“Are you a real estate salesperson or a real estate advisor?”

I have asked this question hundreds of times to hundreds of agents across the Nation. And where the answer is variably different, in many cases it is still the same.

“I am here to advise my clients to make an informed, educated and advised decision that suits their budget, current and future needs.”

I take this answer at face value…  call me a cynic, call me jaded, but there’s a 600 lb gorilla in the room called “commission” that contradicts this statement for many.

As a RealtorR:

- I am compensated on the volume of transactions that “close”

- My “split”, or % of the gross commission awarded to me is determined by my production, or closed volume (i.e. the more I close the higher the % of gross commission I keep).

- So in order to pay MY mortgage, car payment, grocery bills, etc. I must actually CLOSE transactions.

The quagmire that is presented here:

1.  To be a true “advisor” and recommend AGAINST buying a home if it does not fit their budget, lifestyle, or current situation means that I am not going to make any money.

2.  To be a true “advisor” and recommend that someone spend less money than more money on a home means that I, in turn, make less money from the transaction.

3.  To be a true “advisor” and recommend that someone “hold off” on selling a home at the moment due to market conditions, net return/loss, etc. means that I am not going to make any money.

4.  To be a true “advisor” and recommend someone not purchase/sell a home at this time means that I have less volume “closed” working towards an advancement in commission split.

I believe that this is one of the glaring contradictions in the current real estate brokerage model, and one that I don’t have a concrete opinion on how to fix.  But that’s not what this post is about… There is raging online commentary on the commission/brokerage model of the future across the web, and this post isn’t intended to enter this arena.

Too many times have I heard the following:

“I’ve shown them 40 houses and they still won’t write a contract!  I just want them to buy something!”

“I don’t know what their problem is… we’ve seen everything and they still won’t write an offer!”

“I wish they would just buy something”

You are a real estate professional.  You have taken an oath to serve your clients and advise them to the best of your ability.  This “advising” is not limited to the negotiation of the property and searching of the MLS, you are in the truest form, a financial planner for their current and future home situation.   I apologize in advance for what is to follow, but the situation at hand absolutely sickens me.

Dan’s Story

In this video we meet Dan and his family that were lied to about the mortgage “teaser” rate that was applied to the purchase of their home.  Where 98% of the agents that I know would never partake in this type of scam, the emotion is real.  Dan is simply a voice and face of the American Home Buyer who had done everything right, budgeted, and saved to purchase a home for his family.

A Day in the Life

Most have dealt with or seen the aftermath of the Foreclosure process.  An empty house with boarded windows, appliances, basic fixtures, and even copper piping stripped from the house.  But put yourself in the above situation and think about “the day of”.  Then… think about the last client you worked with.  Would you wish this upon them?  After the countless hours of family talk, time together in the car, discussion of kids, pets and dreams, this could be their “next step”.

Wanda’s Story

Rather than vacate her foreclosed upon home, Ms. Wanda Dunn set fire to her family home before turning a gun upon herself and committing suicide.  Extreme… yes.  Commonplace… no.  But have you ever really wondered what someone faces for the future after foreclosure?  Aside from the emotional, personal and embarrassment factor of losing their home, they face the following to their credit score (courtesy of About.com)

Let’s make it a Party…

And how do some deal with the grim element of this problem?  What empathy and understanding do some brokerages employ to rectify an issue that out industry “to some level – let’s be clear…  SOME LEVEL” helped to create?  That’s right… we hire a bus, paint it accordingly, dish out some cocktails and make it a party.

Many reading this will respond with, “Those aren’t my clients”.  They might not be.  But they are the stories of middle/working class families of ranging ethnicity’s that we have turned a camera on.  But please don’t fool yourself as  it is happening.  Middle class or upper class, it is happening daily to clients just like yours.

There are exceptions to the rule just like anything else.  There are those that went to developers directly without direction from an agent.  There are those that took out huge lumps of equity to spend on cars, plasma TV’s and other luxuries.  But there are many stories, maybe one on your block, that haven’t made it to YouTube.

All points to what infuriates me more than anything else… the blind eye of our industry and our focus on the “expendable” client base.

In a post on Agent Genius the other day, a contributor wrote about the “11 Things A New Agent Should Know”.  It wasn’t necessarily a bad post, or the first that struck me in such a way, but it was timely and set me off.

Of the “11 Things a New Agent Should Know” there was not one mention, not an inkling, to market knowledge and further education.  “Stay Positive”, “Be Yourself”, “Don’t be Afraid to be Wrong”, were the major points to be made.  Not one, “Get to Every Training you Can”, “Learn about REO Properties or How to Avoid Foreclosure”, “Educate Yourself on Current Financing” or “Budgeting for Home Purchase”.  Stay positive and don’t be afraid to be wrong… everything else will work itself out.

There is a group within the industry that I believe should be allowed to call themselves a Real Estate Advisor, and I am proud to say that I know many of them.  They represent a group that is both educated and empathetic… a group that puts their clients’ needs above their own.  These are the future of the industry in my uptopian-style rosy-glass future.

The two things I will end with are below:

1.  To Consumers – you deserve the best.  You deserve an advisor.  This is the largest purchase you will probably ever make and $250,000 is still a quarter of a million dollars.  Take your time and make an educated desicion.

2.  To Agents – strive to be or become a real estate advisor.  Take your job as serious as it truly is and understand that you are in charge of their financial future.  Don’t be good be great.

