Thursday, March 18th, 2010

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How Many Lightbulbs?

• Posted by Matthew Ferrara on July 8, 2008

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How many lightbulbs does it take to change a REALTOR? Apparently, a lot, considering we’ve been offering ideas to the industry for more than two decades. But that didn’t stop this silly conversation from occurring the other day in my class:

“Yeah, it’s been on the market for about seven months. The seller won’t lower the price and there are about a dozen properties like it – some much newer – that are being offered for less. I don’t know what to do.”

“Have you provided the seller with the comps?”

“I just did again, for the fourth time, yesterday. She just won’t see the issue – it’s the price. Buyers have a lot of choices nowadays. She keeps saying we’re not doing enough advertising.”

“Have any of the buyers provided you with that feedback, so you could show her what the buyers are saying?”

“Nothing works. I have tried everything. Say, let me ask you a question. Have you ever done that statue thing? You know, where you bury a statue upside down in the corner of the house. Do you think that would help? I hear a lot of REALTORS swear by it.”

Pop. Out goes the lightbulb. In comes the voodoo. And forever falls away any hope of developing a professional sales force out of the million or so actors playing real estate agent.

Only it’s not TV. It’s real life. We’re talking about people’s life savings. Their biggest investment – a financial commitment that will dominate their lives for years, if not decades. Mix in the legal elements – like fiduciary responsibility and zillions of other regulations – a dash of disclosure and a few flakes of Fair Housing. And the “solution” to tough situations is: Hey! Let’s do a rain dance! That will help!

Burying statues in the backyard doesn’t sell homes. Nor does listing overpriced property. Or working with buyers without pre-approval. All of this is smoke-in-mirrors – and it’s only goal is to make the REALTOR feel like they’re doing something – anything – when they otherwise would be faced with having to do the right thing, instead. What will be next? Broomsticks and Pikachu?

That’s right: Do the right thing. Now that’s an idea. A lightbulb whose time has come. Like canceling a listing agreement for your unreasonable sellers. Just co-broke it later (bring the buyer offering a substantially lower but “you know it’s reasonable” price) and stop accruing all the expenses and aggravation. Like asking the buyer “do you want to make an offer” when you’re showing them the FIRST house on your grand tour. At $4 a gallon of gas, do you really have time to drive them to seven more homes without – at least! – asking them every time if they’d like to make an offer. Like greeting people at the door of the open house, then walking through the home with them, explaining things as you go. Not letting them run amok on their ignorant own, helping themselves to the jewelry and prescription drugs, and leaving with really no idea about the home other than the “pretty colors” they saw.

Real estate is a sales business. Sales isn’t the act of “being nice enough to a seller to let them give you their listing” so you can earn a commission. It’s about taking the right listings at the right prices – market prices – so you can make the right deal. Sales is a process. It has goals – like selling someone’s home in a reasonable time frame, for a reasonable price, so you can earn a reasonable living. Sales also has skills required – such as pricing homes within the market tolerances, explaining that prices are set by the buyer, not the seller, and using the skills of recognizing a bad deal when you see one – and running away!

Don’t think I’m blaming the consumers, either. Sure, sellers are insane and buyers are idiots. But you should be so lucky to work in an industry where the consumer’s emotions dominate their purchase process. That’s a salesperson’s dream – unless they’re still dreaming that the Tooth Fairy will bring them an offer on their overpriced under-staged listing in the high tax-burden town this month. REALTORS don’t sit across the table with twenty computer science experts, technicians and IT managers, trying to explain to them why their computer equipment warrants their $500,000 investment. REALTORS don’t have to match wits with a veteran surgeon with a PhD in chemistry as they try to sell their company’s new drug benefits. No, folks, it’s houses.

Yup – bedrooms, kitchens, and your favorite: bathrooms. But while it’s not rocket science, it certainly isn’t going to sell because you positioned the furniture toward the sun. Planting totem pole in the yard won’t keep the evil spirits from overpricing it. Drawing a circle in salt around the front door and splashing some wine vinegar on the walls won’t make buyers suddenly see the “hidden value” in the home.

