Real estate practitioners, as well as the companies and people who support them, are grappling with a problem that continues to elude their ability to solve it.
We argue about who owns the data, whether we’re worth the commissions we receive, and whether the boards, companies and associations are really "worth it." The underlying issues, however, are simply not being addressed.
When real estate professionals are ranked lower than used-car salespeople, it’s clear that we are doing a poor job in articulating the value we bring to the people we serve, whether it’s at the association, board, brokerage or agent level.
I recently attended a leadership training event designed to prepare the group to assume leadership roles at their board. Most of the people in the room had at least 10 years of experience. When the trainer asked, "What differentiates a Realtor from other agents who merely hold licenses?" half the room couldn’t come up with anything.
Why is this so difficult? The reason boils down to the distinction between information vs. knowledge. In John Seely Brown and Paul Duguid’s book, "The Social Life of Information," they define information as something that can be written down or stored in online databases. This is what the current battle about who owns listing data is about — it’s about the information.
In terms of agents, when we controlled the MLS information, consumers had no choice but to come to us. When we lost that, we were looking for other types of information that we could use to replace it. This effort, however, is misguided.
The value that real estate professionals bring to the deal is invisible — it’s knowledge. Duguid and Brown define "knowledge" as experience or wisdom: "Knowledge can never be stored in a database."
If you have ever called offshore customer service for a computer problem, in most cases, the person is reading off a checklist of what the problem could be. Most Americans find this to be very frustrating. We want someone who knows how to fix the problem. That knowledge is generally not contained on a checklist. Instead, it’s the application of experience and wisdom to the problem to identify and implement the steps required to create a solution.
For example, when the appraisal comes in low, what do you do to keep the deal together? You can list the "information" steps to take — sending the appraiser new comparable sales, asking the seller to carry a second mortgage for the difference if the seller has the equity to do so, and possibly applying at another lender.
What you can’t really put into words, however, are the "knowledge" pieces that you will use to keep the deal together. For example, are the buyers so upset that they still don’t want the house? Or are they still willing to stay in the deal? Are the sellers willing to make concessions to get the deal closed, and if so, what will work? How will you keep everyone from going ballistic? How do you move the parties to an agreement when the easiest course of action is to walk away from the deal?
The answer to these questions comes from experience, but it also comes from working through similar types of problems and applying various problem-solving techniques. Even though I’ve been in the business for more than 30 years, I continue to marvel that no two deals go wrong in exactly the same way. This is why information can be part of the solution, but knowledge is what’s required to solve the problem.
What is your value?
How can you begin to articulate your value to consumers? A great place to start is with a list of the steps required to close a transaction. Every disclosure, document and action should be included on a list of items that you share with your clients. When you share this list, explain that your role is to make sure that if there is a problem anywhere in the process, your job is to work with them to create a solution that will be satisfactory to everyone involved.
In fact, one of my former trainers had a terrific strategy for doing exactly that. When she put a client under contract, she gave them a box of very nice chocolates. She asked them to have one of the chocolates to remember how sweet it was to get the property under contract. She then followed up by saying, "Save the rest of the chocolate. If something goes wrong in the transaction, I will tell you to have another chocolate to remind you of how sweet putting the property under contract was. We can then discuss how to get the issue solved."
A different approach is to tell your clients, "About 95 percent of all transactions have a problem so severe that the parties believe that the deal won’t be able to close. About 90 percent of the time, those transactions do close. My job is to make sure that the closing happens."
Our value is something that is like glue — it’s invisible. How we create our businesses and how we serve our clients depends upon how we glue together the information and our knowledge to make our clients’ dreams of homeownership come true.