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sign-inIn the Age of the Internet, Where is our Value?
Date: July 11, 2008 11:53 AM
Permalink: In the Age of the Internet, Where is our Value?
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Recently on the ACRE® Coaching Exchange, our coaching platform for ACRE® graduates, we had a very interesting discussion about where our value today lies as agents. It seems that in the tough market that we are working in, many agents are competing for listings by charging less than the competition and requiring less commitment in the way of an exclusive agency contracts with buyers.
This is so sad because you can never compete on price and stay in business. No matter how low you go, there will always be some desperate soul who will charge less. And when you don't require a commitment from those you work with, you only underscore that your time, experience, and expertise has no value.
In my book Ripping the Roof off Real Estate, I talk about the difference between a commodity, which can and should be shopped by price and a service where the quality, level of expertise, talent or experience makes a big difference in the outcome. When an agent or brokerage competes on price, they reinforce the perception by the public that agents are all the same, a commodity, and therefore they should be shopped by price. However, when a real estate professional understands and articulates their value, the consumer will beat a path to their door and the competition will be left in the dust.
ACRE® Wynne Achatz made a very astute comment about our value:
"WOW let's go back to 1996 - That is when my consulting really began full strength. I was bedridden for 3 months. Took 126 listings and negotiated 32 transactions. How? Clients wanted my help (consultation). They took their own pictures with my camera, measured their own homes, we looked at options, discussed what was needed to get the property ready for sale, action was taken, seller listed and put up their own signs...never minced about the fees. What it all boils down to is that when you have something of value, folks will feel compelled to want it. The "I have to have it" syndrome.Be confident in yourself. By the way: I am now charging $195 up front, non-refundable to take a listing or go under contract with a buyer. This is not considered part of a commission either. I have gotten more than a standard commission by listening to what the consumer wants and then getting paid for it! WE never had it so good. Mollie, Merv and all the ACRE® Coaches, thanks, thanks and more thanks for the opportunity for such a great sharing experience with ACRE®."
Michigan Wynne
Many of you may have heard of or know Wynne Achatz, but for those who don't, she is one of the smartest professionals out there. Let me underline what Wynne said: when she was laid up, clients were obviously not paying her to run around doing functionary administrative type tasks...THEY did them! Her value was that of a fiduciary: negotiating, interpreting, troubleshooting. She was sought after for her expertise, not her busy work.
Now, fast-forward to today: though technology has taken over more and more administrative level tasks while property search and valuation sites continue to pop up online almost daily, many agents are still in the circa 1975 mind warp wherein they believe that their value is in running around putting signs in yards and being the "gatekeeper" of information.
When the consumer asks why they can't do some tasks themselves, the vast majority of our industry is still getting upset...HOW DARE THEY! Many agents, deep down, are threatened when consumers take advantage of the information explosion brought to us via the Internet and get their initial property information online rather than coming directly to us. These agents and their brokers still don't get that their value does not lie in the old paradigm of who does the most administrative tasks that the consumer could do themselves aided by technology. They still don't get that the consumer, given their druthers, may choose to not receive (and have to pay for) some tasks that seem only valuable as proof that the agent in fact earns their commission.
However, if you truly can change your paradigm and embrace the fact that your value lies in your experience, expertise, and judgment, it won't threaten you that the consumer may want to hold their own open house or run their own paperwork around. I don't know about you, but I'd rather be negotiating contracts then throwing lock boxes on doors or waiting around for the fire department to show up and check the smoke detectors.
It should be no threat to us that the public now has access to real estate information, because the value is NOT in the information itself but in the interpretation of that information! If you are paid for your expertise, then you are no longer competing with the Internet to be THE source of data, rather you are paid to make sense of what all the reams of data actually means. In fact, the more data the public has access to, the more they need an information interpreter, not an information provider.
And please, let's dispel the notion that giving up some administrative tasks will somehow lessen our earnings. There is an old expression: "It's not the years in your life but the life in your years." Take the time you would spend doing jobs that are no longer needed to be done by you and devote it to other paying clients. And for those who say that clients will never pay a non-contingent fee for expert guidance, go back to Wynne's story. From 1996 no less!
When speaking with a new prospect about services and their value, I always make my Nordstrom-Kmart speech: "In real estate, there is Nordstrom and there's Kmart. I only do Nordstrom. Now, as a trained consultant, I will give you a lot of choices in terms of what services you want and need and how you can pay for them. But, in terms of the quality of what I provide, I only do Nordstrom because Nordstrom is what's going to put the most money in your pocket when you walk away from the closing table. Now, if you are looking for Kmart you're in luck because there are tons of Kmart agents out there to choose from. But that's not what I do."
Know your value. Because when you peel back all the hype and really understand today's consumer, what they really want is real estate choice, not real estate cheap.
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Paula Bean
I totally agree with ACRE® Wynne Achatz's comment the value of an agent who is an ACRE.
