How Help-U-Sell Works, Plain & Simple

Real estate sales commissions are high because they are designed to compensate four people: the listing agent, the listing agent’s broker – the selling agent (the one who brings in the buyer) and the selling agent’s broker.

Most real estate commissions are a percentage  of the sales price that you pay whether outside brokers and agents are involved or not. Because they are a percentage, the more expensive your home, the more you will pay.

At Help-U-Sell, we ‘un-bundle’ commissions and services. Our home sellers may choose to offer their property for sale through outside brokers and agents – or not. They may choose to go into the local MLS – or not.

Regardless which services the home sellers selects at the time of listing, however, the final fee is based on how the home actually sells. If there is no outside office or agent involved in the transaction, all the seller pays is the Help-U-Sell Set Fee.

That’s another difference: instead of a percentage based commission, our sellers pay a low Set Fee to market their homes through Help-U-Sell. And while there are minor variations based on specific market niches, generally the seller with the $400,000 home who lists with Help-U-Sell will pay the same Set Fee as the seller with the $350,000 home.

We are a full service real estate company. We do what ordinary brokers do and more, including:

  • Consulting with you on pre-sale preparation and pricing
  • Calculating your estimated net proceeds
  • Marketing you home using the most up-to-date and effective methods
  • Helping you evaluate every offer that is received
  • Looking out for your best interest through the transaction
  • Communicating what’s going on every step of the way
  • Handling problems as they arise
  • Coordinating inspections and transaction deadlines
  • Reviewing closing documents with you

Plus – we will save you thousands over what you’d pay most ordinary real estate brokers!

Flashback Friday: Revisiting the Elevator Speech

Happy Friday, everyone. This is the day we dig into the archives and recycle a SFB Post from the past. Today it’s from our second month in existence and I laughed when I re-read it: I remember the exchange between the Financial Planner and myself vividly – and we are still friends. As you read, pay attention to the ‘Set Price’ bit near the end. Really: what do you think about that? Enjoy!

I had an interesting conversation with a gentleman yesterday about the Elevator Speech. When I told him I worked for Help-U-Sell®, he asked (as if from a script): ‘What do you do?’

Like Pavlov’s dog, I spoke right up. ‘We are REALTORS® and we do all the things the other REALTORS® do – and more – except instead of a commission, we charge a low set fee, which can save you a lot of money when it comes time to sell your house.’

He scowled.

‘What?’ I asked.

‘You lost me at REALTOR®,’ he replied. I continued to look puzzled, so he went on. ‘As soon as I heard you were a REALTOR®, I thought I knew exactly what you do. I didn’t really hear anything that came after . . . nothing to set you apart or make you different.’

‘Nothing?’ I asked, aghast. I was in shock. Seeing my discomfort, he smiled.

‘I’m kidding,’ he said, ‘I heard what you said, I really did. But I was listening like a consumer.’

Turned out he was a Certified Financial Planner and had been working through an exercise in his company to get at how to most effectively communicate their message to consumers in a quick, concise and differentiating way: an Elevator Speech.

‘What we discovered was that when we differentiate first, our message gets through,’ he said. ‘We don’t lead with ‘We’re Financial Planners’ because people have a mental image of what that is and if they put us into that picture we look just like everyone else. Another thing – we did away with all the ‘buts’ and ‘ands’ and ‘excepts’ in our speech. We found that those kinds of qualifiers negated what went before in people’s minds.’

My original impulse was defensiveness: I learned that elevator speech seven years ago. I knew why every word was chosen and I knew why it was supposed to work. But when I ran through it again, in my head, I remembered that the opening phrase was chosen to combat the rumors our competitors were spreading, not to differentiate us from them. We said we were REALTORS® right up front – and sometimes elaborated to say we were ‘full-service REALTORS®’ – because the other guys were telling everybody we weren’t!

‘Let me hear your speech,’ I said. I wanted to turn the tables, put him on the spot and see if I could find the holes in his dialogue.

‘Sure,’ he replied, ‘We fix people’s broken investment portfolios.’

‘Really?’ I asked, ‘How do you do that?’

‘See?’ he answered, ‘It works.’ I continued to look puzzled. ‘The whole point of the speech is to let people know you are different in a way that might benefit them and get them to ask for more information. You played your part very well.’

I’ve been thinking about our speech ever since. Perhaps it is littered with little land mines that could blow up and ruin our chances of getting through to the consumer. I remember Mike Miller, during his brief stay as our Chief Communications Officer, insisting that ‘set fee’ was a negative: Lawyers charge fees, banks ‘fee us to death,’ airlines charge excess baggage fees. He was pushing for ‘set price.’ Personally, I’m not ready to go there; but it is something to ponder.

