I have my moments of raving fandom. Presently, my latest blog-crush are the folks at 1000 Watt Consulting. How can you not get fired up when under the category of “Hire 1000 Watt Consulting”, they have this Topic:
Imagine the real estate industry has been nuked. Nothing left. The old guard, gone. Along with the tired policies and politics that hamstrung advancement. Imagine building a brand new real estate brokerage from scratch. Where do you start? What does it look like? What is your business model? What is your proposition to the consumer? What would your Website look like? In this interactive and collaborative session, 1000Watt Consulting will place you in the driver’s seat along with your peers and let you dream up a killer brokerage of the future. Come, shed your Realtor hat. Sharpen your pencil. And get ready change the world.
Let’s unpack THAT for a second.
- Where do you start?
- What does it look like?
- What is your business model?
- What is your proposition to the customer?
- What would your website look like?
How many successful real estate brokerages can succinctly answer two of those questions? How many individual brokers could answer one of those questions? A newbie who successfully tackles three of the above has achieved branding, relevance and market differentiation worth hiring over 90% of the entire industry. Do all five and you are the professional of professionals. Yet the relentless chatter and all-things-to-all-people, SEO language of the real estate agent world all rings the same (search all homes in Briargate, Peregrine, Broadmoor, Fort Carson and Powers, all keyworded into the generic vanilla sky…). This emblematic of a bored and tired profession that has disassociated with the client base it was originally designed to serve.
Don’t hear me wrong about the real estate industry. It is powerful that the largest trade group in the United States also was the first to adopt a code of Ethics. The fact that there is a Code of Ethics is a singular achievement in the advancement of business that The National Association of REALTORS can leverage as a reason for relevance for another couple of decades.
The problem exists in the membership. The mechanism of brokerage and the business propositions of individual agent brands are just so many clouds in the plain vanilla sky.
Guilty as charged.
My transition has begun in making the subjective, objective.
The invisible, visible.
The deep smarts, measurable.
The layers of knowledge, accessible.
Thank you for saving my career, Harold Ware.
In early August, 2009 I took the plunge and became the first (and to date, only) MaxAvenue® member in the Colorado Springs MLS. I have paid to join a tribe of revolutionaries. Consumers… you are the beneficiaries.
MaxAvenue® is a co-brand business management solution for REALTORS that helps sellers get 5 to 15% more for their home, and offers buyers a proven system for finding the perfect home at the right price. It is a process-oriented membership of agents nationwide that are setting out to revolutionize the real estate industry… by empowering the consumer.Yes, you heard me: REALTORS with a stated goal of empowering the consumer.
Example: Do you know how to make the Principle of Price Elasticity work to your benefit as a seller? How about as a buyer? That a professional stager can improve your negotiating position, and that a presale home inspection is a part of any high-value seller’s best negotiation position?
For the last two years I have “experimented” with home-staging, pre-list home inspections and ROI graphs to show the value of improvements. My deployment of these methods has been inconsistent and at best, tactical. The evolution of this business requires a strategic, purposeful utilization of these tools in a way that is customized to the specific consumer needs and goals. The huge advantage MaxAvenue® gives me is the organizing principle of strategy and process that helps me align and realize the consumer’s goal: selling their home for maximum value; or finding the perfect home at a great price. How we get there is customized. Some of the tools stay in the bag and others are leaned on heavily, depending on the mission. But rather than a reactionary, tactical skillset, I know have an understandable, proactive strategic mindset that will directly benefit buyers and sellers alike.
Example of MaxAvenue® thinking at work to benefit a consumer: I just mentioned the “principle of price elasticity”… this states that in every market, there is a 5 to 15% variance in price for a single product. Quite simply, a 3500 square foot home in Orchard Park in Briargate will sell around $400,000. Some will sell at $418,000. Some at $370,000. That’s a 13% variance. Where would you prefer to sell? What could you do with an extra $48,000? Thoughtful marketing can position a property to take advantage of the demand at the top of a product’s value curve.
