Entry by Jennifer Allan

Is "Consultative" the Same as "Consulting?"

  15 Comments

So far, nearly 100% of you (of those who have responded) agree that some sort of ongoing confirmation that ACREs are actually practicing consulting would be a good thing... at least in order to appear on the ACRE Locator map and in the search.

I agree. 

But the obvious next question is: "What qualifies as 'practicing consulting'?" 

Does "consulting" simply mean that you commit to taking a consultative approach with your clients as opposed to a sales approach, but you might only offer traditional real estate services payable only by contingent commission? 

Or should we require that in order to qualify as "practicing consulting" ACREs attest that they are offering some level of non-traditional services and compensation options?  

Thoughts?

15 Comments

I think that the ACRE model is open to much more than just buyers and sellers, so definitely a 'consultative' vs 'consulting' should be considered.

For example, you could choose as an ACRE to only list/sell via traditional means BUT offer compensation options to homeowners wanting advise on value, refinance, remodeling, etc.

Consulting and more so Consultative Selling historically were B2B processes. In the past, before the avent of personal computers individuals who had the available income used banker, insurance firms and other advisers to invest in the financial markets. It was assumed that the average joe would never have the income and therefore no need to be consulted with. 

The consultant's value is and was always meant to help the clients they served to improve a position, increase revenues or minimize a risk.  So as Roger said, even if listing/selling in the traditional model and the goal is to minimize your client's risk compared to a homeowner selling on their own or with another company--technically in my opinion is still consulting/consultative.

I probably wasn't clear as to what I was asking... what I'm wondering is... if we're going to require ACREs to attest that they are, indeed, offering consulting services in order to appear on the ACRE roster (i.e. the map and search function), should it be part of the requirement that they ARE offering non-traditional services and/or compensation plans... or is it enough that they approach their clients in a "consultative" manner even if they ONLY offer traditional services and compensation (i.e. contingent commission)? 

Put another way... if you were looking for an ACRE to refer to, and saw their profile on the ACRE Locator Map, would you want them to have the ability to offer consulting services above and beyond just listing and selling for a contingent commission? And if you were a consumer looking at the ACRE Locator Map... ditto? 

Jennifer, imho, you need to offer choices and make clear that you will recommend whatever is best for the client.  What they choose is up to them.  I've don this for years and as long as you are honest, transparent about choices, you will sleep well at night.   The problem with the referrals are that if you get paid upfront for consulting, then how do we compensate the other agent?  

Methinks this is a webinar event! 

 

Paula - Mollie and I talked about referrals the other day and I really have no idea how referral fees would work in a fee-based system, if they work at all. Totally open to ideas here from those who have more experience in this than I do. 

I once owned a discount company where we listed homes for a very low commission (but provided fantastic service, I might add). It was an unexpected issue that we couldn't get referrals from other agents - for two reasons - 1) a typical referral percentage would be very low and therefore not satisfactory to the referring agent; and 2) our margins simply didn't allow us to pay out significant referral fees. 

It certainly wasn't a derailer to our business model, but was something we hadn't thought about. 

Anyway, I guess that's not on topic and yes, perhaps a subject for a different day, but Paula... do you believe that in order to be considered a "consultant" for the purposes of being included in the public roster, the practitioner should offer choices above and beyond the traditional model?

Dear All,

I thought we had tried to separate the way with which we are paid - commission or fee for service, or retainer - from our role as a consultant. A consultant provides superior counsel or advice. I know we all want to be paid, but it seems to me that it's a different issue and not one that should attract or detract an agent from refering to another. Surely it's the sevice that counts.

John - THAT's exactly the dilemma - and it was probably your emailed response to me that triggered this discussion! DO we want "consulting" to mean more than simply a higher level of service, which, frankly, is what every real estate agent on the planet promises, but rarely provides. 

While I don't want to imply that Real Estate Consulting is All About the Money, it IS an integral part of the program since part of offering choices IS offering options in how our clients can pay us if contingent commissions aren't the best option for them. 

So, again... are you practicing real estate consulting (from an ACRE perspective) if you do not offer any services or compensation options aside from what a traditional real estate agent offers? 

I'm leaning toward no... which is not to say that being consultative is a bad thing - it's a wonderful thing! But perhaps it's not what being an ACRE is about?

Good point John and Jennifer.  When I trained agents in the past, the first thing I would tell them is "Put the People first and the money will follow."  I believe that as a true consultant sometimes you have to give free advice, otoh, everything that goes around, comes around. 

Regarding referral fees, how many times have you helped someone with a rental and not been compensated?  Maybe they were a friend, family member or just a great past client you made lots of money off of and you didnt mind not getting paid on that one transaction.  Then.... what happens next?  They send 4 or 5 of their friends to you who need to buy or sell a house.

" Put the people first and the money will follow "  Thats always been my motto and it always will be. 

 

oh and I meant to add that getting Merv Forney's 'smartplan' makes it a lot easier to offer consulting services.  If you haven't seen it you should definitly contact him and check it out. It makes the the two seamlessly be transparent. Whether you do traditional, discount or consulting.  

