Month: May 2011

For Agents Only

The agent-broker relationship, like so many others, is a value-for-value proposition.  The agent brings value to the broker and the broker returns value to the agent.  Ideally there is an equilibrium in this exchange of value and both parties benefit.  The agent brings something to the broker and the broker brings something to the agent and everyone involved is able to do more and be more.

The ordinary real estate broker wants to constantly add agents because that’s how his business grows.  What he wants from them (what they bring to the table) is their own personal sphere of influence – however big or small – which may become buyers and sellers with the company, thus expanding the broker’s reach.

The broker hopes and prays that each agent he adds will also become a successful prospector for new business.  He hopes that each agent will become successful calling on FSBOS, cold calling, farming and so on, ultimately bringing in far more business than is generated by the existing sphere of influence.  Though few agents ever really excel at this, those who do are Stars.

Since most ordinary brokers have the same tools and the same basic offer to agents, the agent’s decision about which broker to work for usually comes down to two factors:  personality of the office and commission split.  Since personality is hard to change and mostly reflects the leader,  the ordinary broker relies heavily on high commission splits to agents to get and keep salespeople.

So the value-for-value exchange between a broker and agent in an ordinary real estate office is this:

The agent agrees to expand the brokers business at least to the agent’s sphere of influence and hopefully beyond,

and

The broker agrees to give the lions share of the commission to the agent on closed transactions.

At Help-U-Sell it’s a whole different proposition.

A Help-U-Sell broker expands his or her business through marketing, careful leads management, constant exploitation of the opportunities that exist in the marketplace and through consistent follow-up with past customers and clients.  The Help-U-Sell broker doesn’t add agents unless or until the business has expanded to the point that he or she needs help.  Agents are brought in to help the broker handle the business the broker has created.

The Help-U-Sell broker says to the prospective agent, ‘I’ve built this business and have all of these buyer leads I can’t get to.  I want you to take the leads I’ve created and convert them to sales.  Period.  I don’t want you to prospect for new business, I don’t want you to call FSBOS or Farm.  I just want you to convert the leads I’m already generating.  And I’ll pay you a reasonable commission split to do so.’

The value-for-value proposition between a broker and agent in a Help-U-Sell office is this:

The agent agrees to become expert at converting buyer leads into sales

and

The broker agrees to maintain a steady flow of leads into the office and to the agent.

See, it’s a completely different proposition.

So how do the two propositions stack up?  Well average per person productivity in ordinary real estate is abyssmal.  Most agents muck along doing 3 – 6 transactions a year.  In may places if they do a dozen they get an award!  At Help-U-Sell we’ve set the bar at 2 a month, 24 a year.  In many offices that’s a minimum standard: what an agent must do to continue to tap into the flow of leads.

Unfortunately, ordinary agents get very hung up on commission split.  It doesn’t matter that they may be doing only three deals a year, if they’re commanding an 80% split that means they are a great agent!  Once they fall into this line of thinking, it’s very hard for them to recognize the value of leads over split.  That’s why Help-U-Sell brokers usually build their teams with new licensees, ones who haven’t been tainted by the tired old agent-oriented business model common in ordinary real estate.

Another ADDENDUM:

So I’ve already had calls.  Agent X with ABC Realty asked:  ‘What’s the long term payoff for an agent at Help-U-Sell?  I’m not sure I want to spend the rest of my life doing two deals a month.’

Well, then, do 5 or 7 or whatever!  But I don’t think that’s what you were asking.  You’re asking how Help-U-Sell agents grow.  The answer is:  they grow in two ways:

1.  They become ever more effective in converting leads and build their production to the point that they realize their goals.

2.  They expand their repertoire, learn how to work with sellers in the Help-U-Sell system, how to market and generate leads.  In other words:  they become brokers and open their own Help-U-Sell offices.  It’s a big step with big rewards and a very different focus.  Where the agent is focused on converting leads, the broker is focused on generating them.  The broker generates leads through marketing, through listings and by carefully managing the lead intake process in the office.  It’s a very big job with very big rewards.

In addition to questions about growth, it seems that some agents doing average production in ordinary real estate are intimidated by 24 sides a year as a minimum standard.  Don’t be.  If you work at it, you should be able to double your personal production when you move to Help-U-Sell.  You will have no more prospecting demands, no more listings to manage, no more price reductions to orchestrate.  You’ll have lots more time for working buyers and you won’t even have to look for them!  We’ll give them to you!

