Why do velociraptors no longer roam the earth? Because they couldn’t change. For all their ferocity and intelligence, they were not able to adapt to their changing world. Not able because they were not blessed with the human triumph of will, they couldn’t want to change, and so they became extinct.
What’s a Realtor’s excuse?
In today’s world of Web 2.0, disintermediation, and DOJ scrutiny, anyone in this industry who doesn’t believe the real estate business in the 21st Century is going to be dramatically different from the last century is going to be in a world of hurt. The only way to survive will be to embrace that change.
Ardell DellaLoggia started an excellent thread on Seattle’s Rain City Real Estate Guide, where she has a conversation about buyers’ reps changing their worldview on buyer compensation.
Clearly, the Buyer Agent truly treating the buyer as a client, is the key to the future of our industry. As long as agents continue to think that the seller is paying their commission, when they are representing a buyer, they will continue to treat the buyer as a second class citizen in the real estate transaction.
Be sure to read the entire thread to get the most out of it.
But, closer to my own heart is Allen Wright’s post on RealBlogging, which also recommends we re-evaluate the method of Realtor compensation. Closer to my heart because he asks the essential question:
As a real estate professional maybe we should take a step back and ask a more serious question, “What value-added-service am I providing?”
I like being in a commission based industry. I like being paid for my results, not just my efforts. There are 1,200,000 of us all expending some type of effort, a consumer might assume. But who is actually creating value for his clients through that effort?
Some business models such as discount service brokers and the Redfins of the industry have answered this question by saying “we’re not going to give you added value, but we’ll give you what you have come to expect from Realtors for less than Realtors typically charge.” For some consumers, this is an adequate answer. Some people hire day labor handymen to remodel their homes. Maybe they’re handy enough themselves to not need a contractor. Or maybe they’re penny wise and pound foolish, not understanding the downstream consequences of being insufficiently represented. Maybe they make too little money doing their own jobs that they need to save money by doing more of the contractor’s job. Whatever their reasoning, people who apply this reasoning to their real estate transactions will not be my clients, at least not until they have failed “on their own.”
So, will there still be room in this century’s real estate business for Realtors who want to compete for business on other than price? We believe there certainly will be! Everyone tries to differentiate themselves from everyone else by doing the same things that everyone else is doing, saying they have “integrity,” saying they “actually listen to what you want,” by offering free CMAs. Then, when someone actually does do something different, they cry “foul!”. I say expect change. Embrace change. Don’t try to stand in the way of change or you might be run over by it. How are we differentiating ourselves? For one things, we’re letting the consumers know about our results, not just our efforts. This has upset some of our competitors, but has forged healthy, mutually beneficial relationships with others. But most important is we are adding value to the real estate transaction for all of our clients, and getting better at it all the time.
Anonymous says:
I found your blog through a comment on Ardell’s entry about rebating to buyers. I am in a very different market but I thought it was a pathetic, pitch for business by someone who has come to the party too late and without the skills or technology that are needed in 2006. Watching her original blog, she posts her phone number and whines buy a house through me and I will pay you. You can do buyer brokerage without prostituting yourself. Time to move onto another market with less competition, less tech where she can compete. Or are there any of those anymore?
NOTE Ardell is NOT a REALTOR?.
July 14, 2006 — 1:53 pm
Ardell DellaLoggia says:
LOL, very funny. I expect you are a REALTOR, and in fact someone I know. And so you know I was a REALTOR for many, many years…maybe longer than you. The times they are a changing. Discussing commissions and determing a fair price with my clients is clearly not “coming to the party too late”, in fact it is a party that has just begun with regard to buyers. Hiding behind an anonymous posting doesn’t say much for you though. Have the guts to say it to my face, you obviously know how to reach me and my blog. Of course, I might delete you there 🙂
July 15, 2006 — 1:20 am
Tim says:
So what if Ardell is not a card carrying member of NAR, thus Realtor designation!
Does this membership really imply a better experienced agent? Does a discount broker or broker that charges less than others really prostitute their profit or professional business model?
I can tell you our escrow office has just as many problems with ‘experienced’ Realtors, than those who are not members or operate under a discount or rebate driven model.
How’s this for a gem from an seasoned Realtor: “what’s this excise tax about on the settlement statement.”
This is exactly the type of ego driven bickering that I see between agents in transactions that lead to failed deals. And people wonder why the professional image of Realtors struggles.
Tim Kane
Legacy Escrow Service, Inc.
Everett, Wa.
July 15, 2006 — 1:06 pm
Marlow Harris says:
RE: Status as “Realtor”. Perhaps the writer is referring to her status because of the current discussions on Inman about real estate professionals. Dr. Kevin Boileau in a recent Inman article on real estate ethics says, “There really is a technical, traditional definition of professional status, which includes three criteria: 1) specialized knowledge; 2) group identification and membership; and 3) agreed-upon education and training, including ethics training, certification by examination and continuing education.”
He goes on to say, “So, while many agents may have specialized knowledge, they must also be obligated to follow certain, written ethical standards of practice. This allows individuals in a specific industry to maintain specific behavioral expectations amongst themselves as well as toward their target consumers. Without a written code of ethics, standards are nebulous and therefore cannot be formally learned or enforced. This breeds moral chaos.”
I think his point is that by joining a professional organization, such as the National Association of Realtors, one gives themselves credibility and announces to the world that one agrees to maintain a certain code of behavior and ethics, and without doing that, one is something less than “professional”.
That’s just my guess.
July 17, 2006 — 10:51 pm
Portland Real Estate says:
Its a different world out there. I would agree.
January 14, 2008 — 1:54 am