Here’s what I’m thinking: the answer to ‘What do you do?’ might simply be, ‘We are a set fee real estate company.’ Period. It says you’re different, hints that there might be a benefit to the consumer and begs the question, ‘How does that work?’

Please don’t change your elevator speech – you know, the one you currently have that is working. But chime in: What do you think about the advice I got this weekend? Should we rethink the Elevator Speech? If so, how do you see it in the future? Click the ‘Leave a Comment’ link above and speak your mind!

Do-It-Yourself

Most people don’t want to attempt the sale of their own property without professional help.  That’s smart.  There are so many things that can go wrong, so many landmines on that path; and these are BIG things that can cost a lot.  Still, when the alternative of paying, say . . . $15,000 or more in sales commissions is considered, some elect to brave it on their own.  And sometimes they’re even successful.  Most of them, however, say they’d never do that again!

The problem with Do-It-Yourself is the definition of ‘it.’  What is it you are going to do yourself?  The whole thing?  Pricing? Preparation? Marketing? Screening? Showing? Open houses? Contracts? Arranging financing? Handling details? Solving problems?

Frankly, I don’t like that definition of ‘It.’  It’s too big.

But, what if we defined ‘It‘ as simply being those things any capable homeowner could do for him or herself?  What if we pull out all of the technical aspects of selling a home, all of the tasks that take specific knowledge and experience, and shortened our list of ‘It‘ to:

  • Showing the home (I know:  50+ years of REALTOR-speak has conditioned us all to believe we can’t do this well, but, come on:  who knows your property better than you?)
  • Holding open houses

Now, that’s an ‘It‘ I can live with! Especially if it means ‘It‘ can save me big bucks!

And, guess what:  it can.

You see, one of the many things Don Taylor, the founder of Help-U-Sell, questioned about the Ordinary real estate business way back in 1976, was the role of real estate agents in the typical office and the expense associated with having them.  Instead of a real estate office with 50 or 100 agents stumbling around doing half a dozen deals a year each (which, by the way, is a true picture of what an Ordinary real estate office is:  that’s  normal for them), he wanted a handful of agents, focused on a specific job description, doing four or more times the average production of agents elsewhere.  To realize this vision, he looked at the list of things agents have to do in a real estate sale – which is similar to our big list of of ‘It‘ above – and tried to pare it down.

He recognized that most agents spend huge amounts of time opening doors for people and sitting in open houses.  Overheard at a REALTOR meeting:

What did you do last Saturday?

What a day!  I had to show one of my listings in the morning – someone called and wanted to see it.  I drove 30 minutes to get there, waited another 30 minutes  . . . and they didn’t show up.  So, that was my morning.  Then I had an open house in the afternoon, which meant I needed to start an hour early putting out signs and making sure the house was ready to show .  And then it rained all afternoon, remember?  Hard!  I sat there for four hours with my lemonade and cookies and didn’t see another living person.  

Gee, why didn’t you just close up shop and go home?

Believe me, I wanted to, but I promised the seller two open houses and this was the day they chose, so I was stuck.

Don decided that a typical homeowner – carefully prepped by a sharp agent – could easily show his or her own house and, with a little more preparation, hold an open house.  That would save a lot of time in a typical agent’s career – and saving time saves money.  Whose money, you ask?  In Don Taylor’s mind, it saved the homeowner money.  After all it was the homeowner taking over these simple tasks that steal agents’ time.  With a seller participating in this fashion he would need fewer agents and could charge less.

There’s more to how Help-U-Sell brokers are able to charge less and still make more than their Ordinary counterparts.  There is a ton of difference in how Help-U-Sell offices approach the business – marketing, lead capture, incubation, transaction processing – but for now, we’ll stay focused on this one aspect:  Seller Participation.

Think about it for a moment.  You’re a home seller.  It’s a beautiful Thursday afternoon.  You’re home, working in the yard.  The house is neat and clean . . . what the heck!  Why not put out the Open House sign and a few directionals.

Meanwhile, Ms. P, always looking for her dream home, takes a new route from the grocery store and finds your open house.  After a bit of friendly chatting, you get her name and contact information (your agent prepped you well), and take her through the house, which she loves.  She wants more detail and might want to make an offer.  You hand her your broker’s card and tell her he will be in touch.  You wave goodbye.

You call your broker, who calls Ms. P, has her come to the office to answer her questions and have her pre-qualified for a mortgage.  Then he brings her back to the house for a more in-depth tour.  That evening, he comes back with her offer and earnest money check.

You found the buyer yourself.  There was no outside broker or agent involved.  When the sale closes, you’re only going to have to pay your Help-U-Sell Low Set Fee.  It is a successful sale – and you saved thousands of dollars in commissions!

That’s a Do It Yourself I can live with!

