br /> Many of these can be saved if the borrowers only understand the ins and outs of the modification process. Many will not but some can be saved if these people are guided through the process by someone who knows the right buttons to push or the right people to call and understands how to &quot;package&quot; the modification for best results.<br /> <br /> This Christmas morning, we happened to be walking the neighborhood, when it hit me. I need to help. No ulterior motive, I just need to help. I also have a fresh recall of the pro bono discussion recently here on RT. Two plus two equals four.<br /> <br /> I have decided to offer my services to these folks here who are possibly facing foreclosure, as long as ths is regarding their HOME - not an investment property. And, my services will be offered for no charge. I will be contacting the local papers and the Internet sites to promote this, but I am totally committed. People need help staying in their homes. Maybe I can help.<br /> <br /> Yes, this goes against the grain and I might be disliked by some of my peers for this, but it does not matter in the least.<br /> <br /> I know that this has little to do with the group, except it is consulting for a $0.00 fee. I just want to share it in the hope that there are others out there who might be in a position similar to mine in that we can actually work for free on purpose.<br /> <br /> Merry Christmas, Happy Holiday,<br /> <br /> JackH </p>

<p> This morning on the Inman News Roadmap to Recovery, a survey response from Robert Hahn, VP Marketing for Onboard Informatics makes for a great read! </p> <p> In his post, Mr. Hahn states; &quot;they also have to prepare for an industry where the value they add is fundamentally shifted away from the transaction and towards knowledge.&quot; </p> <p> A quick read of this article will be good, as he goes into some pretty powerful arguments that fall in favor of what we are talking about here - the &quot;trusted advisor role&quot; made possible through the &quot;Consultative Model&quot; that we are advocating. </p> <p> Here is a link: </p> <p> <a href="http://www.inman.com/opinion/guest-perspective/2008/12/10/demise-desk-fee-dinosaurs">http://www.inman.com/opinion/guest-perspective/2008/12/10/demise-desk-fee-dinosaurs</a> </p> <p> What is your reaction to this? </p> <p> Jack </p>

<p> In the middle 1970s, I was very involved in taking seminars that would qualify me to be listed in &quot;Who&#39;s Who in Creative Real Estate.&quot; There were some very creative minds teaching us to do real estate the smart way, not the hard way. One of these great minds was Charles Chatham. He was of the conviction that real estate agents should counsel and advise clients, find out what made them tick. </p> <p> More than 30 years later, I cannot talk with a potential client without NOT asking them what kind of house they want. Charles&#39; seminar was one course that was truly ingrained in me. </p> <p> Counsel with your client. Show them you really care about what kind of home they want by asking them about their lives. You&#39;d be surprised how the client finds it easy to trust you . . . and you him or her. </p>

<p> Hi to all,<br /> <br /> Based on feedback and some requests from some of my broker clients, I am pleased to tell you that my new book for the consulting side of residential real estate, &quot;<u>Read This Book! if you plan to stay in real estate</u>&quot; is now available.<br /> <br /> While other books and articles have been written to discuss the relative merits of adopting the new model, &quot;<u>Read This Book</u>&quot; goes well beyond the &quot;why&quot; of consulting and walks the reader through the various steps involved in making the transition from pure traditional to one that includes consulting. In this sense, this is a &quot;how-to&quot; book.<br /> <br /> At the same time, I am happy to announce the opening of my new web resource, located at <a href="http://www.ClientChoiceRealty.com">http://www.ClientChoiceRealty.com</a> where you will find information, presentations, systems, training and eventually coaching links to help you grow with the new consulting model. You will be able to purchase the book here as well as on the usual sites, including Amazon.<br /> <br /> Please feel free to visit and roam around the site, which is a work under completion. As time allows, we hope to add more and more tools and information for your use and learning. We already have plans to add a special broker/owner section where we will offer information specific to that level of user.<br /> <br /> I welcome your feedback and hope to hear from you.<br /> <br /> Best<br /> JackH </p>

<p> As I sit here this morning, I come to the end of three days worth of study and introspection - an attempt to come to some solution for the agents who want to add consulting to their business plan but happen to work under a broker/owner who is not ready for this model. <br /> <br /> Being a broker/owner myself, I have a clear understanding of the possible reasons for this hesitation: liability, loss of income (perceived), loss of focus, accounting nightmares, management burdens. I also have a strong understanding, based on more than 25 years experience, that we in residential real estate have a solid sense of &quot;that&#39;s the way we always did it.&quot; We almost live in a world based on the &quot;if it isn&#39;t broken, don&#39;t fix it&quot; mantra.<br /> <br /> As a producing agent, however, I have a countering sense that tells me I should be doing business that way I believe it should be done, so maybe I need a broker/owner who &quot;get&#39;s it.&quot;<br /> <br /> I want to tell you that neither of these positions is wrong, and neither is completely right.<br /> <br /> I have come to the tentative conclusion that we, as a team (broker and agent) need to work toward some solution that works for both. Such a solution would be based on mutual open-mindedness and a committment to the objective of reaching a mutually beneficial working agreement.<br /> <br /> I also feel strongly that we have come to the jumping off place - where the paradigm is truly shifting. We can no longer put this change off. Our old business model of contingent commissions based on a percentage of the sales price will not work much longer. Consumers will not stand for such a vague agreement. We must begin movement toward a new business relationship based on mutual benefit and total transparency. I personally feel the consulting model is the right one. (read my book to see if you agree).<br /> <br /> So now I need your input. Have you tried to implement some of these principles? Is your Broker/Owner not allowing this to happen? Are you a broker/Owner who has concerns about this movement? Let&#39;s examine this. What is going on in your world? How do you see this playing out?<br /> <br /> Don&#39;t be shy. We can all gain from this. </p> <p> JackH </p> <p> <b><i><font size="2">Copyright 2008, Jack Harper, All Rights Reserved</font></i></b> </p>