Entry by Jennifer Allan

ACRE 2.0 - Stepping Back... and Moving Forward!

  16 Comments

Took a little time off over the weekend from all the fun and drama here on the Exchange to step back a bit and really think about ACRE 2.0... and where we want it to go. All the feedback provided over the last several weeks has been incredibly eye-opening and helpful; hopefully as much to you as it has been to me!

Of course, as we've tossed around ideas, not everyone is in agreement. Some like "The Consulting Professional;" some don't. A few are distressed about the notion of ACRE 2.0 becoming Not Free; most seem to be supportive. Some want to retain the original brand and designation; some are excited about an updated look and feel. Yada yada yada.

So, obviously, we won't satisfy everyone 100%, but unless everyone already WAS 100% satisfied before I came on the scene, I'm pretty sure we can create a future for ACRE that most of us will be happy, excited and optimistic about.

Here are the two major problems with the current ACRE program that I believe need fixin':

1. A relative few are actually practicing consulting, for various reasons, thus stalling the spread of the consulting movement.

2. The enterprise is not profitable; therefore, it cannot continue to exist unless it becomes profitable (or we find a sugar-momma or daddy to provide funding!).

There are other issues that we could tackle (and debate endlessly), but in my opinion, if we don't correct these two, the others won't matter.

Let me reiterate something I said early on when this transition/merger/integration first kicked off... I have no desire to change the real estate industry, but rather to provide a place for like-minded real estate PROFESSIONALS to connect and help each other become more successful. As our membership organically grows, we'll attract more like-minded folks... and more... and maybe someday we'll have enough influence to make a significant impact on the real estate practitioner and industry of the future. Or not...

But for now, I want to help YOU - each of you, individually, the best I can. And so the pieces and parts of the program I'm focusing on are the pieces and parts that best accomplish that, knowing that some of the other initiatives we'd all like to see may just have to wait.

That said, things really are starting to chug along here behind the scenes and hopefully I'll have some good stuff to share in our January 19th meeting or even before.

And if I haven't said it lately.. thanks a million for your patience and support during this process.

 

16 Comments

Jennifer,

Thank you for all the thought and work you are putting into this process.  It is your program, so we all appreciate the way that you are taking our ideas and input into consideration. I don't think it is fair to expect something for nothing. I charge and earn $200 an hour as an ACRE (sometimes more), and wouldn't expect anything less in terms of you getting fairly compensated for taking over the reins of the organization.  I am building an entire brokerage with the ACRE or TCP or whatever it ends up being labeled, as a requirement for every one of the Realtors who want to offer a consulting alternative.  You have the support of myself and my entire office & staff here at Choice Realty in Spokane, WA.  I am eager to see what your obviously creative mind comes up with.

Agree with Ronald 100%!

Thanks, Ron - and I'm very excited about what you're doing. I hope you'll share how it's working with us as things unfold!!!

Jennifer:

 

I agree with your two mission-critical points and particularly like your original concept of, "...a place for like-minded real estate PROFESSIONALS to connect and help each other become more successful."

Ronald, if I were in Spokane I would be looking for an association with you!

Ron

 

I will state that the reason I decided to look into ACRE was specifically due to the fact that I believe buyers and sellers feel like they can utilize the services of a real estate agent with no risk and therefore don't really care about the agent him or herself and how each would be paid.  Or so it would seem, in the area I live.

We are a very small town, in fact our county only has 25,000 people, with the majority living in my town...approximately 17,000.  So, average residential sales are about 10 per month at around $81000 for the average sales price.  I think it would be great to be able to command $200 per hour like Ron above, but as many here actually go USDA or FHA to purchase homes, it would be very difficult to get.  We don't live in an affluent area  or where we have relocations, we don't have any large businesses that are bringing people in to work and being as rural as we are, the majority of people are basically trading up or down.  For the buyer, it is very low risk here.  Average EMD is about $250 and again, many go USDA so that they don't have to put any money down.

I am having to work this program in to a very traditional area where the average agent has about 5-7 sales per year.  If you are a good agent you can usually get about 10 sales and if you are great, of course more.  I don't think the letters behind what you learn mean anything to the consumer.  I know that those coming in to our office don't even realize there is a difference between a real estate agent and a REALTOR.  We have several "companies" that don't even belong to NAR or the MLS.

As for actively practicing the "consulting" side of this, it will have to be integrated as part of my business in a very slow process.  We still have buyers that refuse to sign BRAs.  It is too easy for them to go a mile down the street and have another agent show them a property as other than myself, there are no agents in town that use the BRA.   

