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 Business Development

Less IS More!!

A recent article in Inman News reminded me of something I regularly say when teaching fiction writing: Less is more! In that instance, I mean that “fewer words” accomplishing the same goal is usually more effective than “more words,” but the point is the same: evoking something rather than mimicking it!

The Inman article focused its minimalism on the number of photos we show on our Board’s listing service as well as our own website, Facebook, or other portals. The writer made the excellent point that, just because your MLS allows 24—or 36, or a million—photos, don’t put in poor shots or ugly rooms just to fill up all those slots! Given that so many folks these days search for homes online and do a good bit of decision making on what to go out and see based on those lovely pictures, the writer made the point that we have to put our best foot—or, in this case, maybe a bathroom or family room—forward to keep our listing on the “let’s go see this one” list.

Her point focused on only including photos of the home’s best features and rooms and specifically NOT including that basement bathroom that looks like something from a Steven King movie. Makes sense, since our goal is to attract buyers to come out and see the home. So, remember to evoke the best about your listing and don’t dilute those great features with unneeded shots of boring—or worse—elements. Remember, the writer tells us, our goal is to market the house, not create a detailed Wikipedia entry showing every possible room and/or angle.

And speaking of marketing, I always encourage agents to use a professional photographer or service so your listings will look the very best they can. While it may not make financial sense in some cases, I suggest for any listing at or above the market average in your area, to offer professional photography as part of your listing presentation. If your competition isn’t offering it, maybe it will win you the listing—not bad for around a hundred bucks! And the results are startling—everyone can tell the difference, and those great photos of the great features should help bring more buyers out to the house, all else being equal of course.

Finally, in order to not only enhance the photos of the home, but to really optimize that emotional appeal to grab the buyers when they walk in the door, don’t forget the value of a professional stager! Yep, another hundred bucks out of your pocket, so it won’t be appropriate at certain price ranges and in certain circumstances, but a pro will frankly have a better eye for this than 99% of us, and they can also say things more directly than we can! Again, in your listing presentation, if you offer this and the competition doesn’t, then boom, maybe that and the pro photographer nets you the listing. Even using the new math, I think COMMISSION CHECK minus $200 still equals more than NO COMMISSION CHECK! Remember, the goal of a stager—and those wonderful photos—is to evoke a certain feeling of the home, and that always mean fewer décor items and clutter!

Less can indeed mean more: more commission income and more happy clients!

David M. Hassler

Director of Business Development

Creating Your Roadmap--or Do You Know the Way to . . . Detroit?

Hooray, it’s my favorite time of year again! No, not just football or Thanksgiving approaching in a few weeks, but it’s ANNUAL BUSINESS PLANNING SEASON! Yet, I’m always reminded of how that holiday and some good planning fit together.

Some years ago when my daughters were both in school down in Bloomington, our extended family decided to celebrate Thanksgiving in Detroit instead of the usual family homestead in Columbus, Ohio.  The girls decided to drive separately from my wife and me so they could bring boyfriends.  Since they’d never driven to Detroit, but they knew the family branch in Detroit often drove down to Columbus for gatherings, they figured the best way to Detroit was…yep, through Columbus, Ohio!  Unfortunately, none of the eager collegians thought to bring a roadmap—and this was in the dark ages before they had cell phones, let alone smartphones with GPS—so their trip took nearly twice as long as it should have, and it produced a ton of anxiety for them and for my wife and me, waiting for them in Detroit on a cold, rainy, windy night, hours after they were expected!  So, while they did finally make it to their goal, the journey was unnecessarily stressful and tiring. 

Maybe they should have done a little advance planning and used a good roadmap instead of just setting the final destination!

Yet, since we’re all in business for ourselves in real estate, you may be used to simply setting a final destination of improving sales volume by, say ten percent over the prior year.  But how will you get there with the least stress and anxiety if you don’t know the best route to follow?  Just like getting to Detroit, you can make your journey a lot easier—and probably more profitable—with a good roadmap in the form of a solid annual business plan.

So what do we need in our business plans?  Once you’ve “Mastered your Stats” for 2014 and earlier, you should review your Target Market and see if any adjustments are warranted.  From there, you can begin to develop your goals, working backward from that ten percent volume increase through the number of sides that will take based on your own average transaction value; through the number of listings taken and presentations needed; and on down to the details of each day and each hour of the time you want to commit to your business to achieve your goals.  You can then wrap all this planning into a detailed business plan covering everything from your market budget to managing your time.  By keeping your detailed goals in mind weekly, daily, and hourly, and how they lead to achieving your larger goals, you’ll be able to manage your time more efficiently and thus be more effective each and every day!

Bottom line, if you put in the time and focus this fall to develop your plans and put them into a clear roadmap, your 2015 should be more enjoyable and profitable. The BHHS Resource Center has a great tool for working on your annual business planning that makes it a snap to put together. We’ll send that file around to all the offices for distribution, so take some time as the weather continues to chill, and put together your own roadmap to success so your journey is as direct as possible.

David M. Hassler

Director of Business Development