Help-U-Sell

Are You Ordinary?

Well, the nasty-gramms have already started to roll in. If you are Help-U-Sell you know this comes with the territory: we scare the be-jabbers out of ordinary REALTORS so they tend to hurl Molotovs when we make ourselves heard.

My last post – the one about building a landing page for Sellers – contained some blunt but honest words about ordinary REALTORS. I named a handful of national brands, lumped them all together and said they were ordinary and that there was not one whit of difference in their consumer-side operating systems. There may be some behind the scenes areas of differentiation, most frequently in the way agents are paid and how they are encouraged to help the broker recruit, but the consumer doesn’t see that and doesn’t care about it. The consumer experience is identical whether you are Keller-Williams, Coldwell Banker or Exit. And trust me: that is not a good thing.

So I had a couple of people tell me I don’t know what I’m talking about because their brand is anything but ordinary! I had an old friend from my Century 21 days tell me I’d probably never work in the legitimate real estate business again. Now that’s a hoot, isn’t it? Because in that pronouncement he labelled the Brand I love, which is the one viable alternative to the tired agent-oriented real estate business model (Help-U-Sell), ‘Illegitimate.’ I think I’d rather be illegitimate than extinct, wouldn’t you?

I think it’s time you put your own real estate career to the test. All of you. It’s a simple set of 10 yes/no questions. If you answer ‘yes’ to more than 3 of them, then, no doubt about it, you are ORDINARY – and therefore headed for extinction sometime in the next decade. Ready? Let’s Go!

Do you charge home sellers a percentage based commission? I’m sure you’re doing it because you’ve never questioned whether it made any sense or not. I assure you it does not. If you need convincing, start HERE.
Do your sellers pay the full percentage based commission specified in the listing agreement even if there is no outside selling broker or agent to pay?
Do you allow your sellers to actively seek their own buyers if they choose? And if they are successful, do they pay less?
Does your office management team spend the bulk of its time recruiting new agents and training unsuccessful agents?
Does your office incentivize agents to help in recruiting?
Are agents in your office responsible for doing their own marketing and generating their own leads?
Are the mediocre agents in your office – ones doing, say, 8 deals a year or fewer – on commission splits greater than 50%?
Have you changed offices in the last 2 years?
Do you put all of your listings in the MLS?
Does your office own or have an interest in ancillary services (termite, title, escrow, mortgage, etc), and does your management team pressure you to pressure your clients to use those services?

Seriously: 3 yeses and your REALTOR DNA is probably so twisted you may never recover. The only hope would be if Don Taylor – the founder of Help-U-Sell – were to open up a Betty Ford type clinic for recovering 6%ers . . . and I’m sorry, but he has his eye on other prizes.

So, what do you do if you do get more than 3 yeses and have to admit that you are, in fact, ordinary? Here’s an idea:

Take your gross income from last year. Go ahead, take it right off the 1099
Divide that by 52. It’s ok to use a calculator for this and subsequent steps
Now estimate how many hours you put into your real estate career in a typical week
Divide the Dollars (the answer you got when you did the division in step 2) by the hours (step 3)
That’s how much you made per hour last year in real estate . . . Gross, before taxes, insurance, business expenses, and so on
Now compare that with minimum wage, or with starting pay in any salaried job for which you might qualify
There’s no easy way to say this . . . if the hourly wage is higher than what you grossed per hour last year, get out of the real estate business

Finally, I also got taken to task for ‘hating real estate agents.’ I’m sorry: that’s just WRONG. I love good real estate agents. I think they are more than essential. I think they are heroes. What I can’t stand are mediocre real estate agents who continue to bump along, almost failing year after year. They deliver inferior service, drag the image of the entire industry down, and sap business from good agents who could serve those buyers and sellers so much better.

What Does Your Seller Landing Page Look Like?

I’ve carped about it several times . . . most recently in my last post: Your website should enable potential sellers to learn how you can help them at a glance.

That seems so simple, until you start looking at real estate company websites. Most are oriented almost totally toward potential buyers – which is as it should be. Buyers find us online and if your company website doesn’t offer them superior tools and search capabilities they are not going to stop there. That’s why home search dominates almost every real estate company website.

But what if, like Help-U-Sell, your real estate company is really different? What if you have a completely different approach to working with home sellers than your competitors? If so, you’ve got a story to tell, and you’ve got to find a quick and easy way for potential sellers to hear it – which means ‘online.’

