Sales-y or Service-y?

By
Education & Training with Sell with Soul

If this blog goes where I think it's going, it might make me slightly less popular among the AR crowd...

A few months ago, I was interviewed by someone at RIS Media about my views on the current state of the real estate industry. Blah Blah Blah, we covered all the generic, pithy topics and then moved onto some juicier ones. Yeah!car

He asked me "What do you think it will take to turn the public's perception from thinking of us on the same level as used car salesmen and politicians, to thinking of us as trusted advisors?

Great question. I'd never been asked that before, so I took a moment to think. And the answer hit me like a load of used cars.

If we want to shift the public perception away from thinking of us as people who just want to sell someone something, with as little effort as possible, we need to attract a different kind of practitioner.

A career selling real estate is much like a career as a financial planner, an insurance salesperson or a mortgage broker. Most people enter these fields, not because they have a passion for property, mutual funds, long-term care insurance or good faith estimates, but because they are drawn to the idea of working on commission, hopefully significant commission. They are, basically, natural salespeople in search of a product to sell.

Nothing wrong with that. Selling for a living can be an honorable profession if it's done ethically.

But the perception of the real estate agent as a salesperson will forever lump us in with other people who sell, and will always be held in general suspicion. No way around that - when you're paid on commission, our clients and customers are always going to wonder if we have their best interests at heart.

Especially if they aren't nearly as blown away by our service as they were by our sales pitch.

So, if we want to change the public's perception of us, we need to change our approach, which possibly means a change in our compensation structure. Are we ready for this? I don't know, frankly. I like being paid on commission as much as the rest of you do, and I love the idea that working harder and smarter brings more money in the door. But is there a compromise? A way to satisfy our entrepreneurial needs for performance-based pay without sacrificing the perception that our integrity might be for sale?

Do we care? Or, are we okay with remaining in that bottom five of the infamous list of America's most UNtrusted professions?

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Rainer
8,705
Michelle Sarabia Gallatin, TN Real Estate (615) 594-3171
Bob Parks Realty, LLC - Gallatin, TN

Great post!  We need to title ourselves as not the Real Estate Agent, but a Marketer for Homes.

Jan 29, 2009 09:05 AM #33
Rainer
39,594
Laura Degiovanni
Home Buyer's Agent of Ann Arbor - Milford, MI
Milford Exclusive Buyer Agent

Jennifer, this is a really good post, thank you for broaching this subject.  To me, the answer to this problem is simple--we AGENTS need to pick a side.  We need to either represent sellers ONLY or we need to represent buyers ONLY. Period! 

I am an Exclusive Buyer's Agent (which means that NO agent in my office EVER works for sellers) and even though our business model is clearly unique, buyers are still skeptical about our service--they think there must be a catch.  What we do seems "too good to be true".  Plus, the waters are muddied by agents who call themselves "buyer's agents" or "designated buyer's agents" and claim to offer the same service that we do--but do NOT offer the same level of service.  Buyers (especially first time buyers) tend to be naive about representation and many buyers think that "double dipping" is rare--we agents know that it happens A LOT....

If we REALTORS, want to be thought of as trusted advisors, then we need to put our client's interests before our own and we can't EVER "represent" both sides in a transaction.  Our clients (be they sellers or buyers) deserve our undivided loyalty.  If we are truly looking out for our client's (and ONLY our client's) best interests, then we will more than earn our commission. 

If all we care about is making money, then we deserve the reputation we have....

Jan 29, 2009 10:22 AM #34
Rainmaker
1,604,282
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

You didn't answer the question! 

Jan 29, 2009 10:28 AM #35
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Me? Which one?

Jan 29, 2009 10:31 AM #36
Rainmaker
166,573
Tina Gleisner
Home Tips for Women - Portsmouth, NH
Home Tips for Women

Fascinating & wish I had time to see the reaction of the realtors but ... not tonight

Jan 29, 2009 10:49 AM #37
Rainmaker
543,593
Karen Rice
Davis R. Chant, REALTORS - Hawley, PA
Northeast PA & Lake Wallenpaupack Home Sales

Early up - someone said he felt the problem was with "part timers."  I have to take issue with that - even though I am not a part timer myself.