I realize that in order for a business to continue on and prosper, fees have to be charged and profits need to be made.  But, on the flip side, working in an area like I do, it is necessary to watch how my budget is used.  It is one of the reasons that I believe we don't have REMAX and the other large firms in our area.  Agents here are unable to pay the monthly fees that are required by the franchises.  We don't make enough in commissions per month to be able to maintain them.  As a matter of fact, my broker pays for pretty much everything for us with the exception of business cards, sign riders and dues.  Marketing, phones, desks, computers, etc. are all here at the office for our use.  It's a generous layout. 

I'll be learning and watching and hopefully be able to input ideas from a small town perspective to see how this develops.  Who knows, maybe if I am able to learn everything correctly and learn how to effectively get the idea across to people, I'll be one of the few that can be both traditional and alternative...

 

Very interesting, Carolyn!!!!!

Here is my initial reaction... offering compensation alternatives HAS to work for both parties - client and consultant. If there is no real benefit to the client to pay in a way other than a contingent commission, then it probably is going to be a very tough sale.

However... there is still expertise you possess and services you can provide that are not directly related to a real estate purchase or sale, so maybe that's where you should focus your attention - creating packages of services for non-transaction-related real estate needs in your community that will obviously need to be paid for outside of a commission (since no commission exists without a closing).

I would also challenge you (and anyone else who is feeling the same way) to give some serious thought to HOW a consulting model might benefit the CONSUMER who IS buying or selling right now. NOT how you can talk them into paying you in a different fashion, but why they might WANT to.

Make sense?

Jennifer, first let me say that I think it's awesome that you're leading the way with the ACRE program now.  We definitely have a great starting foundation with you on board.

I agree that the system needs to change.  From my point of view, the old model was based on "getting people in the door" and then trying to upsell them on other items (more training, for example).  I think that's a poor business model.  Of course, the flipside of that is if you charge for the designation (and I feel that you should), how can you promote it so that agents feel that it's worth the cost (whatever it will be).

The problem with the consulting model, as you mentioned, is that few people are practicing it.  I think there is a simple answer for that: the consumer for the most part, isn't interested in it.  When I became an ACRE, I called on other agents within my state who had the designation and asked them if and how they were using it.  Only one said that they still used the model as an option for buyers and sellers and that no one had ever chosen the consulting model as a pay option (always picking commission).

From my own marketing experience, I can safely say that my clients felt the same way.  While many seemed interested in the option of paying upfront and reducing their costs (benefit to them) none ultimately felt that it was worth the risk to them.

So, it's not only about educating agents, but also educating the public.

Whether you choose to use the consulting model or not, one of the best things that came out of my ACRE training was to learn how to actually value your time...to figure out exactly what you do, how much you do it and so on.  It really does open your eyes as to where you time goes and why.

Hello Roger! Thanks so much for your long comment!

I'll have to respectfully disagree with the notion that getting people in the door and then "upselling" them is a bad model if the person offering the "free" and the subsequent "upsell" does it with the right intentions. If you go to my website (www.SellwithSoul.com) you'll find a ton of free stuff there that is helpful in itself (as opposed to just a bunch of teasers to frustrate you into buying the "whole story") - and the intention of all the free stuff being introduce people to me so that they feel comfortable spending their precious training dollars in my bookstore if they're so inclined. It was pretty much the same with ACRE - the course and designation were free and if you wanted to take it further, there's a cost for that.

Anyway, I don't think that was the primary point you were trying to make, but I did feel compelled to respond to it.

As far as the consumer not wanting to be consulted with - I'd love to hear from our members who are practicing consulting as to their thoughts. I'll reiterate what I said above in my response to Carolyn - if YOU truly believe there is a benefit to the consumer in what you offer, they will believe it too, but if you don't really see the benefit yourself (for the consumer), neither will they.

So, perhaps this is one of our challenges to overcome in 2012... DO WE REALLY BELIEVE IN THE REAL ESTATE CONSULTING APPROACH? Not just for ourselves, but for our clients as well?

 

I am in the same demographic market as Carolyn. Average sale under $90,000. Total 50,000 households, mostly rural. 

How I use this is I sit down and have a talk with all our clients or potential clients. Find out what they need, then most of the time we are operating on a traditional model.

However, I offer the OPTION of a fee based model for those who want a la carte services or non trad services.

For example, I have one seller who is out of the area, who needs to "dump" a cheap propery he inherited. He wants nothing to do with the property until it sells. So I offered him a flat fee to sell it and in fact I am co-broking less than 50% of the flat fee. I will do maintenance, care, etc until closing. He has no worries. I will net more than the "standard" x% we charge for a listing, but he's getting a lot more for his dollar and he's willing to pay.

