Real Estate Consulting

<p> There is apparently much confusion surrounding the label &quot;real estate consultant.&quot; I thought it would be a good exercise to get many different viewpoints on this topic. Here is mine: </p> <p> Now a few words about those who call themselves consultants but actually practice traditional business. I am aware that the label &quot;consultant&quot; has gained popularity in many circles. Several of the nationally known real estate trainers suggest that you just flip a switch and start calling yourselves consultants overnight. This is fine, if you wish to add even more confusion, uncertainty and doubt in the minds of the consumers. If you are not a consultant, you should not call yourself a consultant. And what, you may ask, is a consultant? </p> <p> </p> <p> In our world, a consultant is a real estate professional who gives (usually for a professional service fee) advice, counsel, interpretation of data and services to clients at the request of and under the employ of the client. The real estate consultant is tasked with providing the specific service or group of services to the client, regardless of whether these services are part of a transaction or not. The real estate consultant is then a trusted adviser. </p> <p> </p> <p> Of course, many real estate professionals can use the above to label themselves consultants, and that is great. We are not as concerned with the <b><i>consultant</i> as we are concerned about the <i>consulting business model</i>.</b> </p> <p> </p> <p> Under the <b>Consulting Business Model</b>, professional consultants work for the client at the behest of and as employed by the consumer. The consumer has all right of choice and can employ the consultant to perform any manner of tasks that the consumer feel are desired. </p> <p> Now your thoughts. . . </p> <p> Jack H </p> <p> <b><i><font size="2">Copyright © Jack Harper, 2008, All Right Reserved</font></i></b> </p>

<p> What we are talking about here is a very significant change to how we each do business on a daily basis, assuming we actually do make the transition. These changes will probably not come quickly or easily.<br /> <br /> There are a few resources out on the Internet, there is a book, there is a private designation. . . all designed to help you make the shift from purely traditional to consulting business. Mollie W. has her &quot;<u>Ripping the Roof Off Real Estate</u>&quot; book, there is the <a href="http://acrecourse.realtown.com/">ACRE</a> private designation course and there is the ConsultingTimes web resource for ongoing support of those who have the <a href="http://acrecourse.realtown.com/">ACRE</a> designation.<br /> <br /> These are terrific resources. No doubt about that. But they are only the beginning of what we will need as an industry that is about to experience a major paradigm shift. This is clear.<br /> <br /> What I would like to hear, from everyone in the group, is how they see their own needs shaping up. What do you expect to need in the way of support, training, resources, etc. to help you and maybe your associates move into this transition successfully? Are we missing anything? Your input will be valuable. </p> <p> Jack </p>

<div> <b>Determining your Value Proposition</b> </div> <div> One of the first steps we need to take when migrating from traditional real estate business models to a fee-for-service based model is to identify just what your services are, and how much you feel they are worth. </div> <div> <b>First, Determine Your Pricing Strategy</b> </div> <div> By this, I mean you should take some time to determine how you will make your services available and which services will be available as <b>hourly</b>, <b>bundled</b> or <b>full</b> service plans. </div> <ul> <li> <b><i>Hourly Services:</i></b> </li> </ul> <div> Consumers may wish to have you perform certain non-transactional activities. Examples could be assist in a tax abatement application, perform a buy/remodel value analysis, or even assist them in getting the right type of financing for specific purposes (education, reverse mortgage, etc.) These activities can often be performed on a non-transactional basis. That is to say that they are task-specific and do not depend on a closing. They are ideal candidates for hourly offerings </div> <ul> <li> <b><i>Bundled Services</i></b> </li> </ul> <div> Many consultants have found it wise to bundle certain activities into packages. This could be a marketing package, in which you develop a marketing strategy and implement all of the pieces - for a package price. It could be a negotiation and contract package, a closing package or more. </div> <ul> <li> <b><i>Full Service Plans</i></b> </li> </ul> <div> This is where you have an opportunity to offer traditional pricing (contingent on closing percentage of sales price) or you can elect to offer these same services at a capped, or flat fee. I will not express my opinion on flat fee pricing, as it is personal to the way you elect to do business. </div> <div> <b>Added Benefits to Your Pricing Strategy</b> </div> <div> There are many reasons to develop your pricing strategy. Some of the more important ones include: </div> <ul> <li>Consumers will now understand all of the intricacies of what we do, since you will tell them about each activity and the price you charge for it </li> <li>Discount discussions take on a new tone - &quot;Yes, I can lower the fees for you. Which services do you want to do yourself?&quot; </li> <li>Your professional image will take an immediate upward swing. Consumers and associates alike will have a new respect for your position. </li> <li>You can be paid for services that the traditional model and competitive nature of traditional business force us to do for free! </li> </ul> <div> <b><i>Copyright ©, Jack Harper, 2008, all rights reserved.</i></b> </div>