By the way, if you are Century 21, Coldwell Banker, ERA, BH&G, RE/Max, Exit, or any other national Brand, there’s no need to read further. You have nothing unique or special to offer sellers. It’s just business as usual done the same tired way it’s always been done in each of your offices. From a seller’s perspective, what’s the difference between Century 21 and Re/Max? Sign color.

Now, you, as an individual agent or broker, may be extraordinary! You may be completely unique in the spin you put on that old tired operating system. But consider this: if you were to sell your business to someone else, subtract your personality from the equation, what would your sellers have left? Yep: the same old tired way of doing business that is virtually identical to the way it’s being done in your competitors’ offices. No difference.

If, on the other hand, you ARE Help-U-Sell, you do have a completely different program for sellers. It costs WAY less, and the pricing makes sense! (what a concept)! You create opportunities for your sellers to save big time while delivering what they regard as ‘Full Service.’ You let them be as involved in the transaction as they want to be and you don’t play stupid REALTOR games like not letting them talk to potential buyers. If that’s you, you need to be using teaser ads to drive potential sellers to your website, where they can get a quick feel for what you do, which will enable them to take the next step: contact you.

In other words, you need a landing page for sellers, with its own unique URL and QR code.

What should be on it? At Help-U-Sell we have a great template: the ETM. Pictures and descriptions of homes for sale, sold and saves, testimonials and an Easy Way. Here. I took a stab at creating a seller landing page. It’s not pretty, but it could be:

Ok: Sold and Saves, Testimonials, and a more detailed version of the Easy Way. By the way, I know you can’t read that, but if you’ll click it, it will open up a PDF version that you can view or download.

At the bottom there is a link to the great ‘You-We-They’ interactive savings calculator Robbie built last year. If there’s something missing it’s contact information or a contact form. Oh, and a request for a free CMA.

Once you have your landing page built, use Facebook Ads, Google Ads, little teaser ads everywhere to drive potential sellers to it. The landing page should communicate enough of your program so that a viewer would feel comfortable calling you. And you know what happens when they call you, right? About 97% of the time, you get the listing!

How to Use Facebook to Generate Leads

Forget about spending hours posting fascinating real estate information, looking for people to ‘Friend’ and creating an online persona. I know: that’s what all the ‘Gurus’ are telling you to do. And I’m sure it can work. But I’m too impatient for that. I want instant gratification. I want to start a marketing effort today and see the results this week. You can do that with Facebook and the following steps will show you how.

Go to your office website content management system (CMS), or to your tech person if you have one, and build a great landing page for customers. What kind of customers? Well, the page could be directed at Buyers or Sellers, but since every real estate website is directed to Buyers (search, search, search) and since listings are the name of the game, I’m going to suggest you build one for Sellers. What should be on it? A brief description of what you do and why you’re better than anyone else in the business, testimonials from real people you’ve helped with happy photos, and a contact form that ties directly to your cell phone.
Go to your Facebook page. Look for the gear icon in the upper right corner and click it. You’ll get a drop-down menu and you should select ‘Create Ad.’ You’re going to create a little sidebar ad to run on Facebook that will drive people to the landing page you just created.
Locate a good duty free graphic that will draw the eye and craft an intriguing statement in the space allotted. Tip: put your phone number in the ad. It is remarkable how many people will phone you rather than click the link in your ad – and, since this is pay-per-click, if they don’t click, you don’t pay!
This is the fun part. Target your ad to hit the Facebook pages of the people you want to reach. Maybe you’ll choose a geography: say, a 5 mile radius of your office. Maybe you’ll choose an age range: 25 – 55. Maybe you’ll choose any number of other criteria. Each time you select a criteria, you’ll see the size of your potential audience shrink. That’s a good thing. The best marketing is target marketing and as you fine tune and shrink your target audience, the effectiveness of your ad will increase.
Set a click-rate. How much are you willing to pay when a consumer clicks your ad? Facebook will suggest a range and it will often be fairly large, say: $1.50 – $10 a click. Whatever you choose can be edited at any time, so I suggest starting in the lower half of the range, ideally just south of the mid-point. What you’re really setting is the MAX you’ll pay for a click because the click rate varies depending on how many other ads are competing for the same audience at the same time. Maybe you’ll bid $3.00 a click. When you check your stats, you’ll discover you’re only paying, on average, $2.05 a click.
Set a campaign duration and total budget. I would suggest your first campaign should run 1 – 2 weeks and have a budget of, oh . . . $200. That will be enough for you to see some results and make adjustments.
As the campaign runs, check your stats daily, even two or three times a day. Are you getting enough clicks to exhaust your budget in the time allotted? If not, maybe you should up your click rate.
Meanwhile, meticulously track your results. Of the clicks that get to your landing page, how many fill in the inquiry form? How many call you? And what about the people who never click, but call the number in the ad? How many of them are there?

