Realtors are stuck in 1980
Hello REALTORs it's time to stop, drop, and roll. It's not 2008 anymore, and homes aren't all fire sales. You need to change your language, your attitude, your pricing, your approach ... or get out of the business because right now you're just hurting all of us.
I was talking a bit on twitter with Dave Woodson, a social media guru and consultant with businesses that actually believe in growth. He got me thinking about the state of our industry right now. We seem to have a lot of the wrong people and not very many of the right. Let me be frank, and this won't go well for a lot of real estate professionals out there:
- You aren't worth 7%, or 5% or even 3% of the sale of my home. If my home sells for $200,000 do you seriously think that signing a couple pages of boilerplate contract is worth $6,000 or $10,000 or more? I know I get access to your MLS, but you have heard about Zillow and the internet right? I'm betting that sign, that continually leans to the side in my front yard, cost you $150. I'm betting your MLS membership is about $1,500. So you're telling me that you need to make $10,000 for watching me sign your documents, when in all actuality someone else sold my house to the new buyers?
- If all you're going to do is talk in inside baseball recession language, you're only hurting the sale of my home, property values in general, and your own income. When you say things like "let's make a low ball offer and see what they do" or "no one is getting approved for mortgages right now" or "we can list it there, but it will have to be reduced before we'll get any showings" ... you show me that you don't really understand selling. I want my home sold, if all I needed was an order taker I'd have someone in Pakistan handle it. The recession is over, housing is in full recovery, and rates are at historic lows ... pull your head out of the sand and start selling at full price!
- You don't really understand mortgage finance, as a matter of fact it so confuses you that you just hand me and your other customers off to the few remaining lenders in a now over-regulated mess. Sure you told me that the rates were 4.5% yesterday, but do you even know what makes up that rate? Do you know anything about mortgage approvals or how long it takes to get one, or even what real closing costs are now that President Obama fixed housing. (ie. closing costs are now double 2008) It's time you sat down and listened to one of the survivors, things are a lot different and you need to know what you're doing.
Due to Mitch Daniels' tax caps, most homes have seen property taxes plummet in NW Indiana, and could go down even more this year.
FHA is still out there, meaning that buyers can buy with as little as 3.5% down payment. And frankly if they don't have the money today, they will by the time you and your little "offer" game are over. Show them how to save, show them how easy it can be to buy right now at 4.5% interest rates. If they have a 580 credit score, hold their hands and get them to 620.
I'm sorry, I really am because the last great fight I had with a real estate professional ended up with she and I not talking for many years. But I was right then, and am now. You aren't worth more than I will make selling my house or even close to $10,000. In many ways your industry like the mortgage industry is so over-regulated that you resemble amateur attorneys more than anything else.
Sell please, sell with everything you've got.
I once had a old and wise builder tell me "Steve, a realtor is someone who sees an inevitable bus collision about to happen, and throws themselves in front of it just in time" ... Create something that isn't there now, or you really will have become the buggy whips of 2011.
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15 comments:
Really, could not agree with you more. As I see signs, like you said, leaning, hanging by one chain and then they have the audacity to let "sales flyers" go empty in boxes. Most are afraid to learn anything new and then they go to sales meetings cause some slack ass mortgage guy brings in donuts, but never to the one that actually has anything valuable to teach them.
There are more costs to the realtor then that. They have to pay part of that (or some set fee) to their "franchise" (whatever Century 21, Remax and such are) as well as other dues and such.
I luckily have a really good friend, Melissa Osika who is just leaps and bounds beyond anyone else I've ever met on the Realtor side. I think she does some of the stuff you discuss and recently handled my wife's Grandfathers house sale in Hammond. Realtors need to be that person with good advice to help their clients do things right that they will probably only think about a handful of times in the life.
The thing is most aren't that person and could never be. They took the test and just figured it would be easy money. Like most professions, there are those that care and those that it's just a paycheck. Those that it's just a paycheck for need to be gone and then the better ones don't need to get a much money per sale because they will have more sales overall.
As well the internet is going to really drop these prices. Before it was a Realtor going out and finding the homes where now you can find the homes you want to look at and tell the Realtor to let you in. There needs to be a shake up of this structure but as with anything where people's jobs have become obsolete and not really replaced with a new industry for them to move in to you are going to have friction. The buggy whip worker could now go work on the auto line, the Realtor has nothing new to go to.
This isn't the only industry facing these problems and it's only going to continue to get worst as technology continues to make humans obsolete. And tech moves faster then we can make up jobs for humans (like the green bs.) Though for tech creators though it's only getting better. :)
Richard, great point and I know Melissa and agree she's one of the better pros in the business.
I guess i got a little off track in my rant. There's two parts:
First, that the industry needs a total shakeup. Freakonomics showed us that they fight for prices on their own house, but often recommend drastic price concessions to their clients. Compensation will need to change a lot to make it worth it to me to pay $10,000 to anyone for a single transaction.
