The world has changed. Along with the value we bring to the table
We are no longer the gatekeepers of information. Sellers no longer need us to find buyers. Buyers don’t need us to find sellers.
Our position as matchmakers, middlemen, has become obsolete.
Consumers expectations are changing. They’re rejecting sales tactics and rewarding those who seek to make the world better place. To improve the lives of those they serve.
When it comes to real estate, our clients want and deserve to be protected, not closed. They want to be empowered with transparent choices. They want and deserve to deal with a Trusted Advisor. An expert focussing their knowledge & experience to the clients’ advantage.
Even our legislation is pushing in that same direction. Encouraging us to lift our game. To never forget our duty. To put our clients best interests above all else. To be client-centric…
To act as a true Profession.
Ethics. Fiduciary Duty. Liability. Transparency. Honesty. Disclosure. Avoiding Conflicts of Interests. Serving. Advising, Professionalism… are the words used to license us… the higher standards expected of us.
Yet our industry is entrenched in an outdated system at odds with that path. Some would say it’s the anti of Professional:
The Commission-Only Business Model.
It’s driven by a sales culture. It’s self-serving. It’s non-customer centric…
Self-promotion. Prospecting. Scripts. Sales pitches. Listing Presentations. Always be closing… Those are the words used to clone us.
It’s a numbers game: The number of prospecting calls. Leads converted. Listings closed…
Awards for most Vendor Paid Advertising, Gross Commission Income. 100 Million Dollar Cubs. Being No 1… These are the metrics used to motivate us. The awards to stroke our egos.
I once heard a wise man say:
“There’s no better proof of the success of anything than to look at the results – the outcomes – that come from it.”
The Commission-Only model has managed to achieve two things of significance:
- Real estate is one of the most bloated and inefficient industries in existence.
- Consumers resent us. From their point of view, our agenda is dubious, our commissions outrageous.
For a moment let’s be honest with ourselves:
- The value of our client’s property has nothing to do with the actual work required to help them sell it.
Yet because their home is worth more, we charge them more.
- The ease of sale comes down to three things:
- How serious (motivated) the clients are about selling in the first place.
- How well they present their property. And most important…
- How realistic their price expectations are.
Yet we charge the easy sellers the same as sellers who need 10x more work and outgoing expenses.
We lose time, effort and money, working for clients who (through no fault of our own) choose not to accept the market.
So we need the commissions from the easy transactions, to be high enough to offset the hard ones and those that don’t sell at all.
In effect, our genuine sellers are subsidising the non-sellers.
- Over the years, with the rise in property values, the average commission has jumped.
Have our clients received a corresponding rise in value-add by us an industry?
Does it now take more work & costs to help them affect a sale?
Despite the rise in commissions, we as individual agents are also not better off. As the commissions have increased, so too have the number of salespeople cashing them. While the production (transactions) per agent has decreased. (As an industry we now average less than 1 transaction/agent/month).
In other words, consumers are paying more, to support more of us to do less work on their behalf.
Because of the commission-only model…
The focus of the cartels is not about becoming more efficient. It’s not about innovating for our clients…
It’s about bums on seats. It’s about being the BIGGEST. Having the most salespeople saturating the market. Which is the only way to brand dominance and market share in a commoditised industry… With little differentiation, where everyone looks and works the same.
- We tell sellers we work long and hard for our commission. And we do.
Although in truth, the majority of the effort is spent on activities NOT directly related to helping the client sell… Prospecting, networking, self-promoting, free market appraisals, listing presentations… All to win the occasional listing.
- We lead sellers to believe that we ‘sell their house’.
Like we have some magical ability to talk them into buying a home they don’t want.
To win listings we claim to ‘have buyers’. Like we own them in some way… Implying the buyers will only buy through us.
Some even claim to have “the most buyers” because they have the biggest pack of salespeople.
But the truth is: We all have access to the same buyers. Buyers aren’t loyal to individual agents (or brands). They’re attracted to the right property. They couldn’t care less who’s sign is on the fence.
- Sellers are up-sold more and bigger advertising…
Told they’ll reach more buyers and get a better price. Which is simply not true.
