Melody Torrens knew what she was facing when she drove up the driveway of the FSBO she’d been courting for several weeks. No sooner was she in the door than the owner asked for her commission rate. Quoting the rate, Torrens was immediately asked by the owner to reduce it in favor of a much lower one being offered by a discount broker who’d been there before her.
“He was ready to list with a [real estate professional], but he really liked the discount rate,” recalls Torrens, a Realtor®-Associate with Coldwell Banker Residential Real Estate in Coral Gables. Luckily, Torrens was armed and ready with an educational campaign explaining the difference between full service and discount brokers, with an emphasis on how even a low percent rate would double once the property hit the MLS. Torrens then hit him with a bulleted list of every task she would perform for her fee—right down to her 24/7 availability.
“It was Sunday afternoon at 4 p.m., and I asked him to try calling the discount broker,” says Torrens, who sold $2.7 million in properties last year, her fifth in the real estate business. “He didn’t even get voice mail, but rather a message saying to call back during normal business hours. He then called my number, and was instantly patched through to my cell phone.”
That got his attention, says Torrens, who walked away with the listing on the single-family home, which sold for $750,000.
This scenario is playing out across Florida—and nationwide—as discounters, flat-rate brokers and price-conscious consumers chip away at the commission rates of full-service real estate associates. As that happens, salespeople like Torrens are taking measures to prove their worth in the transaction while at the same time selling their services and creating value for both buyers and sellers.
“Thanks to the Internet, buyers and sellers believe they can handle the transaction—or at least parts of it—on their own, without an agent,” says Michael Lee, president, EthnoConnect in Dublin, Calif., and a veteran real estate associate with 30 years of experience. “Plus, we’ve never been good at articulating to the general public what it is that we do and how we earn our money.”
The good news is that there are many ways in which you can prove your worth and effectively sell your services to both buyers and sellers. Here are 10 effective strategies for making that happen:
Brand Yourself
“Remember, perception is reality,” according to Don Hobbs of Hobbs/Herder Advertising. “Agents often want to argue the reality of all the legwork involved in a sale. That doesn’t always matter. Look at any product out there, be it a car, laundry detergent or running shoes. Arguably, every product does what we need it to do, so why would anyone pay more for a pair of Nikes over a pair of no-name sneakers? What are these products doing that makes them worth more? It’s all about how people perceive their value. And the pressure is on you to demonstrate your own value and let your customers know exactly what your services, expertise and knowledge are worth,” he says.
How do you do that? By branding yourself. “Your goal is to own a piece of your customer’s mind so people think of you as their agent before they even need one. Remember, people prefer to work with people they like. And if you’re able to connect with them on a personal level, they will trust you, feel more comfortable with you, and the percentage of commission you charge will rarely ever come into question. To take this a step further, if you brand yourself within a niche—as, say, the “Condo King” or the waterfront specialist—you are offering your customers even greater value with more specialized expertise,” says Hobbs.
He notes that as the market is normalizing, those homeowners who were looking for the cheap answer will become more conscious of finding a sales associate who instills confidence. “Your brand communicates that and the frequency with which they see your branded message will speak to people and heavily influence their decisions and their willingness to pay you what you deserve.”
2. Show Them What Can Go Wrong
Murphy’s Law rears its head in many real estate transactions. Associates who clearly articulate this up front, says Walter Sanford, president at Kankakee, Ill.-based Sanford Systems, have a better chance of proving their worth when it comes time to negotiate fees.
He advises associates to compile a complete list of issues that can come up before or during closing, and present it during listing appointments. On it, include issues—and the time it can take to resolve them—like these:
• The lender does not properly prequalify the borrower (can delay the closing by two weeks or more).
• The lender decides at the last minute that it does not like the borrower (two weeks or more).
• The cooperating agent does not return phone calls (one to three weeks).
• The cooperating agent does not prequalify the customer for motivation (two weeks).
• The buyer does not tell the truth on the loan application (one week).
• The buyer submits incorrect tax returns to the lender (one week).
• The escrow agent fails to obtain information from beneficiaries, lien holders, title lien holders, title companies, insurance companies or lenders in a timely manner (one week).
• The escrow holder allows principals to leave town without getting all necessary signatures (one to three weeks).
“When clients understand all the problems that can occur,” says Sanford, “they’ll be more apt to hire an individual who can solve them.”
3. Start at the High Level
During her listing presentations, Torrens focuses on three key areas: a concise marketing plan for the property (showing exactly how she’s going to sell the home), her client communication plan (weekly update phone calls and regular updates on showing activity) and her professional communication plan (with the public and with other sales associates).
Torrens follows up a couple of days later with a personalized marketing plan. “That will contain specific dates and publications for advertising. And, I always use a professional photographer for still photos and video,” she says.
“An educated seller is an important part of any transaction,” says Torrens, “so I always take the time to walk through these three core areas of what I do and then drill down to the more detailed tasks that I perform.”
4. Give Them Your Stats
Neiman Marcus and Nordstrom’s get top dollar because of the value they add to their transactions, says Sanford. “You are a department store of real estate services that (perceived by the seller) can be obtained in many places. The only reason that you’re full retail plus is because you offer more value.”
