“Real estate is by far the most screwed up industry in America” – Redfin CEO Glen Kelman. On reflection, I agree. Real estate is screwed up on many levels. But not only in America. While many, like Redfin, are going down the technology path to try and fix it, I had the feeling that solving our problems requires more than just new tech. It needs different thinking.
Consider four clients selling their property…
Larry is difficult, to say the least.
He doesn’t accept or follow your advice. Puts no effort into presenting his property at its best and has unrealistic price expectations.
It wallows on the market for months, while you invest time and money working on his behalf. He turns down several fair offers before firing you and listing with a different agent – who suffers a similar fate. But this time Larry withdraws and tells everyone that you and the second agent were “hopeless”.
Claire is genuine about selling and nice to deal with…
But her property is poorly presented and she wants $20K more than the market is likely to bear. She turns down a good early offer. For months you continue to invest time and money serving her until she finally accepts a reasonable offer at $400K.
Mary is lovely…
She lives on the other side of town and has been in her home for 50yrs. She’s never sold before, so takes a bit of hand-holding, but trusts your advice and guidance 100%. She does everything you suggest to improve her presentation, follows your advised approach to market and prices exactly where you recommend.
Within two weeks you leverage multiple interested buyers and present her three offers. One of which is 10% over the expected sale price.
She’s thrilled to sell for $200k and raves about how great you are you to all her friends at the bridge club.
Ken is your dream client…
This is the third property he’s sold with you in the last five years and at least six new clients have come directly from his personal recommendations.
He knows the drill. By the time he calls you for help, his property is already perfectly staged. He has commissioned stunning professional photography and has independent report’s ready to give the buyers up front (LIM, pest, builders etc).
As always, he trusts your advice implicitly, leaving it in your capable hands to get him the best result possible – following your recommendations on the method of sale, marketing and asking price.
Within two weeks you leverage multiple buyer interest and present him with three offers. One of which is 10% over the expected sale price.
He’s so delighted to sell for $400k that he writes you an amazing testimonial (accompanied with a photo of him doing a thumbs up in front of your sold sign). He also posts an inspiring video of himself on Facebook & Linkedin telling the world how awesome you are.
How our traditional commission-only model treats these clients is insane.
It punishes Ken by charging him the exact same fee as Claire, who needed 3-4 times as much work and outgoing costs.
Just because his property was worth more, he pays twice as much commission as Mary. (We all know the value of a property has nothing to do with the work involved in selling it. That depends on how well presented and realistically priced our clients’ property is – which are their decisions, not ours).
And what about Larry?
He demanded the most work, expense & mind space – yet he gets off ‘Scott-free’. Paying nothing. We’re left holding the baby – we are in the hole – losing all the time and expenses we incurred on his behalf.
Which is why we need our commissions to be so high from Ken, Claire & Mary. We need their commissions to offset our losses from Larry.
Meaning our genuine sellers are subsiding all the work done for the non-sellers.
Which is completely nuts. Not to mention a very inefficient model for our genuine clients.
It’s time we fixed it.
But what’s the solution?
A Discount Model has proven not to work in the long run. If we discount for the easy sellers but still lose with the Larry’s – we’ll work more, for less and probably go broke.
A Flat (Contingent) Fee doesn’t fix it either. For a start, it’s the same problem as discount % commissions above. Larry still gets off free. And why should Ken pay the same fee as Claire? Each client requires different amounts of work and outgoing expenses. If we charge them all the same – we’ll still be winning on some & losing on others.
How about an Upfront Flat Fee? … Think Purple – let’s not go there.
Here’s a crazy idea…
What if we looked outside of our own box and learnt from other professions?
We are professionals, right? So why are we still acting like commission-driven salespeople?
What if we actually adopted a professional culture and fee structure?
Instead of seeing people as a lead to be chased, a commission cheque to be closed – what if we treated them as clients to be protected and served?
Instead of making ourselves the star of the show – how about we make our clients the heroes?
Rather than focus on maximising our commission and profile… what if we focused on maximising our clients’ NET sale proceeds? Meaning it’s not only our duty to help them achieve the highest sale price possible. But also figure out how to be more efficient and reduce their outgoing selling costs?
What if we charged them how they expect to pay any other professional service provider? Fees based on the expertise, time and outgoing costs needed to serve only their individual needs?
Rather than paying us on a one size fits all % commission-only basis… what if clients engaged us – retained us – hired us to use our expert skills, knowledge and experience to their advantage?
That way, with our professional guidance… the smarter decisions our clients make… the better they present & more realistically they price… the better sales price they achieve… in less time on market… with less work and expenses needed by us… the less fees they pay… the more they end up with … the more value we’ve added… the happier our clients…
Do you see where I’m going here?
We wouldn’t lose money working for the Larrys of this world.
Meaning we could charge our great clients less while netting the same (or more) for ourselves.
And by leaving our clients much better-off would we earn more referrals and repeat business?
Would we be more attractive to clients like Ken & Mary? Which are the clients we want to attract, right? (Removing the need for respect destroying prospecting).
On top of all that, would we be better positioned as the ‘Trusted Advisors’ in a red ocean of lookalike sharks?
Would we become more respected by our community?
I encourage you to dwell on all these questions. Ponder. Think them through.
Would it be a game changer?
Would it be better for our clients?
Would your life in real estate be better?
Maybe I was the crazy one? Plenty said so. But I believed and set about making that change.
How has it worked out?
After helping over 250 clients here’s the type of outcomes it’s consistently creating.
Clients seem to 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 positive differentiation in our market – giving us a competitive advantage.
We’re being invited to consult with more new clients. Of whom more are engaging us (higher Appointment / List ratio).
More of our clients are actually selling (Our List /Sell ratio has jumped to 98.5%).
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 at 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 clients… No self-serving sales pitches required.
I’ve got to say, for me at least, it’s a breath of fresh air.
And it’s time to share. Because 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. To help like-minded agents also change your world of real estate.
So we’re looking for professionals to join us.
We’re in no way interested in ‘bums on seats’ and will only accept those with the highest standards of ethics and client care. You will be more like a key partner in your own legal or accounting firm – growing your own practice with our backup and support.
It will NOT be a typical franchise arrangement – where head office skims all the cream off the top. We’ve come up with a much smarter solution that cuts out many of the traditional inefficiencies, enabling both you and your clients to be better off.
Until now, as an individual agent, your 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 in our community, so can you.
Do you genuinely care about serving your clients best interests?
Would you like to operate without the underlying conflict of interest, negative reputation and mistrust?
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 seeking you out?
Would you like to be able to offer your clients higher professionalism and more efficient fees, while you also earn more?
Would you like your career to be more meaningful than prospecting & scrapping over commissions?
If so, I invite you to connect. Because as Steve Jobs brilliantly put it:
“Here’s to the crazy ones…”
