One of our blog posts that received the most amount of commentary to date was on the changing agent value proposition - a hot topic in the midst of a shifting economy, consumer behaviors and business models. For the first Trulia Power Panel of 2007, we decided to ask several of our advisory board members the same question since most of them have succeeded through a real estate cycle or two:
- Sherry Chris, COO, Coldwell Banker Real Estate Corporation
- Van Davis, Former CEO, Foxtons; Former President & CEO, Century 21 Real Estate
- Jonathan Miller, President/CEO, Miller Samuel Inc.
- Michael Pappas, CEO/President, The Keyes Company
- Bob Peltier, President, Edina Realty, Inc.
- Bill Plattos, COO and General Manager, First Team Real Estate
- Kaira Sturdivant Rouda, COO, Real Living, Inc
The question: With property information available across the Internet and new discount real estate services popping up everywhere, how should full service agents reframe their pitch to buyers and sellers to communicate their true value proposition in the home sale transaction?
Sherry Chris - COO, Coldwell Banker
When I think about the future of our business, it is a balance between technology and the services provided by a real estate professional that always comes to mind. Smart agents will demontrate to buyers ansd sellers how technology enhances the services they provide, and those services will continue to include negotiating, consulting, communicating and the knowledge and history of areas and properties. Technology is great, but the human element is what will continue to drive this business.
Van Davis - Former CEO, Foxtons; Former President & CEO, Century 21 Real Estate
The Internet has empowered real estate buyers and sellers by virtue of the vast amount and array of information it provides. That said, information is only one of the keys to a successful real estate transaction. The utilization and dissemination of the information is what can make or break the purchase or sale. Real estate buyers and sellers are confronted with complex data as well as changing terminology. The average person is challenged by the rapidly changing national market conditions and even more importantly the changes in their local markets. So why should you use a full service versus limited service real estate professional? Because there is no free lunch.
When brokerages discount their fees there is a reason. It is because you get less; less traditional marketing, less on line marketing, less experience, less attention, less professionalism. When competing for listings full service agents must explain thoroughly and accurately what they do, why they do it and how it benefits the client. They must have comprehensive knowledge of what their discount competitors are doing and not doing. A small increase in sales price resulting from the full service agents efforts will generally more than compensate for the higher fee paid for the service. And after all isn’t it appropriate that more efffective agents get paid more since ultimately they net their sellers more!
Jonathan Miller - President/CEO, Miller Samuel
Many of the alternative brokerage services for buyers and sellers were born in a booming real estate market where the seller was empowered by their strength in the transaction and more willing to experiment. Now that market conditions are weaker, sellers feel less empowered about the transaction and may be more reluctant to try something that is so new. Yet it’s foolish for full service agents think that that these alternative services are going away; many will thrive. Often, full service agents can not compete with many of these alternative service models on a cost basis, nor should they.
As a non-agent, I am not sure how to reframe the full service agent pitch, but I am certain that it needs to be clear and must happen immediately because the industry is changing right now. Most buyers and sellers do their homework on the Internet prior to contacting any service, including full service agents. Full service agents are there to counsel and negotiate, to hand hold and shuttle along the transaction. As more and more information flows into the public domain, their message needs to move from one of “exclusive access” to information to one of “interpreting and acting” on information quickly using a wide variety of tools and expertise that will create a successful transaction.
Mike Pappas - CEO/President,The Keyes Company
Tailor your message to the audience. The generations buying homes today range from young adults in their 20’s to retirees looking to relocate.Emphasize that in today’s market, there is much more inventory. If you are a seller, you can get the most for your home by insuring it is professionally marketed and competitively priced. A trained real estate associate can provide invaluable expertise in these areas.
The power of the Internet combined with the knowledge of a real estate professional will enable buyers to evaluate and select the best option for their financial health and lifestyle. The associate project manages the entire transaction — buyers and sellers can focus on other priorities.
Bob Peltier - President, Edina Realty
There is a difference between information and knowledge. We can all access information, but we need an experienced REALTOR® to provide the knowledge necessary to make an informed real estate decision. Today’s REALTOR® must be savvy in pricing, marketing and negotiation skills. What the REALTOR® provides today is networking that he or she has established through relationships with another REALTOR® to provide critical input the consumer needs at the right time to make the right decision.
Bill Plattos - COO & General Manager, First Team Real Estate
We have seen this cycle repeat itself for 30 years. If it didn’t, we would still be using MLS index cards. For buyers, the only new element is the number of consumer choices available: do-it-yourself, discount broker and traditional agent. Sellers have a number of choices, too: do-it-yourself, discount agent or top agent who can offer the marketing accountability sellers expect.
But the reality is that nearly 80% of all real estate transactions are done by full service real estate EXPERTS who, armed with knowledge and great tools, will offer more than any discount service can ever provide. And as the REAL ESTATE EXPERT, a full service agent should focus on providing expertise in real estate negotiation, marketing, neighborhood information and legal issues relating to mortgage, title, etc.
