Posts Tagged ‘ACRE’

posted by on Consulting & Compensation

To continue my series on “Real Estate Consulting: Sounds Interesting, But It Will Never Catch on…” today’s subject is the concern that “No one will pay for services they can get for free elsewhere!”

A common misunderstanding about real estate consulting, specifically surrounding the practice of charging non-contingent fees instead of contingent commissions, is that the consultant basically charges for services everyone else offers “free.” Which raises the obvious concern of “why on earth would anyone be willing to DO that?”

Why indeed? Why WOULD anyone pay one real estate professional a fee for a service they can get free on every other street corner?

Well, they probably wouldn’t unless 1) what you’re offering is far superior to (or distinct from) what they can “get for free” elsewhere; or 2) you create a win/win situation where there is a tangible benefit to the client to pay for the service.

Let’s hit the first: “What you’re offering is far superior to (or distinct from) what they can get for free elsewhere.”

Not all CMAs are created equal. Not all listing agents have the same success rates with short sales. Not all buyer agents have identical HUD expertise. Some agents have specific areas of specialization that their colleagues can’t touch. In short, some agents are really really good at what they do and can therefore ask for (and receive) upfront or non-contingent fees all day long. Yes, seriously.

Or, what you’re offering is distinct from what the competition offers for free. You don’t just know how to search for and show slope-side vacation condos; you offer a customized tour package of the ski-in/ski-out developments in your area, with detailed knowledge of the amenities and nuances of each, as well as of the more-affordable alternatives close-by. Perhaps you have particular expertise working with investment properties, so your service package for professional investors goes far beyond just searching for under-market properties on the MLS and writing up low-ball offers. How about offering a professional, comprehensive and OBJECTIVE analysis for landlords trying to decide whether to re-rent or sell (without pressuring them one way or other depending on YOUR agenda)?

There are many services someone with real estate expertise can offer that don’t have anything to do with a listing agreement or buyer agency contract. And while some agents do perform some of these services “for free,” they do so as a good will gesture in hopes of getting that listing agreement or buyer agency contract sometime in the future as opposed to doing it as a professional, stand-alone, OBJECTIVE service.

Item 2 above – “you create a win/win situation where there is a tangible benefit to the client to pay for the service” – we’ve already covered elsewhere… so I’ll refer you there! “You Can Sell Anything You Believe is a Good Deal for the Customer

posted by on Consulting & Compensation

We did a teleseminar show in the SWS Virtual Studio yesterday called “Real Estate Consulting in the Real World – The First Steps” where we talked about what a new real estate consultant might do to get his or her consulting practice off the ground.

One of those “first steps” was to come up with a list of two or three specific alternative services you could offer (by “alternative” we mean a service that is real estate -related but not the traditional buyer or seller representation paid by a contingent commission); services you’re really jazzed about – that you feel you could market and “sell” because you feel there IS a market for them.

To help prime the pump, I provided the following list of potential alternative services:

Traditional home sellers or buyers who are willing to participate in a “shared-risk” arrangement
For Sale by Owners (FSBOs)
… who want a professional, objective CMA
… who found a buyer and want help preparing, explaining and executing the proper contracts and disclosures, and/or
… want help navigating the contract-to-closing period
Homeowners who:
…are considering a significant renovation, but don’t want to “over-improve”
…need help deciding whether to “move or improve”
…need help deciding whether to sell “as-is” or renovate
…need help deciding whether to sell now or wait
…want help interviewing for a listing agent
…want help determining if they have enough equity to pursue refinancing
Landlords deciding whether to re-rent or sell
Owners of expired listings who would like an objective analysis of “what went wrong”
Homebuyers who have found a property and want contract-to-closing assistance
Potential homebuyers who are considering buying, but want objective advice without pressure to BUY NOW
Licensed real estate agents who need another agent to list their homes for E&O (Errors & Omissions insurance) purposes, but will handle most of the marketing and negotiation themselves
Licensed real estate agents who need outside expertise in their transactions (and you have that expertise, e.g. short sales, REO’s , estates)
Investors who find their own properties and want a real estate expert on their team to be involved as needed.

At the end of the show I asked the audience to tell me which of these ideas really grabbed their attention; which ones they could see themselves getting fired up to do! And here were the results:

Favorit-est Idea #1
Offer contract-to-closing services to FSBOs

Favorit-est Idea #2
Offer a “What Went Wrong?” analysis to owners of expired listings

Favorit-est Idea #3
Offering sellers the opportunity to “share the risk” by charging an upfront fee in exchange for a lower commission

Favorit-est Idea #4
Consulting with renters for a fee (not on the list above, but several mentioned it)

Favorit-est Idea #5
Offering a “tour” package in resort communities for a fee that would be credited at closing

posted by on Consulting & Compensation

A few weeks ago I started a series of blogs on real estate consulting and the most common objections I hear as the newly annointed Commander and Chief of the Accredited Consultant in Real Estate (ACRE) program.

The first objection I addressed was: “… my broker will never go for it”you can read that here.

The next objection I hear a lot is: “…it will never work in my market!”

The rationale behind this objection seems to be that if you work in a market with a low price point (e.g. the average price of homes is less than $100,000), there ain’t no way you can charge people upfront or non-contingently for your service.

I don’t get this argument. At all.

What is it about a lower average home price that would make people hesitate to pay a reasonable fee for real estate-related services if it’s a good deal for them (which it must be for them to be willing to do it)?

Can a real estate consultant in a lower cost-of-living market charge the SAME fees as someone in a higher-cost-of-living market? Of course not, but they shouldn’t need to… presumably an agent who works in a rural community in, let’s say, Arkansas has a much lower cost-of-living him or herself than an agent who works in Washington DC.

So, maybe the DC agent charges $500 for Service X and that’s considered fair and reasonable in her marketplace. Could the agent in Arkansas charge that? Probably not – maybe he can only charge $100 for the same service. But that $100 will go a whole lot further in his budget than it would in the DC agent’s.

Am I missing something?