The ORIGINAL Realtor® value proposition

By
Real Estate Agent

Disintermediation has become a heated topic among real estate agents in the past few years. For some/many, disintermediation is synonymous with the apocalypse experienced by the travel industry. Seemingly almost overnight, travel agents across the nation and the globe saw their livelihood dwindle to embers in a field that had seemed so certain.

Within our society, fear has swept across the board and become second nature for even college graduates uncertain about the security of job stability. Fathers, mothers, sisters, and brothers have been displaced by outsourcing, corporate reorganization, and the pace of the information age. Understandably, agents are scared that technology will make fossils of them. Accustomed to protecting listing information as a method of protecting job security, such action is seen by Realtors® as akin to a tech company protecting proprietary information.

Great deception exists in this position, however. A successful agent today is not marked by how well they “guard” their listings. Even the ability to get listings successfully proves this point. A Realtor’s® value lies in their great wealth of information and expertise regarding market area, negotiating strategy, and the smooth ride they provide clients. Take the Realtor® away, and none of these can happen. ActiveRain has testified to the greater real estate community these specific points. Without the Realtor®, the transaction would not be smooth, buyers and sellers would struggle far more in the negotiations, and a great deal of the intimate market area knowledge would be lost.

Our next goal as an industry should be to testify to the irreplaceability of the Realtor® in the home sale transaction. The communication ability offered by the Internet should be used to ratify Realtor® worth in the mind of the buyer or seller. The sooner we as agents realize that our fight against disintermediation enforces the stereotype that we have nothing to offer, the sooner we can stop defending and instead turn our energies to promoting that kind of worthwhile expertise that only Realtors® bring to the table. By so doing, we will change the tide in the customer perception and bring integrity and pride back into the industry, ensuring the Realtor’s® role in the purchase and sale transaction.

(Note: I will be flying from New York to Seattle today, so I will not be  available to respond to comments.) 

(Second Note: Right after I left my hotel for the airport I realized that I should have titled the post differently. The old title was "The changing Realtor® value proposition) 

Comments (42)

Judi Bryan
Executive Realty Group - Bloomingdale, IL
Your Chicagoland Connection

Jonathan...

Excellent post, and you hit several nails right on the head!!!  I was particularly struck with your comment "The communication ability offered by the Internet should be used to ratify Realtor® worth in the mind of the buyer or seller. The sooner we as agents realize that our fight against disintermediation enforces the stereotype that we have nothing to offer, the sooner we can stop defending and instead turn our energies to promoting that kind of worthwhile expertise that only Realtors® bring to the table. By so doing, we will change the tide in the customer perception and bring integrity and pride back into the industry, ensuring the Realtor's® role in the purchase and sale transaction."

As much as we may malign efforts online and off that challenge the role and the ultimate "value added" of the Realtor in today's market, the fact of the matter is that "we have met the enemy, and his is us!"  As an industry, for decades we have relied on our "keys to the kingdom" via mls access, and the varying versions of "160 things I'll do to get your listing sold" to define our value.  Those items should have been included in our presentations in the section labeled "Oh, by the way....".  Instead they were served out to the public as our "raison d'etre".  We can't now hold the public responsible for believing what we told them!

Now the public is finding alternatives to get MLS information (or to get their home placed in MLS for a Fraction of what that privilege has historically cost).  And the public is looking at that "160 things" (or whatever the number of the day happens to be) and saying "I can do that myself and it sure won't cost me thou$ands!!!"  The the consumer doesn't understand (because we, as an industry, have not educated them on the subject is that commissions are what they are because of risk mitigation.  If agents were always paid for work that was performed, for value brought "to the table", irrespective of outcome, the consumer's cost would be considerably less...and the agents income would be substantially more reliable.  The question each agent must ask him or herself is what value do they place on their own time for the work they do for FREE.  I'm not just talking about free CMAs...I'm talking about the whole listing/marketing process that assumes the house will sell and assumes we'll get a paycheck...eventually.  (I'm in the Chicago market...and right now, about 1 in 10 listings is selling.  Not great odds for collecting a paycheck!)  I'm talking about the prospective buyers and sellers we do "pre" work for that never materialize into anything.  I'm talking about the buyers who get into our cars who change their minds, who don't take the job in this location after all, whose house didn't sell so they're not in a position to buy.  We've not respected our own time and value...how can we expect the consumer to! 

The challenge, as I see it, is less about re-educating the public (though we certainly need to do that too) and more about re-evaluating our roles, asking ourselves what it is exactly the consumer wants and needs and determining how best we can fill those needs and still make a profit.  We need to pull a "Madonna".  Look at how many times that woman has "reinvented" herself.  We need to reinvent ourselves as well.