Second, putting up a sign and listing on MLS is so yesterday. And so few agents get the fact that they can be replaced by the computer search and a $150 sign. Seriously have you seen the contract documents, they are all boilerplate and do more to protect the agent from a lawsuit than anyone.
Remember I am a home builder at heart, I paid hundreds of thousands of dollars for the privilege to have a realtor put their sign in my yards ... so that my employee could sell, build, contract, finance, and close the house. Then if we dared suggest the realtor didn't do much to get the $10,000 they offered to black ball us in their "professional' industry.
Not all, but many. I'd like to see a whole lot less government manipulation and regulation, it's really just protecting the old dogs and keeping new ones out.
I think Realtors and sales agents should command top dollar if they are good. Most of the sales people I deal with are lousy. They almost never follow up with email, phone calls or any other method much less use the power of direct mail, blogs, proper websites or any other marketing tools that they could use to promote clients offers while building their own credibility.
I recently went out to look at properties and an agent told me he couldn't find what I was looking for in the area I wanted, as per the price we quoted to him. My wife got online and found 10 properties that were within our criteria within an hour!
Any sales person is only worth the skill and effort that they put out.
That's a good point Mark, but what of my point that no matter the skill of the agent ... they just aren't worth 3-7% of the total value of the home. Isn't the real problem that the value to the client is probably closer to 1% total but that no one can make a living on 1%?
So Realtors keep supporting efforts by government to keep people out of the business so they can try to work the supply and demand side of the business to keep paychecks higher.
The conservative in me thinks that too much government is causing too high a price for the service.
@Mark Ellis: Hi! I couldn’t agree with you more. It is true that there are agents that are just plain lousy. Instead of being there to help you, they'll just let you down and leave you empty handed.
Well, my first realtor, whom I am so frustrated, didn’t return my calls. He was gone just like that. Good thing my friend referred to me to this guy who’s been into realestate, Tulsa Oklahoma based for years and he had closed several home deals. I am so impressed with his work that I let him handle my real estate concerns. He even toured me to look for homes in Broken Arrow. Because of him, I was able to sell my old home and live in my dream home at long last.
I have contacted agents in the past who didn't get back to me for several weeks. If you were selling your own home, you would care more about selling your place and will work harder to get it sold than sales agents.
10% of the Realtors make 90% of the money in the business. And the good ones do know what they are doing and work very hard at it. It comes down to knowledge. Yes, anyone can pay someone to put a sign in the ground and put it in the MLS. Most Realtors do not stop there. I don't think slamming all Realtors serves much of a purpose other than making them all look bad. It doesn't help the ones that do work hard to look better. Most of the thinning of the herd is done by the success or lack thereof in the market place. If they aren't good, they won't last. Its that simple.
Are you seriously telling me that as a FORMER AGENT you don't think you were ever worth a full price commission? Apparently you may have been the type of agent who just stuck a sign in the ground and posted the listing on the mls. The rest of us are in the Marketing business and we work hard to get our listings sold.
Carmen, I have never been an agent per se. I have carried a license on and off for 25 years in the State of Indiana, but really never operated as such.
I did build homes, and tried with everything I had to teach a few agents what they were really worth. They definitely weren't worth more than I was making on building the house.
One professional agent and I fueded quite often over my position that listing a home for sale was probably worth no more than $1,000 total. Her complaint was that no one could make a living, I reminded her often that the supply/demand market doesn't care much what one "needs" it cares what one is willing and able to pay.
Listing on MLS, putting up a sign and flyer box, even putting a property on 100's of blogs and online resources ... let's call it total cost $800 to agent. That's worth about $1,000 to the seller.
Telling the seller that the best way to "market" their home is to continually drop the price until someone gets interested enough to try and steal it, that's worth even less. That's merely legally operating as a predator.
The sales commission for stock trading and other commodities has dropped from their high levels to pennies now. Why is real estate supposed to stay so high?
If the complaint is: "well I have to list 10 homes to sell one, I have to show 10 homes to sell one ..." Isn't the eventual successful seller just paying for the other people who didn't have to pay for their marketing? I don't want to pay for the other 9 who got off for free.
The model is broken. How about a model where the seller and/or buyer actually pays for the service? If they want help filling out standard forms, they pay $150 an hour. If they want a marketing campaign that includes a sign and online advertising, they pay for that. If they want a home staging or video tour, they pay for that. I'll betcha that on a $200,000 the value of the services will never amount to $14,000 in anyone's eyes.
Stuck in the 89's is really a huge understatement as most are not on the web, they still waste money on print ads and do not even come close to understanding SEO, PPM, CPM or CYA. Wait, they know CYA it comes when handing out tons of excuses as to why the house did not sell and more than half the time the time it falls right on the agents head for piss poor marketing.
Plus, don't even get me going on the mortgage morons out there that pass off bought and paid for content like it is Gods gift. Funny, the guy that writes that BS does not even use it for his blog. He long figured out SEO and the rest of the suckers fell for it.
I read a lot of news about this and I still can't believe that it is really true until I read this blog post. This article explains everything about that issue.
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