I thought I would address a scary trend that many Real Estate Agents, Investor Agents and in some regards everyday Real Estate Investors are being challenged with declining commissions and low consumer confidence in our real estate profession.
As an active Real Estate Investor and Licensed Agent a recent CNN Report concerned me so much that I sought out Ryan Fletcher, a successful full-commission realtor, to help me understand why our commissions are under attack, agents are losing clients to “Discount Brokers” and why our profession is undervalued by the public. Fletcher exposed several myths that the Discount Brokers, Reduced Fees and Flat-fee Listing Services use to capture market share and entice investors to use. Talking with him also exposed that I needed to “revamp” my real estate business and how I was perceived by potential clients and sellers.
According to CNN Money – “Real Estate Commissions are Under Attack”. Here is the UGLY TRUTH they uncovered – Real Estate Agent commissions, with the plethora of options, discount brokers, flat fee listings, with sellers interviewing multiple agents & running dog ‘n' pony shows coupled with fee wars, agents' own willingness to cut their commissions, also compounded by extreme commoditization, and most agents inability to complete with the mega-agents, have experienced the fastest and most dramatic disintegration of ‘fee size' in the history of our industry.
The Discount Brokers, Reduced Fees, and Flat-fee Listing Services competition are using the following 3 “Myths” to capture new clients and make you think you need to reduce your commission in order to make a living in real estate.
3 Reasons Why NOT to Reduce Commissions
Myth #1: Doesn't Charging Large Commissions & Fees Repel Clients
No. Contrary to popular belief, as most agents fear, positioning yourself as the ‘Most Expensive Agent' in your Marketplace – Nordstrom, not Wal-Mart – publicly, strategically, done properly, actually attracts clients, and a better breed of clientele… not repel them.
Price is, in fact, a psychological trigger. EXPENSIVE = GOOD
Myth #2: Doesn't Getting Big Fees, Require Being A Strong Closer
No. Contrary to popular belief, people who are “strong closers” – reveal to themselves, and others, just how poor of marketers they really are. If you must (and are required to) be a “Strong” closer, then clearly you “Opened” poorly…
It's Fletcher's contention: You shouldn't be “overcoming” objections (at the end of the process) to get sellers or clients to take the desired action; you should be “conditioning” that client from the start, before ever meeting that person, that taking the desired action is the logical “next” step (and, in their best interest).
An effective marketing protocol is nothing more than a series of strong “openings, geared toward conditioning” prospects to continually take the “next” desired action. In this context, “closing” is NOT forceful or difficult – it is easy, and the natural next step…
Strong “Closers” = Salespeople
Strong “Openers” = Authority Figures/Experts/Trusted Advisor
Myth #3: Doesn't High Conversion, Require A Good Listing Presentation
No. Contrary to popular belief, and what you've been taught, a listing presentation positions agents as a commodity. Further, positions you as a person of low status and influence. If you show up as all other agents do, like Amway salespeople do, or pitchmen do, with your “product demonstration” i.e. a listing presentation, a flip chart or power point presentation, and sit at the prospective clients kitchen table, as salespeople and pitchmen do, to demonstrate that product…attempting to “convince” that prospect you are the best – the mere fact you attempting to “convince them” i.e. win their approval, acceptance, etc., reveals the truth about you as a real estate agent.
Authorities / Strong Openers / The Best at What They Do – are not in the “Convincing business”, but rather, the qualifying business.
Trump, for example, would never do a Listing Presentation, because, for one reason, such action would put him in a position of low status and influence. It would undermine his POWER – his POSITION – as a Somebody of Importance. I read where Mark Burnett, the TV producer, was forced to jump through hoops for 6-months before securing an appointment with Trump, before he could “pitch” Trump on his idea for ‘The Apprentice'. True Authorities engineer situations, through “Strong Openings – so prospective clients must…”convince them”, the service-provider, they are worthy and qualified to be their client.
Real Estate Agents Value Under Attack
In talking with Fletcher he shared what he believes – if you're an agent who delivers REAL value to clients – then you should never work for a penny less than you're worth. More so, you should NEVER feel you must, quote… “Get Lucky” just to be paid the professional fee your (superior) skills warrant.
Let's agree on this: Compensation is a direct reflection of VALUE. What people Value, they pay more for. What they do Not value, they pay less for. The CNN Ugly Truth: THE PUBLIC DOES NOT VALUE AGENTS. According to the Harris Poll, real estate agents, as a profession, are viewed as the LEAST prestigious and LEAST respected profession in America. In fact, for the past 7 years: 2005, 2006, 2007, 2008, 2009, 2010 and 2011, real estate agents have ranked DEAD LAST on this list.
As a result of this, it has effected our wages. Commissions, the average commission earned (i.e. compensation) has collapsed and continues to plummet. Since compensation is a direct reflection of value – it really IS NOT an issue of “how to fix” the declining compensation crisis, it is about RESTORING lost value.
=> What people VALUE, they seek out – (client attraction, no prospecting)
=> What people VALUE, they pay more for – (bigger fees)
=> What people VALUE, they tell others about – (more referrals)
=> What people VALUE, well, you get the point…
Reinvent yourself as a High Perceived Value Agent (HPVA) and your real estate business will become easy just like a hot knife slices through butter easily. No more chasing prey. You're not a predator. No more begging, using, or annoying family and friends. No longer are you dependent on them for referrals. You can stand on your own two feet. You can attract clientele with greater effectiveness, efficiency, with greater ease. Best of all, you must never again force yourself to prospect, which “deadens” your soul.
Just one catch to becoming a HPVA, successful agents say, you must: MURDER YOUR LISTING PRESENTATION. Let's connect the dots:
=> Salespeople give “listing presentations.”
=> If you do a “listing presentation”, you are viewed as a salesperson.
=> People Do Not assign value to salespeople
=> Compensation (big or small) is a direct reflection of perceived Value
=> If people perceive you as a “salesman”, they Do Not value your advice.
=> What people Do Not value, they will Not pay big money for (= small fees)
=> What people Do Not value, they will Not seek out (= you must chase them)
=> What people Do Not value, they will Not tell others about (= no referrals)
If you RESTORE VALUE, by becoming what my friend Ryan Fletcher refers to as an HPVA: High Perceived Value Agent, you a-u-t-o-matically reinvent your real estate business to be FUN again.