I’m not saying that smart marketing isn’t an important tool. Of course it is. However, there’s zero evidence that more or bigger advertisements do either.
There are only so many buyers in the market at any point time – dictated by economic factors. The amount of advertising has nothing to do with it. If it did, then why is it that over the last 30 years, the amount of real estate advertising has almost tripled. Yet the number of sales is the about the same?
Further, a bigger advert does not add any value to our client’s property. As if a buyer is going to think – “Well they did have a full page in that fancy magazine – I better pay them an extra $10k.”
Why then do so many in our industry up-sell clients into extra ‘Vendor paid Advertising’?
The answer revealed itself in a recent video – where a prominent real estate trainer is coaching a salesperson in a slump – and I quote…
“The next thing I want you to is to go back to the listings you’ve got and more marketing dollars from them… Why?…
Because you’re going to use those listings to get more listings…”
Self-promotion at our clients’ expense… Classy.
- Our industry publicly says we help our sellers get the best price.
Yet pushes strategies, and high-pressure tactics designed to get a sale. To get a commission, not necessarily the best outcome for our client.
Many salespeople use a style of negotiation that often helps the buyer secure a property for less than they would’ve paid. Effectively underselling the property, while still collecting a commission.
- We make out our job is to convince buyers to buy
Yet behind the curtain, the real job in commission-only real estate land, is not convincing buyers to buy…
It’s convincing sellers to sell.
Convince them to list with us. Convince them to price it right. Convince them to accept the offer on the table.
Otherwise, we don’t feed our family.
- We tell the public that we act in our clients best interests.
Yet insist they pay us contingent commissions. (No Sale No Fee).
Which by its very nature creates a conflict of interest. Undermining our client’s trust & respect of us…
Seriously, in whose best interests do consumers feel a commission-only salesperson is acting?
Is it really any wonder they question our integrity?
Please don’t get me wrong. I’m not saying that commissioned salespeople are bad people. Most are genuine in their desire to do the right thing. At least in my experience, the vast majority of those I’ve worked beside have been.
That said, there is no denying things go on in our industry that shouldn’t. Consumers stripped of thousands of dollars by systems designed to benefit the industry.
Because bottom line, often what’s best for the client, is in direct conflict with what’s best for the salesperson.
So as an industry, the commission-only model keeps us stuck between a rock and hard place. Between our clients best interests and our own survival.
I believe both our clients and we as agents deserve much more.
As an industry, as individuals, we are better than all that.
Let’s find a genuine solution. One that’s better for both our clients and us.
We must re-invent ourselves.
What is our place going forward?
What do we stand for?
What value do we add to our clients?
Why do we deserve to exist in the world?
Frankly, “We sell houses” no longer cuts it.
It’s time to step up. To rise above the status quo. To elevate ourselves to the profession we should be.
I can see an industry that is more efficient. Puts the interests of its clients above all else, and adds genuine value to those it serves. An industry consumers trust and we are proud to be a part of.
How can we create that?
I think Einstein said it best:
“We cannot solve our problems with the same thinking we used when we created them.”
He’s also credited for saying:
“The definition of insanity is doing the same thing and expecting a different result.”
Both are instructive.
So here is something I invite you to consider…
What if we rejected the belief that “Real Estate is a Commission-Only Sales Industry”?
What if we went back to the drawing board, started from scratch and redesigned it as a ‘Professional Service’?
Looking at our industry through that lens changes everything about how we operate: Our purpose. Our culture. The services we offer. The advice we give. Strategies we use. How we structure our fees. The relationship with our clients… the lot.
Can we agree that our purpose is to:
Protect our clients best interests while helping them keep the most from their sale.
Meaning first and foremost we fight for our clients’. Shielding them from costly mistakes and traps. Guiding them through the minefield.
Secondly we must implement a documented approach – evidence-based – with researched and proven strategies to ensure they receive the highest possible price. Finally we must find ways to work more efficiently – to reduce our clients selling expenses. Leaving the most in their pocket.