I have seen many so-called "full time" agents do crappy jobs, and at the same time have seen part time agents run circles around their full time counterparts because they are conscientious and competent (RCHBs at work!)

You are right - we need to change our tactics.  Agents need to stop spouting nonsense just to get the sale or the listing (that includes "bidding" on a listing by claiming you'll get them a price $50,000 higher than the previous agent HONESTLY shared..).  We need to do a COMPETENT and PROFESSIONAL job for our clients, and that includes spelling things correctly, taking decent pictures, getting the info right on the MLS...

I'm disgusted by what I see many agents doing and have the nerve to charge a full commission on a crappy job - and yeah, they're "FULL TIME."

Maybe I missed the point but I got sidetracked...lol

Jan 29, 2009 12:24 PM #38
Rainmaker
33,518
Chuck Capan
REMAX River Cities - Moline, IL
REALTOR Licensed In IL. - Moline Homes Quad Citie

Oh Jennifer I do not think you are getting the blowback that you expected.  So let's stick our necks out a little farther.  Commission no, hourly no...how about flat rate fees.  Say Joe and Mary Homeseller pays their Realtor ® $500 to $1,000 up front...that gets the house listed in MLS, pictures and or video for the many web sites that will carry the property.  Flyers get made and put next to the broker sign in the yard.  The up front fee is not refundable if the house does not sell...the fee is however credited at closing.  Charge fees based on the property...yes a 2 bedroom 1 bath 750 sq ft will pay less than the 5,000 sq ft 5 bedroom 6 bath 4 car garage located between the lake and the 14th green.

There that ought to stir things up a little.

Jan 29, 2009 03:04 PM #39
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Chuck - I'm actually a fan of a flat fee. In my market, a $200,000 house is every bit as marketable as a $400,000 one, although once you get into jumbo's - that changes. But I don't see any reason to charge twice as much for a house just because it's more expensive, if it's equally marketable. But what you're saying is that we should charge a retainer of sorts and still charge a commission on top?

What about buyers?

Karen - So, Karen, how do you really feel about the part-time debate?

Jan 29, 2009 10:26 PM #40
Rainmaker
33,518
Chuck Capan
REMAX River Cities - Moline, IL
REALTOR Licensed In IL. - Moline Homes Quad Citie

JA-

No % commission just a flat fee.  My broker charges 7% so take that 200,000 home we would get 14,000 compared to 28,000 on the 400K.  I really do not change my marketing...both homes get the same service.

Jumbos are not much of a factor here.  Median home price is about $120,000.

What about buyers?  How about the buyer paying the buyer agent's fee.

Oh and by the way (BB creeping in here) my comments here are are just for discussion only.  I am in no way attempting to set prices or collude with other real estate agents.  There that should take care the anti-trust cops who troll this site.

Jan 30, 2009 12:19 AM #41
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Okay, but you said that you refund the retainer fee at closing... I must be missing something. I actually DO charge an upfront fee of $500 which is not refundable in exchange for a reduced commission at closing - is this what you're referring to? Where does the $14k come from? Sorry, I'm an idiot this morning! What IS the flat fee?

Jan 30, 2009 12:23 AM #42
Rainmaker
33,518
Chuck Capan
REMAX River Cities - Moline, IL
REALTOR Licensed In IL. - Moline Homes Quad Citie

JA-

My bad...I was not clear.  I work for a traditional broker who charges 7% no upfront fee.  I think flat fee is an idea that needs to be explored.  Say I charge seller $10,000 for the sale of the home.  I take the $500 upfront...that fee is nonrefundable but at closing the seller pays the balance of $9,500. 

I think there is a place for "Fee for Service"...menu pricing, or some other way.  I all to often hear we charge a percentage "because that is the way it has ALWAYS been done before"

Not to swerve too much off topic but in your opinion what percentage of home sales in your market are FSBO?

