In early 2006, the former president of Realtor.com, Steve Ozonian was appointed Chairman of the Board and Chief Executive Officer of Realty Information Systems, Inc. dba Help-U-Sell Real Estate. Just prior to this time, he was living in Laguna Niguel, California, where he had a home to sell. Would it have seemed “logical” or “right” for him to list his home with a Help U Sell agent? Probably, but that isn’t who he called. He first called, top selling Re/Max agent, Bob Wolff. Bob wouldn’t reduce his commission and Steve listed with someone else (I believe it was a Coldwell Banker agent who actually took and sold the listing). It was NOT a Help U Sell agent or a Help U Sell office. The closest Help U Sell office to Steve’s home was in Corona Del Mar, 21.8 miles away – a bit of distance, but not that far.
It says right there on that particular office’s landing page, “Full Service, BIG Savings! Licensed Professionals at a low set-fee” – and yet, Steve didn’t call them. Why? Was it the distance from Corona Del Mar to Dana Point? I don’t think so, I believe there was another more significant factor involved – marketing position.
What is successful marking? Is it “running an ad”? Is it sending a postcard? Wearing a nice suit and smiling? How about a “PR campaign”? Is that marketing?
Marketing is the “shelf space” you (or the product, or both) occupy in the mind of the prospect. Any product or person is thought of in “a certain way”. This may or may not be based on advertising – usually not. Think of someone you really trust. That person has a “position” in YOUR mind that says that they – and what they have to say – can be trusted. It can be depended upon. The most significant breakthrough on this subject (and still one of the most important books on this subject ever written) is “Positioning, The Battle For Your Mind” by Ries & Trout. The more recent, “The 22 Immutable Laws of Marketing” by Al Ries and Jack Trout is an even better read.
ALL other books and studies on marketing owe a tip of the hat to these guys. This is not to say there isn’t anything else out there that is good, etc. – just that everything else on the subject of marketing is better understood and appreciated if one has read and understood the “laws” and principles that the subject is actually composed of.
I got a call today from a local (non-active) Keller Williams agent who had listed her own house for sale for 2.7 million. We had sold a home of hers for her last year and she (like all high end or “luxury” sellers) wanted to know what my highest sale was. I answered that last year it was a bit over one million and asked her for the address of the home she wanted to sell. I looked it up in the MLS, called her back and told her we were not the right agent for that listing and what I would do if I were her to find the right agent, and some changes I would make in the MLS listing to help get other agents to show it. Why did she want to know what my highest sales price was? She already knew we could get the job done – she had listed other property she owned with us and knew how that turned out.
She also suspected (sort of knew) that we were not “luxury agents”. Right or wrong, most “luxury home sellers” want a “luxury agent”. Steve Ozonian did. The average price where Steve lived is $1,640,003. I believe that Steve wanted something more than: “Full Service, BIG Savings! Licensed Professionals at a low set-fee”. A lot of other people do too. Knowing this, what future can we predict for the “traditional Realtor”? (important to note that Help U Sell, other than their “positioning” isn’t all that different than the “traditional” Realtor)
In the market we HAD companies that positioned themselves as “discounters” or even “full service with big savings” did quite well. Quite well indeed. Not so good now. When the market was so on fire that many people felt they were doing any Realtor a big favor to let them have the listing (providing they would cut their commission) the discount companies made huge progress – as competence was not then the “go button”, price was. That isn’t the market we have today (or are going to have for quite some time).
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Some discount Realtor stats – Sales in Arizona Regional Multiple Listing Service for 3rd Quarter, 2005, compared to 3rd Quarter, 2006:
The leading discounter in ARMLS was Donald Plunkett, the designated broker for Congress Realty. They offer a flat fee of $299.00 to put a listing into the MLS. In the 3rd quarter, 2005, he closed 82 listing sides, 2 double dip transactions and 5 buyer side sales for a total of 86 transactions for the 3rd quarter. That same quarter I had 87 transactions. For 2006, 3rd quarter, Congress Realty stats are: 58 listing sides closed, 2 buyer sides closed, 1 double dip, for a total of 61 closed sales for the quarter. My 3rd quarter stats for 2006 were: 97 listing sides closed, 7 buyer sides closed, 10 double dip sides closed, for a total of 114 closed transactions.