You see, this is how you develop leads using Facebook: you treat it like any other advertising medium . . . because that’s what it is. I love Facebook pay-per-click advertising because it can be so highly targeted. $2.00 might seem like a lot to pay for a click, until you recognize that it is a click originating within your target market, from a person who fits the description you chose, who was sufficiently motivated by your teaser ad to investigate. It’s a bargain!

Here’s the key: What can you offer in your teaser ad to get viewers to your Landing Page? If you are Help-U-Sell, that ought to be easy. (Picture of house ‘thinking’) Headline: Thinking of Selling? Body: See how much you can save! (555) 543-2109.

And, by the way: though I dissed Facebook’s ability to build your business in the first paragraph, truth is: it’s a great tool for staying in touch with past clients. Please exploit that aspect to the fullest. But try a little pay-per-click to generate NEW business.

What is a Sales Commission?

Sales commissions are so common in business that I sometimes wonder if we haven’t forgotten what they are all about.

While there are several ways to compute a sales commission – paid as a percentage of gross or of profit, paid on revenue over an agreed level, paid as a set fee per unit and so on – most are calculated on a percentage basis. The historical background on this goes back to the time when the maker of a thing wanted to focus on the making and get someone else to take the burden of developing a customer base and selling the thing.

Because the salesperson did not have a vested interest in the product or the company – he or she was just ‘the help’ – sales commissions were used as a motivational tool: the more you sell, the more you make. Some organizations took this idea to the max, graduating their commission scale upwards as a salesperson’s production increased. Others, fearing that good salespeople might make more than CEOs, put a cap on commissions (and usually drove their best salespeople away in the process).

The situation in real estate is a little squirrely. Technically, you pay your real estate BROKER (not agent) a commission when your home sells. Usually it is a percent of the sales price (which, of course, makes no sense at all), and it is intended to motivate your broker to work hard securing you the best possible offer on your property. But, in reality, most sellers never meet their broker. The person they deal with is an agent who works for the broker. The broker pays the agent a ‘split’ of the commission the seller pays the broker, and uses the ‘split’ as a means of motivating the agent.

That’s the way it’s been for decades.

But this is 2013. Home selling has changed:

It no longer takes an arm and a leg to sell a properly priced listing. The Internet has made powerful marketing affordable, even cheap.
The mystery of getting a house sold has evaporated as consumers have gained access to information previously held from them and systems have replaced personalities in the selling process.
As a result, the real estate superhero salesperson has lost his/her battle with Kryptonite. There really is no magic in the home selling process anymore. It’s pretty much: price it right, plug it into a marketing system that produces results and negotiate a good deal.
The value of an agent today has more to do with negotiating that good deal, looking out for his or her client’s interests (representation), transaction processing and problem resolution as the sale progresses to closing. It’s not so much about ‘selling.’

What I question is why we are paying our brokers a commission? A commission is something you use to MOTIVATE a salesperson. The broker today is NOT a salesperson. In most ordinary real estate offices s/he is a glorified admin – supporting the efforts of his or her salespeople and keeping the office infrastructure working. The ordinary broker today is someone we should be paying a FEE to, not a commission. A FEE is something you pay a professional for handling a specialized task: you pay an attorney a FEE, you pay an accountant a FEE, why not your real estate broker?

If there is a true salesperson in this equation it is the real estate salesperson, who works for the broker . . . but s/he is not a salesperson in the way you are probably thinking. You’re probably thinking, ‘Yes! It’s that salesperson who is going to sell my house, not the broker!’ But we’ve already established that you don’t really ‘sell’ homes; homes sell when they are priced properly and plugged into an effective marketing program. The salesperson in an ordinary real estate company sells something other than homes. What they sell is the services of the broker to consumers. The broker hires salespeople not because s/he needs someone who knows how to sell a house, but because s/he needs someone to convince new sellers and buyers to do business with the company.

Seem like a muddled mess? It is. We have an antiquated business model at the heart of every ordinary real estate company. They keep trying to dress it up as ‘new!’ but, as we used to say down South, ‘you can put lipstick on that pig, but it’ll still just be a pig.’