I've had medical issues that have lasted over a year. I couldn't drive, hardly move, and in constant pain. I figured out how to get listings over the phone, not see the house or meet the sellers. I refer the buyers out. As long as you can be honest, ethical, moral and transparent, this system works.
Why did it take me over a year to learn this? Because I hurt my back and broke my arm, and I have a Mother who lives with me and needs a lot of attention.
It is amazing what you can do when you are pushed into a corner and have no choices.
I took 6 listings by phone on one day last week because I got emails and phone calls on real estate related issues.
I was honest about my limitations, sent them the needs analysis, and lol, they are waiting for ME. Now, getting them all into MLS, web sites and typing with one hand was an issue though. I had to hire help, so I did what I had to do, and it worked!
I also love Margaret Rome's 'waiting list' idea! Tried that out and was amazed that it worked, but it is because I always under-Promise and Over Deliver. I belive in total concierge services. If I tell you I will do something, I WILL DO IT... however, there is a limit to what one person can do, and do it well.
With all of my medical issues and personal problems, I've found out that if you prove your value, are honest, ethical and transparent, most people will wait for you. The only ones who can't are the ones who need to move asap ie: shortsales, foreclosures. Once I get enough help, that won't be an issue though.
With regards to what or how you charge, regardless of you do commission, and how much, or consulting, at least they are transparent and they don't feel like they are being led down the path of the 'used car salesperson route'.
You can't compete on price because someone will always go lower, just as Mollie said. The next thing you know we'll be paying the client to sell their house, and that is not a sustainable business model
It costs a LOT of money to stay in this business, consumers don't understand that, but once we start treating our careers AS a business, and giving options to the customers, nothing will change.
In the future I think most people will be dealing with an ACRE because it will be their choice with information and options, transparency, and being part of a team together to get them where they want to be, within their time frame and their budget. Everybody wins in that scenario.
Paula Bean
Orlando, FL
JackHarper
Wow - what a great service this is.
Mollie, Paula, you are right on the mark. I suppose it is safe to say that our value begins with our self-worth and how much value we place on our time, talent, caring and willingness to provide value for value - not value for free. We all know what free service is valued at.
I read a posting on RealTalk this morning. I will not point out who wrote it, but the central message for me was:
"One of the things we have been offering for some time is free home staging. We figure in the long run this costs us a lot less than the numerous price reductions we'd be asking for otherwise."
Holey Moley! There is so much to talk about here. First, why is the writer so willing to pre-plan price reductions? Maybe he/she should consider listing it at the right price to begin with?
Second, FREE staging is a tool for this "real estate pro" to use to ace out the competition?
Hmmm, let's add it up:
1. Free Home Evaluation (AKA CA)
2. Free Home Staging
3. Free Marketing Plan (you gave it to them when you did a listing presentation, remember?)
4. Reduced Fees - just because we need to compete?
I am amazed that the writer probably feels slighted when he/she opines to his/her colleagues "why is it so hard to get a full commission?"
You are getting a full commission sir/ma'am. Unfortunately, all this FREE stuff has lowered the value of what you do to the degree that your NEW Value is now equal to a discount.
Jack
Wynne Achatz
Paula, My goodness you have been through a lot. To bad I hadn't told you about all that happened to me and what I did years ago.
It is all about time and worth.
My business strategy has again changed. I charge my transaction/compliance fee when I walk in the door. It is easily explained : I am "Here for you". In order to make this committemnt to you and to all my other clients, I need to spend my time assisting or consulting with those that take me and my time seriously. Doesn't always work, but then I can't have nor do I want them all.
Paula Bean
Paula, My goodness you have been through a lot. (Paula Responds: yes I think I must have broken a mirrow 10 years ago ;-) lol! but there is nothing like diversity to teach you the ropes!
Too bad I hadn't told you about all that happened to me and what I did years ago.
It is all about time and worth.
My business strategy has again changed. I charge my transaction/compliance fee when I walk in the door. It is easily explained : I am "Here for you". In order to make this committemnt to you and to all my other clients, I need to spend my time assisting or consulting with those that take me and my time seriously. Doesn't always work, but then I can't have nor do I want them all.
Paula replies: I agree! I would rather do 5 transactions at a good price with nice people, than 15 and have most of them not be nice or understanding of our value/time and worth. I was on the teleseminar call today (although had to stay on mute mode) with the awesome Mollie Wasserman and JudiB, and this was a heated topic. HOW DO YOU COMPETE WITH FREE?! I WISH I could have chimed in, but the neighbors were gettin a new roof, and the noise level was awful, and then I had Mom to take care of. I will chime in on the exchange about this, and some .02 I have that may help all. Sorry I was not able to participate more. NOW...having said that, I have to say I LOVE Margaret Romes idea of having a waiting list!! lol! I tried this out on someone that I was willing to 'walk away from' and it was AWESOME!! ONLY WHEN you are willing to walk, know what your value is, and your worth, will consulting work great for you.
YOU have to be willing to say NO!
For those of you who missed this call, you should really make a point to make the teleseminars, they are so valuable!
Paula Bean, Orlando, Fl