With the upside down market that the United States is presently experiencing, agents across the country are wondering how they are going to stay in real estate when they have no cash flow. They are still taking on listings in record numbers, but many agents are reporting that they have no income. The houses are staying on the market an overwhelming long time, and most are not selling under their watch, only to be listed by a competitor, leaving the agents with a lot of expense and time invested and no income as a result. The sellers are more anxious than ever before and are becoming difficult to deal with. They expect the agent to pay more and more marketing fees and spend more and more time with them discussing options all in an effort to get the house sold. And, due to the amount of inventory that most agents are carrying, they still feel the need to keep their assistants, even though they can not afford them. The latest joke in the industry is that you want to be the first born, second wife and the third real estate agent.
So, what is an agent to do? How do you turn a dismal market into something that produces revenue when your whole income is dependent upon happenings that you can not control? Many feel real estate is a game of risk; chance and what some agents call luck.
Luck. Risk. Chance. But is it really? Does it have to be all of these things that keep a real estate agent out of control of their own income and destiny? Other businesses don’t operate that way, so why does a real estate agent have to have a lack of common sense and as a result a lack of income, the same common sense that runs most other businesses in the U.S. today?
The only way to put common sense in real estate is to shift the responsibility of the sale to the homeowner and for the real estate professional to assume only the responsibility of “marketing” the home, not the expense of marketing the home. Marketing it in places that they have access to as brokers or in venues in which they get a discount when they advertise in bulk. Many MLS sponsored sites and real estate magazines require an agent to be the advertising party. But these advertising firms don’t get paid on contingent behavior, they take a retainer or money due upon advertising as they know that their responsibility lies in delivering the product, not making the product perform certain results outside their control.
In my opinion and in the majority opinion of the over 9,000 clients that I have served over the last five years, all homeowners with a need or desire to sell, want three things. They want the expertise of a seasoned agent who knows the avenues in which to list a home, how to advertise the home so that every buyer in the marketplace has the opportunity to see it and a seasoned agent skilled in contract negotiations to take them from offer to closing. However, they don’t want to overpay for a strategy that hurts them when the desired end result does happen: the sale the home.
In an attempt to turn the legacy of real estate around, we should take a serious look at other businesses. Our efforts and resulting compensation should be based on a reasonable fee structure wherein we are paid a fee upfront for our time and behavior that leads to a successful transaction between a buyer and a seller. Instead of gouging a few people to make up for all the ones that did not get to a successful transaction we should charge clients a reasonable amount based on effort and merit.
By charging people for our time upfront, we will create a positive cash flow and a more respectable industry. This way we can relate to and meet our client’s needs instead of the typical reactionary cycle of churning and plowing just to keep a listing or to force a transaction between two unwilling parties. The future is ours to change in real estate. As real estate agents and the stewards of our industry we should see to that change.
Rhonda Duffy and Mike Costigan have opened a business to help agents understand their role in the transaction as well as to help them make their business profitable. You can view the details at Cash On Demand Realty System – Real Estate Agent Coaching and Training