What Are You Worth?
In a hot real estate market, when houses seem to sell in minutes and often above asking price, sellers start to question the commissions they are paying. What are you doing to add value to substantiate your fees? In the absence of value, the conversation always turns to commissions.
All indicators from economists and real estate experts are that we will continue to be in a strong sellers’ market for a while still. Until the inventory shortage is corrected, sellers will continue to rule. Having said that, I’m hearing from several agents that sellers are pushing back on commissions, especially because houses are selling so quickly. It all comes down to public perception and in a lot of ways we’ve done it to ourselves.
WHAT IS THE PUBLIC PERCEPTION? In this market, when agents advertise how quickly a house sold above asking price, it paints a picture of an overpaid, unworked agent who makes easy money. The reality is, in a lot of cases, the public perception is true. Let me give you an example. Have you ever worked on a co-op deal and had to rewrite the offer because it was so poorly written? Or have you ever had a question for another agent and they wouldn’t call you back?
The pandemic caused a lot of people to enter our industry. Either they lost a previous job, or they saw real estate as a bright spot in the economy and they decided to jump in. This causes SOMETIMERS come out of the woodwork. People who are not truly committed to our industry don’t deliver stellar service. Instead, they take advantage of demand in the market to make easy money at the expense of their clients and the reputation of our industry. When we experience a downturn, these are the first agents to leave the industry, but in a hot market like we are in now, untrained agents are everywhere, and we have to compete with them.
How do you compete, earn a full and fair commission, and deliver a service to clients that makes them feel like they got great value for the money?
It starts with your PHILOSOPHY. When you start talking VALUE, you can stop talking FEES. In the absence of value all that is left is commissions. It is not the value you THINK you offer, it is the value the consumers BELIEVE you offer. Let me explain…
I believe there is a trend of agents reducing their fees as an easy way to compete, but to do so, they must reduce their services and deal with more clients to earn the same living. I’d rather see you increase your services and increase your fees, but to do so, you must do two things:
- Offer something exceptional that other agents don’t provide.
- Clearly communicate the benefits of those services to clients, so they understand that they may pay you more than another agent, but they are getting more in return.
At the end of the day, the most important person in the relationship is the client. If they are able to pay you a little more, but walk away with a lot more, then it’s a win-win for everyone involved.
HERE ARE FIVE STRATEGIES TO ADD VALUE:
Convert texts to conversations ASAP!
One of the mistakes agents make today is that they dehumanize the home buying and selling process. The client becomes a faceless digital text conversation and that reduces the value of the experience. Conversations build relationships and you can’t communicate your true value unless you get face to face. The sooner you can turn text conversations into a face-to-face meeting, the sooner the prospect can truly understand your value.
Choose your lead generation wisely!
In an attempt to drive volume, many agents have turned to online lead generation, which is basically fishing with a big net in a big pond and trying to capture stranger business. It is more difficult to demonstrate value to a stranger who doesn’t know you and trust you, than to your neighbors and sphere who already do. When you meet with a prospect who already trusts you, they are more open to hearing your value proposition and they aren’t as focused on fees. The best way to increase your fees is to focus on a referral-based business with people you already know rather than prospecting total strangers.
Be a specialist, not an opportunist!
When you are a specialist (focused on a specific type of client, specific type of property, specific neighborhood) you build a case for value. You can’t be everything to everyone. Clients can’t judge your service until AFTER they hire you, so they rely on cues to confirm their decision (your local experience and in-depth market knowledge). Homeowners are interested in having a knowledgeable professional represent their largest asset. In the absence of knowledge and professionalism the conversation will aggressively turn toward commission.
Offer creative services for your niche!
Once you’ve decided which target market you will go after, what service can you offer them that they can’t get from anyone else that they would really value? First time homebuyers have very different problems to solve than baby boomers. Luxury clients have different problems than investors. You need to identify your target clients, figure out what unique problems they have, and come up with unique solutions that other agents don’t offer. Once you do this, you can market your create services to stand out from the crowd.
Show up prepared. Do your homework.
Success is where preparation and opportunity intersect. We can work very hard to uncover an opportunity, but if we aren’t prepared to capitalize on it, our conversion rate is much lower, and our frustration is much higher. What does being prepared look like?
– show up on time for appointments, look sharp, bring a gift
– do a great CMA and know your comps intimately
– use a digital listing presentation, wow them with video content
– use trial closes often (it’s hard to say no when they’ve spent an hour saying yes)
– connect clients to their future plans (focus on WHY they are moving)
– communicate position over price (how they compete with other active listings)
Collectively, the message is: this agent is a professional and really knows their stuff. I trust their advice.
My last advice is this: work from a position of abundance. Your confidence will skyrocket when you are busy and you have more than one appointment this week. Clients trust confidence. If a client presses you too hard on commission, let them go. It is easier to do if you have more appointments lined up.
Review your buyer and seller presentations and the services you offer. What service do you provide that no other agent is offering? If you can’t come up any unique services that add value for your clients, you can anticipate commission challenges.
If you want to learn more about how to add value to your relationships to earn full and fair commissions, check out https://leadersedgetraining.com/agent-virtual-training/.
Chris Leader
President
Leader’s Edge Training upset