Editor’s note: The following is a guest essay by Scott Einbinder, a real estate speaker and trainer.
The Holy Grail of our industry has been the listing. The control of the inventory is the coveted goal that all brokers strive to achieve.
This philosophy, despite all the technology advances, Internet Data Exchange sites, social media and networking strategies, recruiting plans and brick-and-mortar transitions, remains virtually unchanged for most of the practicing brokers. Even the most progressive brokers still remain rooted in the "same ol’, same ol’" listing philosophy.
Specifically, the listing is still viewed as a sterile, non-personal potential revenue unit, while the truth is that it is something much different. Let’s first start with what we call our client’s for-sale home: a "listing." The word is derived from decades ago, when homes for sale were placed on a list.
Those were the days of the multiple listing service-printed booklets featuring a list of for-sale properties. It was not all that personal then, and listings data is still not all that personal. But behind the actual listing is how we feel about that client and, more important, the relationship and expectations that are set with the client.
Listings, in reality, are cherished inventory or should at least be viewed that way. To some real estate agents, any listing is worth it, as leads and visibility can be obtained from it. In other words, it makes for some decent "bait."
There is a disconnect that still takes place today when a listing is "acquired." The often-used phrase in the industry is "I got the listing." We seldom hear the phrase: "I am investing in this relationship."
This disconnect sits at the heart of much of the consumer frustration with our industry. The cure for consumer suspicion will not be discovered by a Silicon Valley startup or in your manager’s office. It will be found at the kitchen table, where agents make the decision to view the "listing" as what I call an "opportunity to perform," or OTP.
By recognizing a listing as an OTP, you are viewing it as if you were actually going to purchase it as any other retailer would. Imagine a world where a seller said, "If you are so confident that I will be happy with your results, you can purchase my listing for $1,500. I will then credit you the $1,500 against your total commission due. However, should you not satisfy me and achieve the goal of selling my house, I will keep the $1,500."
If the industry operated this way, the first reaction would be a huge reduction of listing inventory. Real estate firms would be cutting sellers loose faster than you could imagine.
This "purchase inventory mentality" sits at the opposite spectrum of many listing decisions, which are more closely aligned with the "consignment shop mentality." If you see your company, office or business as an entity that just places listings up on consignment — well, welcome to the world of continued seller frustration and broker evaporation. …CONTINUED
And why would these sellers be cut loose? We know the answer. It would be because there are few agents who would actually pay for a listing that will not sell.
Now think about that. Agents will not write a check for the listing but will still spend time and their broker’s money on a listing that will not sell. The fact is that agents often do spend their own money and time, but they write a more expensive check unconsciously.
A reputation check: Do you think your reputation is enhanced when a listing does not sell? Do you think the seller says, "Ah, you did a great job anyway, even though our house did not sell." Of course not. We all know what the seller thinks and feels: let down.
Now if you are in the camp that says, "Hey, we can’t control what price the seller wants for the house," then I say to you, why take the listing? If you see your role as throwing the house on a list and obtaining whatever crumbs — aka "leads" — come from it, then do it.
However, I would ask that you re-commit to your code of ethics and share with your seller the following: "There is no way your home will sell at this price, but can I have your listing so I can use it to obtain some buyer leads and get some personal exposure in town?" I know some of you are giggling right now. But we know the truth.
Overpriced listings have no real benefits, other than as a channel for a savvy agent to pick off some buyer prospects if you are lucky enough to get them. If this is you, you can stop reading now.
The old-school way of thinking, in spite of your new eco-friendly, online-enabled social networking platform, is that you need the listing first. Then, after time, lower the price. Get ’em signed up! The mindset is that "the seller has to feel the lack of market activity" — only then can we reduce the price.
We all know this ancient philosophy, but what is real is that the seller feels disappointed in you when the price has to be reduced. In the end, in spite of all your alleged conversations that it was too high to begin with, the seller feels let down by the Realtor. And in the end, when the house does not sell, who do they blame? You. And they should.
You are to blame because you accepted the inventory from day one, when you knew it was a markdown. Unfortunately, most never expressly and directly let the seller know that.
A Realtor friend of mine said, "Scott, we never really know what price a house will sell at." Ah, this is the truth, but my response is, "Did you provide your seller with a (comparative market analysis)?" Your market analysis? What good is a market analysis if it cannot be relied upon? Most important, what expectation did you set?
CMAs have become a marketing tool to get the listing, rather than serving its perceived purpose. Why are consumers suspicious of Realtors? When you think about it, the industry too often asks for it.
Share with a potential seller that what makes you different is that you have a platform of authenticity. Say this, "My competitor just might be in the business of ‘maximizing revenue potential’ at the lowest direct investment by taking your home and pulling from it benefits, like leads and personal exposure, while leaving you with no results or disappointment.’ …CONTINUED
"Mr. and Mrs. Seller, I would never work that way. I am in the business to sell your home, and that is my objective." These are statements that require courage, conviction and integrity.
Share with your seller that you see a listing as your opportunity to perform. If you live in the land of authenticity and your seller wishes to list only with the agent who gives them the highest list price, you will then be at the crossroads of a decision.
Of course, there are sellers who want to "try it" for a few weeks at an unrealistic price, then reduce from there. But let us not forget that there are two signatures at the bottom of every listing agreement, and although you begged and pleaded not to start too high, in the end your signature and acceptance says "OK, let’s give it a shot."
Like it or not, you indirectly endorsed the overpriced listing simply by your acceptance of it.
So what to do? Walk away from the overpriced listing? That is profanity in certain circles. The answer is: develop better skills to educate a seller on what really works. Make better arguments. Gather better information. Show your seller that the only homes that are going to closing are the ones priced correctly. If they are not convinced, mention a minor issue known as "post contractual financial pitfalls."
We have all heard the term "qualify your buyer." In 2010, you need to qualify your seller. What does this mean? This means that you take no "OTP" before you insure your client that the house will, at a minimum, pass inspections and appraise.
Why would an agent ever allow a seller to sell a home, only to have to renegotiate it later, when this could have been avoided from inception?
Sellers are rarely given the opportunity to order a home inspection and appraisal from day one. The objection, according to most Realtors: cost. This is just your perception of the objection, though. The real objection is that the seller is not being conveyed the value of the $750 investment.
Agents fear asking sellers to pay for something upfront, as this is outside the comfort zone. The irony is that the same agent has no problem with asking the same seller for a $10,000 price reduction after the listing is signed.
The list of true transactional differentiation you can bring to the table is long. Setting up a business protocol of real and tangible value requires more ingenuity than it does money.
Focus on evolving your listing philosophy to a true consumer-centric platform. The opportunity has never been brighter to those who look for the light.
Scott Einbinder is a speaker and trainer who works exclusively with the real estate and mortgage industries. He can be reached at scott@scotteinbinder.com.
***
What’s your opinion? Leave your comments below or send a letter to the editor.
