Entry by Mollie Wasserman

A response to a skeptical agent

Hi Everyone:

Over the last few months, when I write an article for the Consulting Times, I also submit it to Realty Times and it usually runs a month or two later. Anyway, one of my articles "Blue Oceans: How To Combat a Cutthroat Industry" ran in Realty Times yesterday. Today, Realty Times forwarded me a fascinating response that was sent to "Ask Realty Times". I'm printing this agent's comment plus my response below because I think it's very indicative of the mindset of many of our fellow agents, and even more so, brokers and managers.

I would be very interested in your thoughts. What did you think of his comment? What did you think of my response? Would you respond differently? How so? Since consultling is so new, how we deal with this type of thinking is an important topic and one that I hope will be the impetus for a lively discussion here on the Exchange. Here it is:

Mollie,

Interesting article.Let's take this pre-supposition a little further. Let's suppose that sometime in the future the "Blue Ocean" concept takes hold on the Real Estate Industry. Now we have a "perfect world" all Blue Oceans. What do you think will happen?

These tranquil blue waters will turn RED! Why? In order to get the business out there real estate agents will have to compete (just like now) exept for the fact that there will be far lower commissions (or no commissions), and far lower fees. These fees for our services will go even lower! Eventually It will get to a point where it isn't profitable to be in business.

The industry will be in the same position as today but without the ability to make the money that is possible today. At some point in time we real estate agents are forced to either learn to compete or get out of the business. Even if we get to "Eutopia Land" (all Blue Waters) we are going to have to beat our competition to get business. Personally I think that it is far better to learn to compete now, than later where we are all working for nothing.

"John Smith" Agent

My Response:

Dear John:

I don't believe you understand Consulting. This is NOT discounting. Offering alterntive ways to be paid does not impact you doing your traditional commission transactions. It will not lower your income but instead increase it because you get paid for things that in the traditional model you did for free.

The consumer is not, for the most part, looking for cheap - they are looking for choice. If you give them choices in how they can pay you, many will still choose a tradtional commission because it mitigates their risk. But, by being TRANSPARENT in what you do and how much it costs you to do it, if they choose a commission, they understand that they must pay a premium for that option. Or, they can share the risk with you and pay less but you're guaranteed to be paid.

Offering an hourly rate or a flat fee opens up opportunities to do business with a whole new group of consumers. Case in point: homeowners who may be deciding whether to add on to their house or sell and buy a bigger house. They traditionally do not seek out an agent because:

a) they don't buy that they could possibly get objective advice since one choice will pay you and the other won't.

b) there is no way to pay you for your counsel.

Another example: sometimes, whether we like it or not, sellers will find their own buyer. Sometimes this happens very innocently - they mention to their neighbor that they are thinking of selling and the neighbor has a friend who would love to buy the house. Wala! They have a buyer - now what do they do? This is when they need a professional most but unfortunately, because we don't offer any flexibility, most of the time they go to an attorney to negotiate and troubleshoot their transaction and attorneys can't do this as well because this is NOT what they do. By having an hourly rate, you can offer to negotiate and troubleshoot the transaction, they have expertise and representation for a reasonable cost and you get paid very well for the time you spend and a paycheck that you never would have had!!!

One more: homeowners are often thinking of refinancing or their tax bill seems high. Many would love to pay a professional to run the numbers and see if it makes sense for them to do a refinance or check their home's assesment. We have lost hundreds of thousands of dollars over the years as an industry because we can't address these "wide open blue oceans" of untapped business.

Our ACRE grads are making a lot of additional income helping folks who don't fall into the traditional "full commission for a full package of services" and getting paid for it. This in no way takes away from their traditional business!

This is what I mean by Blue Oceans - everyone is fighting over the consumers who are looking to buy or sell and will pay by commission. With the growth of technology allowing them to do many functional tasks on their own, our industry's refusal to offer choices simply cuts us out of providing the vital fiduciary counsel that is so needed.

Consulting is not about "not competing". On the contrary, it's about competing and wiping out the competition because you can not only offer the standard fare that everyone else does, you can also tailor your services to their needs. Remember, discounting is about lowering your "contingent-on-an-outcome" pay where you are still shouldering all the risk. Consulting is about offering choices to the consumer both in the types of tasks they need you to perform and how they would like to pay for them. Commissions are built on high risk - high reward which is why they MUST be high in order to make up for the unpaid work we all do when transactions don't happen. When you work by the hour, or by a flat fee, the consumer is paying for the services themselves and the agent gets paid very well for the expertise and time they provide. BIG point of difference.

I encourage "John" or others to learn more about consulting by reading some of the articles written on The Consulting Times or check out what ACRE agents, clients, and industry leaders are saying in the Testimonial section.

Mollie Wasserman

This page contains a single entry by Mollie Wasserman published on August 31, 2007 12:59 PM.

NOT Being A Secret ACRE was the previous entry in this blog.

No Task Too Small is the next entry in this blog.

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