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Posts tagged ‘buyers’

9
Oct

The Real Estate Chain Reaction

science class
Today in Mastermind we talked about a series of events that, like a chain reaction, happen when you do everything you can to ensure the right conclusion. Here’s what I mean….do you remember back in high school chemistry we were asked to mix two chemicals together and then document the reaction? Often the students had different conclusions. Why? Because of the variables involved. Was it the measurement of the ingredients, the temperature of the flame or the length of time the chemicals were mixed?

In many ways, the outcome of your first interaction with a buyer or a seller, depends on the steps you take next. As with many agents I know, the first listing is often a friend or relative. This is a great way to get your career off and running, but, for ultimate success, you need to remove all chance and stick to the tasks that work. That means coming out strong. Prepare and stage the house to perfection, get a pre-home inspection, take care of any repairs, order virtual tours and professional pictures, tell the neighbours, hold an agent and public open house, etc, etc. the list is extensive and, quiet frankly, labour intensive and expensive, but at the end of the day you know that you didn’t leave anything out. I bring this up for one reason. You don’t leave any stone unturned because a perfect execution will lead to more interaction and more deals.
Today we talked about the real estate chain reaction and had some interesting examples of it. We heard from one agent who put an ad in the paper for a small house in a relatively unheard of neighbourhood. In a time when newspaper ads hold little value to a young demographic, it seems like a colossal waste of money, but a strange thing happened. The agent got a call from an interested buyer because their parents, who were helping with the purchase, had seen the ad. Bingo. Connection made.
Here is another one. An agent is out-door knocking. He just happens to meet someone interested in selling. Within a week the property goes on the market and sells successfully. The owners were so thrilled they used that agent to sell the mother’s house. That one sells quickly too. The agent then starts canvassing the neighbourhood to let everyone know that he sold it but to also ask if they know of any other people on the street are thinking of selling. Someone mentions the vacant house down the street. The agent writes a hand written note and leaves it at the house. The following week he has that one listed too. And so the real estate chain reaction begins.
I know to here are a hundred similar stories out there, and for each one there are ten others that end with one single transaction and plenty of lost opportunity because the agent didn’t do EVERYTHING, to ensure the chance of future business. You might even suggest that the agents just got lucky. Have you ever heard the saying “the harder I work, the luckier I get”?
There is another benefit of putting every ounce of effort into your listings. Your clients will know the lengths you went to and will recommend you to other people. So, get your business off on the right foot today. Agents fail because they go into the listing with the attitude that the house will sell itself. That might be true, but then what?
In a market where you are competing with 40,000 other agents, commission is no longer the competitive advantage. For ultimate longevity you need to go above the bare minimum of service. Not only will you sell the property but it will cause a chain reaction of events that will help grow your business and guarantee a fruitful career.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

25
Jun

Did Real Estate Get It Wrong On Who Pays The Commission?

rewrite the rulesWhen I think of some of the shenanigans that go on these days between agents and clients I can’t help wondering if our industry got it wrong. Did we made a fundamental mistake when everyone agreed that the seller should pay the listing and buying agent’s commission? If we could go back in time and re-write the rules, would we be subjected to stories we hear about today?

Think about some of the issues that we deal with on a daily basis. Agents are pitted against each other to offer comparable services for lower commissions despite the fact that they are the ones who lay out the most capital and accept the biggest risks. Buyers are looking to save on their home purchase so they contact the listing agent in hopes of gaining the inside edge. Multiple offers are rampant ( a condition of the market ). One may even argue that new business models (offering rebates or mere posting services) don’t solve the fundamental problem that exists…. The agency relationship.

One could argue that true agency, where buyers and sellers pay their respective agents for services rendered, doesn’t exist when only one person pays the bills. Did our industry get it wrong? It’s a question that comes up every time I hear about a buyer agent asking a listing agent to reduce their commission to make a deal happen or when a listing agent’s own offer miraculously wins in a multiple offer.

