Technology and the Internet have forever changed much of the current real property transaction process. In this new environment, what will be the function and what services and products will be provided by the person we today call the “real estate agent”(and their broker)? At what price will these services be offered to the new Internet empowered consumer?
Over the next 5 years, new pricing models will be available to the consumers of real estate services. What is the business model of your “real estate practice of the future” and how will technology and the Internet shape that model? Whatever that model is, you must stand ready to substantiate it with the value you bring to the table.
To begin to answer these questions, you must create a detailed list of your current services, a “menu” of the services you provide to consumers.
That list should be divided into what I refer to as the 5 phases of the real estate transaction. The 5 phases are:
To build your “Menu of Services”, list each of the above on a separate sheet of paper. Now go through your last 6 transactions where you represented the seller and list everything you can think of that you did in the transaction.
Leave nothing out, no matter how small or insignificant you may think it is. From putting the sign and lock box on the property, to advertising, to having a carpet shampooed at the last minute to satisfy a buyer whose expectations were that the property would be in better condition than the condition it was left in by the seller
Do the same for the last 6 transactions in which you represented the buyer.
You now have a “Menu of Services” for both buyers and sellers. Determining the value of each of these tasks and/or services will depend upon the time, skill and training level required to accomplish each. A task that requires a real estate license may be of more value than one that doesn’t require a license.
Most real estate companies today offer their “Menu of Services” bundled in a “one size fits all” pricing model. A few, such as the Real Estate Café, offer services ala Carte. Some package services together. The future holds more choice for the consumer.
How will you determine what services you will offer to the new Internet empowered consumer and how much will you charge for those services? That is probably yet to be determined but it all starts with defining the services and the value the “agent” brings to the future transaction.
Phase 1: Educate
What valuable services do real estate professionals provide the consumer of real estate services in this phase of the Cycle? Here is a start:
Teach them about the home buying process:
How to select an agent – agency and representation
Understanding the contract
Earnest money deposit
Contingencies and how they work
Liquidated damages provisions and how they work
Arbitration and mediation provisions
How value is determined
How to select an agent – agency and representation
Current market status and pricing
How to prepare the house for marketing
Explanation of listing contract
Explanation of purchase agreement
The intent is to create a list of services (and value) you provide…whether you charge under the current “one size fits all” method or decide to price your services individually.
Going through an exercise such as this will help you, the agent, see the value you bring to the transaction beyond placing a property in the MLS, and it will help you establish a value for your services.
The next phase is to Locate if you are working with a buyer and Market if you are working with a seller.
Phase 2: Locate
Real estate professionals:
Develop a client’s needs profile
Screen inventory for buyer, filter those who do not match buyers profile
Provide transportation to properties offered for sale
Provide access to properties (lock box)/arrange for showings
Provide information about each specific property shown (MLS)
Find properties offered other than through the MLS (pocket listings/New Homes/FSBOs)
Provide information about general areas
Tax and local fees
Show buyers how to search on the Internet
Realtor dot com
80 major web sites (Zillow, Trulia, et al)
Newspaper Web site
Broker Web site
Franchise Web site
Personal Web Site
AutoResponders of “Hot Properties”
Prepare property for showing
Broker open house
Promote through e-mail distribution lists you have created
What are some of the things agents perform in this phase?
You represent the buyer or seller as their Agent (a case can be made for lots of value here) – negotiate in their best interest
Assist in determining the contract price
Prepare the written offer
Present offer (lots of value in the first presentation)
Write counter offer
Deliver counter offers
Work with counter offers – negotiate
Continue with the disclosure process
Handle earnest money deposits
Deliver escrow instructions
Explain the escrow process and instructions
Review preliminary title report, explain to parties if required
Coordinate buyer and lender
Communicate with applicable parties
Negotiate and communicate potential amendments during the closing process
Review closing statement
The last Phase of the Real Estate Selling Cycle comes after the closing, it is the continuation of the relationship and communication you created during the first 4 phases. Remember, you want to be your clients “real estate professional for life.”
Continue to be a “value-added” professional by providing information after the sale. In my financial planning and securities business, I have what is referred to as a “book of business.” This client base brings me added revenue each year and has a value (based on a revenue stream that I could sell should I decide not to be in that business any longer). I consider my company’s property management revenue stream and the clients that provide it a “book of business” as well…Build your “book of business”
Communicate with the buyer or seller at least 4 times per year. Bring them up to date on what is going on in the real estate world and in the tax and financial world as it relates to real estate.
Start to build your e-mail address book and begin to do an electronic newsletter. Respond to e-mail promptly.
Ask for referrals at every opportunity
Be there when your clients have a real estate question
Developing “clients for life” is more than a motto. It can become your reality, depending upon your ability to understand and deliver professional services with the “Driving Forces” of consumerism in mind:
The Real Estate Professionals and companies that survive the major changes taking place in this industry are those that can quantify what they do and how they earn their money to the ever more educated and empowered consumer. In this discussion thread we are in the process of doing just that…and I would like to take a momentary detour
Consumers, not just real estate consumers, but all consumers, are today looking for as many of the following items as possible (or different combinations of the following) as they shop for products and services. These items can be referred to as “Driving Forces” and when you, as a Real Estate Professional.
Look at what you do, how you do it, and how you market it.
You should endeavor to bring as many of these driving forces to bear (and make it known to your client in your marketing and correspondence) as possible:
Speed – think of fast food and one-hour film developing. Lots of people want it, and they might even take an inferior product as a substitute for the speed
Convenience – think of Seven Eleven stores (and also remember that people will often pay a premium for convenience–use it in your marketing)
Choice – the more alternatives initially, the more consumers like it, but then they narrow it down
Value-added – people like to get MORE than they pay for, this is value added. Real Estate Professionals provide value added services everyday, but few take the time to re-enforce that to their clients.
Have you ever cleaned or painted a house for a client after a sale?
Helped them move something (I remember helping to move a refrigerator early in my real estate career)…or something like that, an extra, that WASN’T in the listing agreement but you did it anyway?
That’s “Value Added”
Discounts – If it is convenient enough, you will use a coupon. Lots of people look for discounts in everything they do. This doesn’t mean you should offer discounts, but you must be aware that for many this
is a “driving force” so play to your strengths in your marketing
Quality – Are you willing to pay more for quality? Many people are
Service – think of Nordstrom’s, which prides itself in its service.
Again, some people are willing to pay more for good service
Information – this is the age of information! Consumers won’t buy a toaster or a microwave without first buying a copy of Consumer’s Guide”, let alone a piece of real estate. Make it quick (speed) and convenient for your clients to access to lots of (choice) information.