So-called “discount brokers” like me have been hated by the industry. I can’t tell you how many times I’ve been told the fateful words, “You’re bad for the industry.”
The very concept of charging lower rates to list more homes has always been taboo. We were told we were devaluing ourselves. We need to know our worth etc. The industry is now realizing that business is a competition, but we compete in a very different way.
On the one hand, the entire industry is full of brokerages competing to appeal to agents. On the other hand, there are a few companies like us who strongly believe that we should compete to appeal to the masses, and if we win that competition, the agencies will follow.
What agents want from securities companies
I strongly believe that almost every agent who runs a brokerage is doing it just to make more money. For some, that means leads and training, but for the majority of agents, it means lower caps and better commission splits. They simply think that if they can do the same number of trades with a better broker split, they can make more profit.
These agents believe they can save the money they were using to pay brokers and use it to buy more leads and make more money doing so. Just today, I saw multiple posts on various real estate social media channels asking where is the best place to buy leads.
You see, the same brokers and agents that we accused of participating in a race to the bottom are running a completely different race to the bottom. The race they ran was to see who could hire an agent the fastest.
Who has the best value proposition for agents?
Some brokerage firms have chosen to run this race by offering luxurious offices, free technology, and a plethora of expensive training platforms. Other brokerages have chosen to compete in a way that takes almost nothing from real estate agents every time a deal is closed.
You may not be shocked to learn that the companies that offer more freebies to real estate agents and take lower splits are the ones that seem to be winning this competition. . This arms race has led to an all-out war between securities companies, and the public has been left behind from the effects.
Just this morning, I received a job offer email from Hyakuten Securities that said, “Our securities depend on your agent.” The email goes on to state that I am a priority and everything is about me and my agent and everything they do for me.
What’s good for the client is good for the agent
What if you were running a customer-centric brokerage? Is that actually good for agents? What does it say about our industry that saving money for clients is so taboo when everyone is so focused on maximizing savings and value to agents? ?
Is that why we are being watched so much? Now, with lawsuits being filed and incredible fines being imposed on the industry, the public is finally starting to see that day.
As you know, companies like mine have been competing to appeal to consumers rather than agents. The same technology that countless companies use to run more efficient companies and provide better divisions can be used in a different way. We can use these savings to charge lower fees to the public, help agents list homes faster, and generate more business with the most affordable value proposition.
We believe that once you get the consumers, the distributors will follow. We believe all real estate coaching can be boiled down to one simple phrase: List your home faster. What is the best way to do this? Unless, of course, there is a better value proposition for the general public that solves the problem.
When we switched from our first broker, our split went from 50/50 to 90/10 and we did the unthinkable. We cut our publication fees in half and went from being an industry laggard to a top producer.
Competition and disruption are good for industry.
Ministry of Justice is resuming its settlement with NAR to foster more competition in the real estate industry, which is likely to put downward pressure on fees.. Every day it seems like another brokerage is distancing itself from NAR, further disrupting industry cohesion. I feel that’s a good thing.
Our responsibility should be to our fiduciary clients, not to the industry. We believe that the more we try to meet our clients’ wants and needs, the better and happier we will be as agents. The real problem is that if agents have to compete with lower commissions to win the hearts of the public, then companies that are razoring profits in order to win the race to get more agents can survive. I mean, is it?
Rather than paying a broker to provide you with buyer leads in the hopes of listing your home one day, you can pay less to list your home and use those listings to generate buyer leads. It makes more sense to acquire .Why is it morally wrong to charge consumers a small amount of money, but morally right? Do you give more than 40% of the referral fee to the referral company?
Listing a home for a low price, even if you pay a high commission, can earn you more money per hour than spending weeks or months working with buyers on nights and weekends. We are fully aware that this will lead to even greater future profits.
We realized that scaling up an agent to handle 20, 30, or even 40 active listings is much easier than managing 5 highly active buyers. I did. Systems and processes can help you manage a large inventory, but it’s impossible to manage even five families who need you after work and on weekends.
This problem is further complicated if you have a family member who expects you to attend Little League games or family events. And don’t forget, you’ve put in countless hours of labor and may end up choosing not to buy or the contract may be broken. Despite all this, the majority of our industry pays huge amounts of money and referral fees to invest huge amounts of time in buyers who may never be successful.
Using a low-fee listing model to grow your business makes a lot of sense on many levels. Almost every company you work with has some type of loss leader that they use seasonally or on an ongoing basis to create happy customers and continually expand their territory.
One of the most notable loss leaders is Costco’s rotisserie chicken, which continues to lose money.Since 2000, the price is $4.99. During a 2015 earnings call, Costco’s chief financial officer admitted that it loses $30 million to $40 million a year on rotisserie chicken sales, despite inflation issues. , the price is still $4.99. There has to be some logic to this, right?
All of this is common sense to most entrepreneurs. It’s a great idea that he loses $3 for every chicken sold, as long as he makes more money from their visits. by harvard business review, Research over the past 20 years has shown that simply asking your customers what they want and what makes them happy makes you three times more likely to remain a loyal customer.
If the average American sells an average home for $430,000 and pays 6 percent of the price, or $25,818, if they feedback that they wish it had cost less, we would Would you be shocked? Who would dare to ask, “Would it have been more affordable?”
A real estate coach will push you to work harder and a lead company will sell your leads back to you. Coaches and lead distributors rely on your inability to think outside the box. The biggest threat to both is an industry that is open, competitive, and receptive to change.
The more we as an industry are content to do the same thing for the same price and not compete on price, the harder it is to generate business and the more we become a target for law firms and the Department of Justice. It’s time to stop worrying about what the industry thinks about us and start doing what other companies around the world are doing and delivering more value to our customers through superior service and pricing. Masu.
Grant Clayton has been a real estate agent since 2011 and is a second generation real estate professional. The Clayton family business is a commercial real estate development company that has been in operation since the mid-1970s and has completed many monumental projects in and around the city of New Orleans.