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They say, “Cost is only an issue in the absence of value.” Cost versus the absence of value were never really an issue before when it came to working with buyers, but now, in light of the National Association of Realtors (NAR) settlement, it’s the most dominant thought in the minds of buyer’s agents across the country.
The prevailing advice is: “Show your value” and “Articulate your value and fees like a listing agent.”
Unfortunately, many of those agents are frustrated with these responses because, at the end of the day, what does that actually mean? Working with a buyer is very different than working with a seller, so how can one advise an agent to do it the same way, especially when some agents may have never even worked with a seller before?
My goal in this article is to provide a practical roadmap and actionable steps so that a modern agent can articulate and demonstrate the value a customer should expect to receive when working with them.
On my team, we have a strong focus on having the best mindset, skill set and tool set, and buyer’s agents will need to empower and improve their mindset, skill set and tool set when it comes to communicating the changes ahead to today’s modern buyer.
Mindset: Why is it important to have a value proposition?
There are fundamental truths about having and explaining a value proposition. The first truth is that people will pay more for perceived value. This is simply explained: People will pay thousands of dollars more for a Louis Vuitton purse when a $300 Coach purse offers essentially the same functionality.
There is a perceived value in the LV purse that is greater than the also relatively expensive purse that Coach offers.
Another example where people will pay more for increased value is in specialities, complexities or needs. People who need a certified public accountant (CPA) pay significantly more for these services than someone who has a simple tax return and can leverage a tool like H&R Block, TurboTax or a simple bookkeeping service.
There will always be people who perceive the value of a real estate agent as more or less based on their own experiences or lack thereof. Each professional has to decide whether they desire to work with all customers or engage with specialty, complexity or need-based clientele.
The second fundamental truth about value is that people will pay more for convenience. This has never been more apparent since the 2020 pandemic. With the pandemic, we experienced the rise of services such as Instacart and Uber Eats.
These services may have initially become popular due to safety protocols, but they quickly morphed into a service of convenience. People pay a premium to save time and energy to be able to leverage themselves.
The third fundamental truth about value is that people will pay more to have their problems quickly and efficiently solved. Think about simple home repairs, like fixing the capacitor on your HVAC. Many local A/C repair service providers will charge hundreds of dollars to fix this problem, but did you know that the actual cost is $10-$20, and it’s a relatively simple fix?
Many consumers don’t want to do the homework or develop the skills and knowledge to fix certain problems themselves. They’d rather pay an expert to do it. When we solve their problem, we become their hero.
So where can you find your value? In other words, where can you offer perceived or increased value, and where can you offer convenience and solutions in the real estate transaction where customers will actually want to pay you to do your job?
Tools and skills: Ways to discover and deliver value
Before you can communicate your value, you must have a deep understanding of what you bring to the table. Your value can’t be defined by a list, it must be experienced.
So, how does an agent determine their most valuable assets? There are several areas where one can discover and deliver value, including, but not limited to, the technology you offer, the experience you have, the knowledge you bring, the business skills that you employ, the relationships you introduce, the solutions you provide and the leadership you demonstrate.
Let’s explore each of these a bit deeper and challenge ourselves to answer each question with the details of the value you bring to the real estate transaction.
What technology do you use to improve the client experience?
There are varying types of technology that you can leverage in your business to improve the customer journey. You may leverage presentation tools that allow you to stand out from the beginning of the relationship.
Using tools, such as Kaydoh, helps to digitize the presentation experience, thereby making it easier for you to stand out from the competition.
Moving your clients off of the competitor portals and onto your own search engine — think RealScout, HomeStack or Ruuster — helps to give the customer a more personalized search experience. They can chat directly with you about what they like, want to see or homes to avoid.
Bringing user-friendly technology into your buyer’s transaction can enhance their experience, and it can also streamline your systems and help you be more efficient.
How can you demonstrate your knowledge and experience?
