Real Estate Consulting

<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> 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>

<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>

<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> 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>

<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>