Category: Attitude

Innovation

Today, the Real Estate Industry Soil is fertile and innovation is struggling to blossom all over the place.  It’s because of the downturn, you know.  When the market is hot, when buyers and sellers are abundant and financing is plentiful, everyone goes into a gallop just to keep up.  There’s not much time for invention.   Not only that, in a hot market, market share shifts are rare as well.  Just as a downturn spawns creative thinking and new ideas, it also provides an opportunity for bold upstarts to gain marketshare.  Often it is the combination of boldness and innovation that results in growth during tough times.

The fledgling real estate franchises gained a major foothold on the real estate business during the tough market of the late 70s and early 80s.  Small independent brokers wrestling with fewer sales were grasping at anything that would give them an edge and national branding seemed to be the answer.   It was during the same downturn that MLSs began to move away from the endless printing of  ‘MLSBooks’ and convert to a purely online model, a major innovation.

ERA Real Estate launched at this time and was seen as quite the innovator.  Few remember, but the letters, ERA, stood for ‘Electronics Realty Associates.’  Their hallmark innovation was that each office had a crude fax machine, called a ‘People Mover.’  A homebuyer sitting in an ERA office in, say, Atlanta, could receive faxed pages from the MLS Book from an ERA broker in Seattle.  All of the other (non-ERA) brokers had to rely on the US mail to share information with an out of towner.   That silly FAX machine was seen as a huge piece of innovative technology.  (Aside:  we also forget that in the early days, ERA brokers and associates wore a distinctive blazer.  Like the Century 21 mustard gold coat, the ERA blazer was light powder blue – just like my high school prom tux!)

All of this is a prelude to what I really want to talk about, which is Help-U-Sell Grein Group in Stafford, Virginia.  I stopped in to see Josh and Bettina Grein on a recent swing through that part of the country and I came face to face with innovation, born out of necessity.  (Remember?  Necessity is the Mother of Invention).  The Greins were struggling with a tight market and an uncooperative landlord.  Their rent was huge given their location and the decline in the market.  But the landlord would not entertain any thought of a renegotiation of their lease.  They tried and tried and got nowhere . . . until they announced they were leaving.  Suddenly the landlord wanted to deal but it was too late.

Josh and Bettina found a struggling coffee shop in a much better location in their town.  They felt, with a few adjustments, the coffee shop could be profitable and the extra income from coffee sales would be a nice supplement to their real estate income.  The shop also offered a solution to their landlord problem.  There were additional rooms in back of the shop where Help-U-Sell Grein Group could relocate.  They decided to make the leap.

When I stopped in, they’d been open about two weeks.  The  coffee shop was full of people in the early afternoon and though it was a true coffee shop/cafe, it was also clearly the home of Help-U-Sell.  Listing fliers were prominently displayed and it would be hard to miss other identifiers at the back of the shop.  Josh told me he’d talked to more people about Help-U-Sell in the past two weeks than he had in months.  Bettina said she’d had three good agents stop in and ask about coming to work for them.

The Greins have experienced a downturn from peak levels of 2006, but they have managed to hang on and gain share while their competitors have withered.  There’s is a strong market made up of people who work in and around Quantico Marine Base, the FBI National Training Academy and those who make the hour long commute to Washington DC every day.  They have done well in the upper end of the market where homes are priced in the $500,000 – $800,000 range. As Bettina says, ‘We do well in the upper end because that’s where people can save the most money.’

(Aside to every broker who’s ever told me Help-U-Sell is not for the luxury home market:  it’s all about attitude and expectation)

It’s a little early to tell, but my belief is that Josh and Bettina are on to something that will help them gain an even bigger share of market.  They have taken the First Objective of Marketing to the max.  You remember that, don’t you?  The First Objective of Marketing?  It’s Visibility.  First, you want to be Visible.  You want your logo to be seen everywhere, over and over.  That’s why we use blitz signs and have our sellers put out directionals, and wrap our cars and on and on:  it’s so we are Visible to the max.  The coffee shop has made Help-U-Sell Grein Group more Visible than they ever were at their old office and it looks like an innovation that’s going to pay off.

Cue the Cocktail Party Music

‘So, what do you do?’

‘Well . . . do you remember that big real estate sales commission last time you bought or sold a house?’

‘Urgh!  Don’t remind me!  I think the Realtor netted more than I did!’

‘That’s not all that unusual today.  . . But, me?  I’m in the equity preservation business.’

‘What?’

‘I help people have great real estate transactions at a fraction of the cost – which helps them hang on to their hard earned equity rather than turning it over to a salesperson.’

‘Oh, you’re a Realtor.’

‘Yes, Realtor with a twist.’

‘What’s that?’

‘I’m a Help-U-Sell Realtor.  We are a Set Fee Real Estate Company.’

‘Set Fee?’

‘Yeah.  Instead of a fat 6% or 7% commission, we charge a low Set Fee.  It usually saves thousands of dollars over what the other guys do.’