Jan 30, 2009 01:52 AM #43
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Oh, I get it. Makes sense to me - I like it. That way you can come up with a flat fee price depending on your opinion of the marketability of the home... and maybe reduce it a bit if your seller agrees to stage, price more aggressively, etc.

I don't know how many FSBO's we have - I don't see many at all, though.

Jan 30, 2009 02:41 AM #44
Rainer
12,156
Jim Towner
New Vision - Bedford, VA

I posted this as you can see, last year.  Yes, we need to do some work...seems appropriate to revisit my comments..

Is It Any Wonder...why REALTORS, don't get any respect or trust. 

Jim Towner - March 31, 2008

An article written by Matin Crutsinger, Associated Press, appeared in the Business section of Virginia's Roanoke Times with the title "New home sales hit 13-year low".  Not exactly a breaking story or a shocker for anyone who has not been a castaway for the last twelve months or so. Blood and Sex sells papers so the ..13-year low.. part must have really been a winner, readership wise.

The local Roanoke, VA resale housing market was also tagged with a round house punch when the article noted that the Roanoke Valley market was glutted with over-abundance (not just abundance but an Over-Abundance) or a 12.9 months supply compared to 9.8 month supply nationally.  The article also noted that the 9.8 month supply was the highest national number in 26 years.  I guess that is where the "over-abundance" comes in?

Sounds ominous...let's take a look from another perspective. The article talks about the Roanoke, VA market and states that the 259 homes put under contract in February 08 represented a decrease of more than 20% for the same period last year. So that would mean that last year 323 homes were put under contract in 07.  Was 07 good or bad, no one said?  Now let's divide the total sales for 07 & 08 by the number of licensed real estate agents in the Roanoke Valley Association of REALTORS.  The Association website states that it represents over 1,000 sales professionals reaching as far as Smith Mountain Lake.  So another look would determine that in 07 the average productivity per licensed sales associate was .324 sales per associate compared to the more current 08 productivity measure of .259 sales per associate. Now if you double every pending sales contract to represent the seller and buyer sides the sales associate productivity changes to .648 sales per agent in 07 vs. .568 sales per agent in 08.  If national statistics are brought to bear on these numbers, of the 518 sides completed in 08, 80% were probably done by fewer than 200 of the 1,000 plus agents. I wonder what the other 800 agents were doing?  So when the market was ok we sold .648 homes per month per agent but when it is bad we sold .568 per month per agent?   So in good times or bad it looks like it takes the average real estate person two months to get one sale?  If the average sale was over $1,000,000 I guess these numbers would not be so bad, but the average price was just over $200,000 per sale.

So why don't REALTORS get any respect or trust?  Inman news recently posted an article by Marc Davison of 1000wattconsulting.com  "Real Estate: the least trusted profession" Davison sited a 2006 Harris Poll titled "Doctors, Dentists and Nurses Most Trusted Professionals to Give Advice. 

The poll was trying to determine the Trust in Various Professionals to Give Good Advice:  The poll asked the question; "If you were getting professional help or advice from each of the following, how much would you trust them to give you advice which was best for you?"  The respondents were given four choices: Completely, Somewhat, Not At All, Not Sure.

The Davison article picked out the 7% "completely trust" response for Real Estate Agents and compared it the 50% "completely trust" number given to doctors.  Sounds ominous. What is not clearly revealed, without using the link provided in the article, is the balance of the info gathered by this survey.  Please check it out to get the whole picture.

When you combine the "Completely and Somewhat" responses Doctors score 83% compared to real estate agents with a combined score of 72%.  An 11% difference vs. a 43% difference.  This however does not vindicate the Real Estate Agent or the Industry.   When it came to the "Not At All" response Doctors scored a 4% while Real Estate Agents Scored 20%.  Think about this, 20 out of 100 people you might talk to about real estate do not believe one word you are saying!  That should hurt.  Why are we not trusted? The Harris Poll did not elaborate on that, Marc did offer his opinion and if you just consider the per agent productivity numbers I discussed earlier in this post I would hope you begin to get the idea.