Instead of commission only, our clients could engage us on a professional basis. Non-contingent fees based on the work and outgoing cost required to serve each individual client? More like how they expect to engage other professional service providers – Legal, medical, business consultants, accountants, builders… the list goes on and on.
We’d get fairly compensated for work done on each clients behalf – regardless of sale, which is ultimately their choice.
So we wouldn’t need to charge as much to cover the losses from non-sellers.
Further, it removes the conflict of interest. Instanly elevating the level of trust between us and our client.
They’d be engaging us as their specialist expert. So it’s no longer about talking them into anything. It’s about using our expertise to their advantage. It’s about giving them transparent choices. Empowering them to make smart decisions for themselves. It’s about advising, serving and acting upon their instructions.
Which, by the way, is where we add the most value.
Anyone can just sell it. Including themselves…
It’s the quality of our advice before and after going to market. Helping them avoid mistakes. Getting the right strategy in place. Smart marketing. Skilled negotiations. Post contract troubleshooting etc… That’s where we make a difference to our clients’ lives. That is how we truly add value.
Would they be more likely to follow our advice?
And since we’re good at what we do – the clients that follow our advice achieve superior results right?
By living up to all that. By having clients know we’re truly on their side. By genuinely helping them achieve the best price, with super efficient fees – leaving them thousands better off than the traditional way…
Would that increase our client satisfaction levels?
Would they be more likely to recommend us to friends and family?
I encourage you to chew on all that.
For three years now, we’ve been pioneering this path.
Transparently offering clients the choice.
More and more of them are choosing Professional Service Model over the traditional way.
They love that they’re engaging us to act in their best interests.
And for the genuine sellers – it’s simply more efficient – leaving substantially more in their pocket.
Our clients are banking more. While at the same time we are also better off. It’s a win/win.
We’re no longer doing any traditional prospecting. Yet genuine sellers are seeking us out.
We have a compelling differentiation in our market – giving us a competitive advantage.
Our client satisfaction and testimonials have gone through the roof. Creating positive word of mouth & ever increasing referrals.
Most satisfying, the relationship with our clients is on a much higher level. It’s a partnership. A ‘Client’ to ‘Trusted Advisor’ type relationship, rather than ‘Prospect’ vs ‘Salesperson’.
We can now operate in a way that is congruent with our character. We can talk straight. Genuinely help our client… No self-serving sales pitches & half-truths required.
I’ve got to say, for me at least, it’s a breath of fresh air.
Sure, we haven’t all the answers. There’s plenty left to develop. This is ground floor stuff, but we have made a solid start.
And it’s time to share.
I think it’s an obligation we have when we discover something good. When we share that good with the world, more good happens. And that is what I want to do here.
Because until now, for us as individual agents, the only choice has been to operate in that commission-only model, or not at all.
The good news is that a new door has opened. Meaning you do have a choice. After all, if we’ve made it work, so can you.
So I ask …
Do you genuinely care about serving your clients best interests?
Would you like to operate without the underlying conflict of interest and mistrust?
Would you like to be elevated above our industry’s negative reputation?
Like clients to see and treat you as their trusted advisor. Their protector.
Like to never need to compromise your integrity – always giving the advice best for your clients – even if it means they don’t sell?
Do you like the thought of being respected and fairly compensated for your expertise?
Would you love to have positive differentiation in your market? Setting you apart from the lookalike competition?
Would you love to never have to cold prospect again? Instead, have clients asking to work with you?
Do you want to create clients for life, ever-increasing referrals and repeat business?
Would you like to offer your clients higher professionalism and more efficient fees, while you also earn more?
Do you want to help elevate our industry?
Would you like your career to be more meaningful than prospecting & scrapping over commissions?
Then here’s an open invitation…
At 12.30pm on the 22nd May 2018 (NZ Time), I’m presenting a live video conference – sharing in more detail what we’ve done so far to transform our business. Followed by a question and answer session.
No sales pitch. No up-sell or fishhooks. Just some open sharing of info on a new way of looking at our industry – along with strategies you are welcome to implement for yourself. I’ll be an open book – because I believe what we’ve discovered here is a game changer – for us as an industry, and just as importantly, our clients…