Special offer

Is It Time For Realtors To Start Acting Like Lawyers?

By
Real Estate Agent with Condo Metropolis LLC BK3138791

Are You A Patsy For Your Buyers?

As real estate agent, there’s a chance you may have discovered that everyone wants a piece of you. Buyers in particular want your knowledge of the market place, your experience and advice, and allowed to run amok unchecked, they will bleed you dry without a second thought. So long as there’s no charge of course. Because nobody wants to pay for advice. Heck no. Advice should be free, right?

But what if advice is all you’re selling?

As my attorney once said to me when I asked him about his exorbitant fees, “What I’m selling is my knowledge and experience,” he said. “That’s all I have. It’s what’s in my head. I’m not selling a product.”

It seems to me that as real estate agents, we have two important lessons to learn from the “Attorney Business Model.”

1.) Don’t work for free without a shot at a pay day.

When an attorney agrees to take your case on a contingency basis, i.e. “no win, no fee” (as opposed to on an hourly basis), they do so only after you have made a commitment to using their services, that is, you sign the Company Agreement. No paperwork - no attorney. Why? It’s simple. Attorneys don’t work for free.

Commitment from the client is key. Because once you’ve made that commitment to their firm, the attorney may appear to be working for free – but it’s only temporary. Because the expectation is that they will get paid in due course. In essence, they are simply advancing you their skills in expectation of future compensation. The idea that they are working for free is really just an illusion (assuming they select their clients with skill) which brings me to the second lesson:

2.) Like plaintiffs, not all buyers are created equal. When attorneys work on a contingency basis, they don’t take on every client that calls their offices. Not all plaintiffs are created equal, and not every case is winnable. Attorneys survive by taking on those clients that they think they can be successful with. The more often they pick the “wrong” clients, the quicker they go out of business.

It seems to me that real estate agents who represent buyers often stray on both of the above counts. Firstly, like attorneys, we work essentially on a contingency only basis (i.e. no sale no fee). And like attorneys, we have the option to decide who we want to work with. If we don’t feel that we can “win” a particular client’s case (i.e. close on a home sale) then we shouldn’t take it. It’s that simple.

In order to test the win-ability of a particular case, we have to meet with a potential client and go over the value of their case (i.e. “qualify” them) before putting them on the stand (or in our cars). Can you imagine an attorney meeting a client for the first time at a trial hearing without knowing the first thing about them?

Secondly, most of us are not requiring our client to sign the Company Retainer (exclusive buyer agreement). Many are not even asking the prospect if they are already working with other agents. And those that do ask and receive a response in the affirmative, often still work with that client in the vague hope of a pay day. They simply cross their fingers and take a chance. Not even the most desperate of attorneys would dream of squandering their time in this way.

As agents we often give way to pressure because we fear the loss of the client. We fear that if we don’t do as they ask, they will go elsewhere. That’s understandable. So why don’t attorneys give way to those same fears?

I believe the reason attorneys are comfortable with their business model is because they have no doubt that if a potential client chooses to go elsewhere, they will receive the same evaluation. They have confidence in both their education and their skill set. They have self-respect and they value their time.

As real estate agents, we have fallen short of this evolutionary mark. We are less homogenous, we don’t possess the same cohesion as a group, and education levels vary widely. And until our industry is able to adopt some basic standards for working with buyers, we will continue to have our time abused while we run around, flapping in the wind like the Affleck duck and then getting caught in procuring cause disputes. If it’s true that there’s no such thing as a “free lunch,” then it’s high time agents stopped running their businesses like the local soup kitchen.

In short, while a potential client is evaluating our services we should also be evaluating them. And if a.) we don’t think we can “win” their case, or b.) they won’t sign the Company Retainer, we should do what any novice attorney would do and scream “Next!” Because if you won’t give me your commitment, then I’m not going to give you my time.

I think Anthony Hopkins put it best in Silence of the Lambs. While sucking on his favorite Fava beans, he looked over at FBI agent Jodie Foster and whispered: “Quid pro quo, Clarissa. Quid pro quo.”

Posted by

Marcus Burke, PhD, GRI, e-PRO, ACRE is a Realtor and broker of record for the Orlando Real Estate Group and Condo Metropolis LLC. For more information on Orlando home sales, or to list your home for sale with us, call: 407-290-3408 or email Info@CondoMetropolis.com

 

 

Comments (2)

Nancy Keith
Keller Williams Realty - Knoxville, TN

Marcus,

Judging from your writing ability and the tone of you blog post you don't seem to have difficulty articulating your opinion and asking your clients to commit. I'm just curious - has this always been your approach or is this hard-won experience speaking?

Sep 08, 2010 03:56 AM
Marc Burke
Condo Metropolis LLC - Orlando, FL
Ph.D, GRI, e-PRO, ACRE, REPM, CNE

Nancy, actually I still find it pretty tough. Like most of us, I learned the hard way... If you hit the "procuring cause" link in the piece you'll see one of those lessons. I would say that my buyers agreements have saved me about $30K in commissions in the last 3 years, ie. instances where I would have been royally scr*wed were it not for that piece of paper. I still find it hard to practice what I preach - but I just keep reminding myself of all the times the agreement has saved my ass! It helps to have some kind of script of course for dealing with 'the moment' that you ask.

Sep 08, 2010 04:02 AM