Building Additional Business Opportunities Through Consultative Services
One of the recurring concerns I hear when discussing consultative services with an agent or broker centers around the perception that charging only for services rendered, instead of the traditional “full service/ full fee” approach will result in a huge loss of income. Usually the assumption is that we are simply trading what would have been a full fee transaction for a smaller fee. No additional business is to be gained through this approach.
The reality is, unless you begin to implement different marketing systems to complement your new consulting services, you will likely lose income. You will, in fact, be trading high-fee work for lower-fee work. You will be doing fewer activities, but you will also not be adding any new business to the mix.
Will there always be a choice? Can we continue to practice our craft the way we have always practiced? I think we need to allow time to be the judge of that. Whether we will all become consultative service providers as a result of natural evolution or not remains to be seen. Speculation is that we are heading toward a new business reality regardless of what we want. So, the choice may just be preordained.
Whatever happens in our industry’s future, we clearly are each facing a current market reality that often results in reduced commission-per-client and reduced number of transactions. Those of us who have been able to maintain a steady business through this climate can be congratulated. You have been here long enough to have a solid book-of-business that is keeping you on track for success. That may change, however. The financial issues of today show no sign of getting less ugly, and a convergence of technology and data access have brought us to a whole new marketplace. Things are just not like they were before, and they probably never will be again.
Now, more than ever, we need to be absolutely clear on what it is we do for a living. We must make it our mission to formalize our business plan like never before. It is no longer sufficient for us to live by the old “I am a listing agent” or “I am a buyer’s agent” labeling method. Under that style, we were allowed and we allowed ourselves to forecast our annual goals as a percentage of the total dollar volume of the aggregate number of transactions we would close – for our buyers or our sellers, or both. We were clear on what they total would be, since we were equally clear on the average sales price and our “bottom line” commission percent. Well, that just doesn’t work today.
In the current market, buyers and sellers alike are seeking ways to minimize the impact on their bottom line when they enter into a transaction. On the seller side, consumers are looking to the Internet for ways to value, price and promote their homes to the available pool of buyers. On the buyer side, consumers have discovered and embraced the Internet as a way to search for available homes, research market prices for those properties and secure potential financing once they find a home that they want to purchase. This has resulted in the trend we see today where buyers are asking for a portion of the commission back from listing agents and sellers are negotiating lower and lower listing fees.
This can be detrimental to both buyer and seller, by the way. Just being able to establish a price and successfully market the home to willing buyers is only a small portion of the whole process, as any professional will tell you. Inspections need to be made and reports need to be analyzed. Disclosures must be created correctly and the interpretation and possible impact of them must be performed by a skilled professional. Otherwise, both buyer and seller are at risk. This is not a commodity sale.
All of this points to the need for a new business model. We feel that the transparent pricing, or consultative services business model is just what the industry needs. OK. We have established that. Now what should we do to make a living at it?
Get the word out
First, it is important to decide that the move toward consultative pricing and business model carries with it some need to create a new marketing package – much more than a branding message. In branding, such as we see in many commodity products, the objective is to get the consumer to see your brand in their mind’s eye when they hear the words that identify a product category. For example, when the think “facial tissue,” Kimberly-Clark would want them to think of “Kleenex.”
We are not at that level with residential real estate consulting. We are with regard to traditional real estate, to a lesser degree. Each of the large brands hope to capture some amount of mindshare for their brand. When it comes to residential consulting, however, we haven’t even begun. Most consumers would have a puzzled look on their face when you tried to sell them residential consulting services. Something different is needed. Your marketing now must first take on the task of category identification. In other words, you need to tell people what this new business model is all about, convince them that they need it in general, and they need your particular version of it in particular.
Your job, then, will be to come up with some marketing message that quickly and dramatically introduces the concepts that you are trying to promote. Some examples, might be to ask questions:
· Do you really know what you are paying for when you buy or sell real estate?
· Do you know what a real estate agent does – and is that what you want them to do for you?
· What if you could choose only the real estate services that you want and not have to pay for the rest of something they call “full service?”
· How would you like to have a real estate consultant ready to help you on your terms?
Once these questions are asked, it is a much easier task to get the client to contact you, or listen when you contact them. A call for action can now be added – like “Call me to find out what the new Real Estate Consulting service is all about.”
Target New Markets
Clearly, there are many coaching programs available to tell you how to get business for traditional purposes. Farming, Sphere of Influence, Referral Marketing, etc. are all designed to get business for full service/ full fee real estate. Of course, all of these will work well to promote the consulting side of your business. On the other hand, adding consulting services opens a whole new market opportunity to you – one that you would likely not be able to attract with traditional pricing structures.
Here are a few of the opportunities. Some are new, some are tried and true that you will now be able to go after with renewed vigor based on a new business model:
· For Sale By Owner
* These folks already know that they want limited or no help from a real estate professional. What they don’t know, in the beginning, is that this usually changes very quickly after they realize that they don’t have a sale, have a sale that they can’t handle, or many other issues that can arise. This is a great opportunity to say; “I know that you don’t want a full-service agent, right now. I offer my services on an ala carte basis. Would you like to know more?
· Notice of Default Filed
* Talk about dire straits. . . these folks are in trouble and it is getting deeper. Often they will owe more than the house is worth. They probably don’t know that there is help available in the form of government bailouts, modifications, etc. Within the scope of the law in your state, and certainly within the bounds of honest and moral dealings, you can help them tremendously just by providing them information and links to help. Representing them in a modification negotiation is, by the way, very tricky and requires at least special skills and often special licensing. Please check your state regulations before you try to do this.
· Tax Abatement
* In an economy such as the one we are experiencing in 2009, many tax assessors are open to reassessment based on dropping home values. Helping people understand the process and getting the data they need to get the right reassessment can be a valuable service
· Remodel or Move Analysis
* Help homeowners understand the impact of remodeling their current home based on area returns and costs of improvement. Provide realistic before/after valuation so they can determine the “true” cost of remodel versus move.
There are many other opportunities to address business that would not be available to you outside the bounds of traditional business. Remember, we now can help consumers whether they are buying, selling or not selling or buying but need our expertise. That is, after all, your unique value.
Leverage the Relationships
Every relationship that you enhance through the provision of consulting services will lift you higher in the mind of the client. You have clearly demonstrated a level of professionalism to them that has never been their experience in the past.
Even when the client has engaged you for a relatively quick service – say a remodel or move analysis – they have expressed a great confidence in your skills and ethics. You are wise to then leverage that relationship by asking for referrals at every step. A fairly simple way would be to ask them; “who do you know that could also benefit from such service?” You will be happily surprised that they will be much more willing to refer to a consulting service provider than to a traditional agent. The relationship is just different enough.
It is important that your referrals and referees are clear that you are not the typical real estate agent or broker. You are unique and your services are unique and highly desirable. Celebrate that as you ask for the referrals. Be very proud to be at the forefront of a new business trend, one that will soon become the standard by which all others are rated.
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.
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