The tale of an Employer, a Pill Pushing Doctor and a Commission-Only Real Estate Agent
The other day I heard about a very upset mother. Her son had been recruited to do some specialised contracting work in a far off country. It seemed like a great opportunity. However, given the recent unrest throughout the world, she was understandably concerned about her sons safety. They were assured by the employer there was nothing to worry about. So why is she so upset now?
Since he has left, she’s found out that many others have declined the work offer. She’s discovered that they had been given different information, about the stability of the country involved.
I don’t know if this story is 100% true or not. But it did get me thinking about what I would expect from those advising me when an important decision is being made. Especially a decision that affects my loved ones or financial wellbeing.
I would simply want transparent information. I’d want the truth about all the important facts, so that I can make an informed decision. I am happy to accept responsibility for my decisions, but what if I’m not given the whole picture? What if certain things are withheld or glossed over? Like this woman, I too would be upset. I’d feel mislead and deceived. I would question if the person advising me had intentionally lied for their own gain?
This leads to the question of why would a person or advisor in a position of trust, do such a thing?
It always comes back to self interest, which is often driven by ‘fear of loss’. Maybe the employer feared that he would not get enough workers to fulfil his contract? Maybe he feared that if he told the truth, his financial wellbeing would be on the line? Would that make it right? Certainly not. But you can see how it happens.
So how do you protect yourself from situations like this? Firstly it’s important to ask yourself… what personal or financial interests does the person advising me have? How do they stand to gain or lose as a result of my decision? Are they likely to try and influence me towards whats best for them? Ideally you want to seek guidance from those who don’t have a conflict of interest.
Think about your doctor. They are sworn to protect and advise you. They do not sugar coat the facts. They are not there to sell you anything. They tell you how it is and give you the best options and advice they possibly can. They have no conflict of interest. If you decide not to follow their prescription and choose instead to seek alternative remedies – well that’s your decision and it doesn’t effect them financially.
But what if Doctors derived the majority of their income as commissions from the pharmaceutical companies? What if they received payment based upon how many prescriptions they wrote? They would then effectively be salespeople… they’d be “Drug Brokers”. All of a sudden you’d question their motives. They’d have a basic conflict of interest. If you chose not to take the prescription, they would not earn a living. And here’s the thing… even if the Doctor was genuinely advising in your best interests – you’d still naturally distrust their advice.
Now take a look at how the traditional real estate industry works. Your agent is advising you around the sale of your largest asset. They are in a position of trust. You are relying upon them to help you make important decisions that affect your families financial wellbeing.
Yet the industry is based entirely upon a commission-only sales culture and business model. A model where self interest runs deep. They are like ‘Drug Brokers’ with a basic conflict of interest. Your decisions directly affect if they earn a living or not. Even the most basic advice a traditional agent gives you , like a ‘Market Appraisal’, is tainted by ‘fear of loss’. If they advise you the truth up front, about the likely sale price of your property, they risk losing your business to another agent who talks it up or simply tells you what you want to hear. They risk being punished for being transparent. When an offer is on the table, are they advising you to accept because it’s best for you? Or because they need a commission? Because they need to feed their family? Even if they are genuinely advising what’s best for you – how can you fully trust their advice if they only get paid when you say “yes”?
This is fundamentally why we have dropped the traditional commission-only sales culture and business model. It’s why we have restated how we work and redesigned our service based on a client focussed ‘consultative’ model… more like your Doctor, Solicitor, Accountant, or any other professional advisor in a position of trust.
First and foremost the conflict of interest must be removed. By doing so it frees us from the ‘fear of loss’. It enables us to focus on what is really important – protecting your interests and helping you maximise the profit from your sale. At the most basic level it empowers us to give you the best advice without the need to try and sway you one way or another.
After all, if you are like me and the upset mum – you don’t want to be ‘sold on’ or ‘talked into’ something. You just want transparent information and advice so that you can make informed decisions.
“When we decided to sell our family home of 15 years, we thought long and hard about who we would engage to market it for us. When Carl discussed Restate’s marketing strategy he made a very valid point; that real estate agents all use the same media tools to market property i.e. print, websites etc, the key difference is the level of service and the fees. Restate’s fee structure was the deal breaker for us. It was just commonsense to pay for a professional service rather than a flat commission rate. This was followed up with professional and honest service, with frequent and open communication from the whole Team at Restate. We are delighted to have sold our home to a new family for a fair price, and saving ourselves thousands in fees. Thanks Restate!!” – Ali & Bob