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Bernice Ross
The market is rapidly dividing itself into two separate buckets — do it yourself, low (or no) commission models versus concierge style service coupled with a unique value proposition (UVP). There’s a third bucket, however, where most agents fit. If you don’t fit into the UVP category, your commissions are about to take a major hit.
It’s abundantly clear that the pressure on full commissions is increasing exponentially. The question is, what steps can you take today to protect your commissions in the future?
Are You Neiman Marcus or Sears?
Like real estate, retail is also bifurcating into two major camps. If you are in a reduced commission model, your situation is akin to Wal-Mart. You’re constantly battling over price (i.e. commission). Online marketers and aggregators are vigorously competing to gain market share in much the same way that Amazon is attempting to take market share from Wal-Mart and Target.
At the other extreme are the high-end retail brands such as Louis Vuitton, Mercedes and Jimmy Choo that are prospering due to the quality of their products, their uniqueness and the services they provide.
For real estate, this translates into being a highly niched expert in your marketplace, having a UVP that has at least two or three unique services your competitors do not provide, plus stellar online customer reviews. You must also be able to show the sellers how they will net more by using your services (even though they may pay more in commissions) as compared to using your competitors.
Unfortunately, most agents fall into a third camp that can best be described as “Sears.” This middle tier is rapidly disappearing not only in retail, but in real estate as well.
Sellers are willing to pay a full commission, provided that you can show the unique value you bring to the transaction. This means that you must be able to specifically delineate how your full-service, premium value proposition nets the seller more money as compared to the services provided by less capable, “limited services” agents.
Begin with Your Website
Your website is the most obvious place to begin distinguishing yourself from competitors. Because websites today must be responsive – able to adjust in size to fit multiple devices – most agent websites look alike. Now compare those bland websites against the two sites below.
The Figueroa team won the 2017 Inman Innovator award for most innovative team. Instead of a pop up, flash or rolling photos at the top of the website, they have an aerial flyover of their market area. The site is simple, clear and totally focused on their web visitor with interesting and relevant content.
Team Diva Real Estate epitomizes a highly niched brand, serving the LBGT community within Coldwell Banker Bain Seattle. Team Diva sells diva dwellings to diva dwellers who reside in Divaland. They are unabashedly proud of who they are, dedicated to providing exceptional service to their clients and community, and their clients love them.
The Best Service Providers
Finding good resources for inspectors, repair people, cleaning, painting and other house maintenance is always a challenge. When we decided to expand our patio, I asked our builder to give us the names of the concrete contractors who were working in our subdivision. The one contractor who returned our call bid the job at $5,000.
The bid seemed high, so I called HomeAdvisor. Within seven minutes, I spoke with two concrete contractors and scheduled appointments for the next day. Their bids came in at $2,850 and $3,500. We hired the contractor with the lowest bid, who also had 130 verified five-star reviews.
The Most Powerful Persuader
If you’re good at getting close to or over asking price on your listings, the list-to-sell-price ratio is the most powerful tool you can use.
To determine your list-to-sell-price-ratio – the average percentage where your listings sell – follow these steps:
- Add up the list prices of all your listings that have closed in the last six months.
- Add up all the final sales prices that have closed for the last six months.
- Divide total final sales prices by total list prices to find your list-to-sell-price ratio.
Now compare this number with the average list-to-sell ratio for your MLS or, if possible, the ratio for competing discount or limited service firms.
To illustrate how this works, one of our clients was regularly facing limited services companies who claimed that their list-to-sell ratio was 100 percent, meaning their average listing sold for full price. But our client’s average listing was selling at 109 percent of ask price. On a $300,000 transaction, that is $27,000 more!
The bottom line is that a large majority of sellers are still willing to pay a full commission provided that you have a strong UVP and can show them how they will net more in the long run by working with you.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author. She may be reached at Bernice@RealEstateCoach.com.