Sanford suggests the following:
1. Offer to provide a home inspector (free of charge) within days of obtaining the listing agreement. “Tell the sellers, ‘It will provide many valuable clues regarding the condition of your home and allow time during the marketing period to have repairs done prior to a buyer making an offer,’” says Sanford.
2. Go over your statistics, including your sales volume and number of days on market compared to other sales associates vying for the seller’s business. “Find out your competition at the pre-listing stage,” he says. Also, go over the average list-to-sale ratio from your local Association. “Show them how you can beat that ratio,” he says.
3. Detail your marketing. “Go over your networking strategy, Internet marketing, telemarketing, database research, and other. Sanford says to use this wording, “My marketing brings more potential clients to your home. With more potential clients, the chance of better offers is heightened substantially.”
5. Go Beyond the Norm
Knowing the premium that her clients put on exceptional customer service, Linda Lindsay, a Realtor with Downing-Frye Realty Inc. in Naples, says the best way to convey her value to them is by delivering “above the norm” service in a professional, courteous manner at all times.
In real estate for nine years and a top producer at her office, Lindsay serves as a “411 information line” for her clients, always provides service after the sale, dresses professionally at all times and stays on top of market trends and information (which she in turn shares with clients). “I find ways to go out of my way to exceed their expectations,” says Lindsay.
6. Offer a Money-Back Guarantee
Other associates may have laughed behind Phyllis Staines’ back when she introduced a “money-back guarantee” a few years ago, but this broker-associate, with RE/MAX Coastal Real Estate in Ponte Vedre Beach, says the strategy has helped her prove her worth in a competitive market. Staines writes the guarantee into her listing agreements, which state that in the event that the seller needs or wants to cancel the agreement, she will wish them well—no harm, no foul. “I call this the easy-exit listing agreement,” she says.
“Everything we buy, from toasters to cars, comes with a guarantee of some sort,” says Staines, who has been licensed since 1998 and sells $7 million in properties annually. “But when a seller hires a [real estate professional], there’s no guarantee that we’ll do what we say we’re going to do, and the only recourse is litigation. No wonder the average seller is gun shy to sign a listing agreement.”
7. Explain How Commissions Really Work
It’s no secret that some consumers see sales associates as professionals who earn high fees in exchange for a minimal amount of work. To make sure her sellers are better educated on how the commission process really works, Lynn Sands sits down and explains it to them.
“They need to understand that while they’re committing to a certain percentage, it doesn’t all go to me,” says Sands, a sales associate with Boca Raton-based Coral Shores Realty Inc., who has been in real estate for 10 years and who sold $3 million in properties in 2005. She tells sellers that half of the fee goes to the agent who brings the buyer and that a portion of the other half is shared with her broker. “I let them know that I don’t make a fortune on one listing,” says Sands, “and that it takes a lot of listings to make a living in this industry.”
8. Personalize the Presentation
Torrens brings along a listing presentation book on all appointments with sellers, but it’s not the same one used by other associates in her office. Instead, she has customized the publication to include information about her own experience, knowledge and interests. She includes information on recently sold homes, her career experience, hobbies and interests, which in some cases help her connect directly with her prospective clients.
“My presentation is in book form that stands so it faces the client. As I speak about each area (myself, my company, my marketing plan and past business), I turn the pages for visual reinforcement,” says Torrens. “My policy is not to leave anything with the prospective client (other than my business card) unless they’ve signed a listing agreement. Then, I leave them a copy of the agreement, the CMA, a brochure on preparing the home for sale and a copy of my marketing plan.”
“I personalize what I’m bringing to the transaction,” says Torrens, “as a way to stand out from the many other agents doing business in Florida.”
9. Make a List … and Share It
To distinguish yourself from the many other sales associates vying for listings, Lee suggests creating a document that lists the many activities that you perform for every single listing.
Segment these lists into marketing activities, buyer-related activities and those performed for FSBOs or expireds, for example, and jot down the 100-plus steps that you typically handle for your clients and customers.
“The average client’s eyes will glaze over as they go through your list(s),” says Lee, “and realize what it really takes to sell a home.”
10. Get with the Program
The fact that the average consumer doesn’t understand what real estate associates do for their commissions is the industry’s own fault, says Staines, who feels that sales associates have historically done a poor job of conveying their value and worth to the public. But all is not lost, says Staines, who sees plenty of opportunity for you to reverse those misconceptions and help buyers and sellers truly understand the value that a trusted advisor can bring to the table during the purchase or sale of a home.
“This is a business, and those of us who are not in it as a business need to get out of it,” says Staines, “and those of us who are in it as a business—and who aren’t working it as a business—need to reevaluate what we’re doing.”
A good first step, says Staines, is to stop pointing fingers at discounters and online brokers and instead to welcome the competition. “With competition come more options for clients,” says Staines, who compares real estate to the airline industry, where flyers chose between coach, business and first class. “Just as a flyer would, sellers can make the best possible choices for their own situations.”
Bridget McCrea is a Clearwater-based freelance writer.
