Have you noticed that things just don’t work the way they used to? Buyers are taking their sweet time about making offers. They just seem to have a whole lot more information on the market and prices than they used to. Once they do make an offer, many of them can’t get a loan – even when their credit and income seem to be right on the mark.
Once they do make an offer, get a loan that looks like it might happen and are ready, willing and able to close a sale, the seller (who might just happen to be a bank or loan servicing company) takes an unbearably long time in selecting an offer to work with. Buyers get frustrated, agents get frustrated and nobody wins!
On the seller side, assuming you are working for a homeowner/seller and not an REO (real estate owned), you are up against some pretty serious competition. REO’s are priced down in the basement. Short sale listings divert buyers – temporarily. Once the buyers find that the lender wants more than the asking price, they often come back to the market for another property to bid on. How many times, by the way, have we heard about buyers getting to the last day before signing and their lender pulls the approval back to underwriting for no apparent reason? Back to square one again.
In the event you are listing REO properties, I don’t need to tell you that getting to the closing table can represent a major miracle.
Homes are selling, though. Closings seem to be at all time record highs. But, on the other hand, prices are so low that we need to close two or three times as many sales today as we did three years ago, just to make a reasonable living!
With so many changes being handed to us that we didn’t ask for, why would we ever think that now would be a great time to make significant changes to our business model? We have enough to handle, don’t we? We can hardly keep up with the world as it is. Why would we add to that burden?
The answer is not easy, but it is simple. We need to make changes, simply because changes have already happened, with or without our permission. We need to counter this with a new business model that embraces the changes in consumer mindset and market conditions that make it difficult to earn a living using traditional processes. After all, you are not likely to be paid unless there is a closing.
Those who have followed my consultative program know that I am not in favor of a complete demolition and rebuilding of the residential real estate business. There is much that works about our traditional model. Consumers are familiar with the contingent-on-close percentage of sales price fee structure that has been around since the early days.
here is comfort in familiarity and there are many clients who will want to keep things just as they are and have been. There are some, though, who are chomping at the bit for change. These clients are the ones who are asking for rebates and discounts. They are starting to question what we do for them and what we charge for what we do. These same clients are doing what it takes to become educated online. They are researching property values, performing property searches and finding real estate professionals with whom they might want to work. It is our job now to find ways to work with them – on their terms!
The consultative approach is perfect for this. We begin the process by building service lists that will have meaning to the client. This is in contrast with the traditional model that begins with something we call “full service.” In other words, currently we sing the old song: “All of me, why not take all of me?” the answer today is that they don’t need “all of you.”
They just need the parts of you that they don’t have on their own. They need your “fiduciary” skills – those skills that come with a great deal of education and practice. You need to determine what those skills are that you have, then create a method of offering them at a fair price.
But, getting back to the traditional approach: We will not simply shut down our current business model. We will enhance it by adding one word that makes all the difference to the new real estate client. That word is “Choice!”
Now, we present our value to the clients as follows: “We can work together on your terms. Either you and I will work on a pre-determined set of services for a predetermined price, or we can work together under the traditional full service model. It is up to you.”
As long as you take the time to communicate your services and value proposition clearly to the degree the consumer can then make informed decisions, you can leave the decision to them.
By adding these options to our offering, I submit to you that consumers will see you in a whole new way. Once they begin to make that change in their thinking, you will be able to see the opportunities become available to earn an income that were not there when you gave the client no choice.
You will be able to be paid for all of the work that you do – even the work that you currently perform for free in order to hopefully get to a closing. Consumers will win, because they will be in control of what they hire you to do. You will win because you will be paid a fair price for your skills and services.
Jack Harper is a longtime REALTOR® and author who is an avid proponent of the consultative model in today's real estate market. He believes in providing fair and professional service and being paid a fair and reasonable fee for those services every time he is engaged by a client, whether there is a sale involved or not. He advocates allowing the consumer to have full choice in terms of the services and is an evangelist for the consulting model.