There are many factors that make up consumers attitudes and perceptions.  Good old nosey Harris conducts lots of polls.   Consider the August, 2007 poll conducted to determine the Prestige of 23 Professions and Occupations. You can see this poll on the same Harris Poll link.  Respondents were given the following choices: Very Great Prestige, Considerable Prestige, Some Prestige, Hardly any Prestige At All, and Not Sure/Refused. Want to take a stab at how Real Estate Agents fared?  The winner of the "Very Great Prestige" was Firefighter with 61%, followed by Scientist, & Teacher tied at 54%, Doctor & Military Office tied at 52%,  Real Estate Agent, dead last with 5%. 

Wonder why?  I hope so.  Let's return to the beginning of this article where I reference the .."13-year low" article.  Generalities abound.  There is not effort made to delineate or examine if there is any hope for any price range or location.  Certainly the price demographic of a major resort area such as Smith Mountain Lake has an impact on the Roanoke Valley statistics, both in price and total sales units.  Are all price ranges, communities, subdivisions equally affected?  This type of information is readily available.  There was nice graph included in the article which just illustrated that  "Yup" there are a lot more homes listed for sale. A veritable "Over-Abundance" of all houses but with no distinction of where or what price range or any differentiation of D.O.M just all houses lumped into the same rather distasteful stew.  I hope that is not how we do CMAs or provide advice, perhaps this plays into the trust factor?

In the same Roanoke Times, I noticed a number of real estate ads. One Ad for what appears to be a nice New Home Community displayed  pictures of houses, some narrative, phone numbers next to agents photos....but not one email or website address....I seem to have read somewhere that the internet was playing a somewhat important role in the real estate business these days.  Something like upwards of 80% of today's buyers begin their search on line.  I guess we don't want the consumer to get better informed before they talk with us?    

If we want trust we must be trusting, if we want prestige we must perform professionally and demand the same of our peers.  The Harris surveys tell us we have a ways to go and our own actions prove it. 

There is hope here.  There is still opportunity for anyone who wants to be a professional.  Like politics, real estate is local.   Start your own poll.  Have you ever turned to your client at the settlement table, pointed to your commission on the RESPA statement and asked them flat out, "was I worth it"?  Have you ever had a client point to the commission amount on the RESPA statement and ask you   "was this enough"? Make that a goal.

I know hundreds of real estate agents.  I am fortunate to know many real estate agents and brokers that score much higher than any of the Harris polls and have earned the respect and loyalty of consumers. I know other agents who have not done so well.  But I know Real Estate Brokers and agents can earn trust.  What will you do about it? 

 

Jan 30, 2009 05:26 AM #45
Rainer
17,981
Katie Minkus
Hawaii Life Real Estate Services, LLC - Kamuela, HI

Aloha, Jennifer... Great post! Taking the law of attraction into account, I think there is definitely an energetic component to our compensation structure that attracts a certain sort of person and a certain response (one way or the other) from the public to our profession. Most of us are so willing to "help" our clients  - proven by the comments above - that we often work way more hours than we "should" and we give away way too much of our time and energy and typically we're the types that take care of everyone else before ourselves. Seriously, do you know how many Realtors I see now in the gym that weren't there when the market was cranking? So, if we are so willing to DEVALUE our own time, if we are so willing to give away our time for free, if we're so willing to work 100 hours on something before we see a dime, then yes, I think you can absolutely make the connection that our compesation method has something to do with the type of person attracted to this industry as practitioners, as well as how we are perceived to the public.

Ed may not have been pleased with the amount his lawyer charged him, but he still says they "did a good job." Why? Because lawyers are paid up front. In fact, the good ones won't even talk with you unless you bring a check to their office for a first meeting. Lawyers insist energetically and literally that they are "valuable" to a client and to the larger community because they are paid up front for their services. We are telling the public the exact opposite - that we aren't "valuable" in the same way as a lawyer because we "don't care" when we get paid, as long as it happens eventually... People may not like lawyers, they may be judged harshly in our society, but certainly, they are seen as "trusted advisors" and we are not. Or - let's take financial advisors. Perhpas you don't "pay" them a fee upfront, but definitely they get "paid" as soon as you open an account and move money from somewhere else to them for them to manage on your behalf. The money is "paid" up front, even if the financial practicitioner gets paid on salary or gets a commission check at the end of the month from their company. They are "trusted advisors." We are not.

