Public perception regarding services provided by real estate brokers can be incomplete or outright inaccurate. Some sellers might see access to MLS as the main benefit to hiring their own broker. The same might hold true for many buyers. If MLS is the extent of our service, the public and “those” brokerage firms are right; we are paid too much. If your value proposition is not clearly understood and articulated, sellers and buyers have no reason to hire anyone other than the cheapest broker in town, and competition comes down to who will work for less.
We know better. The nuances of even simple real estate transactions are generally lost on the buying and selling the public. A broker who has developed and can articulate a thoughtful and unique value proposition might help avoid competing based on commission rate only.
To solidify your own value proposition, consider your answers to three questions:
1) Why would people hire you as opposed to your competitors?
2) What useful information can you provide that cannot be obtained elsewhere?
3) Why are you worth what you are asking clients to pay?
When asked why people should hire you, not your competitor, the same responses are offered time and again, “because I will work harder,” “I am available and responsive,” or “I will take care of you.” Your competitors never say “I won’t work hard, I am not available, I won’t take care of you.”
If enough brokers answer these questions in essentially the same manner, our service becomes a “generic” product, and the purchase decision boils down to the broker that is the cheapest, much like deciding where to fill up your gas tank. A generic answer to question one is indicative of little or no value proposition, certainly not a unique value proposition.
A seller might pay you more if you could help them net more at the closing table? Your ability to smooth the road to a successful closing, negotiate a better deal, keep the seller out of harm’s way or emphasize positive property characteristics might fall within your scope of abilities. A good place to start thinking about your value proposition is the Uniform and Agency duties in the listing contracts. Another excellent resource is the Contract to Buy and Sell.
I overheard a broker talking with a prospective seller. The seller had asked the broker to lower his commission rate closer to what another broker had quoted. The broker’s simple response was powerful; “Mr. seller. If I were so quick to agree to reduce my commission rate, what would that say about my negotiation skills? After all, I will be the one negotiating your selling price with the buyer.”
The importance of developing mutually beneficial business relationships with clients cannot be understated. Do buyers and sellers simply want the cheapest broker in town, or would some pay more to receive a higher value? You might pay more if you had solid reasons to do so. Establishing a firm value proposition could change a career from the cheapest broker in town, to the most profitable. This and upcoming articles are offered to help you refine your own value proposition!