‘So you’re a discount broker?’

‘No, I’m a different kind of broker.’

(puzzled look)

‘I do everything they do and a number of things they don’t do, but my business is organized differently.  I’m leaner, more efficient and I use technology to produce the same results they do at a fraction of the cost.’

‘And it works?’

‘Let me put it this way:  Last year the average agent in our MLS closed 4.75 transactions.  There are just four people in my office:  me, my  assistant and two agents who work with buyers.  Together we closed 74 transactions last year – which works out to what?  18 each or something.  Sure it works.’

‘Damn.  Wish I’d met you six months ago.’

‘Why’s that?’

‘My home’s on the market with Acme Realty right now.  One of my neighbors works for them.  Anyway:  it’s not working.’

‘Where is it?’

‘Over on Elm.’

‘Oh, the two story? . . . with the fenced yard?’

‘That’s the one.’

‘I showed that last month.  Yeah.  I had an out of town buyer.  I remember he liked it all right but he was really wanting something with a basement — which is what I eventually sold him.’

‘Oh; so it goes.’

‘What I remember is the price.  You were right at the top of the market, probably a little above it; and with prices still dropping (slowly now, thank goodness), it didn’t compete all that well with others on the market.’

‘That’s why it’s not working out with my agent.’

‘What do you mean?’

‘I haven’t heard much from her since the listing was taken, but I’ve told her a couple of times I think we need to lower the price.’

‘What does she say?’

‘She says she doesn’t think that’s the problem and that she’ll do some research and get back to me . . . which she hasn’t done.’

‘Well, it’s your listing.  You control the price and terms.  Maybe you should start telling rather than asking.’

‘What I’d like to do is cancel the listing and try another agent . . . maybe you!’

‘I really can’t talk with you about that while your home is listed.  When the Acme listing ends I’ll be happy to talk with you, but right now – assuming the listing is still in effect – I really can’t go into that with you.’

‘I wish there was something I could do.’

‘There is.  Call your agent, set an appointment to meet with her – at her office if you prefer – and have her pull a new Market Analysis for you.  Then set a reasonable price.  And remember:  if you’re basing your today price on the prices of similar properties that closed 90 days ago and more, you’re probably setting it too high.  When pricing today, you really have to anticipate and reflect the trend.’

‘Have you got a card?’

‘Sure.  Here it is.  I hope you can work things out with your agent and I wish you luck.  If things don’t turn around, I’d be happy to talk with you.’

Big Brother: 1984, 2011 Style

Does the idea of someone hiding secretly in your living room, peering out through a little hole in the curtains, watching your every move, taking notes, gathering information they may use against you in the future creep you out a little?  Are you starting to recognize a pattern in the results your Google searches retrieve?  Does there seem to be a theme to the ads on your Facebook page?  Cue the eerie music, and start looking over you shoulder because there is most definitely a Ghost in Your Machine.

Eli Pariser is out with a book today (The Filter Bubble: What the Internet is Hiding from You) describing the discomfort if not the danger of the new ‘highly-personalized’ Internet.  Since 2009, Google has gathered information about your online behavior and used it to tailor your search results.  Facebook has been doing the same and at this point most sites that serve up information to you are following suit.  The idea makes great sense from a marketing standpoint:  if they know what kinds of information you routinely seek, if they know what kind of advertisement makes you ‘Click’, they can serve up more of the same to you eliciting even more clicks.  It is the ultimate in targeting, something we Help-U-Sell folk know all about.

So, if you are a tea party Republican and visit sites espousing those views and your friend is an eco-friendly liberal and surfs accordingly, when you both Google ‘Obama’ at the same time, you’re going to get very different results.

And that’s the danger.  The Internet (read: Google) is serving us a diet made up not of truth, but of what we want to see.  And it is a very personalized offering.

I am particularly disturbed by this because if flies in the face of so much I’ve said about the glories of unlimited access to information.  Let me see if I can quote myself . . . ‘Instead of sending troops to Afghanistan, we should be flying over and dropping smartphones on the people.’  I guess if we did that and the people immediately started surfing to sites that espouse hatred for the West, Google would establish that pattern and serve up more of the same; hardly  the eye opening and broadening effect we might want.

We had so much press about polarizing rhetoric several months ago, particularly after Arizona Congresswoman Gabrielle Giffords was  shot.  There was a plea that we turn down the volume, crank it back a notch, become more civil to one another.  Now I understand how the language could have become so rigid, so harsh, polarizing.  Thanks to the personalized Internet, each side of the debate (any debate) was being buoyed by the constant reinforcement of their own point of view.  If all you see is what you want to see you can become pretty rigid in your thinking.

After all, tolerance is a virtue and it is born of empathy – the ability to walk in the other guy’s shoes, live in the other person’s skin for a moment.  If all you’re getting is a recycling of your own opinions, how can you ever know what the other guy thinks or feels? How can you ever empathize?  How can you become tolerant?

