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.
I listened to multiple speakers at Inman Connect discuss “iBuyers,” Zillow Instant Offers and companies such as OfferPad, Opendoor and Knock, and 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 commission in the future?
Are you Walmart, Sears or Neiman Marcus?
Like real estate, retail is also bifurcating into two major camps. If you are in a reduced commission model, your situation is akin to Walmart.
You’re constantly battling it over price (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 Walmart, Kmart 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 service these companies 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 be described as “Sears.” This middle tier is rapidly disappearing not only in retail but also in real estate.
How to stand out from the competition
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” (adjust in size to fit multiple devices), most agent websites look alike.
Now compare these 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 their 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 niche brand serving the LBGT community within Coldwell Banker Bain Seattle. Team Diva sells diva dwellings to diva dwellers. They are unabashedly proud of who they are, dedicated to providing exceptional service to their clients and community, and their clients love them.
Leverage AI (artificial intelligence), AR (augmented reality) and predictive analytics tools
One of the best ways to earn a full commission is to leverage the latest tech innovations.
- To make your CMA stand out, you can use the CMA from HouseCanary or Inman Market Intel powered by Weiss Analytics. These tools not only give you a CMA, but they also predict how much the appreciation or depreciation on the home will be one to five years from now. They also allow you to use comps that are five years old or even older. The Inman tool also allows you to adjust the value based on a Zestimate or an appraisal to create a true “Collaborative CMA.”
- Use the free report from HomeDisclosure to impress the sellers with how thoroughly you have searched out the permits, schools and other details about their home.
- Use TLCEngine to generate the “true cost” of homeownership of their home that you can share with potential buyers to help them to better understand how this home will fit their pocketbooks and their lifestyle.
- Show your sellers Automabots, “Ethan” from Roof.AI or “Holmes” from Structurely; all are chatbot applications that convert leads 24/7, something few of your competitors can match. In the case of Holmes and Automabots, the chatbot has the capacity schedule showing appointments on your calendar as well.
- Show the sellers how you create a paperless open house and easily convert leads with Spacio or Open Home Pro.
- Virtually stage the sellers’ home using at least two different motifs: mid-century modern, contemporary, traditional, Tuscan, etc. Search virtual home staging software on Google to locate companies that provide this service in your area. Many of the furniture companies (most notably IKEA for modern furniture), also provide this service.
Connect clients with 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 are working in our subdivision. The one contractor who returned our call bid our 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: the list-to-sell price ratio
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 past six months.
- Add up all the final sales prices that have closed for the past six months.
- Divide the total final sale prices by the total list prices to get your list-to-sell price ratio.
- Now compare this number with the average list-to-sell ratio for your MLS, or if possible, the list-to-sell 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. (That means their average listing sold for full price.)
In his case, his 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, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at www.RealEstateCoach.com/