E.g., Would you hire a paralegal to handle a divorce…or would you hire the best attorney you could afford? If you were going to invest your life savings on your dream home, would you hire someone who lacked negotiation skills, insights about your neighborhood or knowledge of real estate law? Of course not.
Bottom line: Many real estate professionals believe that we should get paid for having the information, but that is a fallacy. The client has all of the information. The true value of a full service agent is to advise, faceplate, negotiate a win-win contract, close it properly and finally, do a true follow up — not for days, but years.
Kaira Sturdivant Rouda - COO, Real Living
A professional real estate agent’s true value proposition is his or her local market knowledge, negotiation skills, marketing savvy and financial planning skills. A huge competitive advantage continues to be agents who can demonstrate acumen and expertise online. Let’s face it: it’s easy for consumers and agents to focus on the wrong venues and hype. And, things change daily. Key elements agents must be able to master and pitch to clients today include: immediate e-mail response time, a robust personal and brokerage Web site, a blog, a listing search marketing strategy, and online contextual and key word advertising. It’s critical to be where today’s consumers are - and she’s there - online. And the majority are, as always, seeking a professional real estate agent’s help.
Popularity: 5% [?]
`
January 5th, 2007 at 4:41 pm
Van Davis is alot of Formers, but what is he doing now?
January 6th, 2007 at 11:53 am
Van Davis said:
“When brokerages discount their fees there is a reason. It is
because you get less; less traditional marketing, less on
line marketing, less experience, less attention, less
professionalism.”
Booo Mr. Davis!
You’ve cast an unhealthy indictment on the discount brokerage.
If you were to spend some time in a foreclosure ravaged and
impoverished community where people are searching for the dream of
home ownership you might see the advantages of doing some pro-bono.
Discounting doesn’t necessarily equate to less of anything;
it’s the right to place into practice a fundamental concept
referred to as competition. I’m sure you’ve heard of it,
Mr. Davis. If you put too much food on your plate in the serving
line at the cafeteria your going to be charged for more food
than you can eat, and waste it, too. The discount brokerage provides
the client with a menu showing them that they’re not paying for
something they don’t need or didn’t order; sort of like RESPA.
Does full service mean “one stop shopping” to you, Mr. Davis ? Your
logic smatters of the argument for the banks trying so desperately trying to get the Gramm-Leach-Bliley Act passed, removing the professionalism
we’ve worked so hard for from the bargaining table. Aren’t the banks
searching for the same thing you are, Mr. Davis ? Full Service ?
January 14th, 2007 at 12:46 pm
Among these answers Jonathan Miller is the most candid, in my opinion. Then again he’s an appraiser and his industry isn’t in the line of fire, so he probably has the easiest time expressing an un-varnished view.
Bill Plattos, on the other hand, misses the point. This hasn’t been happening for thirty years, as he claims. What we’re seeing now is a new phenomenon.
Thirty years ago (or ten years ago, for that matter) a home buyer/seller was completely reliant on a licensed real estate agent for even the most basic data/information. Now everyone is on a similar playing field. And, interestingly, there are now seven times more NAR members than there were thirty years ago – a larger population of agents competing in a tougher market where a significant amount of leverage has shifted to the consumer, and where technology is bringing new competitors in droves. This is an environment that presents a lot of opportunity, but only for those players who recognize that the world is changing fast.
One interesting thing jumps out at me; none of these experts voices an opinion about what the consumer wants – and it would seem to me that’s where this issue starts and ends. Thirty years ago consumers expected to have an “expert” book their flight from Dallas to Tulsa and buy 100 shares of IBM for them. We know that consumers, for a variety of reasons, no longer want this. Do consumers still have the same expectation from real estate professionals?
January 20th, 2007 at 1:20 pm
I agree that Johnathan Miller’s comments are the most candid and I think that he had the best idea of things to come.
I’ve also used the stock brokerage industry as an example of how the real estate industry will change in the not-so-distant future. All the big stock brokerage firms once laughed at and made fun of a little start up that was doing “everything the wrong and untraditional way”. Well, that “little start-up” is called Etrade.
As an agent, I know that I am no longer necessary as an information provider and my role is changing to a consultant and guide so to speak. Consumers are becoming more empowered by the day due to technology. They also have a desire to become less reliant on agents (who by the way have a horrible reputation at the moment). That’s fine by me and I look forward to it. As for other agents…well, many will put a fierce fight, but they’ll all eventually lose.
December 14th, 2007 at 5:04 pm
It all depends on what your debt to income ratio is. Your credit cards need to have no more than a third of their balance at all times. and you must be bringing in more income than you have debt that is present. Let me know if you need a good agent or lender. If you are a first time home buyer you may be able to get some grant or bond money you won’t have to worry about paying back, and you can use it towards a downpayment or closing costs.
Rachelle