Real Estate Consulting – Sounds interesting, but no one will pay for THAT!

Oct
2012
30

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

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