There is another, newer way to do business that makes sense, is completely effective and costs less. It is Help-U-Sell, where you pay a broker a Set FEE to sell your home. Because selling a properly priced home is not rocket science, the broker and his or her support staff and office systems ‘sell’ your home. You’re not paying a bloated percentage based commission so that the broker can then turn around and compensate a salesperson NOT for selling the house but for bringing in new business to the company. That merry-go-round you’ve been riding all these years is in a gazebo lined with fun-house mirrors: the distortion and dizziness are numbing. Get off now, regain your footing and return to logic. Call Help-U-Sell and ask, ‘How do you guys work?’ You’ll probably be delighted with the answer.

NOTE: I keep talking about ORDINARY brokers and ORDINARY real estate companies. I realize it would be easy for almost any broker or agent with any company to imply that I couldn’t possibly be talking about THEM because they really are different. So let me clarify: probably more than 90% of the real estate offices operating in The United States today are ORDINARY. They are offices where the broker’s number one job is NOT selling real estate, but rather recruiting agents. They are offices that put the agent at the center, developing endless programs to aid salespeople, not consumers. They are offices that charge consumers a lofty percentage based commission not because there is a relationship between the commission and getting the home sold, but rather because they need all of that cash to pay the salespeople the huge ‘splits’ required to keep them. It’s all about accents. Ordinary Office = accent on the agent. Extraordinary Office = accent on the consumer (And there is no better way to put the accent on the consumer than to charge a logical low set fee for the service involved in selling a home).

Real Estate Sales Commissions Revisited

Most traditional real estate brokers – what I like to call ‘ordinary’ brokers – charge a percentage of a property’s sale price as commission. It’s been that way for . . . well, for as long as anyone can remember. It’s what we do because . . . it’s just what we do. To question it would be like questioning why we eat three meals a day or why we go to bed at night. So, while percentage based commissions irritate real estate consumers to no end, they are rarely challenged. Here at the Set Fee Blog, we challenge them every day. We believe the future of real estate will be better for consumers who will pay a logical (lower) set fee to market their property.

Let’s take a breath here in the Spring of 2013 to, once again, chip away at that tired old percentage based paradigm. Let’s take a look at why percentage based real estate commissions make no sense.*

REASON ONE: Percentage based commissions are arbitrary

In my examples I am using 5%. But why? What does 5% of the sale price have to do with what it takes to get the property sold? What does it have to do with effective representation of the seller’s interest and the effectiveness of processing the sale? Nothing. It’s just a number I pulled out of the air, remember? And that’s how ordinary brokers set their commission rates: they usually just pull them out of air. There is no connection between the fee charged and the level of effort and resources it will take to sell the property.

From an ordinary broker’s perspective, the arbitrary percentage based commission is full of possibilities! Because it is a percent of the sale price, the amount of dollars collected in commission goes up as more and more expensive property sells! A typical strategy for an ordinary broker who wants to improve his/her bottom line is to target ever more expensive property . . . because 5% of $500,000 is a heck of a lot more than 5% of $300,000 . . . and, honestly? It usually takes no more time, effort, energy or money to market a $500,000 home than a $300,000 home. Yea! Let’s hear it for arbitrary commission rates!

REASON TWO: Percentage based commissions are inequitable

Let’s assume you want to sell your $300,000 house. It’s a nice big 4 bedroom with 2,200 square feet of living space. You decide to list with a fictitious company, Hypothetical Realty, and agree to pay their 5% commission when the property sells. That’s $15,000 (Gulp!).

(Wait a minute . . . I’m having trouble catching my breath . . . I’m thinking about YOU in your $300,000 house. If you are a typical $300,000 house homeowner, you might earn in the neighborhood of $80,000 a year. That means YOU, the owner of this house has to work about 2 1/2 months to pay your real estate commission! Really: take your paychecks for January, February and half of March and give them to your real estate broker because that’s what it’s going to cost to sell your house! )

Now, when your neighbor sees the For Sale sign in your yard, he starts to thinking . . . ‘maybe this is a good time for ME to sell.’ So he calls up Hypothetical Realty, has them over for a chat and agrees to pay their 5% commission, too. But his house is smaller: it’s just 3 bedrooms and 1,800 square feet. Price: $240,000. If it sells for full price, the commission will be $12,000.

Wait a minute! You’re paying $15,000 for the same service delivered by the same company that your neighbor is paying just $12,000 for!?! WHY?? Where is the logic in that?? Are you paying $3,000 more because it will take that much more advertising to get the job done? (Hardly) Are you paying $3,000 more for a better For Sale sign?? Oh, I know: you’re paying $3,000 more because your agent is going to work $3,000 harder, right? WRONG! There is absolutely no reason why you’re paying $3,000 more than your neighbor other than this: you’ve been conditioned from the moment you had your first real estate transaction to accept without question the notion that real estate commissions should be a percentage of the sale price.