There are some great options out there to help agents evaluate and redefine how they want to work, that respect both the consumer's needs and budget as well as the agent's time and expertise.  The particular one I've become involved with (because I believe it's the very best resource out there to help us address these changing market conditions as well as redefine our value to the public in terms that make sense to THEM) is ACRE (Accredited Consultant in Real Estate).  Here's a great little introductory video on YouTube.  In the interest of full disclosure, I'm not just an ACRE, I'm on their "Council" as well.

I've believed for years that if we do not take an active role in addressing the needs the consumer has in a way that makes sense to them, someone else will!  And there is no question we'll not be happy with the outcome.

Nov 18, 2008 11:03 PM
Patricia Beck
RE/MAX Properties, Inc., ABR, GRI, SRES - Colorado Springs, CO
Colorado Springs Realty

I think the service of a real estate agent is crucial in today's volatile market because deals can fall apart so easily.  Someone in a previous comment talked about making a difference, one client at a time, and I couldn't agree more. 

Nov 19, 2008 12:47 AM
Mick Michaud
Distinctly Texas Lifestyle Properties, LLC Office:682/498-3107 - Granbury, TX
Your Texas Lifestyle is Here!

While selling without a commission is an attractive thing for many sellers, the "good news" is that as Americans, we are convenience oriented.  So while sellers can save commission, they will find out how much it is earned. 

The perception by many is to throw a property up on MLS and wait for the buyers to call.

Just like building houses.  I consult with people who want to save the 20-100K per home when they want to build a custom home.  They very quickly find out why a builder charges what he does.

The only problem is, they don't appreciate it until the job is done. 

Agents can provide value.  You just need to find out what that is for your practice and sell it.

 

Nov 19, 2008 01:22 AM
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

Jonathan ... great post here about Realtor value. We agree that a successful agent today is not marked by how well they "guard" their listings, but rather how they move listing information to as many sources as possible for maximum exposure.  Thanks and best wishes. Harrison

Nov 19, 2008 01:32 AM
Judi Bryan
Executive Realty Group - Bloomingdale, IL
Your Chicagoland Connection

Mike...

I ABSOLUTELY agree with you.  Not only is it the "convenience" factor...most consumers, particularly when large dollars are involved, are risk averse.  The difference, imo, with what we're doing is that offering them real options, and then going through the dialog about what it is we're doing for them, what the costs are, etc, and their options for paying for them (one of which is to pay a commission at the closing...which incorporates the "premium" for our absorbing all of the risk), they begin to understand why we charge what we charge.  The truth is the consumer doesn't really care what our costs are when we're the ones paying for them.  But they DO care about those costs (and have a better understanding of them) when the option is presented to them of it coming out of their pockets! 

And the beauty is there is no limit to how this can be structured (provided your state licensing has no restrictions on alternative pricing structures).  For example, you can offer a "shared risk" option....letting them participate in the risk, thereby reducing the risk to the agent.  When they do that by whatever level of up front or over-time payments you agree to, and a balance due at closing (which reduces THEIR risk), the resulting total fee generally represents a savings to them.  And if they choose not to share any of the risk...well then they stick with the commission at closing alternative.   I see no reason why that option should be taken off the table. 

Nov 19, 2008 01:51 AM
Kathi Frank
Kate Writes Right - Houston Heights, TX
The Woodlands TX

Jonathan, your post is absolutely truthful.  Our challenge is communicating our true value.  Unfortunately, when NAR did the first marketing campaign, they emphasized the "errand running" aspect of our services.  We have not yet come up with a powerful way to let the public comprehend our value.  Active Rain is helping.

Nov 19, 2008 02:53 AM
D B
Quakertown, PA
e-PRO, Realtor - Bucks County PA - 610-952-3578

I enjoyed reading your post, and also the comments as well

Don

Nov 19, 2008 04:14 AM
Jenny Durling
L.A. Property Solutions - Los Angeles, CA
For Los Angeles real estate help 213-215-4758

I completely agree that alot of our value lies in our expertise in our local market areas. I believe in working only with buyers and sellers in the geographic areas that we are intimately familiar with and referring clients when they are outside of these areas.  Part of the problem in "proving" our value may be the number of agents who regularly take listings out-of-area or represent buyers on properties they have not even seen.  How can we truly be representing our clients' best interests if we do this?