Notice how the market we HAD favored Congress Realty and the market WE HAVE favors me? Also notice that 58 X 299 = $17,342. If you care to do the math, multiply that times 4 (3rd quarter is usually about 25% of the annual totals in residential brokerage).
I like all of my numbers better. Tell Trevor.
Jeff Brown says:
Russell – Of course, what you’ve shown is true beyond debate. But you knew that in the heat of the last several crazy years.
Saying discounters will begin falling by the wayside is like saying Russell Shaw will sell a few homes this year. Duh 🙂
It sure is nice to see it in print though.
November 24, 2006 — 10:54 pm
Norm Fisher says:
A brilliant post. It would be tough to find more powerful evidence to support your thinking than Ozonian’s choice of agencies. I’m surprised he could slink into the office after that one, even if it was the smarter move.
November 25, 2006 — 8:48 am
matt says:
I might have missed something in the post, but to say that all listing for the discounter were $299 is probably not correct. “58 X 299 = $17,342.”
I see a lot of “Discounters” using low selling price as a tool to get people in the door, or on phone. $299 is usually a no support price…and then they tack on a-la-carte items to raise that price up. True, it will never be full commission, but I doubt all 58 sold for only $299. How would he still be in business only making $17K per quarter?
Russel, How hard was it to get to the level you are at today? Many realtors never get to this level, because it is very, very hard. I would bet that it is a lot easier to throw up a bunch of ads, that say you will sell a home for $299, and get a ton on people in your office. It can’t be that hard…
November 25, 2006 — 10:56 am
Trevor Smith says:
Hi Russell,
You have some good thoughts. I totally agree that certain agents will always have a certain niche. Heck, one of the investors in Redfin (My heroes) used Windermere to list his house. Discount Agents will never be for everyone, just like Wal-Mart isn’t for everyone. However, just like Wal-Mart, Discounters will always have a substantial place in the market.
I think great service will always be important, for discounters or not.
As for discounters going by the wayside during the market slow down, time will tell. I think sellers are looking for every way to save their equity when the market slows. A flat fee or 4-5% commission is pretty appealing during these times.
November 25, 2006 — 9:04 pm
John L. Wake says:
Discounters ain’t cheap if your home sits unsold on the market, eating up your savings and putting your life on hold until it sells.
November 27, 2006 — 10:30 pm
Karen Detwiler says:
Don’t discount ‘discounters’. Many of us in real estate who charge a flat fee certainly don’t cut corners in the marketing of our listings or the service we provide to our clients. I get so frustrated with the so called traditional real estate agents that belittle flat fee companies. What are you afraid of? If non-traditional real estate companies are providing a high level of customer service and customer satisfaction, they will be around for a long time. As for me, I feel good about the services I provide my clients – and I sleep well at night knowing I’m charging a fair price. Plus, I love all the referrals I get from satisfied clients who have a bit of extra money in their pocket from their commission savings!
December 4, 2006 — 8:48 pm
Jason Gracey says:
So I was driving down the road yesterday and I notice one of those new Cricket cell phone franchises, I believe they are nationwide at this time. They sell many of the same phones as the others, ( Sprint, Verizion, etc.), but they only charge a flat monthly fee for unlimited minutes. Great concept, give the consumer the same thing as the other guys, phone/service, but do it for a fair price.
So I arrive home a few minutes later and go to check the mail, and there I find a red envelope from NetFlix with my latest DVD movie selection in it. I love NetFlix, much larger selection than the brick and mortar stores and for one low price per month. There are MANY other examples across the American landscape of companies offering the consumer what they want…Great Service at a fair price.
Thing is, Blockbuster is starting to offer a similar service as NetFlix, and I do not see Blogs/commercials/PR campaigns aimed at belittling ‘Cricket’.
Why do we only hear such squawcking from ‘traditional Realtors’?
I hate ‘discounters’ just as much as the next guy, and probably more so in that many 6%’ers are quick to lump Help-U-Sell in with them. Well do the research, and you will find the real discounters out there,( I go up against and defeat discounters all the time), you may have heard of a few…Keller Williams, ReMax, Coldwell Banker.Some as low as 4%. You see, I do not discount my commission, don’t have to.
