Perfect Pricing

“Price is what you pay; value is what you get.”

--Warren Buffett

Recently in a coaching session with one of our agents, we reviewed their stats for the last year.  The agent had been on fire and had closed a volume considerably higher than any previous year.  Their average side was far above market and their sold listing DOM was well below it.  All great news!

Then we looked at the average commission rate per side and found it was just a touch over 2.5% instead of their targeted 3.0% average.  The agent had done a few relo transactions with their lower fee in return for a near guarantee of a closing, but overall, based on their average sale price, that 2.5% was on the low side.  In fact, when we looked at the numbers, the agent could have added another $25,000 to their bottom line if they could have kept the average rate at 3%.  That’s some real money!

We talked about many of the market pressures on our pricing and yet the agent realized they could take a more proactive approach to their goals.  That’s when I heard Uncle Warren’s voice whispering in my ear:  “Price is what you pay; value is what you get.”  Wise words, since all too often we allow ourselves to be dragged into discussing price instead of value.

In his excellent work, Book Yourself Solid, Michael Port talks about Perfect Pricing and he focuses on value versus price.  He encourages us to think always about the value our services provide and to ask ourselves—and the client—some questions:

         How much financial benefit will our service create/provide?

         How much pain will our service relieve?

         How much pleasure will our service create?

         How will our service create substantial peace of mind?

While some of these may sound like “soft” benefits, they’re what really separate excellent service from the mediocre.  And just as importantly, we have to ask how we value ourselves.  Remember, as Port says, people rarely buy professional services based solely on price.  They actually express their own values through what they buy!  So let them!

At the very least, most people love to feel they’ve gotten a deal, so when we believe it necessary or appropriate to discount our fees—yes, we need to consider it as such—we should be sure to help them feel how successful they’ve been in their negotiation and how much we’re giving them.  If we don’t think there’s value in what we’re giving away, why would our clients?

Of course, a discount with a client should produce or strengthen a referral source that brings us more clients and more revenue, so we can sometimes view such discounts as an investment in marketing.  Just make sure that when we make such an investment, the prospects of the return are high!

Remember, “price is what you pay; value is what you get.”

David M. Hassler

Director of Coaching

What Do Sellers Really Value in Selecting a Listing Agent?

Here's one of those age-old questions in our business:  What is it that Sellers really want--and value most--when they consider selecting an agent to list their house?  We've all had our varying experiences and, no doubt, been surprised on occasion when we thought we had a listing all sewed up, only to get that email or voice mail from the Seller letting us know they chose someone else!  Really?  Really?

While most of the successful agents in our business would probably say that it still comes down to how well we can "connect" with the prospective Seller--and that's clearly a huge aspect of winning in a competitive situation since no connection equals no client--there are a number of elements beyond that personal/professional link, and it's best to keep them in mind.  And also some things we maybe don't need to worry about all that much!

NAR did a recent survey of home sellers and asked them what was THE MOST IMPORTANT factor in their choice of a listing agent.  Here’s the goods:

         Reputation of Agent                                                                           35%

         Agent is honest and trustworthy                                                       18%

         Agent is a friend or family member                                                   15%

         Agent’s knowledge of the neighborhood                                           14%

         Agent’s association with a particular firm                                           5%

         Agent’s has a caring personality and is a good listener                       5%

         Agent’s commission                                                                                1%

A couple elements strike us right away:  Not unsurprisingly, the agent’s reputation as well as their perceived honesty and trustworthiness account for more than half of the respondents choice (53% between them) as the most important attribute.  Bottom line, that’s “connection” in a nutshell!

Next, comes our good old Sphere of Influence—that “friend or family member”—and we’d bet the words “referral” as well as “repeat client” probably apply there as well!  So, between your SOI and making a great connection, you can put yourself in a strong position to win the listing nearly 70% of the time!

And here are the interesting elements:  knowledge of the neighborhood is considered the primary criterion for choosing a listing agent only 14% of the time, so it’s still important—we probably won’t win a listing no matter how charming we are if we have to say “Gosh I don’t know” too many times—but not as crucial as it used to be back in the dark ages when only Realtors had access to the dark secrets of the details of homes on the market and those already sold. 

