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Getting Back to the Basics When the Basics have Changed

confusion If you are out in the market trying to make a living in real estate, I don't need to tell you that our industry continues to go through tremendous changes that are challenging our most basic of real estate practices and assumptions:

Revolutionary growth in technology which continues to transform our industry.

A huge consumer backlash that, contrary to conventional wisdom, is not just challenging our commissions but challenging our very value as professionals.

A growing bewilderment by both the consumer and ourselves over what exactly our role as real estate professionals today is supposed to be.

Yet, in the midst of all of this, when we clearly need some new direction, it seems like all we're getting is the same old advice from the same pundits that have been around forever saying the same things like:

"It's time to get back to basics."

"The market will recover and be like it was."

"Just use the market downtime to sharpen your traditional sales skills and when the market comes back, you'll be ready."

Deep down we know that this traditional advice just doesn't fit our current realities anymore. But, let's be honest. We like hearing it. It's comforting. It's familiar. It's sort of like a broken-in pair of shoes - when we put them on, our feet can just naturally settle in to where they are comfortable. Unfortunately, those shoes won't get us to where we need to be today! Now, it is true that real estate works in cycles, the housing market will come back as will business, but it will increasingly be a very different type of business. And this business will be going only to those practitioners who are trained and ready.

It's time to take our industry back. And as difficult as it is to stretch our comfort zone, it's time to break in a new pair of shoes. In our business, that new pair of shoes is Real Estate Consulting. Read the rest of the article...

Posted by Mollie Wasserman on 06/04/2008 07:07 AM

Comments (2)

real estate consulting, feeforservice, service choices

Post is included in group: ACRE Consulting

2 Comments on Getting Back to the Basics When the Basics have Changed

JUN

2008

Mollie, I agree with almost everything you said in your article. The public is ready for working on a consultative basis with one exception. They aren't willing to pay for it on an as needed basis. The public's perception is that real estate agents work for free and shouldn't get paid until a transaction is closed. Until the public's perception is changed, getting paid when services are performed isn't going to happen. Not for a while anyway. However, I do like your concept and theory.

Good Post and article!

Thanks for your comments Michael. However, as we are seeing in the experiences of our graduates of our ACRE (Accredited Consultant in Real Estate) Program http://www.TheConsultingTimes.com, slowly, the public's perception is changing.

What we have found is that the public is happy (in fact sometimes anxious) to pay for quality services if they could just understand what they are paying for! We call it transparency. Instead of dancing around why commissions are high, we explain why they MUST BE and offer choices if the consumer would rather pay by the hour or pay for the services themselves rather than paying a premium for a guaranteed outcome (which is what a commission is).

As an industry, we have royally shot ourselves in the foot by trying to equate a commission with payment for services. In reality, if commissions were truly payment for services rendered, the public could pay a lot less and we could still get paid quite well. As I say in my book, Ripping the Roof off Real Estate (http://www.theconsultingtimes.com/ripping/), we need to start leveling with the consumer that paying by commission has no relation to services rendered.

Commissions are all about mitigating risk. It's basic Economics 101: High Risk means High Reward. If you as a consumer, want the agent to take all the risk, they must get paid a high reward. On the other hand, if you want to pay only for the time or services, you can't also have it be contingent on an outcome. Like any other service provider, if you want to pay for the service, you need to pay when the service is rendered.

Until we are willing, as an industry, to call a commission what it is, and provide other alternatives, we will continue to see our compenstion erode and value undermined. Consumers will be increasingly left on their own without the necessary services, expertise, or representation, OR left to third party vultures that would have them believe that selling or buying a home is no more difficult than selling old clothing at a yard sale.

You say Michael that until the public's perception is changed, getting paid for services performed is not going to happen. I agree. Where I might differ with you is actively making that change in perception happen because perception doesn't change on it's own. ACRE is a year and a half old (launched in Nov 2006), and we already have over 100 ACRE Grads all over the US who are earning money and getting business by practicing consulting that they never would have had. I'm not trying to give you a sales pitch, but am trying to say that the public is crying for responsible, transparent choices that make sense to them and we are already building a group of real estate professionals that are meeting that need. Public perception IS changing - but sadly, much faster than that of our industry!

Mollie

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