“What Am I Not Getting?” Commissions Demystified

We Help-U-Sell folk often get mis-tagged as ‘Discounters.’  We take umbrage at that notion because we don’t offer a stripped down version of ordinary real estate (which is what a discounter would do).  Instead, we offer a completely different model, a different approach, one that is more efficient and – surprise! – costs less.  Usually, the ‘discounter’ tag comes courtesy of our competitors who can be quite vocal in defending their turf.  But sometimes, on seeing how much they’ll save with Help-U-Sell, consumers also wonder how we do it.  They’ll say:

‘So, this looks like a great deal, but what am I giving up?  What am I not getting that I’d get with a ‘regular’ real estate company?’

The question is not what you’re not getting;  it’s why are they charging you so much for the same thing we do for a low set fee?

Of course there’s an explanation.  It makes no sense from a consumer or business point of view, but it is an explanation.  It starts with what you’re paying for when you engage a real estate professional.  You could make a list several dozen items long but it boils down to just four things:

  • Marketing
  • Securing the Buyer
  • Representation
  • Managing the transaction details
At Help-U-Sell our brokers take responsibility for three of those four items.  Marketing, Representation and Managing the Details are all the purview of our brokers and though they might delegate bits and pieces out to qualified assistants, they don’t generally assign those tasks to agents.  The Help-U-Sell low set fee pays for those three things, and if the seller locates the buyer for his or her property that’s all they pay and it’s usually a huge savings over a percentage based commission.

How often do sellers find their own buyers?  You’d be surprised.  It’s not unusual for a seller to go to work two weeks after listing, learn of a co-worker transferring in for whom their house would be perfect.  It’s also not unusual for one of the neighbors to drop by with friends and family in tow.  We help our sellers find their own buyers by coaching them on doing their own open houses and letting them help distribute property information.

The ordinary broker charges a steep percentage based commission because his business model involves  paying four different people to do the same thing we do with one.  He has to be prepared to pay his company, his listing agent, the selling company and the selling company’s agent.  So the seller ends up paying not one, but four commissions!

And here’s where it gets really interesting.  Where we allow for the possibility of a seller finding his or her own buyer, in ordinary real estate, the four commission commission is the commission:  you pay the full fare no matter how the house sells.

What’s fun in this is that our listing brokers usually make more on a sold listing charging a low set fee than their competitors who charge a bloated commission.  The Help-U-Sell broker doesn’t have to split the dollar four ways!

The four commission situation is at the heart of the ordinary real estate world.  It probably won’t change anytime soon because there are about 1 million licensed real estate brokers and agents who depend on that model for their livelihood.  The industry will change when enough consumers find out they don’t have to do it that way.

Here’s a nice footnote to this discussion.  We haven’t talked much about the fourth item, locating the Buyer.  Yes, we allow our sellers the option of finding their own buyer and if they do they will experience maximum savings.  If one of the agents in our office finds the buyer, the seller pays the set fee plus a showing fee – which still ends up being much less than the four commission guys will charge.  If the seller wants, we’ll even put the listing in the MLS and offer it for sale through outside brokers.  If one of them brings the buyer, the seller pays our set fee plus whatever commissions will be necessary to take care of the selling agent and broker – but that’s still just three commissions, not four and it almost always costs less than what an ordinary broker charges.

Best of all, regardless of whether the seller elects to offer the house for sale through our agents or even through the MLS, if in the end he finds the buyer himself, the low set fee is all he pays.  It’s a great system.

ADDENDUM (The next day)
I’ve been asked to ‘demystify’ this post.  At Help-U-Sell we all understand what I’m talking about – but sometimes those on the outside need a little more explanation.

When you hire an ordinary real estate agent (who will likely charge a percentage based commission), you’re agreeing to pay not one, but four commissions:
  • 1 for the listing company
  • 1 for the listing agent
  • 1 for the selling company
  • 1 for the selling agent
You’ll be charged the same percentage based commission regardless of whether it takes all four commissions to get the job done, with any un-allocated overage going to the listing company and agent.


When you list with Help-U-Sell you get flexible pricing based on how the property sells.  Your low set fee covers marketing, representation and managing the transaction details.  If you locate your own buyer – which happens more than you think – you pay just that:  one commission.

If one of the buyer agents in the Help-U-Sell office locates the buyer, you pay two commissions – the low set fee to the Help-U-Sell office plus a showing fee that will compensate the buyer agent.

If an outside MLS agent brings the buyer, you pay three commissions:  the low set fee for the Help-U-Sell office, plus a commission for the selling company and agent.

With Help-U-Sell you may pay one, two or three commissions depending on how your house sells, but never four.

With ordinary real estate you pay four no matter how your house sells.

Make sense?

Accessibility Toolbar