How do you thrive in today’s luxury market? Don’t miss Inman’s Luxury Connect, October 15-17, 2019, in Beverly Hills, California. Walk away with the marketing, technology and luxury intelligence to grow your business while expanding your referral network with built-in networking sessions. Join 500 of the most notable names in luxury real estate. Reserve your spot here.
When was the last time someone questioned your value and said you were overpaid? Not exactly something that an agent looks forward to hearing. In that case, what can an agent do in today’s market to combat this issue?
Here are five things to keep in mind — and some strategies to assist you when a buyer gripes about high commissions.
Dispell reality TV myths
The real estate buying process is glorified in today’s world with all the HGTV and Million Dollar Listing shows making it seem very glamorous or overly simple.
How else can you explain a program that highlights taking buyers to three homes and then finding their dream home through a silky smooth buying process. All this in one episode with a few short commercial breaks.
How important is the agent in the show, really? It seems the agent is just opening a few doors and pointing out which room is the kitchen and which room is the master bedroom. Everything always works out and the episode wraps up in a timely manner … just like it does in real-life real estate, right?
One of the keys to combating this mindset is to highlight the other important aspects of the real estate process, which are dramatically simplified on TV. In reality, the process actually has many more moving parts than are highlighted on TV.
Plus, what about all the times things don’t work out perfectly? Have you ever had a deal not go as planned? Our job is more about consulting, negotiating and problem-solving than it is about the fun of finding a house.
The perception is that everything will work out, so why do you need a professional, especially a high-priced one. Some of the best agents make the process look easy and are able to avoid the turbulence that a buyer might experience. The more time spent showing what is happening behind the scenes, the more clarity the buyer will have on the overall value of an agent in the process.
The story of a smooth buying process and the simplicity of buying a home is a story told around campfires to this day. Those messages are highlighted and passed around. Few will tell the story of the nightmare experience where everything went wrong. That is too embarrassing.
No one comes back from Vegas sharing how much money they lost. It’s only the winnings that are highlighted. It is similar in real estate.
Plus, who needs a captain of the ship when the water is calm? It’s when the dark clouds come rolling in and things start to go sideways that an experienced captain is needed to take the helm and guide things to the desired result.
It’s kind of like insurance. No one likes to pay insurance premiums, but they love the peace of mind it gives. And it’s great to have when the unforeseen happens.
An experienced and skilled agent is like insurance for the transaction — a guide to help avoid potential pitfalls along the way. As agents, it’s our job to make sure that everything is looking calm and to highlight the obstacles that have been avoided along the way.
Make sure your social media is showing the right picture
Let me play devil’s advocate and look at some typical posts and messages shared on social media.
Let’s take some images and messages and then interpret what they might mean to clients following along online.
Social media post 1: Shows images of glamorous house photos
Public interpretation: “Wow, that looks cool. They get paid so much for just looking at fun places?”
Social media post 2: “Multiple offers and sold in 1 day!”
Public interpretation: “Geez, that was easy. How much are they getting paid for 1 day of work? I am working hard over here, and how many months will it take for me to make as much money as they ended up making in a few hours”
Social media post 3: “Multimillion-dollar producer”
Public interpretation: “Multiple millions of dollars? Wow, they are making how much money?”
Social media post 4: Congratulations and highlights focusing on capping commission splits or advertising low brokerage fees.
Public interpretation: “They are making every dollar of that commission? Since they are pocketing all the money, there has to be room to negotiate as that is a lot of money for one person to make for a couple hours of work.”
OK, OK, so I bring these up as a quick sample and some things to keep in mind and create some awareness around your messaging. If a house sells quickly, great. However, imagine focusing on the effort that the seller and you did beforehand and all the work leading up to that experience to justify the great result.
The more that you can pull back the curtain and show what really happens behind the scene, the more value you will highlight. There is plenty of value there to be shown, but typically we only show the end result: the closing table photos and the touchdowns being scored. There is beauty in highlighting the work behind the scenes and all the effort to get the end result.
Communicate your value well beyond finding homes
When our main role in the buyer’s process is seen as “finding the house,” it actually devalues our position. There is a lot of outside money being pumped into the housing market to highlight that our main role as agents is to “find houses.”
Yet, people can find homes on their own by looking at all the many websites. Think of how many venture capital groups, large corporations and website providers are highlighting the ease of finding a home by simply clicking a mouse from the convenience of their own home.
In the past, the perception was that agents had access to more house options. Now the perception is that all the homes for sale are available online through a variety of websites.