I guess the point is this:  you can’t rely on Google or Facebook or any clickable source to serve up truth.  If you want truth, you’re going to have to do it the old fashioned way:  you’re going to have to dig.  You’re going to have to go out of your way to understand the opposing point of view.  Bias is everywhere and on the Internet, the bias is YOURS.

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!

Things that make you go ‘hmmm . . . ‘

The American Dream – or, rather, the currently popular notion of the American Dream – is under attack.  Congress and the big banks are working hard to dismantle our industry and our way of life.  Credit has become difficult for the average American to get, causing housing demand to shrivel and prices to plummet.  The FDIC has used our tax dollars to buffer the losses of mortgage lenders so that often, it’s in their best interest to foreclose and sell assets for a song rather than work out a new deal with homeowners.  Some speculate that many of the same mega-millionaires  who engineered the fraud that led to the expansion and bursting of the housing bubble are continuing to benefit from the mess they’ve made and are slowly turning us into a nation of tenants.

That’s the dark view of our current situation.  And that’s all it is:  a slanted view through dark glasses.  There is an appealing alternate view as well and truth probably lies somewhere in between the two.

In this climate I think it’s important to remember something that seemed to gel in yesterday’s Broker Roundtable call:

The American Dream is Home Ownership.  It’s not appreciation, mortgage deduction, refi every two years and pay off your credit cards.  It’s Home Ownership.  People buy homes to build families and have comfortable lives, to control their lives and lifestyles.  The financial aspects, while certainly a factor, are just that:  one factor.  Ours is still a nation where the average citizen (with the help of a possibly carnivorous bank) can own and control their own home.  Our job is to help make that dream possible in any way we can.  We seek out those who have a passion for this idea and dig through mounds of possible properties to help them find the ONE that most perfectly matches their dream.  The REALTOR is a hero here.  And make no mistake:  REALTORS are fighting tooth and nail to defend the Dream.  Thank you all for that.  And let’s dig down and send an extra $50 or $100 to our State and National REALTOR Political Action Funds.  It’s the best line of defense we have.

* * * * *

Congratulate me!  I own the search phrase, ‘Set Fee.’  If you type that into your Google search bar, the Set Fee Blog comes up first and in several other positions on the first page of organic results.  This is what a year and a half of consistent content development on a focused topic will do.  It works with blogging, with your company website (new pages, hyper-local content), with your YouTube channel, and on and on.  Google functions today as a kind of collective consciousness for people everywhere.  It pays attention and notices consistent, value-rich information and if it sees it regularly over a period of time, it reaches a tipping point and suddenly, the creator of the content is deemed to be the best source for the information.

Of course, that’s not at all unlike your Help-U-Sell business (you knew I’d get around to that, didn’t you).  If you go out to a geographically defined population of homeowners with a clear, consistent message that they will recognize as valuable,  eventually you will own that position in your geography’s collective consciousness.  Each homeowner who uses your service and is delighted will sing your praises and your next customer will become that much easier to find.  Eventually a tipping point will be reached and most homeowners in your target market will know your offering; and since the offering is outstanding, most will be disposed to working with you when the need arises.  Twelve to eighteen months of steadfast, unwavering, hard work can have you garnering 10%, 20%, 30% marketshare in your target market and more.

Google has become an electronic version of word-of-mouth advertising.  It listens to what’s being said and if it hears the same thing enough times from sources it decides are credible, it tells the world.  There is no tricking Google – just as there’s not tricking the consumer.  There’s not a way to make this happen other than just do it.

* * * * *

How about a little double-ending action . . . that’s always been a hallmark of Help-U-Sell.  Unlike your ordinary competitors who simply throw a sign in the yard, plop the listing into MLS and then wait for some other broker to wander in with a buyer, Help-U-Sell brokers have always worked to put together transactions without outside help.  That’s why seller participation and consistent target marketing are so important to our program.  Unfortunately, for some of us,  the down market has obscured that focus on getting the job done ourselves.  In an effort to find the few real buyers who are in the market, some have fallen to marketing our inventory to the industry as well as to consumers.  That’s ok.  But here’s a little reminder, courtesy of Kimber Regan of Help-U-Sell Hanford-Lemore in California.

Kimber has taken to ‘creating listings’ for her buyers.  When she finds a real buyer, one who is ready, willing and able to buy now, she sends them off to get pre-qualified and then locates upside down properties fitting their list of wants and needs.  She goes to those homeowners – who are not on the market – and offers to help them with a short sale.    She’s double-ending much of her business these days with this little attitudinal gem, and you can too.

Part of the Help-U-Sell offer to buyers has always been that we will not just rely on the MLS to find their dream home.  We’ll also contact non-listed homeowners who are in neighborhoods and homes that would be right for them, looking for that one or two who may sell if a good buyer showed up on the doorstep.  It’s a very valuable offer today when buyers can find what’s in the MLS on their own via Zillow, Trulia or (if they’re smart and lucky) Listingbook. Thanks, Kimber for reminding us who we are and how we work.

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