Extreme Makeover - Real Estate Edition - Part III - Getting Business

Kris,

Here's another thought to consider. It sounds as though you are already, particularly in your marketplace, an "out of the box" thinker. The things you are doing, implementing in your busines (like your laptop, or your aircard) are tools that help to "differentiate" you and how you work from the competition. You've undoubtedly heard the anachronym USP (Unique Service Proposition). Just like your other "tools in your toolbox", Consulting is an opportunity to create, not just expanded service to your customer/client base and income opportunities for yourself (and those of course are huge benefits to the approach), but it's also a great USP opportunity. Why? Because each of us needs something to help create an "edge" in the marketplace.

You mentioned your market..mine is the opposite. I'm in the Chicago area. Currently we have over 115,000 homes (attached or detached) in inventory. In the past 12 months, just over 66,000 homes sold. And we have about 40,000 agents!!!! With numbers like that, we all need resources to HELP THE PHONE RING. The reality is that most consumers may not want to pay for services up front...but most consumers don't really understand what a good agent really does. As Jack mentioned earlier...most think we sit with the seller long enough to get some papers signed and then disappear until a contract comes in, then disappear again until closing when we scoup up a huge check. What the thrust of the presentation (as I see it anyway) is to illuminate the responsibilites involved in getting a property sold and closed (and I'm not talking about flashing a long "task list'...I'm talking about nuts and bolts of our duties and responsibilities and risks) for the consumer and helping them decide which alternative approach best suits them and their budget (and our own business plan) so we both can make informed decisions.

The bottom line, though, is offering something like this can OPEN DOORS...doors to people who "think" they want a discount broker, or who "think" they want to fsbo, or "think" they want mls only, or "think" they want to "shop commissions". They think those things because, as an industry, we've failed to offer them a wealth of options so they can compare and decide what REALLY would be best for themselves. If you're offering something that no one else is (and letting people know you are), you're likely to find that people are contacting you just because you're not limiting yourself to that "one size fits all" approach (because we all know that one size DOES NOT fit all!).

JudiB

Jack replies... [ I advocate a steady, measured approach to change. I would start out with letting my market know that they now have choices. We will still do things the way we always have, but now the consumer can choose to have a different experience. We will offer them transparency through our needs analysis that is designed to tell us all the best way we can work together. If they prefer the traditional path, we are thrilled to do that for them.

Will this work in your market? Yes. Will it be an overnight change? No. Is it a little daunting? Yes. But is it the right thing to do for both consumers and our industry alike? You decide. ]

Kris, I too am in a smaller market - A Barrier Island some 125+ miles long. We have a year round population of 30000+ / 945 REALTORS and to date only 196 have broken the ancient celebrated 1,000,000 in sales ;-O. Things are a bit slow and we are a major vacation rental investment/second home and some local year round market. Locals are having trouble earning as most serve the local industry - Tourism; either in RE sales, RE Rentals - vacation and all levels of contractors and services for same. Rentals are fairly strong... sales - not so much.

It is important to get your feet wet. Study the market, learn everything you can about consulting, review time and services #'s and get involved with the Consulting organization - ACRE. Many there have a wealth of experience, situational and transition type. They have a huge strength in that they share knowledge and marketing and solution pieces. Once you take the course and obtain your Accredited Consultant in Real Estate - ACRE™ then you can begin marketing with some behind you. Blog, do articles in the local 'rag' or whatever you feel will help you raise the level… at least in curiosity within you targeted market.

The value of Consulting - done educated and right, allows you the opportunity to share in a 'transparent' way what makes up a RE transaction and services involved and performed by a Professional REALTOR. It provides you the ability to be straight forward and honest with clients within all expectations and services. It will hold you above the others.

You made a few points that seem to already have you above most in technological arenas and Consulting will set you that further ahead of the competition. Use it as an option as you convey your 'Trusted Advisor' position in the market to potentials.

Then, when you can close one, go above and beyond satisfying the clients to the fullest and get testimonials to the difference you can then share with future business opts.

You eat an elephant one bite at a time. I'd rather have them wondering what and how I am doing it... it allows them at least the curiosity to ask and... you are onto another opportunity.