<div> I am constantly reminded, as I teach newer agents some business skills that are now part of our automatic toolkit, of the two scariest questions on their minds: </div> <ol> <li>Where will the business come from </li> <li>Will they think I am too new to be effective </li> </ol> <div> <br /> </div> <div> These questions come from their wide-eyed faces as they nervously proclaim &quot;OK, I have my license - what do I do now?&quot; I call this the &quot;deer in the headlights&quot; phase of our real estate career. </div> <div> <br /> </div> <div> This is not entirely reserved for new agents, by the way. I am finding more and more that some fairly experienced folks who may have come into this industry in the past 10 years are going through a whole new &quot;what do I do now&quot; thought process. Things have changed - dramatically. Transactions are fewer today and there seem to be many more agents ready to take the business away. </div> <div> <br /> </div> <div> Add to the already tense atmosphere surrounding such a severe market shift the major changes we are undergoing based on the convergence of technology, listing aggregators and would be lead generation companies (let&#39;s call them intermediaries for lack of a more polite term). We are just seeing the tip of the iceberg relative to how much major change is taking hold as we speak. </div> <div> <br /> </div> <div> The good news is this: As much as things are changed and changing, one thing remains the same and even becomes more significant. This is a relationship business. There is no magic. It is all about who knows you and trusts you, isn&#39;t it? We are touching people&#39;s lives and finances in some pretty significant ways. First, we are working with them on what is probably their most significant investment. Second, we are working with them on something so personal, so deeply a part of who they are - their home! It might be a house to you, but never lose sight of the fact it is home to them. </div> <div> <br /> </div> <div> So, let&#39;s tie this together. Since we are asking them to trust us with such an important issue as this, we need to be viewed as a trusted advisor! This doesn&#39;t usually come overnight. We have to demonstrate that we are skilled enough and caring enough to be trustworthy. The best way, for most of us, is to work with our sphere of influence. These are the folks who already know and trust us. We need to place major emphasis on this target market and creating an image in their minds that we are ready, willing and able to do what they need us to do. </div> <div> <br /> </div> <div> Remember, we have the added obstacle of being different than anyone who came before us. We are asking them to take a leap of faith. We are asking that they believe in this new model of doing business. And, by the way, we are asking them to trust us enough to commit to pay for our services - whether they close a sale or not! </div> <div> <br /> </div> <div> So, work with your friends, past clients, farm, and family - all of the people you consider to be on your side enough to be open to this new way of working. Know your model and have your mind so clear on what is different about what we do that it will roll off your tongue when they ask &quot;what makes your way better?&quot; </div> <div> <br /> </div> <div> Stay the course. </div> <p> Jack<br /> <br /> </p> <div> <b><i>Copyright ©, Jack Harper, 2008, all rights reserved.</i></b> </div>

<p> Once in a while - maybe every few years, I am struck with the notion that we in the real estate industry are too locked in to a business model that is no longer valid. </p> <p> Here is what the consumer often thinks of us: </p> <ul> <li>Drive around in fancy cars </li> <li>Pick up checks </li> <li>They tell us what they do requires a lot of skill and knowledge, but they never tell us what they do for the money we pay them </li> <li>they have an exclusive club that I can&#39;t join - called the MLS </li> <li>They get together secretly and agree on commission prices </li> </ul> <p> Here is what we think: </p> <ul> <li>Work for free </li> <li>Work for free </li> <li>Lose a deal (also called work for free) </li> <li>Maybe close a transaction and get paid </li> <li>Work for free </li> <li>Work for free </li> </ul> <p> You have to agree - there is some major difference in our perception of our business and the public&#39;s perception - even if you don&#39;t completely agree with the above model. </p> <p> There has always been an underlying resentment toward REALTORS® and their fees - usually associated with the difference between public perception and industry perception. If they don&#39;t know what we do, how can they agree to its value? </p> <p> Add to the mix the relatively recent appearance of our listing data all over the Internet, and the growing armies of companies only too happy to use our listings to make it easier (so they claim) for these resentful consumers to do business almost without us! Claims of flat-fee listings services and lead generation typically feed into the sentiment that we are overpaid for what we do or don&#39;t do. So we respond with what has proven to be the worst possible response - discounts. </p> <p> Now, I am not telling you not to discount. What I am saying is that we have raced to compete with each other by totally invalidating our service structure. The &quot;I will do it for less&quot; model only has a positive impact when everyone understands what the &quot;it&quot; in &quot;do it for less&quot; really is! So we have a broken system. </p> <p> Consumers are hearing &quot;full service&quot; claims all day long. What that means to each real estate pro offering it is as varied as there are stars in the sky. &quot;Full service&quot; means one thing to one agent and something else to another. So consumers are left to guess and wonder what they are paying for. In that light, discounts are meaningless. </p> <p> The current popular (as it has been for decades) &quot;contingent on sale&quot; commission plan is no longer valid. Consumers are able and willing to participate in their transactions. They might be greatly skilled in finding available properties. They might be skilled negotiators. They might be excited to hold their own house open on the weekend. But we sometimes list these things in our so-called full service offerings. They pay for it anyhow - thus we are unintentionally discouraging their participation. </p> <p> Along come the new Internet-based companies who not only encourage consumer participation, they insist on it. This new breed will tell the consumer exactly what they will do and what the consumer is expected to do. The entire process is totally transparent. And, by the way, this is growing in popularity and acceptance. Consumers love to save money. And, not surprisingly, they love to know what is going on with their money dealings. So this new model is gaining ground. </p> <p> Can we continue to lean on a broken stick? Yes, for a while. But it will become weaker and weaker. Soon it will just give way and we will be unable to hold our business up in the face of a changing economy. </p> <p> So, now what do we do? Just give up? </p> <p> I don&#39;t think so. I feel strongly that we have an opportunity to re-engineer our profession in ways that will call upon us to be of value to our clients, more than ever before. We need to become trusted skilled advisors. We must first gain the skills we may be light on. Then we need to determine if those skills are of value to the consumers, Finally, we offer these skills and services at a fair price - but we offer them on several levels: </p> <ul> <li>Hourly fee for service </li> <li>Bundled services </li> <li>Full Service - non-contingent </li> </ul> <p> Once we do make this transition we will find that our professionalism and our public perception will raise up quickly. The transparent level of what we do will become inherent in ALL that we do. Consumers will know exactly what they are paying for and, by the way, they get to choose what they want us to do for them! </p> <p> Is this scary? Absolutely. It calls on us to change almost everything we do. But if we don&#39;t, how long will it be before outside pressures force us to change?<br /> <br /> </p> <div> <b><i>Copyright ©, Jack Harper, 2008, all rights reserved.</i></b> </div>