As a Help-U-Sell Broker I have the pleasure of delighting sellers when they learn about us. So often, when I lay our program out before them, they get almost as excited as I am. Often, they say:
‘Wow! This is amazing! Why doesn’t everyone do it this way?’
The answer is too complex to share with a seller on the verge of signing a listing agreement, so I usually take the question to be rhetorical, and reply, ‘I don’t know . . .’ or ‘Beats me!’
But there is a reason. It’s a stupid reason, but it is the reason:
Our industry is organized around the notion that the average agent should make a decent living.
Thirty years ago or so, Brokers (not Agents, Brokers) made a shift in their business models. They put the accent NOT on serving buyers and sellers but on recruiting, retaining and serving agents. In a sense, the Agent became the Broker’s client.
Today, Brokers go to school not to learn how to better serve buyers and sellers, but to learn how to recruit. Keller-Williams, Exit and a host of other companies have invented new wrinkles in their operating systems to reward agents who bring other agents into the company. Basically, they’ve found a way to get their agents to do the recruiting for them.
In ordinary residential real estate today, it’s all about the agent: how to find more, get more, keep more agents. The Broker believes his income stream is dependent on agents, not on buyers and sellers, and that belief colors the entire operation.
So who are these average agents (the ones everyone is working so hard to recruit)? Nationally they do seven or fewer deals a year. Really. Think about that. What kind of service do you think an agent doing only seven deals a year brings to the table for a buyer or seller? Compared, say, to one doing 25 deals? Who’s going to be sharper, more up-to-date, better able to negotiate and solve problems as they arrise?
But, because the ordinary Broker’s business is dependent on his getting and keeping as many seven-deal-a-year agents as possible, he has to find a way to make doing seven deals a year appealing. He has to find a way for the average agent to make a reasonable living.
There’s a two-step formula for this.
First, charge outrageous sums of money for your services and do it with a percentage based commission so that your fee is tied to the sale price of the house. That way, when your agents sell more expensive property, they bring in more cash. Never mind that in most cases, it takes no more time, effort or money to sell a more expensive house. Just be glad you get paid more when you do.
Second, give the lion’s share of that bloated commission to the agent. You’re going to have to pay them really well so that they can appear successful even though they’re only doing seven deals a year. If they appear successful, you’ll be better able to attract more seven-deal-a-year agents who also want to appear successful.
Ok. I’m overstating the case. But I think you see the lunacy in this system. And it is lunacy, madness. The ordinary real estate business is so off track, it may never be able to right itself. It is so lost that the moment Google or Microsoft decides to jump into the business with both feet, automate it like Schwab did the brokerage business 25 years ago . . . well, your friendly local real estate agent could become extinct. . . like the dinosaur.
Thankfully, there is an alternative.
- It is a system where the Broker is IN the real estate business, where his or her client IS the buyer or seller, where the agent is part of the Broker’s operational system to provide excellent service to clients.
- It is a system where the Broker’s income stream is dependent on how many buyers and sellers he or she serves, where growth is driven by careful marketing, not by recruiting.
- It is a system orchestrated by the Broker to drive ever increasing numbers of leads into the office, leads that are handed to the agents who are charged with the important task of turning them into happy clients.
- It is a system that nurtures truly successful agents, who outperform their ordinary competitors in spades.
- It is a system that charges a reasonable Set Fee for the service it provides, a fee that is much lower than the percentage based commission charged by ordinary brokers
- It is a system that offers sellers a menu approach to services and pricing, where one size does not fit all, and where the fee paid has a direct relation to the tools it took to affect the sale.
- It is a system that delights customers because: it works, and they save money.
It is Help-U-Sell.
*By the way, in case you missed it, in 2012, the median gross income for an agent was $34,900, according to NAR. That’s gross, before expenses.