Thursday, September 13, 2007

Real Estate Gimmicks

Caveat - This is a hot and debated topic amongst real estate agents. It is not my desire to stir up strife. I desire nothing more than an honest look at things. Thus, we have this blog.

Have you ever seen an Internet ad, a billboard, or heard a commercial on the TV or radio that resembles this:

We Will Sell Your Home in 90 Days - GUARANTEED
Or We Will Buy It
Or, maybe it looked/sounded something like this:

This method of getting listings is extremely popular. It was made popular by a very well known motivational speaker and business coach. I personally know quite a few real estate agents who employ this method of advertising/marketing. Some agents swear by it, while others feel it is dishonest and gimmicky.
Feelings, ultimately, do not matter. What matters is the fine print involved...AND the statistics of success.
Ok, so what is the fine print involved? I mean, isn't the phrase "acceptable price" extremely ambiguous. Acceptable to whom? The truth is that the "acceptable price" will be determined by the real estate agent, it will be based upon an appraisal done by an appraiser chosen by the agent, and it will be a price that is below market value. If you do not agree to the "acceptable price" then you do not qualify for the guaranteed program. Now, if you are a seller, would you be comfortable with this? I would not.

But this isn't all, in most cases. There are more stipulations to the guaranteed program, in most cases, that must be met in order to qualify. For instance, in most cases, you must agree to purchase your next home with this particular agent, you must purchase a home listed by the agent guaranteeing your home sale, and the home that you are selling must be listed below the average top sale in the area in order to guarantee a qualified buyer. Wow!

If you are a potential seller then you may be saying, "Um, yeah right!" If you are an agent who employs these methods then you may be saying, "Who cares about all of that. It works!" Does it? Let's look at some stats:
  • Agent 1 who uses the guaranteed program had 181 solds in one year, 183 listings expired (this means that the home did not sale), and 159 listings cancelled (the agent was fired). This is a success rate of 34.6%
  • Agent 2 who uses the guaranteed program had 132 listings sold in one year, 112 listings expired, and 225 listings cancelled. This is a success rate of 28.1%
  • Agent 3 who does not use the guaranteed program had less than 20 solds in one year, less than 5 listings expired, and less than 5 listings cancelled. This is a success rate of over 72%

So, does this methodology work? It depends on how you define work. If you define work as such: Work. adj; a methodology of marketing for listings that gets a real estate agent more listings than the average agent who does not employ this methodology, then yes, this system works. But if you define work as such: Work. adj; a methodology of marketing for listings that gets a real estate agent more listings than the average agent who does not employ this methodology AND has been proven to be more effective in getting listings SOLD for near or at market value, then no, this does not work.

I'll use Jeanine Claus as a real life example. Jeanine Claus is the owner and lead agent of The Claus Team of Keller Williams Realty. In 2006 Jeanine took approximately 101 listings. She had 15 sellers expire. There were 5 withdrawn listings. There were 81 solds. This is a sucess rate of 80.19%. She does not use the methodology described above. Her method of getting listings is niche marketing with a brand that is so well recognized that she gets stopped at the grocery store and is asked, "Are you the santa hat lady?" Her brand is everywhere - and I mean, everywhere!

There are a few other groups within the real estate world that I could name (but won't) who do not use the method spoken of within this blog and they do extreeeemely well. In fact, one of the top groups at Keller Williams who sold over 35 Million last year do not use any such methods of getting listings other than niche marketing and referrals based upon good, strong, proven business. Does this mean that another agent within the same company who uses the "guaranteed" method will not be as successful as far as volume is concerned? Of course not! But again, it depends upon how you define "success," and for whom?

Many agents who approve of the "guaranteed" method feel that the agents who disapprove of the "guaranteed" method are - 1. Not keeping up with the times, 2. Scared to put their money where there mouth is, or 3. Aren't technically savvy enough. All 3 of these presuppositions are subjective and extremely general. Novelty does not equal correctness. Disapproval of a trend does not equal fear. A refusal to follow a trend does not equal a lack of knowledge. It could just be that many agents feel that the "guaranteed" method does a disservice to the client, ultimately.

At the end of the day there are going to be agents who do whatever they want to do. You can't teach integrity, regardless of methodology. You can't teach authenticity. Someone is either going to watch out for the clients best interest, or they are not. I know this though - real estate agents do not need to nurture a "car salesman" persona. We already have a bad enough name because there are so many dishonest and ignorant agents out there. We all know that any John Doe can run out and get a license. It behooves us to do what we can to cultivate a persona of sincere professionalism.


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