Nov 19, 2008 04:34 AM
Anonymous
Jacqui Jeffress

This is a great blog with a lot of food for thought.  One extra thought - as professionals we need to do all we can to enhance the education/performance of our fellow Realtors

Nov 19, 2008 04:53 AM
#32
Jean Groesbeck
Compass - Anacortes, WA
Broker, CRS, e-PRO, ABR, ASP, CNE, IMS

I got an email today from a first time buyer who did not want to use a REALTOR to save money!   We still a have lot work to do educating.

Nov 19, 2008 05:02 AM
Jean Groesbeck
Compass - Anacortes, WA
Broker, CRS, e-PRO, ABR, ASP, CNE, IMS

I got an email today from a first time buyer who did not want to use a REALTOR to save money!   We still a have lot work to do educating.

Nov 19, 2008 05:02 AM
Jean Groesbeck
Compass - Anacortes, WA
Broker, CRS, e-PRO, ABR, ASP, CNE, IMS

I got an email today from a first time buyer who did not want to use a REALTOR to save money!   We still a have lot work to do educating.

Nov 19, 2008 05:02 AM
Jean Groesbeck
Compass - Anacortes, WA
Broker, CRS, e-PRO, ABR, ASP, CNE, IMS

I got an email today from a first time buyer who did not want to use a REALTOR to save money!   We still a have lot work to do educating.

Nov 19, 2008 05:03 AM
Tricia Maestre
ABC Realty LLC. - Barkhamsted, CT

I agree with most of what was said and thought the post a great post EXCEPT that many of the REALTORSwho have been in the business for years are used that horde mentality. As well as used to not playing nice.  I also find that ANYTIME people can go around you by not paying commission they will, which is why some agents are sooooo protective of everything.  I recently had a women that wanted to look at a home that was $795k.  The owners had dropped the price and did away with the commission for the buyers agent (all but $100.00) No problem for me because I have no problem telling my buyers that I do a lot for my commission (and of course I give them several examples of it).  Well long story short the buyer did not want to pay me at all and (as I suspect and warned the listing agent who is in my office) that she was going to do exactly what she did.   It really bothered me that the ONLY reason she did not want to work with me ( she was sweet as pie when I got her some info and answered her questions) was the money.  Another problem is most people see us as one step above a used car salesperson and do not see value in what we do UNTIL like some friends of ours (did not have an inspection or an agent representing them to save money) and that lack of guidance, support and knowledge cost them $12,000 at last count.  They would have paid me about $3,000 but that was not worth it to them.....AND THESE ARE FRIENDS OF MINE!  So if people we know and love do not see our value how is it the general public will???Lastly this FSBO I am working with got TAKEN big time not only by her selling agent but by the sellers( the ffoundation is sagging and it was clearly visible when you walked up to and into the house.  Long story short she did not sign a buyers agreement and the agent took that as a license not to apply due diligence.  The girl not only over paid but the house is a wreck.  It is agents like that who know they have a faduciary rresponsibility and do not live up to their obligations as REALTORS that gives all of us bad name.  The local courts need to prosecute these agents who make us as a whole look bad.   

Nov 19, 2008 05:49 AM
Anonymous
Nancy Conner

Great post!  I think a huge part of our value to the consumer is the depth of our knowledge of the community that we work in, and all the various factors that may affect what will be a good real estate investment versus a poor one.  I'm thinking of a past client of mine who was relocating here from out of state, planning to buy a home and wanting to do lots of their own preliminary research on line to pick what houses they wanted to see.  They had also described to me their primary criteria for the house they would buy, and I could tell that the houses they picked were not all going to meet those criteria very well.  When they arrived, we looked at the homes they had picked first, and then I showed them the list of other homes I thought they might want to consider.  As soon as we started looking at that second list of homes I had selected, they "got it" that my knowledge of the community was going to really help them find the house that would be just right for them.  So many things aren't visible in the on line listings - does the house sit right next door to a gas station?  the local junk dealer?  does it reek of smoke or pets (and you know this already from your previewing or other showings for other buyers)?  Or is it in one of those neighborhoods that always sells for above average prices in below average market time because it is so popular and sought after, for whatever reason? I think there are lots of ways we do add value to the buying/selling public, and that knowledge of the community is definitely one.

Nov 19, 2008 06:29 AM
#38
Marie Meyer
Keller Williams Realty - Central Valley, NY
Orange County New York Realtor

Hello Jonathan ... I believe that with all professions whose numbers have dwindled, we lose something valuable.  In the case of travel agents we lost much of what we will lose if we lose Realtors.  Their intimate knowledge and their ability to make planning a trip a smooth process. 

Before coming to real estate, I had a long career in another "dying" profession, Librarian.  Again, a total lack of understanding of what a librarian does.  That intermediary role is so often misunderstood.  Unfortunately we are dealing with perception versus reality.  And I have seen perception become reality to the detriment of service to the public all too often.  Poor service becomes the norm without the realization that it is poor or why it is poor.  

