Is That Rebate Brokerage Hurting Your Business?
When I was sitting in my hairdresser's chair last week, I got this question from her. She's been doing home improvement projects lately and I get the feeling she is considering a move. Mind you, she openly told me that she recommends another agent in the area because she "loves his voice." She is referring business based on a crush. Doesn't bother me a bit. I don't do business with people only because I think they are referral sources. She gives me the best cuts and color I have ever had. She's certainly not the cheapest in town either. My last cut was $55. Cut and color--$130. I could probably get a haircut for $30 at a walk-in salon, or cut and color for $90. I know, I've been.
So when she asked me if the rebate brokerage in the area is hurting my business, I first asked her why she was asking. Turns out, a townhouse in her neighborhood had one of their signs in the yard went under contract in a couple of days. Not surprising. Our area has a huge shortage of townhouses, which is usually the home of preference for first time buyers. My answer was a simple comparison.
A rebate brokerage to me is like what a walk-in hair salon is to her. Does she feel threatened by the opening of the latest location of the walk-in hair salon in the area? Of course not! Sure her clients could go there and get the same services for less, but the services are really not the same. And the reason they aren't the same is that top notch hair dressers are not going to be attracted to a business model where they make less money than they could somewhere else. And if you want a consistently good hairdo, you are going to have to pay for it.
When I have been to walk-in hair salons, I remember feeling like I was in an assembly line. My hair dresser remembered me and greeted me, but the overall experience was nothing to write home about. And the haircuts were not always done as well. Why? She was going fast to get me out of there so she could move on to the next walk-in. The consistency in results didn't exist.
When I found my higher end hair dresser, at the recommendation of a family member, the difference was night and day. The higher end shop never made you feel that there were rushed to get you out. You were offered a beverage upon your arrival and, my favorite part, given a head massage after the shampoo. You even get to choose if you want a rejuvenating or relaxing massage. Best yet, my hair always looks fantastic when I leave and right up until I go back. The hair dresser is phenomenal. I am getting what I pay for, which is top notch service and expertise.
The real estate reality is the same. The best agents in any marketplace are not going to be attracted to a brokerage where they give a portion of their paycheck back to the client. Not going to happen. You are going to end up with less expertise, even though you both had to pass the same test to get your license. The real expertise is learned from what you put into the job. It's not magically delivered into your brain when the ink is dry on your license. You have to WANT to be excellent. You have to WANT to learn the ins and outs of complicated transactions so you can best serve your clients. You have to WANT to have a thriving referral business.
So no, I am not worried that the rebate brokerage put a sign in a yard and got it under contract in two days. A monkey from the zoo could do that in our current market. Where I earn my money is making sure your home appraises for the sales price, making sure your contracts express EXACTLY what you what to happen in the transaction, in screening buyers and their offers to make sure they are qualified and there are no red flags. I have a file of resources for items I can't help you with, so you never feel you are on your own. And never has a client of mine felt I got paid too much. Those clients are the ones getting paid to list with the rebate brokerage and, while they may not know it, praying for a good outcome.