People often confuse knowledge and experience, but they are not the same. The fact is you can have one without the other. Moreover, what do you do if you are new to real estate and don’t have a lot of experience?
The best way to demonstrate knowledge and experience is when you have a predictable and repeatable process. People naturally trust and follow processes. We have been trained since our early formative years to trust the process, follow the process and value a process.
Knowing what is going to happen before it happens and explaining that to the customer is invaluable. It’s in explaining the process that enlightens people on what to expect, and people are pleased when their expectations are met.
In explaining the process, you demonstrate your knowledge and your experience because you are preparing the customer for things they may have not yet ever experienced before. Process mitigates fears. You can be taught a process, or you can create your own, but it is by far the easiest way to demonstrate your knowledge and your experience.
Another way to demonstrate your knowledge and experience is to have a deep understanding of your real estate contracts and documents. Can you logically and tangibly explain the inspections and repairs (or financing) section of your state contract?
Does your state offer multiple purchase contracts, can you articulate why one document might be better than another for a particular situation? Do you have a substantial handle on the deadlines, contingencies and opportunities to cancel your state purchase contract? It’s this type of in-depth knowledge that customers will want to know you have and know.
Finally, are you up to date on market trends? Not only are you following the trends (monthly, if not weekly), but can you explain what you see?
The trends and stats that I recommend that you follow for your area are:
- Average days on market (months of inventory)
- Original list price versus sales price ratio
- Average and median sales price
- New listings versus active listings versus pending listings versus sold listings (each month)
Also, these numbers should be reviewed across the past 12 months and across the past 10 years. You will be able to recognize trends when you understand the big picture, along with the details that led up to each change.
What business skills do you have that improve the client’s experience and journey in real estate?
A skill isn’t something you take to naturally, that’s occasionally called talent. A skill is something that you practice and nurture; it’s a muscle you build and work on every day. What skills or business muscles do you actually work on every day or even weekly?
Some relevant skills for real estate include planning and preparation, clear communication and, of course, negotiation.
When it comes to negotiating, do you bargain, assert a position or accommodate the other side? What’s your negotiation style and technique?
Have you taken classes to improve your skills? If not, perhaps that is something you should invest in for yourself. Your ability to negotiate should be your top skill, yet it is the one agents spend the least amount of time investing in.
Agents will hire coaches and trainers to improve their communication and conversion skills, but if they were better negotiators, they would subsequently be better converters. At the end of the day, it’s all negotiation.
What relationships and resources can you offer the customer to help them have a smoother transaction?
Real estate professionals are highly sought-after individuals, but not from customers, so much as vendors who want to work with the customers we procure.
Having a list of vendors is only a value to the customer if we have relationships with those vendors. If we can share an experience of the benefits of that working relationship, that is valuable to the customer.
A list is not helpful without context or recommendations — in fact, they can get that online. The reason online lists work is because they are paired with reviews.
Can you offer a review (a story) about that vendor? If not, it’s not valuable. But the more stories you can share, the more valuable that relationship is to the customer.
Another opportunity to provide value with resources and relationships is by having another set of eyes on the transaction via a transaction coordinator. Having someone else to back you up and be available when you are not can really improve the client experience.
A transaction coordinator can save you and the customers time and money through effective communication, properly calendaring deadlines, and coordinating schedules and events. Especially when you are working with more than one customer, it’s too easy to miss something. Providing this service to the customer is no longer a convenience — it should be an expectation.
Do you know the customer’s biggest problem? Do you have the solution?
A good agent asks questions, but a great agent actively listens to the answers! Today’s buyers face several challenges when purchasing a home in the current marketplace. Their questions and concerns principally center around affordability, meeting contingencies and finding the right home in the right location (inventory).
Have you explored all the options buyers have today? Are you familiar enough to be able to identify the issues so that you can refer them to a plausible solution?
