Author’s Note: Over the next few articles, we will present various stages of transition from a purely traditional business model to one that reflects the objectives, business offerings and processes of the consulting model. This will be the consultative mindset that will distinguish us from the limited service discount brokers and will place all focus on the client’s objectives.
I am in the midst of a very significant project. That project will see the complete dismantling of my previous real estate business structure and will proceed through the creation, testing, refinement and implementation of a totally new model – the Consultative Business Model. As anyone who knows or has followed me knows, much of this is already done. I will now retrace some of the steps that I and JS Harper Realty have gone through to come to a place where we feel we are truly operating within the consultative model.
The consultative mindset must begin with the customer. We need to follow the wisdom of Ruth Stafford Peale, the late widow of Dr. Norman Vincent Peale. Once, when asked about success, she replied “find a need and fill it.” Simple yet powerful, these words are only the beginning. If we apply this to our business, we will attain moderate business success. If, on the other hand, we extend that to include “then, take that opportunity to create new and unique offerings that will become wildly popular even though there was no previous need for them” we will possibly see dramatic and lasting success.
In real estate, it is fairly simple to see that we have been filling needs for a long time. The client’s needs, however, have changed very much in recent years, and we are at a point now where we might be missing the true “need.” Perhaps a new look at an old question is in order:
Who are my Customers?
The short answer is everyone who will do business with me will be my customer. That, however, would also be a wrong answer! Starting with this new business, I hereby resolve that I am in business for profit. I will no longer allow my need to feel successful override my true need to be successful. Therefore, I will no longer work for free. My customers will be those consumers whose need fits with my offering and who recognize that hiring a real estate professional because that professional is the best one for them is so much better than hiring the cheapest and most willing to give away free stuff just to “get the deal.”
I am very clear on this. I have watched so many of my colleagues, agents and associate brokers alike, as they “invest” so much of their valuable time and focus in performing tasks for clients, tasks that would normally be paid for at a fair price, for free. No one can tell me exactly when or how this practice started, yet it has become the norm for residential real estate practices all over the country. There is absolutely no business logic that supports this model. If there were, I suspect it would continue to take hold and grow until we have an all-out price war that ends when every real estate professional does every task needed by clients for free!
By refusing to do this, they are afraid that their business will go to someone else. I am happy to state that I will be thrilled to have any income derived from “free” work go to any other real estate broker. No problem. This reminds me of the old price wars in retail. There is no real winner, as we all understand that everything has a cost. There is no “free” in business. If we give one thing away for free, we need to make up that cost on another item (the old loss-leader approach).
My customer will understand that he has choices in real estate. He will seek to know what those choices are and he will demand total disclosure and transparency of agreement with anyone he elects to deal with. My client will be competent with certain technologies, such as Internet and electronic communications. With these core competencies, he will be able to perform certain of the functional tasks associated with the real estate dealings he is involved with. He will perform those tasks in concert with his selected professional advisor (me, of course) and will operate under a true agent/principal relationship with that advisor.
So, back to the question: My customer is anyone who has needs in the real estate and investment areas, who recognizes that there is a time and a place for self-service and for professional assistance. These clients are convinced that, given the correct due diligence, one can find the best professional at the most fair price. My customer will not see every real estate professional as being the same as all others. He will understand that quality is much more important than quantity and he will opt for the best solution for his needs at the best price for that level of service. Catch phrase here: “You must get what you pay for, but you will pay for what you get.”
Given these characteristics, it is also important to note that my client will either be willing to work with me on a time and material basis, or he will understand that he must share some amount of the transactional risks prevalent in real estate and will commit to compensate me for my time and skills regardless of the outcome. Otherwise, my client will have the option to place the risk on me for transactional success, but will pay a higher fee as a result and will reimburse me for pre-agreed costs in the event our work does not result in a close of escrow.
To restate; my customer is anyone who chooses to do business with me on mutually acceptable terms and who I agree to do business with. My customer is my partner and my employer.
Jack Harper is a longtime REALTOR and author who is an avid proponent of the consulting 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.
Copyright, 2008, Jack Harper, All Rights Reserved