There is a bear in the woods. He has been lurking around for a few years and presents a threat to us. There is an aggressive new competitor in our industry. This competitor seems like an ally to Realtors but is really an adversary. There are a large number of web-based outsiders that are trying to penetrate the real estate marketplace. These outsiders are waging a battle to sign up customers through early stage offers of gift certificates, cash, gift cards or opportunities for free rebates. Multiple agents are also promoted to the consumer with the inducement to receive sales materials such as CMA’s or marketing plans. These companies are luring in consumers with the hook of lower fees or bonuses.
The most sophisticated of all these interlopers is Lending Tree. They have already been engaged in lawsuits with the Cendant Groups and RE/MAX. I have no doubt they will continue to step over the line and others will follow. The only service these companies are providing is being the intermediary between the potential prospect and a group of agents bidding for the business. For this service they want 30% – 40% of the commission!
These companies are working diligently to become significant players in the agent referral business. For example, if a consumer used Lending Tree to help them find an agent they could receive up to a $2,000 gift card at Home Depot based on the price of the home.
The whole industry of these web-based party crashers is to make money at your expense. For you to do all the work you have been doing already but for a 30% – 40% reduction in your fee structure.
There are others like Home Loan, which offers a cash reward of $500, or Master Moving, which offers a reward of .225% of the sales price. The reward would amount to $675 on a home valued a $300,0000. All these companies want a slice of an already thin pie.
A recent study by NAR gives us an indication of why we are experiencing these predators prowling in our industry. For the years 2003 and 2004 only 13% of the consumers returned to their agent they used from a previous purchase. This statistic shows our glaring lack of service after the sale. It shows that we are no better then other sales people who make a sale and never follow up with the client again. Until we change our ways that bear will be out of the woods and in the back yards of our clients. He will be rummaging through the garbage cans trying to find a way to be invited in!
We must drive these bears back to the woods. The only way to do that is to really protect what we have starting now!
As agents, too many of us are relying on the mail and email to forge relationships with our clients after the sale. We are using a pre-packaged CAP program, or Client Appreciation Program, where we give them “items of value” monthly. I don’t want you to misunderstand me here. It’s fine if you do that. There is nothing wrong with regular contact via mail or email.
The problem lies when we get lulled into a secure feeling because we mail them something every month that generates an impression on our client for a total of 30 seconds at best. The clients also knows that you send this same “stuff” our to 500 plus other people as well. The consumer knows that all we did was mail merge a mass letter and mass marketing piece. How special does that make them feel? Sending out mass mail marketing pieces is better than doing nothing, but it falls far short of the exclusive relationship that we are hoping for.
We must realize and value these mass mailings for what they are…support pieces. These pieces’ only value is supporting the personal efforts we should be engaged in. The personal efforts we make toward our clients are the foundation of raising our referrals and our retention of our past clients.
Our personal efforts can be segmented into two key areas, the “relationship building” area and “expert in the industry” area. We need to be building the relationship so they know we care about them. We also must establish ourselves as the industry expert. Our past clients need to feel that having an expert on their side outweighs the giveaways that these companies are enticing them with. If all we have is a relationship they will be tempted to evaluate and even accept these outsiders offers.
To master the relationship-building arena we need to move beyond mail and email. We must intermesh personal intervention, phone-to-phone or face-to-face contacts. Our past clients need to hear from us personally on a regular schedule. We must raise the level of intimacy with our clients by frequency of personal contact and intensity of personal information. Intensity of personal information is the core information about a client. We are going to track this core information on each client. An example would be birthdays, anniversaries, children’s birthdays, children’s activities, and client’s interests. There are more options than one could list in an hour. The question is what do you want to track? What will give you the edge to protect what you already have? The power of this information in a usable format is explosive. A usable format would also set up intimate correspondence based on life events, like sending out birthday and anniversary cards. A usable format would be the ability to search your database based on these categories as well as other specific categories.
Very few agents go do what I will describe now. You have a client that has an interest in golf. You know that because it is core information you track on your client’s interests. You read an article on a golf topic about a new course opening in your greater region. You then photo copy that article with a note for the client saying, “I read this article and really enjoyed it. I thought of you when I read it because I know you love golf. I hope that you and the family are doing well.” You then mail the article to your client. Then place a call in a few days to make sure they got it and you can ask for referrals. If we do this type of relationship building we reduce the exposure to defections of clients. A defection is when someone leaves your database and uses someone else. The use of the CAP system being your only avenue of relationship building is not enough!
We also must position ourselves as the expert in the industry. The reason why fees have been feeling additional pressure downward is the message from these outsiders, the media and others. The message they are sending is, “It doesn’t matter who you select, as agents we are all the same.” Our message needs to be “It matters who you select to represent your interests.” First we have to believe that to our core. Second we have to be able to document that empirically with statistics. We must be able to articulate our average list price to sales price, average days on the market and average listing sold verses listing taken verses the board average or another agent’s average. From these statistics that we call the “Big 3″ we need to show the benefits to the client. The benefits of a higher net dollars in their pocket, lower hassle factor or disruption to their family because of a reduction of days on the market and a higher probability of sale when using us to represent their interests.
We also must regularly update our client to the condition of the marketplace. Again, showing them empirical evidence of inventory of homes based on price range, number of homes sold in each price range, days on market in each price range and the absorption rate. The absorption rate is how many months of inventory we have based on current trends. These statistics affect the value and ultimately the equity position for our clients.
There are endless ways to position you as the expert. We must create a positioning plan and then implement or execute the plan to raise awareness of our expert status.
These outsiders are threats and they present a clear and present danger to our industry. There are strategic and tactical moves we can make in this game to minimize the momentum that is building from these outside forces. The timing to implementation is now. We all need to work together to drive the bears back in the woods.
Dirk Zeller is an Agent, an Investor, and the President & CEO of Real Estate Champions. His company trains more than 250,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. He’s the widely published author of Your First Year in Real Estate, Success as a Real Estate Agent for Dummies®, The Champion Real Estate Agent, The Champion Agent Team, Telephone Sales for Dummies®, and over 300 articles in print.