I am seriously considering implementing a "retainer fee" for both buyers and sellers up front - a nominal amount that I will refund to them at closing, but that also sends the clear message that my time is valuable. My goal would be to have this in place by the end of the year. Will I piss off some clients who don't want to pay up front? Sure, but then the question is, would they have bought or sold anything from me anyway if they don't value my time or my expertise, or would they have been another one of those "prospects" we spend so much time with that never pan out?? Truly, I only WANT to work with clients who see me as a professional and value my time anyway, so if I'm putting out there in the world that I'm valuable, law of attraction tells me those who use my services will also believe I'm valuable, and will compensate me appropriately, and those that don't and won't, will simply not call. That seems like an effective way to streamline my business and if it frees up more time to go to the beach, then that's all good too!

Happy Aloha Friday! Katie Minkus, R(B).

Jan 30, 2009 08:45 AM #46
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Katie- now THAT is an angle I have never considered. I like it... gonna stew on that one...!

Jan 30, 2009 08:56 AM #47
Rainmaker
657,017
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

I like the upfront fee or retainer fee ideas too.  

I think part of the problem is simply that there are so many real estate agents out there. Perhaps if we came up with a formula to limit the number of agents per transaction to be comparable to the number of doctors per illness, we wouldn't be so 'common'.  

I remember telling someone I was getting my license and he said, "Great - you already can't swing a dead cat by the tail without hitting a real estate agent!"  "But I'm going to be a good one!" I thought.  Since then, I've found it extremely difficult to convince people who don't know me that I really am ethical, hardworking, interested in helping them, and want to do a better job than the 'other guy'.

Hence, the large amount of 'free' work I do - newsletter, blogs, market analysis with monthly updates when people plan to sell or buy 'in a few months', etc.  

Jan 30, 2009 10:26 AM #48
Rainer
17,981
Katie Minkus
Hawaii Life Real Estate Services, LLC - Kamuela, HI

Mahalo, Jennifer!! Let me know what you come up with, soul sister, I love to think and talk about this stuff!!! :)

warm aloha, Katie

Jan 30, 2009 10:26 AM #49
Rainmaker
24,117
Mike Hughes
Mike Hughes Team - Hughes Residential - Newton, MA
Services Newton, Brookline, Lexington, Waltham & W

Hi Jennifer,

Great conversation topic!  I think that some have tried a different approach (I.e. Redfin and ZIP).  I feel that their service is inferior to mine.  I know others who agree ... part of the problem with moving away from a commission structure is that it tends to reduce the motivation (and competition) to work hard (unless it's really high pay - which is not possible because these people would already be doing well and not likely looking for a salary, etc.).

I think that the biggest change that needs to be made is the industry's admittance to the fact that WE ARE sales people.  Sales people in EVERY industry drive corporate revenue.

The problem with real estate "professionals" is that they try to be a "friend or consultant."  I openly tell my clients that I'm a sales person.  I'm confident in the process, I guide them through the process and they know what to expect from me (and know what I expect from them).  So, here's my point: I think that the real estate agent who tries to be anything but a salesperson comes across as the sales-y and an in-genuine person.  We need to face the fact that most people aren't calling us because they need a new friend ... they contact us to buy or sell a property.

Best regards,
Mike

Jan 31, 2009 03:24 AM #50
Rainmaker
131,417
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

If I agree with you 100%, which I don't, what is your solution?  I didn't see any.

Feb 02, 2009 06:38 PM #51
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Mike - I don't have a solution. I do think about it from time to time and have yet to come up with something. But the question stands... do we really care about our position at the bottom of "the list" and if so, are we willing to do something about it ... something that would require a change in our perception of who we are and what we do?

I dunno.

Feb 02, 2009 10:37 PM #52
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