For too many agents, the quick answer is, “Let’s put it on the market, and we’ll find out,” or “If it’s not in the MLS, it doesn’t exist.” Don’t you agree that if you can solve the customer’s biggest challenges, they would see value in that? It’s a competitive market, so let’s improve our game plan.
Here are a few examples of some common problems and their potential solutions.
1. Problem: Contingency to sell my house
According to a recent study, Realtor.com found that 73 percent of homesellers also plan to be homebuyers. Therefore, a common challenge for many of today’s modern buyers is that they will likely first need to sell their current home to purchase their next home.
This contingency can be a deal breaker for many transactions, especially when you stack several contingent buyers into a single flow of multiple transactions. If this is a buyer’s major concern, what programs exist to help them?
Now more than ever, there are solutions and programs to help existing homeowners relieve the pressure and timing challenges of buying and selling simultaneously because this customer’s biggest fear is being without a home.
There are multiple vendors that offer options, such as Knock’s buy before you sell, Easy Knock’s sell and stay or Opendoor’s guaranteed cash offer, which allows sellers to stay in their current home and set a closing date at their convenience.
Familiarize yourself with the vendors in your marketplace that offer these modern solutions. These programs may not work for everyone, but if you are truly their trusted real estate adviser, shouldn’t you be the one to let them know these programs exist? It will ultimately be up to the customer to decide what is the best option for them.
2. Problem: Financing contingency
With the various cash buyers looking for homes to purchase, being a financed buyer in an already tight market can feel like a fool’s errand, especially when you lack awareness about the various options available to assist you.
There are a couple of ways financed buyers leverage various vendors to give themselves an edge by becoming a cash buyer. There are vendors who will underwrite the buyer to upgrade their offer to cash, so that buyers can win the home they want without feeling at a disadvantage against other cash offer buyers.
Another option for buyers who may be concerned about current interest rates but don’t want to lose out on the home of their dreams is a rent-to-own program that allows them to lock in their dream and purchase at a pre-agreed price on their timeline (perhaps when interest rates come down).
3. Problem: Lack of inventory
Inventory is a problem everywhere, and it’s coupled with the fact that the same people looking for inventory are often the same ones withholding it (remember, 73 percent of homesellers are also homebuyers).
So how do we create or find additional inventory? Being able to help a customer identify a home that they ultimately purchase that was not on the MLS has extreme value. So where can we find those homes?
First stop, new construction. This is the easiest way to find new and upcoming homes for sale that the customer would not likely find on the major portals.
New construction can often resolve the timing issue as well. If a homebuyer needs time to sell their current home, they can leverage the time it takes to build the new one.
An expert adviser is key here to helping them time this experience so that the customer is not without a home and not paying two mortgages at the same time. Your guidance and market knowledge is key here.
Another important place to find inventory is in off-market listings and coming soons. Again, this is often associated with a value proposition connected to your brokerage, such as eXp Realty or Compass, or to your local MLS, such as BrightMLS and several others.
If your brokerage does not currently support off-market listings, perhaps that is a suggestion you can make to your leadership. It’s a competitive advantage if you use it.
Last but not least, are you proactively searching for missed and new opportunities? These opportunities can be stale (more than 6 months old), expired and withdrawn listings, vacant homes and homes presently being worked on by investors as rehab projects. Knowing what is coming to market soon is just as helpful to a buyer searching for that dream home.
How do you demonstrate leadership in the transaction so that the customer feels like they are truly being helped and listened to?
Demonstrating leadership is fundamentally your job as a real estate professional. Leadership that is grounded in serving the needs of the customer and the community is what truly makes us a great industry.
An example of how you can display leadership in the eyes of your customers is by offering relocation resource assistance — pointing them in the right direction to whom and where they can get help. When you are new to an area, you don’t know where to begin.
But don’t limit offering assistance to the move. Expand into information about lifestyle. Offer information about drive times and traffic, restaurants, weekend activities and more. You are only limited by your own creativity.
