Selling Real Estate without Selling Your Soul, Volume 2: The Soulful Collection 2010 - 2012

Review

Introduction to Volume 2

of the Sell with Soul

Blog-to-Book

Welcome to Volume 2 of the Selling Real Estate without Selling Your Soul Blog-to-Book!

If you’re joining us from Volume 1, then you already know what to expect from Volume 2—a chronologically arranged compilation of (mostly) real estate-related blogs written by the author of Sell with Soul. Volume 1 begins in late 2006 and runs through the end of 2009; Volume 2 picks up in early 2010 and continues through the end of 2012 (when my blogging career abruptly stalled, for reasons you shall read about later!).

In order to set the stage for Volume 2, let’s take a little trip down memory lane and revisit the life and times of both the real estate industry and the author during the time period covered in Volume 1.

In 2006, the year I wrote my first blog, we in the real estate industry were still riding a wave of optimism, many of us coming off a run of banner years, with no real reason to think anything would change. Home prices continued to climb, interest rates were reasonable, buyers were plentiful and loans relatively easy to get. While there were hints and whispers of the crisis to come, many of us, myself included, turned a blind eye to the warnings and continued making financial decisions based on a rosy history of past performances which, as we now know, is no guarantee of future results.

Sigh.

So 2007 arrived amidst rumblings that all was not well in the US economy, but shoot, what can you do? You keep doing what you’re doing and hope for the best. Well, the best was not to be and in late summer—BAM. The mortgage meltdown struck and led us into an economic crisis that most of us are still recovering from.

The crisis continued into 2008 and 2009. It became clear to those of us who made our living in the real estate industry that we had to make a choice. We could:

Cry, and/or

Quit, or

Adjust

Some chose to adjust, but many did not or could not, and real estate agents hung up their licenses in droves. But for those who decided to gut it out, despite assertions that they were not participating in the recession! it was a brutally rough period for anyone involved in the real estate industry.

Foreclosures and short sales were all the rage. In many areas of the country, property values dropped by half; some even more. We heard stories of banks in some particularly hard-hit cities refusing to foreclose on abandoned properties—because they didn’t want them either! In many markets, if an agent didn’t speak Short Sale, they might as well go Out of Business since the only real property for sale was going to involve a seller who owed more on his property than it was worth.

While no one talked about it much, real estate agents were quietly taking on second (and third) jobs, declaring bankruptcy and losing their own homes to foreclosure. I’ve never discussed this publicly, but I include myself in that last statistic—one of my personal properties was foreclosed on in 2010 after nearly two years trying to get a sale through the unbelievably bottle-necked short-sale department at Bank of America.

No question, it was a tough time to be involved in real estate!

During this period, my personal life was in chaos as well. While I now consider the years between 2006 and 2009 to be instrumental in getting me where I am today (which is a very good place!), at the time—ugh. I won’t regale you with the gory details, but suffice it to say that I didn’t sleep a whole lot during those years!

(All this said, if you haven’t yet read Volume 1, don’t think it’s all doom and gloom and woe is me! Not at all! Yes, times were tough, but the overall vibe of the book is quite positive )

So that brings us to the end of 2009/beginning of 2010 which is, not coincidentally, where Volume 2 begins.

We didn’t know it yet, but things were on the verge of looking up. Agents were getting busy again, with retail clients even! The recession was officially over and there were glimmers of light at the end of the economic tunnel. Those who had hung in there through the dark years were finally being rewarded with a moderately robust backlog of real estate business.

Things were looking up in my own life, too. In mid-January 2010 I fulfilled a decades-long dream of Living on the Beach when I rented a sweet little cottage on Pensacola Beach in the panhandle of Florida. Exactly one month later, I met my future husband and 11 months after that added a -Hagedorn to my legal name!

Business was also starting to boom for me. I published my third book, Prospect with Soul, and created several real estate training products that were enthusiastically embraced by the SWS readership. In late 2011, I took over the Accredited Consultant in Real Estate® (ACRE) program from the wonderful Mollie Wasserman and in 2012, I re-opened SWS University and created The Exceptional Agent Project.

I tell you all this, not because I want to bore you to tears right off the bat, but rather because a blog is, at least in part, a personal journal. Therefore, the blogs you’ll soon be reading are reflective both of the economic realities of the time of the original posts as well as of whatever was going on in my life.

While Volume 2 is formatted and arranged in much the same way as Volume 1, you may notice some differences in both the tone of the blogs (the voice) as well as in the topics discussed. While Volume 1 focuses heavily on concepts related to running a Sphere of Influence business model and to the rookie real estate experience, Volume 2 branches into other, perhaps more controversial topics.

You’ll notice right away (in the first four blogs of this volume, in fact!), I devoted a lot of virtual ink to Issues in Compensation, even before I took over as the Commander in Chief of ACRE. It’s always bewildered me that we are, on one hand, required by our Code of Ethics to represent our clients’ best interests, but on the other, compensated as if our primary fiduciary duty is to ourselves.

I also had a lot of fun poking fun at some of the industry’s ridiculous training philosophies, such as the notion of striving for an 80/20 business model (80% of time spent prospecting; 20% spent on client care) and, of course, I couldn’t leave out the ever-popular referral-begging approach that’s sure to ensure that your friends stop taking your calls.