Then, at just 5% of sellers choosing it as their most important criteria, is the agent’s association with a particular firm.  We all choose our firm based on its support and its tools and its ambience and energy and its reputation in the market, but, as long as we “connect” with the prospective seller and show ourselves to be trustworthy and knowledgeable, 95% of those potential sellers really don’t care a whit about the logo on our business card.

And, most importantly, it turns out that only 1% of sellers think your commission is the most important element in their selection decision!  So, keep that in mind and focus on your ability to connect while leveraging your SOI—and of course impressing them with your leading edge knowledge and abilities by using your new tablet and going as paperless as possible—and you’ll be seeing your average commission rate increase and more money flowing into your business.  Talks about making more money per hour!

David M. Hassler

Director of Coaching

There's Not Quite an App for That!

Have you ever wondered what’s the best—as well as maybe the easiest—approach for dealing with that first time home buyer or even a repeat buyer who hasn’t been through a transaction in a number of years—especially one you’re not sure will be qualified for a mortgage, or if so, for how much?  That cute couple that came to your open house and even gave you their email address, and it wasn’t “Goofy@fakey.net?”  Or that floor call or that third level referral from someone you’ve long forgotten?

And yet, a potential client you feel just might become a long term, repeat client and source of referrals over the next ten to twenty years (or more!) so one worth investing some time and effort to assist and cultivate.

Yet, how much time and effort do you invest, especially if it’s mid-April and the snow has finally started to melt and you’re delightfully swamped with transactions involving the typical level of hurdles to leap?

Enter Doorsteps.com, an online—thus, not quit an “app,” yet—solution that can be personalized with your own profile, including photo and logo, and that walks that prospective home buyer, step by step, through the entire buying process.  And it does so, on screen, in simple, slick, well-explained steps, inviting the buyer through interactive questions to really understand their own goals and desires—and the complexity of the process and how important a professional guide will be.

The great part is that, throughout the process that takes the buyer from initial thoughts about the type of neighborhood they’d like to their first night in their new home, YOUR name appears repeatedly as their guide!  And the best part is that you can check each of your buyers’ progress and see their choices and results at any time, and those choices provide a written record for both parties!

So, when you want to invest some time and effort in qualifying that new potential client, yet limit it to the most effective use of your time, you can simply invite them via email to follow the path on Doorsteps.com, only investing more of your time once they're fully qualified.  Of course, you could also invite that new potential client into the office, where you could sit down with them and give them a brief tour of Doorsteps, perhaps walking though some of the initial questions together on your tablet or laptop.  A great way to get the relationship started, show your sophisticated use of the latest technology, and give the buyer a cool introduction to the level of complexity involved in the process.

Online, interactive, trackable, detailed, personalized, and a great marketing tool, what’s not to like? Yes, it does require a monthly fee, but you can test it out free for thirty days!  Check out Doorsteps.com and let us know what you think! 

David M. Hassler

Director of Coaching

Understanding Your Client's Personality Type

One of the great things about our real estate business is that so many different kinds of people can be successful using their own unique personality and approach. Of course our clients have their own personalities, too, and we can be most successful if we understand those personality types, whether we’re competing for a new listing or guiding our clients through negotiating the purchase agreement, counters, and the inspection response process.

Most folks recognize four broad personality types, and two of the most obvious ones are the Directorial/Competitive type and the Analytical/Methodical
type. The Directorial type is used to taking the lead and being in charge, and they typically see the big picture and the bottom line. If we approach this person by working through all the details, we risk losing their attention, and possibly their respect.  This type may also need to feel they’ve come up with ideas on their own, so we need to gently guide them toward the position we recommend!

Conversely, with the Methodical type, if we start with the big picture and our bottom line recommendation, they may tune out and lose confidence since they need to have all the details first, so they can reach their own conclusions.

Of course there’s a lot more to it, but it can help if you make sure you know and understand each of your clients’ personality types, so you can find greater success and enjoyment in your real estate career!

David M. Hassler

Director of Coaching