Demonstrating leadership can also be as simple as instructing a customer to “follow me” as opposed to “I’ll meet you there.” Customers want to feel taken care of and know that you have their back.
If someone doesn’t feel like they can rely on you, that’s a barrier to trust and leadership. Let them know and experience what working with you is like. Show them how you help them, don’t just tell them.
Also, create an active feedback loop. Encourage them to communicate with you about their experiences working with you. Find out what they enjoyed, what was frustrating and why.
Get their feedback on not just the properties themselves but also on how you worked with them on writing their offers, the inspection process and closing. This feedback loop helps the customer feel heard and helped. Having someone articulate back to you the experience you provided causes them to think about all the things you did for them and not just the end result.
Skill set: Selling and communicating your value
Now that we have discovered our value, now we must consider the best ways to communicate it. As they say, “Value unarticulated is value unappreciated.”
In my years as a real estate agent, broker, team leader and industry contributor, I have experienced the teachings of many coaches and brokers, but one that stands out is Mike Ferry and his four rules of real estate sales, the first of which is relevant to this conversation: Selling is not telling, it’s asking lots of questions.
We must be clear that we are salespeople; we don’t sell houses, but we do sell a service. Our mission is to share the value of our service with as many people as we can.
So if the goal is to help our customers, then we must ask lots of questions so that we can determine their needs and then solve their most pressing problems. You cannot make assumptions in our business, so the only way to truly help our customers is to ask them questions, look for the changes or the challenges in their circumstances, and offer relevant solutions that address those needs.
The second way we share our value is by making compelling offers. A compelling offer is irresistible and can’t be refused. Every agent should have two or three compelling offers memorized in their toolbelt for why a customer should want to work with them.
The formula for creating a compelling offer is simple: It identifies a pressing need or concern plus how that problem significantly impacts the customer plus how solving that problem will create extreme benefit to the customer. Notice a compelling offer is all about helping them; it’s not about how great you are.
Here’s an example of a compelling offer taken from the notes above:
Compelling offer script
“I understand that you are concerned that buying a home today is so competitive, especially with (insert percentage in your market) 29 percent of buyers offering cash and no financing contingency, which puts customers who are financing at a disadvantage when making offers on their dream homes, sometimes causing them to lose the negotiation or offer more than they want to win a bid. I don’t know if this is for you, but we have a cash buyer program, where we can get you qualified to become a cash buyer, which would remove any financing contingency that would prevent you from winning any bids for your dream home.”
So now that we have learned to ask more questions and memorize our compelling offers, we need to refine our sales skills and approach. There are two books that I recommend that we all read to refine our sales skill set. The first is SPIN Selling by Neil Rackham, and the second is The Power of a Positive No by William Ury.
There is no quick way to teach sales skills, but there are theories and approaches that can catapult you ahead of your competition just by simply taking action on what you learned.
Mindset: Charge in alignment with your value
Some of you are going to have the hardest time with this last point. In a post-NAR settlement world, one of the biggest challenges buyer agents will have to face is charging what they are worth.
Imagine a world where commissions based on percentage is no longer viable. In fact, in a world where a buyer is paying for their own representation, a percentage could be seen as a conflict of interest.
Why should a buyer pay more for your services when they are paying more for the house? Shouldn’t fees go up when we save the customer money and down if the customer ultimately pays more for the house? Or should it be a fixed price based on the amount of work performed, skill sets involved, and time spent on tasks?
What about building a menu of services? Some customers will need more or less help, so why not charge accordingly? In a marketplace built on value-based pricing, we can no longer state that we give the same exceptional value no matter the price the customer pays.
That just does not make sense anymore. The natural evolution will be the lower the costs, the fewer the services, and the higher the costs, the greater the services provided. This is marketing 101, economics 101, and the future of real estate.
Kendall Bonner is vice president of industry relations for eXp Realty. Connect with her on Instagram and LinkedIn.