 

Ordinary Test Explanation

It struck me that providing a rationale for each of the ten questions in the previous post would make sense.  I mean:  Ordinary brokers and agents may not even understand the significance of the questions much less why they might be an indicator of ordinariness.  So, here is the background for each question (If you haven’t read the original post, it would make sense to do so before continuing):

1.  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.

There is no relation between the time, money and effort it takes to sell a home and a percentage of the sale price as sales commission.  It’s a complete disconnect that nobody in the industry can explain logically. Rather than pound away at it again, if you need to learn why that approach is so off-track, just follow the link (‘HERE’) above.

2.  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?

One of the organizing principals of the real estate business is that people need representation.  Buyers need a knowledgeable expert to look out for their interests in a transactions just as sellers do.  So the real estate sales commission – usually, but not always paid by the seller – is designed to be split between the broker representing the seller and the broker representing the buyer.  Since most brokers hire agents to represent them, those agents also have to be compensated.  So that big percentage based sales commission is actually designed to compensate four people:  the listing broker, listing agent, selling broker and selling agent.  Fine.  Let’s do an example:  

Mary has a $350,000 house and lists it with Acme Realty,* agreeing to pay a 6%* sales commission when it sells.  That’s $18,000!  For simplicity’s sake, let’s assume that all splitting of commissions in this example will be done on a 50/50 basis:  the two offices will split the commission 50/50 and they each will split their portion 50/50 with their respective agents . . . which is rather laughable, because it happens so rarely today.  In today’s real estate universe, most agents are getting 65% -70% of their office’s portion of the commission, sometimes even more.  But back to the example.  We break down Mary’s $18,000 commission as follows:

$4,500 for the Listing Office

$4,500 for the Listing Agent

$4,500 for the Selling Office

$4,500 for the Selling Agent

Now, what happens if the Listing Agent finds the buyer?  We’re not having to pay a Selling Office or Selling Agent, right?  Does Mary get to keep the $9,000 that was designated for them?  

Ok, ok, I know:  the Listing Agent is doing two jobs here, that of the Listing Agent and that of the Selling Agent, so they should get paid twice, right?  And what about the Listing Office?  They had marketing expenses on the Listing Side and have to pay for all kinds of systems to enable agents in the office to find and work with buyers, so they should be compensated twice, too, right?  I won’t split that hair. Having been in the Ordinary business for years I will admit that there is a little more effort for a listing agent who finds his or her own buyer and a little more strain on office resources . . . . but it’s a little more, not $9,000 more.  The in-house sale is a windfall for agents and brokers at the expense of home sellers, so much so that in the biz we call it ‘Double-Dipping.’  

3.  Do you allow your sellers to actively seek their own buyer if they choose?  And if they are successful, do they pay less?

We are connected people.  You have friends, family, neighbors, co-workers, acquaintances.   And there is a chance that any one of those people – or someone they know – may be the best buyer for your house.   But when you list with Acme, are you encouraged to spread the word to your personal network?  And if you do and are successful in finding your own buyer – not only eliminating the Selling Broker and Selling Agent, but also eliminating the marketing function from Listing Brokers list of duties –  is there a corresponding reduction in the sales commission you pay?  Wouldn’t it make sense if there was?  I’m just sayin’ . . . 

4.  Does your office management team spend the bulk of its time recruiting new agents and training unsuccessful agents?

This is symptomatic of a real estate office and broker with the accent on the wrong syllable.  They are in the recruiting business, not the real estate business.   This is a broker who believes hiring agents is the key to profitability . . . and almost any agent will do.

Listen:  most people who get a real estate license and join an office don’t make it.  Most are gone in a couple of years.  But everyone who gets a license has friends, family and neighbors who might do business with them before they crash and burn and leave the business.  The Ordinary broker builds his or her business on this principal, using the personal relationships of recruited agents to expand the office’s reach to consumers.  

The extraordinary broker, on the other hand, uses carefully orchestrated marketing and finely tuned office systems to expand his or her business and enhance profitability.  Agents are very important, but they are there to help the broker take care of the business the broker has created, not to create business for the broker (although, that naturally happens).  

Can you see the difference?  The Ordinary broker, running a body shop, really doesn’t care whether the new recruit becomes an outstanding agent or not.  Oh, they’d like everyone to be successful and make them a ton of money, but they know that’s not going to happen.  What’s really important is that they get 5 or 6 deals out of those failing recruits before they move on.  

On the other hand, the extraordinary broker’s business lives and dies based on how well his agents take care of the buyers and sellers the he has worked so hard to secure.  There is no room for non-producers, for those who lose leads and fumble repeatedly.  Bumping along at 6 deals a year is unacceptable. 

5.  Does your office incentivize agents to help in recruiting?

All this means is that the number one priority in the office is to add more agents.  See the explanation in #2 above – it is the same. 