My marketing and service is on par, and in most cases, well above that of the top producers in my market.
As to your comments regarding Steve Ozonian, I have it from a rather good source that your comments are false on many fronts.
December 5, 2006 — 9:39 am
Sean Linder says:
Anybody with a blog can post anything they want without regard to the facts. Russell Shaw is the perfect example. A couple of years ago somebody posted practically the same story about a previous CEO of Help-U-Sell. New CEO, new name, same BS from the “traditional” agents. Come on guys. I know you’re grabbing for every branch as you fall out of your 6% tree, but can’t you at least come up with a new story?
December 9, 2006 — 1:17 pm
Greg Swann says:
> New CEO, new name, same BS from the “traditional” agents.
Your comment is unclear. Is it your position that Steve Ozonian’s home was listed with Help-U-Sell? Would you be so gracious as to email me a PDF of the listing?
December 9, 2006 — 1:30 pm
Sean Linder says:
Steve Ozonian’s home was on the market before he joined Help-U-Sell. Currently his home is not on the market at all.
December 11, 2006 — 3:57 pm
Greg Swann says:
> Steve Ozonian’s home was on the market before he joined Help-U-Sell. Currently his home is not on the market at all.
Again, this seems to be non-responsive. Did Steve Ozonian list his home for sale in the process of joining Help-U-Sell, as one of the things he did in the course of taking that job?
In other words, did Steve Ozonian list his home for sale with another brokerage at a time when he might reasonably have been expected to have used Help-U-Sell, which would have been known to him to be his prospective employer at the time the listing was taken?
These are not hard questions.
For what it’s worth, even if the essence of what Russell Shaw has said is true — that Ozonian listed his home with another brokerage even though he was going to work for Help-U-Sell — I would not consider this to be hypocrisy. Help-U-Sell would normally be a poor marketing choice for a home that might appeal to its CEO.
What does look like hypocrisy to me is the tap-dancing you have undertaken using what may be a fake name and what is certainly a fake email address. So far, no one from Help-U-Sell has flat-out denied the essential claim in Russell’s post. Is this something you can do — and document?
December 11, 2006 — 4:16 pm
Tim Lamont says:
My issue is not with your post, which I believe hits the nail on the head, but with Jason Gracey’s comment. Though I can see his point, I would ask that he – and others – be a bit more specific when listing those companies he calls “discounters.”
One of the companies on his list is Coldwell Banker. I work for Coldwell Banker Residential Brokerage based in Waltham, MA. We are owned by NRT. We are not discounters by any stretch. However, not all Coldwell Bankers are Realogy-owned. There is a franchise side as well. It is my fervent hope that the Coldwell Banker offices to which Mr Gracey was referring are franchises.
December 15, 2006 — 9:31 am
Ryan Ozonian says:
i found this on the internet upon googling my dad. Im a student at USC. Most of your information isnt even correct. Our home is not in the city of laguna niguel. Never was Coldwell involved in anything. And my home is 11.6 miles from the CDM office not 21.8. Get your facts straight before you write things about people.
February 22, 2007 — 6:11 pm
Dale Rainey says:
An interesting point to make in the discount brokerage discussion about firms like Congress and my company http://www.ulistit.com is that we are able to operate in many different areas at the same time. True $17k might not be a lot for one quarter, however I believe Congress is licensed in something like 7 states, so it’s not reasonable to make projections based on only one city. http://www.Ulistit.com is licensed in 3 states at this time and the great thing about discount flat fee methods is that we get paid on every listing, not just the ones that sell. There is an economy of scale that makes it viable, although agreeably not for everyone.
March 7, 2007 — 8:32 pm
Jill S says:
I’m not an expert here, but I’m doing research on Congress because they’re hiring data entry people for their MLS listings and I’m trying to find out if they’re going to be around for a while, etc. Any thoughts?
April 11, 2007 — 11:28 am
Anonymous says:
Jill, I believe Congress is the largest fee for service model in the country. ( I am fairly certain no one else is even close to them in volume ) I suspect they will be around for awhile.
May 10, 2007 — 8:46 pm