Just Plain Talk

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years, I am struck with the notion that we in the real estate industry are too locked in to a business model that is no longer valid.

Here is what the consumer often thinks of us:

• Drive around in fancy cars
• Pick up checks
• 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
• they have an exclusive club that I can't join - called the MLS
• They get together secretly and agree on commission prices

Here is what we think:

• Work for free
• Work for free
• Lose a deal (also called work for free)
• Maybe close a transaction and get paid
• Work for free
• Work for free

You have to agree - there is some major difference in our perception of our business and the public's perception - even if you don't completely agree with the above model.

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't know what we do, how can they agree to its value?

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't do. So we respond with what has proven to be the worst possible response - discounts.

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 "I will do it for less" model only has a positive impact when everyone understands what the "it" in "do it for less" really is! So we have a broken system.

Consumers are hearing "full service" claims all day long. What that means to each real estate pro offering it is as varied as there are stars in the sky. "Full service" 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.

The current popular (as it has been for decades) "contingent on sale" commission plan is no longer valid.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.

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.

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.

So, now what do we do? Just give up?

I don'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:

• Hourly fee for service
• Bundled services
• Full Service - non-contingent

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!

Is this scary? Absolutely. It calls on us to change almost everything we do. But if we don't, how long will it be before outside pressures force us to change?