I agree wholeheartedly that we must testify to our irreplacibility.  We must do this as we work with clients.  There needs to be a sharing of what was once considered "behind the scenes" work and costs.  If we make it look easy, that will be the reality. 

Fear exists because of this reality of perception.  Therefore, as Realtors we have to touch more than our clients/customers, we have to touch society at large.  In so doing it is up to each Realtor to have integrity, exhibit pride and get the message out there. 

Nov 19, 2008 08:47 AM
Marian Gregor-Ann
Keller Williams - Ann Arbor, MI
Arbor area Real Estate

Jonathon, Since we're going retro (1/11/07) Back around '98,'99 and 2000 Realtors were frantic that when buyers & sellers got easy access to neighborhood/housing/finance information we would become unneeded. Quality service will always be in demand as evidenced by the many homebuyer/seller surveys. I simply show the 'tire kickers' the door ;~)))

Nov 21, 2008 02:07 PM
Anonymous
Todd Menard, Amer. Institute of Prof. Standards and Practices

REALTORS need to look at other professional service industries where the consumer places their trust. Accounting, Legal, Insurance, etc... and think of the questions and perceptions we have when we place our trust in other prof. service industries.

Consider John Cochran, Esquire, his value lays not in a 'list' of services he provides, rather it lays in what lies between his ears! His recognized and realized value is based solely on his diligence to remain informed on issues effecting his industry, his learning-based mentality which continues his quest for knowledge beyond his current, and his experience in the field of specialty which determines his ultimate success pattern. Perhaps if all O.J. could have afforded in his "capital punishement" murder trial was a discount legal representation he would have been in jail a long time ago! Discount services may be an option for those seeking 'price' value, but for someone who must depend on a history of successful verdicts on behalf of his client the discount price proposition is out of the question, as they are searching for 'quality'! What relationship does price have with quality? The more the a consumers needs demand the successful outcome of their endeavor the more they desire to increase the probability of the desired results.

Value? Value is perceived and interpreted from what the consumer believes is our function versus what they receive. The consumer is our evaluator. What criteria do they use to evaluate a REALTORS performance? Could it be their experience with REALTORS in the past? How about based solely on friends comments of their past and current experiences with a REALTOR? Do they know WHAT our duties are? Do we? I challenge us all to remain diligent in our quest for continued education and implementation, while we embrace the benefits provided by technology. Each consumer determines what value means to them so it appears the task is to define WHAT criteria they use to perform this evaluation.

We know that most real estate and property laws were created using the NAR Code of Ethics as a foundation. We know the consumer has no idea what the statutes or administrative codes says our duties are, and we also knwow that unless they have a complaint they are not familiar with the N.A.R. Code of Ethics and Standards of Practice. If we provide the sellers and buyers with a copy of these documents, take time in our presentations to explain the values of these regulations for the consumers behalf, and explain this is what a REALTORS duties are... commit to upholding these aspirational ideals throughout the representation, then possibly the consumer will now possess a thorough understanding of our duties. Should we perform our duties according to these tenets, and of course meet the clients legal expectations, then would it be reasonable to imagine that the client would interpret our services in a positive manner using appropriate criteria? Once the consumer is made aware of this might this command more accountability in our performance as well, and provide a standard of care in our industry?

The requirements of our profession is our knowledge of the rules and regulations and our competence and understanding of how to apply them in the context of our representation... Our TRUE VALUE is determined by the consumers perception of the results!

Sorry this is so long! Wishing you all a prosperous 2009!

Nov 23, 2008 06:48 AM
#41
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

Jonathan ... I revisit your "Original REALTOR Value Proposition" article from time to time and reflect on challenges that remain for us.

I agree that we should "testify to the irreplaceability of the Realtor® in the home sale transaction", and I do when situation calls for that.  The ease of communication and getting free RE information by the Internet "should be used to ratify Realtor® worth in the mind of the buyer or seller."

I am especially disappointed to learn this evening that one of our Realtor team members at Coldwell Banker had a personal friend (so she thought) who found a FSBO, that this "friend" and her husband bought the FSBO property, didn't use our team member for professional services, while believing that such purchase without working with her friend was OK. 

Our team member's professional Realtor value and worth was known and should be ratified and respected.

Jan 10, 2011 04:04 PM
Rich Jacobson
Fathom Realty West Sound - Poulsbo, WA
Your Kitsap County WA Real Estate Broker

I miss you, Jon! Hope you're doing well!

Nov 16, 2021 07:16 AM