At some point, consumers are going to figure this out. Oh, sorry – that point was about ten years ago. That’s why they’re raising eyebrows at your commission. That’s why they’re wondering why they can’t get hold of you by email. That’s why, after seeing the photos you placed online, they’re asking you to please, please, please stick to text-based classified ads.

Am I picking on you? No. I don’t have to: the consumer is doing it plenty fine for me. Am I trying to help you see a point? Yes. It’s this: When you’re sitting in a class called “The Ultimate Technology Course” and you’ve actually spent $300 to be there and you have a 100 page workbook in front of you with dozens of sales, marketing and technology ideas, maybe, just maybe, you’ll put away your amulets and incense and pay attention for a few minutes. Possibly out there – on the vast internet, within the networks of experts like Turcotte and Brouthers and CRB and WCR – you’ll find a few skills, techniques, tools and technologies that will help you do the right things that trained salespeople do to build your business.

Otherwise, just like your statue-underground marketing strategy, it’s probably going to be lights-out for your career.

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Comments

5 Responses to “How Many Lightbulbs?”
  1. Tom Gaddis says:

    Matt,
    That’s tellin’ it like it is. You sound a bit cynical, but it’s all true. Real estate agents, for the most part, are a bunch of unrealistic morons. I get so sick of battling the damage done by idiot agents who take listings at any price and wreck the marketplace for those of us who try to list property within reason, and get people to fix up and clean up their doggy dirty houses. If I sound like a burnout case, I probably am …after a lifetime career of 34 years. At least I’m still standing while dozens of others have moved on to a “real job”. So go ahead and hit hard……the tough ones need it and can take it -and those who can’t take it can go get a real job.

    Regards,

    Tom

    PS: A Phoenix agent gave me a St. Joseph statue last winter. It came in a little cardboard box with instructions. The instructions said to price the home at market value, fix and clean, and stage the home for maximum appeal. If you do all that and bury the statue, your home will sell in a minimum of time. Amazing how smart St. Joseph is!!!

    [Reply]

  2. Jeri Gray says:

    Your are right on target with this article.
    Jeri

    [Reply]

  3. Well written article and right on point!

    It has long been my policy if, after seeing comps to the contrary, a seller insists on overpricing his home or refuses to do what is needed to stage it properly, I will politely not take the listing. It does me no good to spend my money marketing a property that isn’t going to sell no matter what I do! The problem is, salespeople who don’t have to pay for ads are too willing to spend their broker’s money! I think that agents who work on the 100% commission concept are successful because they shoulder the costs and are less likely to take an overpriced listing! Maybe part of the answer to not taking overpriced and unsalable listings is for all salespeople to share in marketing costs!

    [Reply]

  4. admin says:

    Sheila:

    You’re right on the money! Literally!
    Of course, until recently, the hot market “papered over” this situation. Brokers could “afford” to throw the marketing money away. And they didn’t ask: Who’s making the decisions around here? Whether the agent shoulders their own costs – or the brokers simply take control of their own businesses – the recession is proving one thing: brokers can’t survive on bad practices much longer.

    Put it another way: The issue of overpriced listings isn’t an economic, technology or even skills problem. It’s a leadership issue.

    Thanks for commenting!

    - Matthew

    [Reply]

  5. Well written article and right on target!

    It has long been my policy to walk away from sellers who, after seeing comps to the contrary, want to overprice their homes. It does me no good to spend my money marketing something that does not sell!

    I think part of the problem is that salespeople are often too willing to spend their broker’s money! 100% commission salespeople (or brokers who also list and sell) are often successful because they have to shoulder the expenses and are less apt to take an overpriced listing just to have a listing! Maybe the solution to so many overpriced/unsalable listings is to have all salespeople share in the marketing expenses for the listings they take.

    [Reply]

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