111 Ways to Justify Your Commission: Value-Adding Strategies for Real Estate Agents and Brokers

236 Pages·2007·5.26 MB·English

by  michael Lee

Value-Adding Strategies for
Real Estate Agents and Brokers
Michael Soon Lee
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This publication is designed to provide accurate and authoritative information
in regard to the subject matter covered. It is sold with the understanding that the
publisher is not engaged in rendering legal, accounting, or other professional
service. If legal advice or other expert assistance is required, the services of a
competent professional should be sought.
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Acquisitions Editor: Michael Sprague
Development Editor: Mary Good
Production Editor: Fred Urfer
Production Artist: Janet Schroeder
© 2007 by Michael Soon Lee
Published by Kaplan Publishing,
a Division of Kaplan, Inc.
All rights reserved. The text of this publication, or any part thereof, may not
be reproduced in any manner whatsoever without written permission from the
publisher.
Printed in the United States of America
August 2007
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ISBN: 978-1-4277-5470-7
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DEDICATION
To my wife, Miriam, and our sons, Ryan and Christopher, who
sacrifi ced so much to help make this book a reality. This book is also
dedicated to the hundreds of real estate professionals who lent ideas
and suggestions to make sure it had unique value for the readers.
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C o n t e n t s
Foreword vii
Introduction ix
Part 1. Establish Value 1
Part 2. Marketing 85
Part 3. Client Selection and Relations 135
Part 4. Business Practices 151
Part 5. Increase Your Value with Education
and Professional Development 177
Part 6. Give Them More Than They Expect 197
Conclusion 213
About the Author 215
References 217
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F o r e w o r d
I believe that the current demand for lower real estate commis-
sions is the result of two things: increased competition in our indus-
try, and decreased value. As markets improve, more people get into
the business. The newer agents don’t know how to compete on value
so they compete on price. It seems their belief is, “Because someone
asks me to cut my fee I have to cut my fee.” It’s the easiest answer for
them but ultimately the most painful. They end up working for less,
then resent themselves for having reduced their commission. They
also have less money available to market the property and just end up
working harder for less money.
When I ask experienced agents why they cut their fee they usually
say, “It’s to get more listings and maintain market share.” My answer
is, “Market share is for kids—profi t is for adults.” The way to increase
profi t is through maintaining your margins, not just market share.
If you give good service and good value you can gain both. Given
the choice of losing the listing or losing money, I’d rather lose the
listing.
There is a belief among agents that by making a bit less on each
transaction they’ll make it up in volume. If they would actually do
the math they’d learn that reducing the commission by 1 percent
requires about a 20 percent increase in units to break even.
The single best solution to maintaining a reasonable number of
closed units and getting paid well for them is to deliver value. What I
like about Michael Lee’s book is that it offers specifi c ways to deliver
value and to explain that value to clients.
I suggest that real estate agents ask the owners this question: “At
the time you purchased your present car, were there less expensive
options available? Why did you knowingly pay more for this one?”
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viii Foreword
Their answers will establish their belief that it is worth paying more
for additional value.
Value is crucial today for agent survival and success. For example,
in my video “Selecting Your Real Estate Agent,” I show owners the
eight essential steps that must occur in order for a home to be sold,
and how to recognize the value an agent delivers in each of those
steps.
In my seminars I can show agents how to create value but it’s up
to them to take action to provide that value. I believe that a book that
has 111 ways to do this is a great written tool to help people go forth
and sell their value to their clients.
David S. Knox, CRS
National Real Estate Trainer
Minneapolis, Minnesota
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I n t r o d u c t i o n
Today, more clients than ever are questioning the value of real
estate services and asking agents to reduce their commissions. In fact,
the average commission rate dropped 16 percent in the last 14 years.
(This is according to the latest research from industry analyst REAL
Trends.)
Unfortunately, it is expected that there will continue to be down-
ward pressure on commissions because technology has made it pos-
sible for clients to conduct many real estate activities for themselves
online. For example, buyers can look for the home of their dreams
over the Internet right from their own home, surfi ng the Web while
still in their pajamas. Sellers can use the same technology to advertise
their property worldwide over the Internet, bypassing the formerly
exclusive Realtor® Multiple Listing Service. What everyone seems
to forget is that technology is only a tool; real estate is still very much
a people business. In the end, successful transactions are still built on
trust and the ability of the realtor to solve the clients’ problems and
help meet their needs.
Another challenge to commissions is the growing prevalence of
discount brokers, who really emerged during the most recent real
estate boom from around 1995 to 2006. They constantly implied that
the public was being overcharged as home prices escalated. They
constantly pointed out that they offered lower fees, which suggested
that the only difference between brokers is the price, not a difference
in value.
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