Reality check for 60 Minutes- Not all real estate agents are the same
By Susan Rochwarg
A happy couple sold their home and bought their next home on their own except for the limited services of an online discount service. That's newsy news for sellers and buyers struggling to navigate the complicated, ever changing, risky and less than predictable real estate market.
Sunday night television aired the story on 60 Minutes, television newsmagazine, May 13th. The couple bragged about saving $26,000 by not using an agent, and in exchange they had to promote their home, show their own home and negotiate with potential buyers, and sellers of their new home.
I found the story contained a disturbing number of misrepresentations about the real estate industry. I was disappointed with 60 Minutes and expected the facts would be accurate. I don't under estimate the impact this story will have on the buying and selling public, so I'll take the opportunity to share what I think is most important relative to the story and that is there is value in a real estate agent's commission when you have the best agent with the best services! There is reason to question the services of agents and their Marketing plan, tech tools savvy, energy for the job, communication skills and their wisdom to get you the results you want!
The segment didn't refer to the price range of the two homes or any of the sales research and ‘home' work they did in order to determine a fair negotiating position when selling or buying. It wasn't clear if they had sales or negotiating experience or what they did for a living. They did say that they did cut their asking price by $10,000 in order to sell. Viewers weren't given information about what the couple's costs were for lost wages to sell their home and buy another one or what additional advice they sought from financial, legal or other professionals.
They may have consulted with one or probably several real estate agents for advice about home pricing, a market analysis, conditioning and staging recommendations, details on current area market conditions and marketing ideas. The cost of that was free.
As a real estate agent that's trusted in my market, I provide these services all the time in exchange for the opportunity to earn business when they buy and sell. It's part of interviewing for the job but it can be so much more than that. Because our industry has always been a commission based model, our time and expertise is not typically compensated until the close of purchase rather than through out the process on an hourly or job-related basis. No matter how good I am, I don't always get hired after a consultation, which typically takes me between 4 and 8 hours including preparation and research, telephone consultation, initial and many times a follow up consultatioin meeting with the clients. Because there are so many hours of work that go uncompensated, compensation for getting the job done is that much higher. Maybe sellers and buyers want to pay us to handle their real estate needs and affairs by paying us by the hour. I wonder what that's worth?
Rather than providing buyers and sellers with valuable information regarding the process of selling or buying on your own, it seemed to me that 60 Minutes was focused on calling to question the value of using a real estate agent. NAR studies for years, have shown that a majority of consumers thought their agent was fairly compensated for the work they did. The story indicated that commissions have continued to rise as prices have skyrocketed and although there is a percentage relationship, that percentage has gone down, not up, in recent years.
The show makes it out as though full service or comprehensive brokerage is no different in level or quantity of services than on-line internet brokerage. In fact, the program did interview an agent but left the impression with the viewer that commission structures are way out of line. In fact, it indicated that all commissions were fixed (not true) and that the real estate industry was governed by NAR (not a governing body).
Additionally, the program referenced the internet and its role in the replacement of such intermediaries including travel agents and real estate agents, rendering them irrelevant in the process. Personally, I embrace the internet using several web sites for information delivery to the consumer, 2 real estate related blogs, and I'm about to become a member of VM Direct and HelloWorld video broadcast, video email, video messaging etc.. All these technologies embrace the internet and are critical in the advancement and sustainable growth of a real estate agents business today, in my view.
Things like ‘You get what you pay for,' ‘not all agents are created equal.' sound so trite and uninteresting for a news story. Not only are viewers fed a distorted and incomplete picture of what selling or buying on your own means, horror stories aside, agents now gain a huge marketing problem stemming from the fact that a significant fraction of the TV viewing public starts to think that you are charging too much for your services without regard for what you and your company offer versus another agent or online services company. Instead of creating an opportunity for agents to set them self apart by their services and success record, they are set apart by price as if there is no difference between agents.
