Many years ago I heard a story: A large factory had to completely shut down because on its machines quit working. None the factory workers could get the machine running so they called in an expert.
The expert walked up to the machine tapped it with a hammer ad the machine started running again. Then he turned in an invoice for $300.
The factory manager went nuts. How could this expert charge $300 for just tapping with a hammer!!!! He demanded an itemized invoice before he would pay.
The next day the expert turned in a very simple itemized invoice.
Tapping with hammer $2
Knowing where to tap $298.
Lenn Harley wrote this great post about how the same sort of principle applies to real estate.
The secret of successful real estate practice is being paid for what you know and not what you do or how long it took to get it done.
Oh sure, you can keep track of the hours you spend on a CMA for a prospective listing client. Or, you can keep track of the hours you spend previewing and touring with a prospective buyer. However, is that the best practice?? Or, is it better to learn from experience and offer the prospective buyer or seller services that they CANNOT POSSIBLY DO FOR THEMSELVES???
DON'T FALL INTO THE TRAP OF COUNTING HOURS! Rely on your experience and your market knowledge when meeting with prospective buyers OR sellers. Shucks, home owners can now get the same information we have about what sold, for how much and when. SO WHAT??
Does the average home owner understand that:
- Every property is different and it takes real estate experience to understand the value of different features.
- Even if you get an overpriced offer on an overpriced listing, there are no comparable recent sales to support the higher price.
- For every $10,000 over the average list price in the area, the home buying pool is reduced in numbers.
- Just because the home 3 houses away sold for $100,000 more than the recommended list price two years ago doesn't mean that it would sell for the same amount today.
- The pricing TREND for a community is often more important than prices TODAY.
Are you listening to the owner?? Or, are you showing them how much time you spent researching their property??
PAY ME BY THE HOUR??? DON'T EVEN THINK ABOUT IT!
On one sale, I earned $5,000 an hour. On others, I've earned about $50 an hour. Over the course of the past 10 years, I've averaged about $110 per hour. I can live with on that.
I'm worth every single dime I'm paid for the knowledge I use in my daily practice, knowledge that the home owner seller or home buyer does not have.
Nor am I paid by the hour. Some of my best listing experiences lasted about one week on the market. Some of my best selling experiences involved one or two home tours with buyers. How much time we spend iwth a buyer or seller has to be measured against the likely success of that time spent. When you're working with a past, repeat buyer or seller, there is a very high likelihood of success and you may be willing to invest more time with that client.
On the other hand, if a buyer or seller is not completely on board with what you know to be the best practice for their stated needs, you may be working for experience and not for an expected commission. That's just fine for new agents who need the experience, but not worth the time for experienced agents who can judge the likelihood of a successful closing.
Success in real estate practice is know what to do and when, not how many hours we spend doing what we do.
After all, it's so much fun, who's counting??