Absence of thoughtful marketing will allow a property to sell at the bottom of the curve. I showed properties yesterday over $1 million. One listing company never called the Broadmoor Resort to schedule the showing. They showed up and turned on the lights and opened it up just fine… they just forgot to tell the merciless guards at the gate someone was coming to see it and to please allow entrance. Process failure. Another property was amazing, in a superb location, 1960’s Hollywood architecture with beamed ceilings, walls of glass, flagstone interior flooring, huge rooms, views of the Broadmoor… but the carpet in the basement smelled like dog pee and despite the obvious deposit of hundreds of thousands of dollars into the home, there were obvious oversights that made my buyer question the million dollar plus price tag. ROI-absence. A third was a huge home priced well and was the only one that my buyer thought was over-priced. The reason? Cheesy vacation home furniture, the stuff you don’t mind lounging on after your golf vacation with friends at The Broadmoor, but not the kind of stuff that showcases a $900,000 property in a market where everyone is tight with their cash. Failure to Stage.
All three examples that due to price elasticity, will end up costing these sellers $100,000+. All three. Guaranteed.
Without a process, you can’t even get a showing. The Broadmoor Resort is a super-exclusive area and a REALTOR card is not sufficient for admission. Build in that area or take a listing in that area and the guards are your friends or your enemies. Reconciling the obstacles to sale is paramount in any process.
A seven-digit price tag, even above the Broadmoor Hotel where the bells chime in lovely tones as you exit the car for the home viewing, demands a perfect property. I will still say that this is one of the coolest homes I’ve ever been in. But anyone buying at that price tag is looking at lots of cool homes. There are 218 of them for sale right now in our MLS alone. Year to date, 16 have sold. That’s a ten year supply of million dollar homes. How do you make something as subjective as “cool” objective? Property condition perfection.
The third property has the handle of a great builder and a great area. But people buy with an eye to their future, not a nostalgia for 1997. Removing the dated furniture and staging it with modern furnishings alone would offset the brass and Corian. Replacing all the brass and the Corian is a 5:1 value. If this home does sell, it seems likely that the furniture and overly-brassy fixtures are costing them in excess of $120,000.
There is nothing wrong with the agents listing these homes. All three are great folks who do a super job negotiating. Their websites are super, the advertising is top notch, they communicate effectively. The problem is that the future has arrived and the industry has not kept speed. Listing a property is a traditional method of promoting a property. It is non-traditional to market a property. Marketing invests in the product and makes the product better. An Accredited Staging Professional averages a 7.2% higher price for their home than a non-staged home. One service, properly deployed, results in a $60,000 to $80,000 price swing in this ballpark. It probably also reduces the holding costs from, oh, I dunno, 4 years of mortgage payments, to four months. Now leverage staging with a pre-sale home inspection, with a budgeted ROI forecast, with a transparent broker marketing budget, and you see why listings in any market can sell not just faster, but for much higher dollars. The reason is that the sellers are put in the best negotiating position possible. Buyers are afraid such a choice property is going to be bought by someone else.
The reason buyers are so wishy-washy in a market like this has to do partially with the economy, but more with the fact that they can afford to be wishy-washy. Buyers have three concerns: Paying Too Much for a home; That Something is Wrong with it; That Someone Else might get the property first. If they don’t believe that someone else might get the property first… there is zero motivation to action. In other words, buyers are not seeing properties that they find sufficiently appealing. They see a lot of homes that they like… nothing prompts them to love.
The transparency of the web and the expectation of customized customer service starts at Starbucks, and is extended to the trash company that calls with a reminder of the one-day late pick-up due to Labor Day (my $20 a month trash company Waste Connections just did that. Incredibly good customer service). It is rarely found in the (keyword) marketing of real estate.
Echoing Marc Davidson…
What would a real estate company look like with a business plan designed around a consumer-centric business proposition? Would you use a real estate website that gave you advantages in an open and free marketplace? If the business was not focused on selling and technique, but instead marketing, deep smarts and long-term client care, would you share that with someone else?
MaxAvenue® embraces process. Promises don’t sell homes; Process sells homes. This has nothing to do with a glossy in Homes Illustrated or a bus bench on Nevada. It has everything to do with putting a consumer in the maximum position of strength before they begin any negotiations.