There may still be a few hot markets where homes basically sell themselves, and there are undoubtedly home sellers who have the time, skills and patience necessary and succeed in getting the best price for their home when they sell and the best deal available when they buy. That describes no more than a tiny fraction of U.S. home buyers and sellers. Most want to have a family counselor for real estate as you would an attorney, a doctor or even an accountant. An agent's expertise should be in all of those areas as they apply to real estate in order to advocate, negotiate and take care of their clients, charge a fair price relative to the services and be recognized as valuable and worthwhile asset to a home buyer or seller.
In fact, when a consumer chooses to uses a limited services, entry-only, discount fee agency or broker, and offers the seller's home through the MLS serivce platform in order to gain additional exposure for the seller (good tool), they typically offer a cooperating compensation for buyer's agents working with buyers who sell the property. What happens in these cases, further exaggerates my sense of the unfairness of attacking the fees that full-service agents might charge. It's also the largest, most obvious demonstration that there is a huge difference between agents and it's not all about the fee that they charge. For example, in a case where I bring an offer on a home listed by an entry-only, no services, facilitator listing, I've got to do all the work that isn't getting done by the seller, never mind his 'secret agent.' There is no agent and the seller's limited experience and familiarity with the complicated process, negotiating, communication and timelines, the paperwork, the liabilities etc. I now have to step up and provide services to the seller that he thought he didn't need and in most cases, he chose not to pay for by choosing a low-fee, low services, discount brokerage or agent because he either saw no value or difference among agents or wanted to save lots of money. Guess what? Because I'm trained and motivated to get the deal done, and go the extra mile whenever it's needed or necessary, I'm going to pull that seller through the deal to the end, in many cases spending twice as much of my money, energy and time on the deal because the seller represents himself. This makes me crazy and infact most importantly, it's absolutely not a win-win! Win-win, or no deal- we walk away. If I'm winning and you're losing that's no good either. That's why it's so important to me to communicate that my goal regarding commissions is to charge a fair price, one that my clients and me feels is fair for the job they need/want done. So the seller gets no representation, but he gets an agent to facilitate, orchestrate, and navigate the deal for him, he doesn't pay. What's fair about that?
Between the "free" internet and low prices at discounters, our culture is shifting to become more focused on price rather than on quality or value received. We're perceived as just too expensive and not worth it before we can even present fully the benefits and scope of our work. I see this as a cultural shift whereby the person and the people don't seem to matter but rather the cost. We are becoming more enamored with and dependent on our machines and our possessions than on other people. I can't imagine that can last.
Truth is, I see that in the absence of value, when it comes to anything, including real estate agents and their brokerage services, price becomes an issue. Of course the value of truly great real estate agent and the benefits in cost savings, reduced liability, reduced risks, increased opportunities for buyer prospects (as a seller) and housing prospects (as a buyer) and commission options and a choice in marketing and sales strategies was never mentioned.
Career real estate agents who have a plan for working successfully for buyers and sellers have ongoing operational expenses, expenses specific to the job at hand and liability insurance and professional training and licensing costs that on line companies don't have. But the responsibility is on the agent to demonstrate clearly the value that he or she brings to the client. You've got to get what you really need from your real estate agent and then you'll recognize and appreciate the value. Agents that deliver on a plan, give recognizable and measurable value do not need every deal that comes their way. They can afford to give back to their buyer and seller community without fear of criticism and without compensation. So needs consultations and advice, answers to questions, data feeds, market updates and vendor recommendations are all free and I give them with pleasure.
Too many print publications (some now dead) had viewed the internet not as a huge information asset and a valuable interactive selling tool, but as the enemy. They suffered for it. No print publication can operate the way it did a decade ago, and no REALTOR® can, either. Customer information management and interactive website design are but two new skills essential for marketing real estate brokerage services to today's more price aware buyers and sellers.
Your Real Estate agent does matter and it matters a lot. It matters to your bottom line, your equity position, your net, your expenses. It matters to your security, communication, understanding. It matters to your integrity, your reputation, your liability. It matters to getting the things you deserve, your long term plans, your short terms plans, your dreams!
If you need help with real estate, please call me anytime. I'd love to help.