Matt Dollinger

The You Factor

]]> http://theyoufactor.com/2009/08/05/advising-the-face-of-real-estate-today/feed/ 11 http://theyoufactor.com/2008/06/13/become-the-james-bond-of-real-estate-20-ways-to-boost-your-confidence/ http://theyoufactor.com/2008/06/13/become-the-james-bond-of-real-estate-20-ways-to-boost-your-confidence/#comments Fri, 13 Jun 2008 22:23:47 +0000 Matthew Dollinger http://mattdollinger.wordpress.com/?p=67  

“He who has confidence in himself will gain the confidence of others.” – Leib Lazarow

So what do James Bond and the most successful Real Estate agents that I know have in common that so many others lack?  It’s simple really… they all have an unbelievable amount of confidence.

Seriously though.  Would James ever face a time sensitive situation with SPECTRE, the end of the world at hand, and face whatever beautiful damsel was with him, (personal favorite was Honey Ryder ‘aka Ursula Andress’ from Dr. No), only to say, “Ummm… yeah… I don’t really know how to handle this.  Let me call Q and figure this out.”

HELL NO!  James would have done his research, know EVERYTHING about whatever Hans Blofeld was threatening with, disarm-blow-up-stop it, order a martini, and end up sailing into the sunset with gorgeous woman in tow.

My point is that James, like many other admirable people in business, film, etc. has confidence, true confidence.  Confidence isn’t bought, or scripted, or sold to clients… confidence is learned, earned and projected through knowledge.  In real estate, it is one of those almost emotional intangibles that allows one agent to differentiate themselves from others in their field… and to go against common belief from some, it does not come from an expensive suit and a foreign car.

To Me, ( and this is only my opinion) confidence in real estate comes from the following:

*Market Knowledge

1. What does the currently inventory look like, new developments, projected developments, etc.
2. What is the average market time in the area for SOLD properties and what is the average market time for UNSOLD properties.
3. Asking price, selling price, # of price reductions, etc.
4. Appreciation rates year over year and trends

*Neighborhood Information

1. What school districts are in a particular neighborhood, what are their scores/rankings, who would your client contact to enroll their children.
2. Parks, restaurants, nightlife, etc.
3. Shopping, grocery, fire department, police, post office, crime rate, projected commercial development
4. Public transportation, commute time, etc.

*Current Financing Opportunities

1. Current traditional loan rates and requirements
2. FHA possibilities, knowledge of process, requirements
3. New/Changing State Legislation
4. Declining Market requirements
5. City Tax Smart Programs and Other Bond Programs  

Short Sale, Foreclosure, and Pre-Foreclosure Homes

1. Benefits/Cautions of purchasing one of these homes
2. Understanding of the short sale and foreclosure process including paperwork
3. Why these homes might not be a bargain

(Good, Honest, Researched) Answers to some of the most common questions

1. Why should I buy a home right now and not in 1 year when home prices have declined?
2. What is FHA financing and why should I consider this?  Isn’t this only for low income?
3. Am I going to make money on this home when I go to sell?
4. Can’t we go in 100K under asking price and see what we can get?
5. What’s your role as a Realtor/Why should I work with you?

If an agent can answer even 60% of these questions I think that they should have a pretty hefty amount of confidence in the Marketplace.  Maybe not to the level of Mr. Bond himself, but allot better than a majority of their competition.  Where would someone go to find this information? 

• Pricing -
• My all time favorite program available to most Realtors is Agent Metrics.  www.terradatum.com  Check to see if they have an agreement with your association or if you have to pay for the program.  Either way, it’s worth your time to gather a good understanding of this program and blow the competition away.  Ave. Sales Price, DOM, Inventory, and Absorption rates in both chart and graphical format.  Enough to make a numbers nerd like me salivate.  (CAUTION)  STAY AWAY FROM NATIONAL REPORTS LIKE THE S&P CASE SCHILLER REPORT.  READ MY POST HERE TO READ MY THOUGHTS ON NATIONAL REPORTS.

• Neighborhood Information -
• There are a number of great sites that will allow you to pull all of the information you need. 
• www.everyblock.com – available in Chicago, New York, and San Francisco
• www.walkscore.com – available in most metropolitan areas
• http://factfinder.census.gov/home/saff/main.html?_lang=en  Census information
• http://nces.ed.gov/ccd/schoolsearch/ Public School Information
• http://nces.ed.gov/surveys/pss/privateschoolsearch/ Private School Search
• Bars, Restaurants, and more – www.citysearch.com

• Current Financing Opportunities -
• My feelings are that if your current mortgage broker isn’t taking it upon themself to help educate you on the different options, programs and rates out there, you need to work with another broker.  It’s not enough to say, “I have a mortgage broker for that.”  YOU need to know what the programs are, how they work, and what you could recommend to your clients. 
• Fannie Mae has an unbelievable amount of information on their website regarding programs and insight into the industry 
• Freddie Mac also has much of the same information.  Stay with the big boys as far as information unless you have a trusted local lender.

• Short Sales/Foreclosures/Pre-foreclosures
• Check with your local association.  Many are offering GREAT training programs to their membership
• Sean O’Toole over at Foreclosure Truth has a GREAT forum for answering and asking questions
• The Inman Blog – search short sales, foreclosures, etc. for leading industry insight
• The NAR Website has a great section on short sales, how to manage them, etc.

Confidence effects people in many different ways.  Lack of it can paralyze you from doing anything at all including the simplest of prospecting activities, phone calls to your closest of clients, negotiating the proper price of a home, or even talking to clients at an open house.  Knowledge is power, and by becoming empowered, you will always come out on top, and ready to take on the world.  “Shaken not stirred”

Matt Dollinger

@properties

“The You Factor”