In a true agency relationship the seller would contract a listing agent to market a home including all the basket of goods and services that go with it, as well as ensure that the transaction went smoothly. The selling agent would have a unique understanding of the neighbourhood because he or she would be hired because of their local knowledge not because they were offering reduced commissions for doing two sides of a transaction. The seller and the agent would be free to negotiate a fee and the law would stipulate that the listing agent could not represent a buyer thus eliminating chances for error or corruption.

In a true agency relationship the buyer would contract a buyer agent to find a home, negotiate a sale price, and work with the listing agent to ensure a smooth transaction. The buyer’s agent would be duty bound to provide expert and professional service and work in the best interests of the buyer and be free to negotiate an appropriate compensation.

A few things would need to change. For instance, dual agency, also known as multiple representation would no longer exist. We would not have customers anymore, just well-informed clients. Controversy would no longer exist on how commissions are paid and what incentives are being offered. Flat fees might be more widely adopted and we might see the development of two types of real estate brokerages, those that list homes and those that act for buyers exclusively. Naturally there is the problem of compensating the buyer agent but perhaps bank legislation would have to allow a buyer’s commission to be rolled into the mortgage or sale price.

I’m not suggesting we need to throw out the current system. It’s not perfect but, for the most part, it works.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

9
Nov

Mastermind for November 7th. The Reverse Cold Call and The Power of Rentals

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Well, I’m sitting in the lounge waiting for my flight to Orlando. I am heading down for REBarCamp and NAR, the once yearly convention for Realtors. Since I have nearly an hour to kill and about 15% battery life on my iPad, this is as good a time as any to write a blog about today’s Mastermind session.

I have written about cold calling before, but we haven’t talked about the reverse cold call, that is when someone calls you out of the blue to enquire about one of your listings. We had a great group this morning and as such, we got some great feedback on the different ways agents deal with them but what seemed to be consistent was the fact that while everyone had a different methodology they all asked pertinent questions in order to qualify the caller. Has the caller been looking for long? Are they working with an agent? What are they looking for more specifically? Have they put in any offers? Most of these questions are part of a natural investigation to see if they are working with a Realtor but there’s another important benefit of a long chat…..it’s conversation. It builds rapport. It’s your opportunity to show your professionalism and talk about your value proposition. Remember, if they are hitting your site they are probably hitting 20 other sites so what do you have to offer that is different from everyone else? Regardless, one of the finer points of being a great salesperson is having great listening skills so ask lots of open-ended questions and keep the caller talking. (Maybe pretend that you are talking to a kidnapper and the longer you have them on the phone the more likely your team can pinpoint their location).

Naturally the conversation drifted to the next stage. Assuming you get to the place where the caller is still interested in looking at your listing, when is it appropriate to have them sign a BRA (if at all)? Some agents would argue that buyers don’t get to smell the leather in their car until a BRA is signed. Others would say that they would invest a few hours showing new people around, develop a relationship or find out if they want to work with the buyer or to find out if they are even serious. What about you? Would you have a new buyer meet you in your office to listen to a buyer presentation, or do you work on the fly? I would love to get your opinions.
It is worthwhile recognizing that today more unrepresented buyers are calling listing agents. Why? First, they hope to save on one side of the commission and second, in the fast paced world we live in today, buyers have already done their research. They know what houses they want to see and are happy to go right to the source of the best information available….the listing agent. If you plan on showing your listing, and perhaps a few others, make sure you develop some appropriate dialog to combat any potential objections.

Finally we talked about rentals. For lots of agents they are just a waste of time. Craigslist, ViewIt and a few other sites have given landlords plenty of places to display their properties, nevertheless, many owners don’t want the hassles so are happy to give up a month’s rent to find the right tenant. Consider that one agent in our group did 14 rental deals in the first year. Those rentals translated into 7 sale deals over 2 years (plus a few referrals thrown in as well) and the buyers have become clients for life. Two other agents said that after taking potential renters out to look at a few places they were able to convert them to buyers. Finally when business is slow agents should look at rentals to subsidize their income.

Look at that. Another blog goes into the books with 7% of my battery life to spare and the boarding call just minutes away. I hope to report back shortly on all the great stuff I learn in Orlando!

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