Usually it takes no more time, energy effort or money to sell a $300,000 house than a $250,000 house in the same neighborhood. So why aren’t they paying the same thing? I really have no explanation. I think, next time you talk with Hypothetical Realty, you might want to ask them.

REASON THREE: Percentage based commissions are inflexible

Ok. You listed with Hypothetical, remember? They are selling your $300,000 house and charging 5%. The reason the fee is so high is that in all likelihood there will be TWO real estate companies involved in the transaction – yours (the listing company), and a different company who comes in with the buyer. Both companies will need to be paid. And, of course, each of those companies will be represented by an agent who needs to be paid, too. So that 5% you agreed to pay is not just one commission, it’s four: one for the listing company, one for the listing agent, one for the selling company and one for the selling agent. Ok, maybe there is some logic in this lofty commission stuff after all! There are a lot of people who have to get paid!

But wait: what if your listing company finds the buyer? What if there is no outside broker involved? Do you still have to pay all four commissions? Yep. That’s what you agreed to when you signed the listing agreement. So what does the listing broker do with the extra cash he got to keep? Well in other industries it’s called overage or breakage . . . and it’s one of the keys to pocketability . . oops, I mean profitability.

Or, how about this sad tale: you list your home with Hypothetical on Friday and on Monday you meet the new person transferring into your company from out of state. They hear about your house, fall in love with it and want to buy it. You call up your agent to write it up. Now YOU found the buyer, right? Are you still going to have to pay all four commissions? Yep. That’s what you agreed to when you signed the listing agreement.

You see, there is no connection between what it takes to make the sale and what you’ll pay. It is a completely inflexible, one-size-fits-all system that, I’m sure you agree, makes no sense.

I could go on, but I think three reasons why percentage real estate commissions make no sense is enough. It’s important that you know that it doesn’t have to be this way. There are alternatives out there, though they can be hard to find. One I know and believe in is Help-U-Sell. They charge a logical Set Fee to sell your house. It’s just a wild guess on my part, but that $300,000 house? The one Hypothetical was going to charge 5% or $15,000 to sell? Help-U-Sell Theoretical Realty (a fictitious company operating in the same fictitious neighborhood) might charge something like $3,950 to sell it. Oh, and they’d charge your neighbor with the $250,000 house the same $3,950.

Now I want to be completely clear about this. That $3,950 is this particular Help-U-Sell office’s Set Fee. It covers the consultation and advice you’ll be getting, the marketing of the home, the negotiation, representation and transaction processing you’d expect from any Full Service real estate broker.

What it does not include is any commission for an outside broker or agent. You don’t have to offer it for sale through outside agents, and in some hot markets, that might be advisable. I mean if you can sell without paying extra people, why do it, right? However, most sellers opt to go into the local MLS which means agreeing to pay outside brokers and agents a fee if they bring in the buyer. So you’ll be adding their fee to your Help-U-Sell $3,950 in the event that’s how the sale is made. How much would it be? For your $300,000 house, you might offer between $6,000 and $9,000 to compete for an outside broker or agent’s attention, but the amount you offer is entirely up to you.

And here’s the best part: suppose you do want to offer your home for sale through outside brokers as well, you go into the MLS and you offer to pay an additional, say, $7,500 to an outside broker should they find the buyer . . . but then, you go to your office and, as in the example above, you find your own buyer. What do you pay? Just the Help-U-Sell Set Fee, $3,950. You see, with Help-U-Sell, you pay a fee based on how your home actually sells – with or without outside broker help – not based on an arbitrary percentage based commission that was intended to compensate four different entities.

*In this Blog post, I will be using examples of percentage based commissions. For convenience sake, I’m going to use 5% as the commission rate. It is a number I plucked from air and is in fact a rather unusual number in today’s real estate universe: most charge more. It is important to remember that real estate commissions, whether percentage based or set fee, are fully negotiable between the broker and the consumer. There is no ‘going rate,’ and each situation is (theoretically) handled differently. Brokers set commission rates for their individual offices and if rates are negotiated, they are done so only with the broker’s approval. Price fixing occurs when two or more brokers get together and agree to charge the same thing. That is a highly illegal activity. At Help-U-Sell, different offices charge different set fees for a very logical reason: the cost of carrying a listing varies from location to location as does the number of days it takes to get a listing sold.

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