Editor’s note: This is the first of a five-part series.
I just marked my 10th anniversary as an Inman News columnist and thought it would be fun to take a look back at the hot topics, how the industry as changed, and the themes that are as relevant today as they were yesterday.
A decade of change and more of the same
In many respects, the issues we faced a decade ago are still with us today. Key examples include how to utilize new marketing technologies, how to stay profitable during a shifting market, as well as how to cope with economic and natural disasters over which we have no control.
In 2003, an interesting trend was emerging. There was a lot of discussion aout Web marketers "disintermediating" agents from the purchasing process. In a column titled, "Why FSBOs Need a Web Savvy Real Estate Agent More than Ever," I outlined the reasons that FSBOs would have a much tougher time marketing their properties online, even though FSBO companies were springing up everywhere. The quote below references research that was an early harbinger of a startling trend:
"Despite the lowest interest rates in 30 years and one of the hottest seller’s markets in history, the number of FSBOs who ultimately list their house with an agent has increased from 76 percent to 80 percent (California Association of Realtors study, January 2001).
"Inman News reports that ForSalebyOwner.com experienced a 7 percent decline in traffic during the month of June (2003) alone. When the real estate market shifts from a seller’s market to a buyer’s market, these numbers will probably be even higher."
In other words, 24 percent of the sellers were able to sell their properties by owner in 2002 vs. 20 percent in 2003. According to the latest NAR Profile of Buyers and Sellers, that number is down to about 12 percent, half of which are intrafamily transfers generated by marriage, death or divorce. Sellers do indeed need a Web-savvy agent more than ever.
Defending your commission
When Inman News copy editor Dave D’Alessandro decided to change the title for my series from "Defending Your Commission" to "Waging War on Real Estate’s Discounters," the title alone set off a firestorm of debate that led to my first book.
The discounters trumpeted how they were going to put the full-service folks out of business while the full-service companies desperately searched for ways to compete on value rather than price.
My position was that most discount brokerages fail in a market downturn and that history would probably repeat itself. With the collapse of most discount brokerage models in today’s market, history did do exactly that. Chances are that in the next upswing, however, discount models will gain momentum once again.
The strategy for defending a full-service commission really hasn’t changed much. The research from a decade ago is still true today: Up to 85 percent of all sellers will pay for premium service provided the agent can demonstrate how their approach helps the seller achieve the highest possible price in the shortest amount of time.
Furthermore, commission objections are still best addressed by asking questions rather than trying to hard close the seller on your value.
For example, instead of telling the sellers they should list at a full commission because buyer agents will show the listings with the highest commissions first (which probably violates the law), a better approach is to ask the following question: "To obtain the highest price possible for your property, you need someone who is a powerful negotiator — isn’t that correct?" (The obvious answer is "Yes.")
"So if you hire an agent who can’t even negotiate a full commission on their own behalf, how effective do you think they will be in negotiating the maximum price for your property?"
The shift from telling to questioning is still one of the most important fundamentals in all types of negotiation.
How to win more listings
In 2001, what would the tech-savvy agent offer a seller to make their services stand out from the competition? This list from "Do You Have a 2001 Listing Presentation?" would benefit many agents today who have yet to adopt these proven tools. When agents describe how their premium marketing plan is unique, here’s what they could use back in 2001:
1. Your listing will be posted on my personal website, my company website, Realtor.com, and will include a 360-degree virtual tour.
2. Your listing will be advertised in my email newsletter that reaches my past clients and my sphere of influence.
3. Your yard sign with have a toll-free phone number that allows me to obtain valid phone numbers of people who call for information on my listings.
4. You will also have access to our online tracking system that allows you to check the status of your transaction 24 hours per day.
The last point is important. Transaction tracking systems have been around for a decade and yet they’re just now starting to become commonplace as more agents move to a paperless transaction process.
Need more timeless tips? If so, don’t miss Part 2 of this series.