It is scary that vendors believe real estate agents provide less value today. But what’s scarier is the fact that many agents seem to agree with them.
As these agents join the race to the bottom, we’re waiting in anticipation – who will be the first one to provide their service for free? As ridiculous as it sounds, that’s where many are heading.
The downward fee environment spreads every time a vendor doesn’t see value in the agency fee. According to Macquarie Bank, the percentage for service is declining from 2.16 per cent in 2009 to around 1.85 per cent in 2014. It will probably come in around 1.40 per cent in 2016.
And our prediction is the figure will be more like 0.8 per cent by 2020.
Today’s agents are confused as to how to add value worthy of their fees. They have become merely ‘facilitators of process’. In doing things the way they have always been done, we’ve become irrelevant.
You sign up a vendor. Post a property ad. Don’t quote a price. The inquiry pours in. Then you begin the search for real buyers in the mix.
You don’t know your buyers. You’re not bringing any value to the process. You’re merely a tour guide. And like the travel industry, consumers now want to navigate their journey without us. We need to offer more.
Building relationships with buyers is the key to adding value. Keep them involved in their segment of the market and they will put their money on the table when their hearts and minds align. It happens fast and the results are measurable.
We’ve forgotten these simple truths.
Remember, it’s two or three buyers that make all the difference to your vendors’ listings, not 100,000 page impressions, not click-throughs. It’s Business 101 to understand your customer’s needs and meet them. Do our vendors want a million viewers or two to three motivated buyers for their property?
Where some agents have lost their way, focused on getting as many eyeballs on their listings as possible, others are working intimately within their concise network of buyers. Outdated agents rely on web portals to drive traffic to their inbox before beginning the same shoot in the dark approach each time. Some spend enough time on the phone to survive. That’s fine. But it’s not good enough.
Yet agents, and the industry as whole, seem to think they need to adjust their model to become sustainable in a lower commission environment. Instead, narrow your focus and sharpen your offering.
A few agents are partway there. They have a little black book built on working with buyers. But even in the same agency, no one shares this information.
The redundant agent qualifies buyers for the property they are inspecting. A modern agent qualifies them for all of their vendors, present and future.
The agent of the future will qualify buyers for their entire sales team.
Think of it as continuous buyer momentum rather than buyer reach. Now, there’s one tangible way to prove commission fees. Meanwhile, agents who start from scratch with each new campaign are always five weeks behind. If they’re inefficient now, imagine when they’re competing against this new model.
Now, imagine being an agent in a group committed to customer-centric delivery.
There is plenty of development and experimentation to be done with buyer practices and collaboration from agents working in the same network. Emerging agents will benefit immediately from a collective approach, while industry leaders will have a real incentive to share their experience, because it delivers ongoing value for their customers.
The agency of the future will encourage its agents to sharpen these focuses. Instead of broad shoot in the dark tactics, the new approach will be narrower, more precise and more collaborative.
Value for consumers equals fees for service. But you’ll have to prove your worth.
ABOUT THE AUTHOR
Shannan Whitney is the CEO of BresicWhitney.