In my area I am seeing a shift in attitude from consumers. They are hiring the best agents they can find.
When the market was hot, many sellers looked for price above service. They felt any idiot could sell their home. Real estate companies offering limited services began to pop up. They attracted mostly inexperienced agents and prospered. Some of them opened second and third offices here locally.
As the market shifted, many limited service companies and agents became less successful. Many of their listings sat and rotted. Those that sold took longer and their clients required more help and time. Many of their agents have left and are leaving the business or moving to full service companies. Some began to close offices and consolidate. Recently a large local, limited service company changed their business model to full service and did away with flat fees. They also changed their name and their name.
The market goes through cycles. We are in a cycle were homes are not selling as easily as they did a couple of years ago. In a changing market real estate agents and companies need to be at the top of their game to succeed:
- Homes are taking longer to sell.
- Marketing is more expensive.
- Sellers need better guidance, through the entire process.
- Home preparation and pricing is critical. If the home is positioned wrong it simply will not sell.
- Sellers need increased and improved services:
- Home staging
- High end photography.
- Better printed materials.
- Virtual tours and websites
- More open houses
- Increased advertising of their homes.
- Consumers are checking you out. They want the best they can find.
- They demand full time professionals who are dedicated to selling their home; not someone who is doing this on the side.
- They are looking for designations and accomplishments. Consumers are reading about them on the internet and know what they are.
- They are looking for neighborhood experts who are moving the homes in their area.
- They are getting referrals from their friends and families instead of quotes.
- Consumers are checking out your website and reading your blog posts.
- Sellers are looking at how you are marketing your other listings.
Do I believe we will be seeing the death of the limited service business model in my market? Absolutely not! Several will survive this market, many will die. The same is true of full service companies who may not have been at the top of their game.
When the cycle changes again and homes are flying off the MLS quicker than you can buy an ad in the newspaper, the various business models will be thriving again and popping up all over the place. Every hair dresser and fast food worker will be racing out to get a real estate license. Those of us who do this professionally will still be here. We will be thriving as we did in the tougher market, but will have even more war stories about what the agent on the other side of our transaction just did. We will also have tons of material to write about in our blog posts.
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Randy L. Prothero, REALTOR®, ABR, AHWD, CRS, e-PRO, GRI, SFR
Century 21 Liberty Homes
Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers. His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.
Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) and the Leeward Regional Chairman of the Honolulu Board of Realtors. To improve overall professionalism in his area Randy also offers classes for real estate agents.
www.HawaiiRandy.com * Oahu (Honolulu County) Property Search * Hawaii Military Relocations
Randy - I have seen this occur a couple of times in my real estate career, and the dynamic never fails. Great job explaining how this happens!
When people ask us about Limited Service....I always ask them...why would anyone want to work somewhere to make less money....only because they do less work....and usually get less results !
Jason - Thank you.
Sally & David - You are right the type of agent they typically attract is looking to do less work.
I have no problem with various business models. There will always be consumers who want a variety of offerings. In this market that model is not what many consumers are looking for.
Randy,
You are right on about everyone thinking they can be a REALTOR....and they can sell houses when the market is good. I also know that the consumer does not get served well in those instances also. Many of those people are not limited service when it comes to pay either. So why would you pay the same price for an inexperienced, part-time, less educated, less service agent? It is because the consumer does not understand what we do. Thanks for the comments.
Randy,
You are right on about everyone thinking they can be a REALTOR....and they can sell houses when the market is good. I also know that the consumer does not get served well in those instances also. Many of those people are not limited service when it comes to pay either. So why would you pay the same price for an inexperienced, part-time, less educated, less service agent? It is because the consumer does not understand what we do. Thanks for the comments.
Thanks for the update. I don't keep track of that stuff but it makes sense to me.
Dead on in my area as well. Limited service means exactly that your selling options are limited. I hope they all shut there doors!
I am seeing the same thing in my area. In fact, most of them have folded!
Limited Representation was popular when the market was red hot. Now, it takes a bit more than just the MLS to sell a property. Limited Representation is still a very good alternative, for some sellers.
Randy, in a tighter selling market you need smarts. Many of the limited service companies just put up a sign and pray or say the Seller has to do all the work from that point forward.
Terrific post! Down markets are when it becomes very clear who the true professionals are, and buyers want to be with the best. thanks for sharing!
Randy, your so right the least experience will not make it. One answer is to join a team.
Randy,
I wrote about this awhile back and there were an incredible number of differing comments on the subject.
Competing with Commission Cutters and Discount Brokers -Any other ideas?
I am of the mind that a person usually gets what they pay for! Thank you for adding compelling ideas to the discussion!
Earleene - You are right. If we do not do a good job of marketing our services the public will not know the difference.
Gene - I track listings in my communities and have seen a significant shift in who has the listings.
Laura - I have never had any problem with how others charge their fees. That is their business. I do have a problem with those who take the money and do not provide professional services, leaving the rest of us to clean up their messes.
William - I was guessing that other areas were seeing similar results.
Mott - I believe all business models have a place for some sellers. Limited services, do not fit very many though.
Gary - A sign and a listing in MLS will not cut it in today's market.
Li - Attitudes among the public change quickly when things are tough.
Frank - Joining a team is a wonderful way for a lesser experienced agent to get the needed experience and assistance.
Russell - I believe folks charge exactly what they are worth. If they over charge or under charge they will change or not be around long.
I've seen this too. Last night I went on a listing appointment and had no resistance whatsoever to my fee or services. The onwer said more than once that he hated my fee, but it would be false economy to list with someone who doesn't get results. Smart man!
Aloha Randy,
Great blog on the value of service. I've actually done staging for the firm I believe you are talking about. Their service has gone from marginal discount to "Signature". I think it's great, people are beginning to see the value of what an experienced REA can bring to the table and the difference between real service and discount brokerages can make in a sale.
A couple of years ago only the top producing agents would consider staging properties and utilizing real estate merchandising to attract the best buyers. Now, the former discount brokers are offering what the top producers have known for years, that full attentive service, effective marketing and merchandising will get sellers top dollar for their properties, regardless of market conditions.
Peace,
Margaret - I am seeing similar reactions.
Kimo - Good points. I also think cable TV has helped educate the public about the need for staging.
Its pretty basic. You get what you pay for...
Yeah...the one Jennie and I closed yesterday...the other side had to work a little...not much...but more than I've seen from them prior.
apparently Help U Sell filed for Bankruptcy
Pete - And you don't get what you didn't pay for.
Sally - You saw one or two of mine. I am amazed that some of these folks don't lose their license.
James - I have not heard that. I looked it up and here is a link to the story on Inman News: http://www.inman.com/news/2008/08/15/help-u-sell-franchiser-files-bankruptcy
Dead on sir....VERY similar things happening in my neck of the woods as well, GREAT blog as usual.
Jim - Thank You
Randy we just had one here in town close their doors and become part of a much larger Real Estate Company, so I guess this must be happening in other parts of the country.
When properties were selling in less than a week, the limited service model was able to flourish in many areas regardless of the operating prowess or ability of those firms to weather dry spells in cash flow. Now that the average Days on Market has increased dramatically across the country and the costs associated with continually marketing those listings has increased, it only makes sense for the weaker/less established firms to convert their business model.
As Randy said, the limited service model is not going away, but I believe the popularity will continue to wane the longer the current slow down continues.
George - I am sure that the pattern is repeating in most markets.
AJ & Jodee - I think we will see it continue until the next cycle.