Developing a Real Estate Menu of Services
The New Models
While I believe it is true that there will always be demand for "full service," I also believe that over the next few years, new pricing models will be available to the consumers of real estate services. What is the business model of your "real estate practice of the future" and how will technology and the Internet shape that model? Whatever that model is, you must stand ready to substantiate it with the value you bring to the table.
To begin to answer these questions, you must create a detailed list of your current services, a "menu" of the services you provide to consumers.
That list should be divided into what I refer to as the 5 phases of the real estate transaction. The 5 phases are:
If You Build It...
To build your "Menu of Services," list each of the above on a separate sheet of paper. Now go through your last six transactions where you represented the seller and record everything you can think of that you did in the transaction.
Leave nothing out, no matter how small or insignificant you may think it is. From putting the sign and lockbox on the property to advertising to having a carpet shampooed at the last minute to satisfy a buyer whose expectations were that the property would be in better condition than the condition it was left in by the seller.
Do the same for the last six transactions in which you represented the buyer
You now have a "Menu of Services" for both buyers and sellers. Determining the value of each of these tasks and services will depend upon the time, skill and training level required to accomplish each. A task that requires a real estate license may be of more value than one that doesn't require a license.
Most real estate companies today offer their "Menu of Services" bundled in a "one size fits all" pricing model. A few offer services ala Carte. Some package services together. The future holds more choice for the consumer.
How will you determine what services you will offer to the new Internet empowered consumer and how much will you charge for those services? That is probably yet to be determined, but it all starts with defining the services and the value the "agent" brings to the future transaction.
Phase 1: Educate
What valuable services do real estate professionals provide the consumer of real estate services in this phase of the Cycle? Here is a start:
- Teach them about the home buying process:
- How to select an agent-agency and representation
- Financing alternatives
- Understanding the contract
- Earnest money deposit
- Contingencies and how they work
- Liquidated damages provisions and how they work
- Arbitration and mediation provisions
- Inspection provisions
- Disclosure requirements
- Neighborhood information
How value is determined
- How to select an agent - agency, and representation
- Current market status and pricing
- How to prepare the house for marketing
- Disclosure requirements
- Explanation of listing contract
- Explanation of purchase agreement
The intent is to create a list of services (and value) you provide, whether you charge under the current "one size fits all" method or decide to price your services individually.
Going through an exercise such as this will help you, the agent, see the value you bring to the transaction beyond placing a property in the MLS, and it will help you establish a value for your services.
The next phase is to Locate if you are working with a buyer and Market if you are working with a seller.
Phase 2: Locate
- Real estate professionals:
- Develop a client’s needs profile
- Screen inventory for the buyer, filter those who do not match buyer's profile.
- Provide transportation to properties offered for sale
- Provide access to properties (lockbox)/arrange for showings
- Provide information about each specific property shown (MLS)
- Find properties offered other than through the MLS (pocket listings/New Homes/FSBOs)
Provide information about general areas
- Tax and local fees
- Show buyers how to search on the Internet
- Standard advertising
- Classified ads
- Display ads
- Local advertising
- Internet advertising
- 80 major websites
- Newspaper website
- MLS website
- Broker website
- Personal Web Site
- AutoResponders of "Hot Properties"
- Prepare property for showing
- Broker open house
- Open houses
- Promote through e-mail distribution lists you have created
What are some of the things agents perform in this phase?
You represent the buyer or seller as their Agent (a case can be made for lots of value here) - negotiate in their best interest
- Assist in determining the contract price
- Prepare the written offer
- Present offer (lots of value in the first presentation)
- Write counter offer
- Deliver counter offers
- Work with counter offers - negotiate
- Continue with the disclosure process
- Handle earnest money deposits
- Open Escrow
- Deliver escrow instructions
- Explain the escrow process and instructions
- Review the preliminary title report, explain to parties if required
- Coordinate buyer and lender
- Communicate with applicable parties
- Pest Control
Negotiate and communicate potential amendments during the closing process
- Review closing statement
The last Phase of the Real Estate Selling Cycle comes after the closing, it is the continuation of the relationship and communication you created during the first four phases. Remember, you want to be your clients "real estate professional for life."
Continue to be a "value-added" professional by providing information after the sale. In my financial planning and securities business, I have what is referred to as a "book of business." This client base brings me added revenue each year and has a value (based on a revenue stream that I could sell should I decide not to be in that business any longer). I consider my company’s property management revenue stream and the clients that provide it a "book of business" as well...Build your "book of business."
Communicate with the buyer or seller at least four times per year. Bring them up to date on what is going on in the real estate world and in the tax and financial world as it relates to real estate.
- Start to build your e-mail address book and begin to do an electronic newsletter. Respond to e-mail promptly.
- Ask for referrals at every opportunity.
- Be there when your clients have a real estate question.
Developing "clients for life" is more than a motto. It can become your reality, depending upon your ability to understand and deliver professional services with the "Driving Forces" of consumerism in mind:
The Real Estate Professionals and companies that survive the major changes taking place in this industry are those that can quantify what they do and how they earn their money to the ever more educated and empowered consumer. In this discussion thread, we are in the process of doing just that and I would like to take a momentary detour.
Consumers, not just real estate consumers, but all consumers, are today looking for as many of the following items as possible (or different combinations of the following) as they shop for products and services. These items can be referred to as "Driving Forces" and when you, as a Real Estate Professional
- Look at what you do
- How you do it
- And how you market it.
You should endeavor to bring as many of these driving forces to bear (and make it known to your client in your marketing and correspondence) as possible:
Speed - think of fast food and one-hour film developing. Lots of people want it, and they might even take an inferior product as a substitute for the speed
Convenience - think of Seven Eleven stores (and also remember that people will often pay a premium for convenience--use it in your marketing)
Choice - the more alternatives initially, the more consumers like it, but then they narrow it down
Value-added - people like to get MORE than they pay for, this is value added. Real Estate Professionals provide value-added services everyday, but few take the time to re-enforce that to their clients.
Have you ever cleaned or painted a house for a client after a sale?
Helped them move something (I remember helping to move a refrigerator early in my real estate career)...or something like that, an extra, that WASN'T in the listing agreement but you did it anyway?
That's "Value Added."
Discounts - If it is convenient enough, you will use a coupon. Lots of people look for discounts in everything they do. This doesn't mean you should offer discounts, but you must be aware that for many this is a "driving force" so play to your strengths in your marketing.
Quality - Are you willing to pay more for quality? Many people are willing to pay a premium.
Service - Think of Nordstrom's, which prides itself on its service.
Again, some people are willing to pay more for good service.
Information - this is the age of information! Consumers won't buy a toaster or a microwave without first buying a copy of Consumer's Guide, let alone a piece of real estate. Make it quick (speed) and convenient for your clients to access lots of (choice) information.
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