6.  Are agents in your office responsible for doing their own marketing and generating their own leads?

In the ’70s and ’80s, when brokers took the accent off marketing and lead generation and put it on recruiting they found the only real tool they had to attract agents was commission split.  This made sense then as it does now:  when everyone has the same operating system and the same tools, all that’s left to distinguish one company from another is commission split and personality.  From that time forward, agent commission splits have risen and risen to ridiculous levels.  Even non-productive agents are often paid stratospheric splits.  With more of each commission dollar going to the agents, brokers had less to spend on marketing.  Most simply quit marketing homes – that became the responsibility of the agents.  Instead, many brokers shifted their own marketing efforts to recruiting and retention programs.  They were marketing to attract new agents and to cause the ones they already had to stick around.

The reason this question is on the list is that the situation is symptomatic of an office that’s gotten out of the real estate business and into the recruiting business.

7.  Are  the mediocre agents in your office – ones doing, say, 8 deals a year or fewer – on  commission splits greater than 50%?

According to NAR, the average REALTOR in 2012 grossed $34,900.  That’s a little less than $17 an hour before taxes, insurance, business expenses and so on (assuming a 40 hour work week).  That will most likely be less than 10 closed transaction sides . . . and will often result in the agent getting some kind of plaque.  In fact, ‘Million Dollar Club’ agents – those who sell $1Million worth of real estate will gross something less than $20,000.  This is not only acceptable to most ordinary brokers, it is often celebrated, rewarded, fussed over.  If the non-producers in your office are being paid more than 50% all it says is that your broker is begging people to come to work for the company, even non-productive people.

Here’s a great truth from nature:  eagles don’t flock with turkeys.  If you are not one of  the living dead occupying space in your Ordinary office, get out!  Now!  And then do something extraordinary:  take a look at becoming a Help-U-Sell set fee broker or a buyer’s agent in a Help-U-Sell office.  

8.  Have you changed offices in the last 2 years?

Many years ago, I spent some time as Director of Recruiting at Century 21’s International Headquarters  (Can you imagine that?? Me???!  That was before I saw the light!).  We tracked all kinds of things related to agents and offices.  One of those things was turnover.  Generally speaking, every office turned completely over every three years.  I know:  the visual of that office turning over is funny.  But the stat isn’t.  It means if you take a photo of your office staff during sales meeting today, and put it away for three years and then look at it . . . .most of the people in the picture will no long be with the office.  Yes there are exceptions, but the fact is, agents in general have become obsessed with commission split, and office jumping to attain a higher number is regular as rain.  And what does this behavior say about the function of the office and the broker?  It says those things are irrelevant.  Unimportant.  A necessary evil.  If you are caught in this office-jumping cycle, consider the notion that a capable broker can greatly enhance your career.  If the broker’s business is to generate leads that you convert to sales, you’ll do more, make more and have more fun.  Of course, your split will be lower, because your broker will be spending serious money on marketing, but your career will be so much better you’ll finally stay put!  

9.  Do you put all of your listings in the MLS?

The MLS is great!  It’s a wonderful marketing tool!  Trouble is:  it’s expensive.  A seller going into the MLS has to be prepared to compensate not just the listing office and agent, but also the outside office and agent representing the buyer.  In many situations it’s worth the expense, but not in all situations.  

In fact, in most normal markets (not depressed or under-performing) , a properly priced listing will sell in a reasonable time with or without the MLS.  So why add the additional expense to the seller’s HUD-1 if you don’t have to?  If you could get the job done without costly outside help and thus save the seller serious money, why wouldn’t you?  I know:  your MLS probably has a rule that says you have to put all listings in, but that just means your seller has to sign a waiver if they’re not going into the MLS.  

Of course, if you hold your best, most marketable listings out of the MLS, passing the savings on to your sellers, your fellow agents are going to hate you.  You will be taking a little of their cheese away and giving it to your sellers.  But who are you supposed to be taking care of in your real estate career?  Your listed seller or the agent who works in the office down the street who secretly wishes you’d move to Tierra Del Fuego?

10.  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?

I remember working with Ordinary brokers in the ’90s.  The big issue – other than recruiting, of course – was profitability.  You see, there was none.  By then, agents were demanding such high splits that even good, productive offices were making no money.  I remember going to a meeting of brokers in California.  Their discussion of profit was honest.  The consensus was that it was impossible to make a real profit in real estate, that the smart thing to do was to use the real estate office to drive business to your ancillary services.  Make your money on title, escrow, insurance, and so on.  Sad.

Really:  don’t you think that, if your business can’t make a real profit that maybe there’s a problem with your business model?  I mean, if you were selling hammers that cost you $2.00 for $3.00 and paying the salesperson 50% commission, you’d know what to do.  Why is that so hard in real estate?  

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).