Bill Holt , ACRE™ - On The Outer Banks, NC - www.obxmls.com / www.obxneighborhood.com - Blog

Quoting Bill Holt, ACRE, ePRO:

The value of Consulting - done educated and right, allows you the opportunity to share in a 'transparent' way what makes up a RE transaction and services involved and performed by a Professional REALTOR. It provides you the ability to be straight forward and honest with clients within all expectations and services. It will hold you above the others.

Well said, Bill. You are in that proverbial "different" market that Kris can likely relate to.

I am in the middle of some writing and a portion of what I wrote this morning relates dirrectly to what you just said about transparency:

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 a true professional, skilled in all aspects of residential real state business. Do it some other way and you can be viewed like just another discount shop - giving away services but never really performing to the consumer's expectation. They don't understand what you do and you don't understand what they expect.

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.

Then, you must perform to the expectations.

Best

Jack

Copyright ©, 2008, Jack Harper, All rights reserved

How does a consultant handle the co-commission situation in the MLS?

Let's say a seller purchases your Marketing Package which includes listing the property into the MLS. Do you tell your client that they will have to include X% to pay a buyer's agent? Or, would you collect those fee's up-front and pay the buyer's agent yourself at closing? And if the property does not sell, refund those fee's to the client?

Just trying to figure out the best method here.

Thanks a bunch!

Lisa Goranson

Chicago, Illinois.

Lisa Goranson said,

How does a consultant handle the co-commission situation in the MLS?

Let's say a seller purchases your Marketing Package which includes listing the property into the MLS. Do you tell your client that they will have to include X% to pay a buyer's agent? Or, would you collect those fee's up-front and pay the buyer's agent yourself at closing? And if the property does not sell, refund those fee's to the client?

Jack Says:

Lisa, this is a great question. In my world, the seller is advised that they need to offer compensation to the buyer's broker that is separate from the compensation they are paying their consultant. Buyer brokers need to be paid too.

The total of fees paid - mine and those paid to the buyer's broker - are usually less than what they would pay under the traditional contingent-on-close brokerage model.

What do others think?

Jack

Copyright ©, 2008, Jack Harper, All rights reserved

Lisa,

Your consulting arrangement does not affect the MLS offering of compensation. Your services are only for the agency relationship you are involved in... in your example - the Seller. Your offering of compensation to a Buyer's Agent is something you handle at the Listing table based on the market and what will facilitate a BA to show and sell your listing.

Bill Holt, ACRE - On The Outer Banks, NC

I agree. Lisa...For a long time now, when the subject of brokerage comes up I ALWAYS discuss it in two parts. I never quote a "combined" number, but rather the two part split..referring to MY fee vs the COOP fee. It's handled as two separate entities. So, when we discuss marketing in the mls, we discuss what would be a competitive offer of cobroke.

No doubt you use the same Marketing Agreement as I do, since you're also in the Chicagoland market, and it really makes that easy because the listing agreement ITSELF spells out how much goes to the listing broker and how much goes to the selling broker. Consulting is no different...you discuss your fees, how much and how ever they are to be paid. Then you discuss what the offer to the coop would be. Until the "norm" is for buyer agents to be paid by their buyer clients directly, that's pretty much the hand we're dealt...so it's the hand we must play.

JudiB

Perfect! Thanks everyone for your input!

Lisa

Quoting Jack Harper:

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.

Over the years, I've observed that most real estate professionals fail to educate their prospects and clients as to what services they perform in the real estate transaction. Here's a pretty comprehensive list of services that I am sure this Group can add to - "The Critical Role of the REALTOR in the Real Estate Transaction" -

http://www.orlrealtor.com/Files/PDF/Value_of_a_REALTOR_183_Steps.pdf

THANKS for your input John,

This is so interesting! I developed this list YEARS ago, along with a colleague of mine from a different company.... then our board got involved, added to it, and a preview of our illustrious CEO, Belton Jennings, thus the culmination of this email. wow.

This got started YEARS AGO to prove to the public that we DO, in fact, EARN OUR MONEY. My only problem with this is having to PROVE that I'm good at what I do. I just broke my arm, funny story, but when I asked my orthopedic surgeon for a list of satisfied clients, he was not real happy about it, lol! I feel the same way, if I have to PROVE my worth to you,then you know what? Go deal with someone else.....I have better things to do. Guess what happens when I say that?

WHEN will the real estate profession catch up with the rest of the Professional World???