- Why do agents remain with a brokerage?
- Why do buyers buy particular homes?
- Why do real estate brokerages choose certain brokerage platforms?
Simple answer – the value exceeds the cost. How you position whatever you’re selling, to maximize your sales price, you must deliver value. Anyone who sells anything has been frequently asked, “what does it cost?” Whether you’re selling to consumers, recruiting agents, or selling software to brokerages, delivering, and discussing your offering in terms of the value it delivers, is a key to winning these transactions.
What Is Value?
Value can be defined as a measure of the benefit provided by a good or service to its market price. This is famously illustrated in a version of a tale you may have heard. Here’s how I heard it.
Henry Ford’s car production line stopped, and his engineers in Detroit could not figure out how to get it working. Ford called Charles Steinmetz, whose firm helped design and build the production line, and asked that he travel from Chicago right away to help with this issue. Upon arrival, Steinmetz inspected the production line, then gathered the engineers in a conference room and drew the solution on a chalkboard. The engineers soon fixed the production line, and cars were rolling off soon thereafter. Thrilled, Ford tells Steinmetz to send an invoice. Ford gets a bill for $10,000. Furious, Ford demands an itemized bill. Steinmetz replied, 1) Pack of Chalk, $0.10 2) knowing what to do with it, $9.999.90.
How Brokerages Can Deliver Value to Agents
Do they perceive the benefit they received from your brokerage as greater than its market price (commission split)? Do you provide websites, real estate brokerage specific CRM, email marketing, training, proven processes, office space, guidance, culture, and support? Are your agents getting the benefit out of all you deliver for them? If not, their perceived value of your services weakens, and makes them susceptible to offers from competing brokerages.
However, if you can help an agent make more money than the costs they are paying you, you’ve achieved a couple of things:
- Created value and equity between you and your agent
- Strengthened the bond between the agent and the brokerage
Here’s an example that may ring true to you: In this day of brokerages being acquired and agents wooed across town by aggressive competitors, and compounded by the remote capabilities of today’s connected agents, the sense of community within a brokerage office has weakened. I recently spoke with a brokerage CEO who lost some agents who were incentivized to leave the established brokerage to join the upstart brokerage. However, once recruited, the agents were no longer a priority, and the new brokerage’s culture was not what the agents wanted. So, these Realtors gave up serious bonus money to return to a culture where they felt welcomed and valued. This is the power of delivering value, vs competing on cost, to your agents.
How Brokerages Can Deliver Value to Clients
While every brokerage in your market has access to the MLS, which is a key to exposing most properties to the market, why should a consumer list with your brokerage for your stated commission rates, when there are lower cost brokerages in the marketplace? Why are you worth it? Some ways to deliver value:
- The marketing that you will provide above and beyond the MLS – access to buyers around the globe, outstanding design services for the marketing pieces, advertising you will spend to promote the listing.
- Handling details for your sellers beyond simply selling the home, including managing/sourcing repair services, cleaning services, providing moving vans, etc.
- Over communicate. Nothing is worse than not hearing from an agent when it’s a stressful time for your clients. Ideally you would have a portal a seller can login to see exactly where the home is being marketed, and what the views/leads have been like.
When you start talking about your value proposition to your sellers, and they are envisioning how much easier their sale will go, and how much faster it will be, steers the conversation away from price.
A focus on price only commoditizes your service. A focus on value presents you as a solution worth your price.