Another client I've had for 10 years. He walked in and asked me how much parcel x might be worth if he buys it. I did a market analysis, emailed it to him and he replied, "Send me a bill." He didn't even ask how much my fee is, because after 10 years he knows and trusts how I work. He'll pay my fee for this knowledge. 

Just how I've been incorporating it -- I have to printed fee schedule. I interview and tell clients what I will do for x and if they want less or more the fee is what I decide. They can choose to do it or go traditional model. THe point is it is their choice. 

I meant NO printed fee schedule. Except for my rental business where I do print a fee schedule for my landlords.

Well here's the rub--when it comes to educating the public on consulting, offering a new model or whatever it is you are trying to get the public to accept, it's necessary to look at the framework of how it is presented.

Pay as I provide the service or a commission at the close of the transaction. This is almost a no-brainer for the client.

You may be able to convince a few, but only if you're taking the time to show them there's a big savings for them. In my experience that either isn't happening or there isn't a huge saving to keep them from deferring the cost. 

As for the rest of the professional who see no value in following the few who believe in getting paid for what we do when we do it, from the consulting angle, they will need a more concrete reason to join in. That normally mean showing them the money.

My opinion is, both are possible.

The question again is when and how you present the consulting model that keeps it from being a huge success. If you catch the homeowner at a time when they know the in the next few years they will need to sell. In that framework consulting would work wonderfully well for the client.

For the professional, it's no simpler than showing them the money. This is possible by explaining to them we have expanding the market almost exponentially by going after a market base without an immediate need to sell.

The point is how do we market consulting to make it more appealing. 

Wow! I had about 4 calls come in while making the last comment. Sorry if it doesn't flow well.

Hey guys,

This is a link to a GoTo Webinar. The speaker is Brian Solis, the topic is The End of Business As Usual. It's dated for Jan. 18, 2012 the day before Jennifers Webinar. It may be useful. 

One of the learning goal of the webinar is, fostering advocacy by delivering the right value to consumers. Check it out.

http://now.eloqua.com/es.asp?s=607&e=336504&elq=f162db534fdb4bae94c9594b4534695b

Carolyn, 

I might be able to help. It sound like people in your county my live in their homes a little longer then average homeowner. Based on the population and the number of transactions you mention, it can get a little slow sometimes. Take a look at the follow sites.

www.equitylocksolutions.com  and www.commissionlock.com

I'm not asking you to do anything, but to keep an open mind. People are being innovative to solve problem in our market. 

These companies are not related and the Commission Lock program I designed. Who say we can't go after homeowners before they have a need to sell. Think about it.

Thank you. 

I've been using a consulting model since I started as an agent.  Working primarily with investors, I learned fast that if I didn't have fees for certain things (like BPOs) or charge by the hour for others, I'd quickly go broke.  When your clients are routinely buying $10-20k properties, living off of commission doesn't work.  I also think the whole commission pay structure is idiotic in this day and age, which is why I joined ACRE when I found it, to hear from like-minded agents.

While, the "well, if it's not working for you, then you must be doing it wrong" comments may be warranted, they're not very helpful.  Again, one of the things that I did learn from the ACRE training was to actually figure out how much time I spend with a listing on an hourly basis and come up with a dollar amount that makes it worth my time.  Based on that, in most cases for my market, the "discount" to the seller for an upfront fee is usually not worth the risk to them vs. the traditional commission model.

Again, I don't think the average agent is in a market where the median sale price is $200-300K or up, where an upfront vs. a commission may be a huge difference.

The consulting model still works for the smaller tasks requested and for the true consulting only hourly fee, but as a listing tool (at least in areas like mine), it's very limited.

Roger - I can see that being the case... that any sort of non-contingent listing fee simply isn't feasible in particular situations. Merv and I had that conversation when we met a few weeks ago when we were talking about his SmartPlan - that as the price of the property gets lower, it's actually a better deal for the consumer to go the traditional route... as I said when I owned my discount company and was faced with lower-end listings - "There IS a cost of getting up in the morning."

So, that may be one segment of your business that you simply won't be able to use the concept of offering choices in compensation.

 

This page contains a single entry by Jennifer Allan published on January 9, 2012 8:59 AM.

Former Management Consultants - Identify Yourselves! was the previous entry in this blog.

ACRE/TCP 2.0 - Another ReBranding Solution... is the next entry in this blog.

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