Commentary by Scott Einbinder
RISMEDIA, Oct. 29, 2007-The demise of the discount firm Foxtons will hopefully be a lesson to the entire real estate industry. The lesson is that millions of dollars of capital, first-class marketing campaigns and an award-winning Web site is no guarantee toward success if the truth does not prevail. The truth of our industry needs to be that our actions, our focus, our purpose and our intent is to put the client and customer first and ourselves second.
The press has publicized the end of this discounter, yet what the press does not realize is that many more traditional real estate entities file bankruptcy or are on the brink of it everyday. In fact, hundreds-if not thousands-of these entities are in this very vulnerable position. The entities I am referring to are the thousands of agents who are leaving the business or who are on the edge of quitting. This does not get the same level of publicity; however, it has never been truer. Each agent is an independent business that runs on many of the same principals as any firm that places its interests first over that of the customer. These agents are little real estate firms within larger ones, and if continued on the same path, will share the same fate as Foxtons.
I travel the country speaking to real estate firms about defining value and providing truth; to stop the smoke-and-mirror show and raise the bar of what we provide the real estate consumer. And what is the truth I refer to?
The truth that our value proposition to the industry needs to stop focusing on ancient concepts like marketing plans, advertising gimmicks, open houses and misleading personal awards. Almost every listing presentation I evaluate is dominated by the company’s marketing plan and advertising strategy and personal agent success.
We show these features to a seller with the hope that they will believe it works. With the hope that this concept of “exposure” will convince them that our value somehow has a relationship to our marketing and advertising strategy. Yet every real estate professional reading this article knows all too well that the old open house and classified ad is not there to sell the home. It is not there to accomplish our objective of exceeding our clients expectations. It is there to benefit us.
We use open houses like satellite offices to get buyer prospects. I cringe when I hear agents say, “The only benefit I have to this high-priced listing is that I can get some buyers at an open house.” I ask, “Does your seller know how you feel?” and then I see that uncomfortable smile appear on the agents face.
We run classified ads to make the seller think we are investing money in our advertising campaign. I see pages and pages of these silly ads and I wonder, “Was the agent laughing when they wrote that?” Can we come up with more than “cute,” “gorgeous,” “spacious,” “lovely” and “charming” to describe the home?
Yet the truth-the unvarnished truth-is that this is exactly why we are not authentic to the public. This example runs through the veins of our industry and we wonder why companies and agents “go under” or have a tough time maintaining premium commissions.
The leadership of our industry must step up and stop holding on to fiction and side agendas and demand their brokers and agents be authentic. I speak to agents every day who still believe their marketing and advertising plan sells houses, yet inventory levels have never been higher of unsold listings. Is it because you did not deploy your marketing strategy or does it have something to do with the inability to price and position the house correctly? Is your listing not selling because the three open houses you had did not draw enough people, or is it because 90% of the homes similar to your listing are on the market for less money that yours? Is it because you did not stage the home correctly filling it with candles and flowers, or because you were afraid to speak to the homeowner about a price reduction?
The essence of our business must circle around client and customer benefit. As leaders we must demand our agents understand that value is derived from the ability to understand merchandising of real estate, having a clear strategy of contract negotiations, acute knowledge of financial and mortgage aspects, and an effective transaction management and risk mitigation protocol. This is what our industry is. This is where the firms that are winning are moving. This is truth.
I marvel at the Sunday paper. I see half- and full-page ads that cost brokers thousands of dollars to “promote listings” and “promote agents.” Ads are run that say, “Congratulations Jim,” like anyone but Jim even cares. However, I sit in those same offices listening to agents complain that their deal is in trouble because of a home inspection dispute that will “kill their deal.” I ask, “Why did this agent not order a home inspection the day after the listing was taken? Why did this agent not require the home seller to be proactive and preemptive to repair issues that will probably come up anyway?” Agents say to me, “Order an inspection before a contract? We don’t do that!” I ask, “Why not?”
The same office where beautiful four-color magazines with their listings and agents line every restaurant in town, is the same office where agents do not know how to read a title policy, or understand how to evaluate an LP/ or DU Finding, or understand how to assess the trend analysis of an appraisal. The office spends countless dollars on advertising but little resources on educating their associates.
The truth, the transparency, the authenticity is what will save our industry and the agent from further deterioration. It is the firms that have the courage to abandon the “tricks of the trade” and put the customer and client first.
Currently, there is a Web site set up by the Department of Justice to inform the public about commission differentiation. I wondered how long it will take our leadership respond. As predicted, industry leadership moved to fight it and discredit it. I have already read the article where the leadership has claimed the Web site is filled with misinformation. Isn’t this the same misinformation we give out at the listing presentation regarding things that will get your house sold that do not work or are not authentic?
Leadership will spend its time and energy fighting rather than teaching. If leadership feels the site is bad, teach your agents how to respond to the public. Teach your customers what they should know. The burden is on you! This is the culture that we must change. The public watches these fights and draws the conclusion that all real estate firms are bad, regardless of the commission.
The truth is to educate and teach. Teach our brokers, managers, agents and then our clients and customers. Teach them about the issues that matter the most-the issues that are about them and their money. Teach them how to manage expectation and how to be proactive and predictive to real estate problems. It is the truth that will drive commissions higher because the value delivered will be greater than the value paid.
Rather than getting mad at the Department of Justice for its Web site, let’s give thanks. It is a desire to empower the public. Empower the very group who pays our bills and allows us to operate in a rewarding career. How can any action that is designed to do that be bad? The challenge is for us to build a business that embraces the customer. The good news is, the opportunity has never been better to do just that. More units and higher revenue per transaction is standing right in front of you. Lower the wall of secrecy. Open the door to understanding, and your customer and clients will seek you out like never before.
Maybe, just maybe, we will see a full-page ad in the Sunday paper that has faces not of agents, but of happy customers. Face after face of people who were offered value and received it. Faces of people who were offered an expectation that was not only met but exceeded. Faces of people with smiles. Maybe if we stop placing ourselves on display and put the one who matters the most, the truth will be here to stay. In the end, the truth has no competition, and it value is priceless.
Scott Einbinder is a national sales trainer and motivational strategist to the real estate industry. He can be reached at Scotteinbinder@aol.com.