 

Transparency and choice are key words that are as, and perhaps more, important than consulting. Those of us in the business understand the difference in motiovations between being a consultant and a commissioned sales person, most consumers don't, and educating them in that regard is both difficult and vital to success. Working with consumers on a straight commission basis is fine as long as everyone understands the pros and cons, but it is naive for anybody to assume that an agent who is solely paid upon the close of a sale will not be influenced by that fact. 

Thanks for all the feedback. As I'm reading through both the existing and new ACRE designation course material, we consistently define consulting along the lines of "offering clients transparent choices in the services they receive and how those services can be paid for" (and variations of that theme). If that is our party line (and I believe it is and should be), then it only makes sense to incorporate it into any attestation that our members make as to whether or not they are actually practicing consulting. That is - that they ARE indeed offering alternatives to the traditional model of working only with buyers and sellers and being paid a contingent commission. 

That said, in no way do I want to downplay the importance of providing exceptional, consultative (i.e. not-salesy) service - THAT's been the SWS platform since 2006 and is what the Exceptional Agent Project is all about. And I do not want to imply on any level that real estate consulting is all about a fee schedule. Ideally, it's BOTH - providing exceptional consultative service AND offering alternatives to the traditional model. However, the ACRE designation course IS all about creating an alternative business model where the licensee has far more flexibility in the services they offer and how they can be paid for them, so to then, at the end of the course, imply that we don't think this flexibility is part of the definition of being a consultant (that you just took a course to learn how to be) seems a bit contradictory to me.

Hope this makes sense... 

 

Consulting is a modus operandi. So is selling. The former is principally about advising someone to do something that is in their own best interest; the latter principally about pursuading someone to do something that is in the salesperson's best interest. Sometimes those interests coincide; sometimes not. Can these two modes of operation overlap? Obviously they can.

Commission and fees are radically different forms of remuneration. The former motivates actions that are in the salesperson's best interest, i.e. getting paid. The latter are paid for advice and/or professional services whether or not the advice is accepted. Commission, by nature, is a motivator; fees not so much. One is contingent on an outcome; the other is not. What does commission motivate? It motivate actions. Actions are usually for somebody's benefit. Considering that this form of remuneration is first and foremost about one's livlihood, it is apparent that it motivates actions that will serve the salesperson's best interests.

The advice that, in a given situation, would get one closer to a commission, is not necessarily the same advice that would be impartially in the client's best interests.

Interests are key. Case law (Common Law), state/provincial statutes and our industry regulations all insist we have a duty to place our clients' interests above all others, including our own. To be paid for that agency under an arrangement that clearly incents the salesperson to act in her own best  interest arguably leads to a risk of those interests conflicting.

I submit, therefore, that fees are more consistent with the delivery of professional quality advice and services, and that commission is more consistent  with the selling.

If, by the practice of consulting, we wish to differentiate ourselves from the hordes of salespeople, why would we want to intermingle the remuneration arrangements and so bring confusion rather than clarity to the mind of the consumer.

 

Ron is always right on target!! Thanks.

Jennifer,

I think to be listed as a consultant one must have a consulting component to their fee schedule.  Offering services such as contract review or writing for by owner transactions, working hourly or for a fee all are unique aspects to being a real estate consultant as opposed to taking a "consultative" approach to being a real estate commissioned sales person.  My company offers an alternative business model and that is what separates us from the majority.

OK, let me weigh in on the subject of "Consulting" , at least from my perspective or maybe it's the perspective of those working in Ontario, Canada.  After nearly 16 years in the Real Estate industry, as a Broker and Investor, I have participated in many seminars, courses, workshops, and for the vast majority the focus has been and continues to be on how to sell, what to say, when to say it and the list goes on.  OK, now that I have said that, I am also beginning to see a larger focus being placed on the so called "soft sell " approach, ie. getting to know the client, buyer or seller, first without hammering them with Sales Ya, Ya Ya.  Some of the sales guys which have been around for a while still subscribe to this way of doing business and if it works for them fine.  However, what I am seeing more is that those which contact me are looking for "advise".  They are looking for a direction from someone competent in the industry.  Maybe they want to buy at some point, or sell, but initially looking for some direction, on the market, financing, upgrading their home, cleaning up their financials if a business or commercial property, for future consideration.  Lets face it as REALTORS, we are or should all be "consultants" and this may in fact end up in some kind of contractual agreement with a client but in the meantime we have offered a service which establishes a direction for our clients.  For this kind of process, I agree that there should be a financial commitment from those seeking advise and in so doing, there should also be a "list of services" and what each task do cost.  Again noted.  As REALTORS; we are all consultants because we serve to direct a client to take action at some future time.  Should we be compensated for any of this work.....YES.  How are we compensated?  Well that all depends on what we are asked to do and what we as agents and the client agree to.  Could be on a commission basis and or on a fee for services rendered and if on a "fee for services", I like to have a retainer prior to the commencement of tasks.

Sooooooooo! in the end we are all "Consultants" and although ONE of the objectives may be to Sell a property or assist in Buying a property, we should be know for what we do.....Consult.  It's not a dirty word.

This page contains a single entry by Jennifer Allan published on February 23, 2012 4:51 PM.

To Attest or Not to Attest? was the previous entry in this blog.

What Makes An Expert an Expert? is the next entry in this blog.

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