With all the homes listed online, why do you need an agent anyway? Especially if the agent’s main role is to find houses that are already available for anyone to see.
Let me ask you a question: Are all the possible homes for sale available to the general public through searching online? Is that concept true? The answer is no! Not even close.
There is a small window that people can access to see many of the present homes for sale, but what about homes that were available for sale six months ago that might be a good fit for the buyer in today’s market? What about finding homes before they hit the open market?
Do you have a network of contacts to assist you in finding homes before they are up for sale? Of course you do! Think of all the times you see and hear of homes before they go on the open market. This is a key message that needs to be shared and highlighted.
When meeting with a buyer, if it’s clear that he or she thinks that they have access to all the houses and that your main role is to only help them find a house, it becomes difficult to justify your role in the process.
Plus, for many buyers, their buying process comes down to being the fastest to hit refresh on their browser, thinking this will put them ahead of the game of finding the newest homes for sale.
People are used to shopping online. And this can be fun. It’s important to highlight the fact that finding the house is only a small part of the overall process.
If it were that easy to find the perfect match online every time, then Match.com and eharmony.com would long ago have solved the challenge of people finding a match in their own lives. The truth is, it’s not that easy to find the perfect match online!
Although the process starts out as fun while one scrolls through possible matches on FarmersOnly.com, it becomes more and more tedious as the wrong matches are found.
This is similar to the house search. How much easier would the dating process be if you had an agent who would help screen through profiles, preview matches and find options not on any websites. And then walk you through the process to ensure everything that’s being advertised is true!
Adjust your attitude about money
It’s always fascinating to me to watch agents who are so focused on paying the absolute lowest fees possible, cutting every possible expense and then acting surprised when their potential clients want them to do the same on their home deal. If an agent doesn’t value tools, experience, resources, support and time over money, why should their clients think any different?
It’s going to be challenging for someone who is caught up in trying to find the best deal for their real estate business to then turn around and try to explain to buyers that their time and effort is worth a higher fee. I had an agent express to me her frustration with clients constantly asking her for discounts on her commission.
After spending some time talking to her vendors, it became clear that she constantly asked for discounts from everyone she dealt with in her business.
Her obsession with finding the best deal was reflected in her communication with her clients as she encouraged her clients to constantly price shop every vendor.
She said it was critical for her clients to pay the lowest fees for mortgages, inspections and title work. She was constantly expressing that the most important aspect in the process was getting the lowest fees and yet she was surprised that her clients were then doing the same thing to her.
What would happen if she highlighted the quality of her experience and reinforced the thought that you get what you pay for in the real estate process?
Remember, it’s probably not about you, so just be the best version of you
Do you think you are overpaid? Now if you said “No” and are a little offended by this thought, ask yourself this: “In your market, are there some agents who are overpaid?” Most likely you will say that there are.
When buyers look at the overall market, they see that as well.
Perhaps consumers have had experiences with agents they felt were overpaid, so now they make a generalized statement reflecting everyone in the industry.
For example, suppose you hire a builder to build you a custom home, and during the building process, there is poor communication. You end up managing the subcontractors and doing most of the work.
What might your thought process be the next time you have to build? You may well think that homebuilders are overpaid and you might decide that you are better off doing things yourself to save money. Your recent experience could easily reflect your new reality.
It is not uncommon for buyers to think that all agents are the same and if they feel that they overpaid last time, then that must be the norm.
So how do you combat being grouped with those agents who are overpaid? You must become a better version of yourself.
As you constantly work to achieve this, you will stand out from the masses. This would likely mean that the 2017 version of yourself is not good enough in today’s market. You need to become version 2.0 of yourself, and then version 3.0.
If there is time and effort dedicated to self-improvement, it will become harder for agents to ride on the pricing coattails of those agents who are actually underpaid. If you want to make more and have others recognize your value, you need to step up your game.
You might come across buyers griping about high commissions in today’s market. Let them know, “Yes, there are many agents who are overpaid in today’s market. Fortunately, I’m not one of them, I’m actually underpaid for the value, services and resources I provide.”
The more you can own that, the better you will be the next time anyone questions your worth. In the immortal words of the great Saturday Night Live philosopher, Stuart Smalley: “I’m good enough, I’m smart enough, and doggone it, people like me.”
You are worth your commission. Just be sure to continue striving to be more and more deserving of every dollar you receive.
Aaron Drussel is the chief officer of big ideas and broker/owner of Better Homes & Gardens Real Estate Influence Partners in the Salt Lake City area. Follow him on Instagram or Facebook.