December 15, 2016 by Jeff Lowen
In a peculiar paradigm of pretentious professionals, one asks why, if commission rates are subject to anti-trust laws, why does everyone charge a similar amount or less, instead of charging a similar amount or more?
Here’s a simple answer. Many coming into the real estate business are no more than consumers with a goal. That goal is everything from the quick riches of real estate to building a viable business on which to thrive. Most, if any at all, know very little about the business of real estate. Few will understand it’s a business, they’re the owner and work from there.
Which leads me to the simple answer. When you study for your real estate license, you won’t be learning anything about why you’d charge any amount. Only that price fixing and Sherman anti-trust laws ensure you are in compliance. Up until then, many believe 6% is the going rate and all Realtors® alike charge the same. So, if many consumers think this way, where did it come from? – I know! I know… It’s us proficient, prestigious pros… That’s who!
Regardless of whence this fee structure evolved, every agent virtually charges the same in the face of legislation that prevents it. Virtually the only constant in the industry itself! Conversely, during the initial stages of a real estate professionals career, approximately zero training will include the finer points of bringing your clients’ value for whatever a person charges for their services.
You see, when it’s all about the money, the focus becomes narrow-minded, unappreciated and very Spock-like unemotional. And although our bureaucrats may desire legislation that ensures compliance as if we were all robots, anyone who’s ever bought or sold a home will tell you that it’s anything but unemotional. A transaction can be and usually is complicated, so coupled with the lack of training that bringing value is very important along with the almost non-existent understanding of the mechanics of a negotiation that 90% of agents have; it’s no wonder they fall back on the money issue. It’s easy to understand, can be measured and is in plain black and white on a contract.
However, it’s the agents and business owners that realize there are certain predictable steps of a negotiation, focus on bringing value to the transaction and their clients and absorb the emotional roller coaster without regurgitating it onto their clients, that are the most successful.
So, again I ask: Would you pay you – for what you are charging?
Let’s look at an example. Jim, an agent that just got his license, is listing a home for 6%. He’ll do what he’s been taught. Sign, brochures, MLS, maybe an open house or two and then stand by and wait for the phone to ring (or the inbox to grow). Why 6%? Because it’s what he’s been told is the ‘average’ going rate, and that his broker will not accept anything less. Why not go for the minimum, right? Jim’s clients are okay with it but fail to see the value and look at these fees as a necessary evil.
Andrea on the other hand, is listing a property down the street from Jim’s. Andrea calls Jim and talks a little shop to see if there is anything she may have overlooked that another industry pro might share. She also calls around her listing to procure potential buyers from neighbors that may want a friend or family member close by. Additionally, she makes an event of the first open house, invites her past clients, friends, and sphere, or center of influence, local vendors and really puts thought into it. She’ll offer a pre-home inspection to avoid any surprises, a reliable lender or two with lending options for prospective buyers, a moving company with some free tips and boxes for her seller clients, offer a program where she’ll pay for some or all of it, and even have options-in-hand for family pets, things to do during showings and open houses, has studied negotiating tactics and best of all, she’s taken the time to articulate all of the value she brings in a package where the sellers can pick and choose what services they want and need for what they’d like to spend.
Andrea’s clients aren’t’ thinking that fees paid to a Realtor® are a necessary evil. They are wondering how they could get along without her!
Do you see the difference?
The moral of the story here is that you can do yourself and your clients well if you understand what it is they need and want, what they will be doing to get there; then develop programs, methods, and systems to take care of it for them. Believe it or not, I’ve met listing agents that didn’t even know why their clients were selling in the first place! Ugh!
Preemptive services – Services you offer that when in place, stay ahead of your clients’ needs. This is the perfect solution for a smooth transaction for your clients, even when the transaction isn’t going smoothly behind the scenes. You’re the buffer.
So why then, does the consumer get the same fee from the newbie agent with less to offer? I’ve discussed this with many mega-successful agents and answers from experience to leveraging systems to training to educating the consumer – find their way into the conversation. However, time and time again, the often overlooked aspect of a well trained successful agent, is their ability to articulate their value to their clientele. Knowing what it is they do, how well they do it, what differentiates them and how to present it in a way that their prospects can’t see a viable option without them.
Does this mean they can charge more? Well, by charging more you might mean ensuring every person that their clients talk with, in the area of real estate, the first thing that comes to mind is their agent, their experience and why you, too, should be working with an Andrea-like professional.
Jim, on the other hand, either misses out on potential repeat and referral business or needs to call Andrea to learn more. You see, there is value in a mentor, coaching, extra training relationship with someone who can guide, share, encourage and ultimately present Jim with great business options that create raving fans like Andrea. With that said, one can only expect great things and lots of repeat and referral business to come.
Now, the question is… What are you doing to raise the level of your game?
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