The Consulting Times Real Estate Professional Edition

Mollie, Merv and Paula will attend the Inman News "Real Estate Connect" conference in San Francisco July 30th through August 3rd.

The Inman conferences are the premier networking, information, and technology conferences for the real estate industry.

Executive-level real estate professionals, opinion leaders, technology giants, industry experts, and press gather each year at Connect Conferences to discuss a broad cross-section of traditional and cutting-edge topics critical to the real estate industry, opening the door to a wealth of opportunities for business development, information and idea exchange, discussion and debate.

Over the last year or so, as the market has softened in many areas, newer agents who found making money so easy just a few years ago are getting out of the industry. Agents who remain are being told to “get back to the basics”. The problem is that “the basics” have dramatically changed in the last few years. Gone are the days when cold calling, sending out postcards, spending your valuable time at open houses, working floor time, etc. actually worked.

In real estate today, large numbers of agents are competing for a shrinking market. With unlimited real estate information available online and multitudes of sites competing with, and seeking to replace the agent, the public increasingly looks at the agent (and brokerage), who only offers the traditional full-service package payable only by commission, as a commodity to be shopped by price. Limiting themselves to the traditional commission model, agents and brokerages are indeed swimming in a bloody red ocean of cutthroat competition.

By contrast, real estate consulting, which provides the consumer responsible choices in the services they can obtain and how they can pay for them, while paying the professional fairly for their time, experience, and expertise, creates an “uncontested market space, ripe for growth that makes the competition irrelevant.”

In a recent article, the founder of a leading online real estate referral site, tried to make the case to beleaguered real estate agents that buying leads is good for their business and intimated that failure to buy these leads from third party companies (such as theirs) is to miss out on business.

First, let's start with the basic premise - I agree with them that there is a cost of obtaining business. Whether you do old-fashioned farming, mailings, phone calls, or put your resources into your client base and get your business from referrals, business has to come from somewhere and it has a monetary cost.

In the article, "Discount Brokerages Band Together" Matt Carter of Inman News wrote that Virginia-based RebateReps.com helps agents who want to dabble in discounting without alienating full-commission customers, or work for a discount broker full time. "Most Realtors® don't want to advertise themselves as rebate agents because it cannibalizes their other business," said RebateReps founder and owner Daniel Rubén Odio-Páez. "RebateReps connects buyers to local agents who are willing to rebate part of their commission but don't necessarily want to advertise that fact." Odio said. "RebateReps allows agents to have their full-service brokerage and to service our (discount commission) leads."

One of the ACRE™ Grads on our Graduate Coaching Exchange recently posted the following: "I have been talking up this whole consulting idea within my office and the other agents are so critical, suggesting that I am advocating limited service brokerage. And while I am saying no way, I am having trouble defending my position. HELP!"

If the only thing we change about our business is implementing a different way to charge clients for real estate and real estate related services we have missed the point. You just become another real estate agent with a different business model. So, lets take a look at what "consulting" and "consultant" really means:

CONSULTING:
From Wikipedia: A consultant is a professional that provides expert advice in a particular domain or area of expertise such as accountancy, information technology, the law, human resources, marketing, medicine, finance or more esoteric areas of knowledge. Also, consultant, from the Latin consult, meaning "to discuss" from which we also derive words such as consul and counsel. (Merv says: insert real estate or any other field of expertise in this definition.)

From Webster: Employed or involved in giving professional advice to the public.

CONSULTANT
From Wikipedia: Often a consultant provides expertise to clients who require a particular type of knowledge or service for a specific period of time, thus providing an economy to the client.

From Webster: One who gives professional advice or services.

OK, enough of that. Here are the key words I like to focus on: professional, expert, knowledge, counsel and advice.

Before deciding to start my real estate business three years ago, I concluded after extensive research that I didn't want to be like over a million other agents competing for the same clients. I needed to differentiate myself as more knowledgeable, more professional, and providing a more business like approach to the local industry. This meant to me being a cut above everyone around me: the way I looked, the way I talked, what I said, the presentation materials (and technology) I use for clients and, most importantly, having real data, knowledge and/or experience to backup my opinions, counsel and advice. This approach is no different than the highest paid corporate business consultants. They exude confidence and are comfortable with their knowledge (and ability to get it).

Was I professional? Yes. It was how I spent an entire career consulting and providing technology services to clients across the US. I literally create a very corporate business proposal for every potential real estate client that I interview.
Was I an expert (in real estate)? Obviously not. But, I was confident in my general business skills to look at real estate as just another business with a different set of rules.
Did I have the knowledge? Yes, Very detailed from a business standpoint and able to get specific real estate knowledge when I needed it. I always had more data on a listing appointment than any of my competitors, including agents from my own office. I rarely lose.
Was I able to give counsel and advice? I was, by being confident that if I didn't know something, I could go find out. And, feeling comfortable telling a client those exact words. I also was able to state that our office with over 40 agents had over 400 years combined experience and are a tremendous resource to us. No problem was too difficult to solve.

Potential clients may be attracted to me because of a website that is different and the fact I advertise a different way of doing business but, they hire me because of my professionalism; the way I approached their potential business NOT just because of my fees.

I truly believe that when you can differentiate yourself from the crowd as a true professional consultant and can articulate the value you bring to a client, your fees become of secondary importance. Don't get me wrong, you have to have a compensation system or schedule of fees but that is not the focus. I am a mere babe in the woods when it comes to real estate experience compared to all of you. You must take your experience, knowledge and wisdom and package it so that you stand out. Be different without giving up who you are. Most importantly, your clients need to recognize your difference and the value you bring above all others.

The proof is in the pudding (where the heck did that phrase come from? Try http://ask.yahoo.com/20020903.html)
The first two full years in business, we generated six figure gross incomes each year from our "consulting" approach.

This is a different perspective on consulting and one that I believe is extremely important to become a successful "consultant." I am happy to take questions and value your comments and feedback.

Oh, I can't resist providing one more definition.

PROFESSIONAL
From Wikipedia: Professionals usually have autonomy in the workplace - they are expected to utilize their independent judgment and professional ethics in carrying out their responsibilities. Typically a professional provides a service in exchange for payment, in accordance with established protocols for licensing, ethics, procedures, standards of service and training / certification.

If we are going to affect much needed change in our industry, becoming a professional consultant is the first step.

Zillow is now offering a "great deal" to agents: you can post your listings for FREE! What great exposure, and how kind of Zillow to offer such a wonderful service to agents without taking a dime-what a nice company!

Note: Republished from the Northern Virginia Real Estate Guide

October 17, 2006

The traditional commission model has no relationship to effort and expense across a wide spectrum of property types, markets and price ranges. We (Pam and I) began using consumer Choice models when I established our relationship with RE/MAX on August 1, 2004. We have accumulated significant experience with different approaches and what works and what doesn't; the pitfalls, potholes, roadblocks and agent/broker scourge as well as documented successes. This stuff works! I believe it IS the future for the real professionals in this business.