Because I was living on Pensacola Beach during the Deep Horizon/BP Oil Spill in 2010, you’ll find a series of blogs on the subject, which, if you lean toward the left side of the aisle, you might want to skip (if you want to continue to like me). Apparently my viewpoint on the matter was obnoxiously conservative and I lost more than a few followers over it who felt I was, in one former reader’s words an unfeeling monster due to my opinion that we needed to stop harassing BP and get about the business of cleaning up the mess.

Lessee…what else will you find in this Volume? In late 2010, we introduced the Favorit-est Tips series (the favorite tips from SWS teleseminars as voted on by attendees); in 2011 we talked a lot about contact management (much more interesting than you might think!) and in 2012 we focused on being Exceptional and why one might want to do that.

As with Volume 1, this blog-to-book is arranged chronologically, with entries posted in the order in which they appeared in my official SWS blog on the Active Rain platform (www.ActiveRain.com/blogs/sellwithsoul). However, I’ve also created an Index by Category so if you are looking for material on a specific topic (e.g. Compensation & Consulting or Rants & Ridiculousness), just flip to the Appendix and you’ll find the Index there.

So, without further adoooo… let’s go back to January 2010!

January 2010

Real Estate & Tempur-Pedic—There’s a Lot to Love About Our Compensation Models

I was watching TV the other (sleepless) night. Caught a Tempur-Pedic commercial. Seems the Tempur-Pedic is a spectacular bed for whatever reason, so spectacular, in fact, that the company gives you a 90-Day trial period. Not 90 days of simply looking at your new bed, but 90 days of actually sleeping on it. If you don’t love it, you give it back. No questions asked.

Now, that’s a guarantee.

I’m not in the market for an expensive bed these days (I’m actually sleeping on a blow-up right now—don’t ask), but I tell ya—I’m impressed. I’m sure Tempur-Pedic’s 90-Day guarantee is mostly gimmick, and I have no idea if they stand behind it, but I’ll give them the benefit of the doubt that they do. And proclaim that we could use more gimmicks like this in our world.

What if everyone guaranteed their product or service this way? Wouldn’t that be SWEEEEET? If your doctor doesn’t cure you, he returns your money. If your publicist doesn’t increase your exposure, he doesn’t see a payday. If that pay-per-click campaign you shelled out $500/month for doesn’t produce results, you get a refund.

Sure, there are innumerable flaws in this model, but isn’t the overall philosophy wonderful? Put the pressure on the provider to: 1) be worth his or her fee, and 2) analyze the situation before accepting payment to determine if your money will be well-spent, and I imagine we would see an exponential improvement in the quality of products and services delivered to the marketplace. I can’t tell you how many times I’ve paid for a service and been told after a disappointing experience—Well, we never guaranteed results!

Why not? Why did you TAKE my money if you didn’t think it was a good investment for me? (Okay, that’s a silly question, but I still think it’s a fair one).

While I believe that the real estate industry’s compensation model is seriously flawed, I do like the message we send that if we don’t perform, we don’t get paid. Unfortunately, all too often we DON’T perform, even under this model, but that’s a topic for a dozen different blogs. Philosophically, though, I like it.

That said, and yeah, this will sound really inconsistent, but I could also get behind the model of real estate agents as salaried professionals or pay-per-project consultants. Which I’ll elaborate on next time!

Salaried Real Estate Agents? Yeah, I Like It...

The other day I wrote a blog about how I wished the whole world operated under the Tempur-Pedic model of Satisfaction Guaranteed or Your Money Back! Which, in a way, is how our industry operates already since in most cases we don’t get paid until/unless we perform. However, I promised to also explore the other side of the equation—that is, a real estate industry without commissions, without the emphasis on Pay for Performance. In other words, a salaried or fee-based model.

The most common objection to the salaried real estate agent (and for simplicity, let’s just call all non-contingency-based models salaried) is that without the incentive to perform, service to the client would suffer.

In theory, that makes perfect sense; as I’ve experienced way too many times just in the last year, once you’ve paid for something, you’re stuck with the service you get or don’t get, whether you’re satisfied or not satisfied.

But here’s the thing. That blanket assumption actually CONTRADICTS a big part of the traditional real estate compensation model—specifically, that we are paid a PERCENTAGE of the deal. That is, we make far more money on a $500,000 deal than on a $100,000 one. Therefore, the anti-salary line of reasoning says that we will naturally work far harder on the bigger deal than on the smaller deal.

I don’t know about you, but I don’t work that way. My $100,000 clients get pretty much the same attention and service as my $500,000 ones. Not necessarily because it’s the nice thing to do, but because that’s WHO I AM. If someone hires me to do a job for them and I agree to be hired by them, my pride ain’t gonna allow me to give them a half-a$$ed effort, regardless of the final paycheck. That’s how I’m wired, aren’t you?

So, if we agree that we don’t treat our lower dollar-versus-higher dollar clients much differently, is it really that big of a leap to assume that we are capable of providing excellent service under a salaried model?

If you were hired and paid a decent salary to take great care of a reasonable number of buyers and sellers, would you really do a sub-standard job because you aren’t being paid on contingency? Or would you take your job seriously and do your best because that’s who you are?

Now, I’m not talking about prospecting. I’m talking about doing what needs to be done to market, contract and close your seller’s home or getting your buyer into his first home, next home or dream home.

But see, this is where it gets fuzzy. BECAUSE of how we’re compensated, our business tends to attract practitioners who view the career as primarily sales, not service. They enjoy the chase, the hunt, the pursuit—that is, they like to prospect. And there’s nothing wrong with that. But those aren’t necessarily the skills and talents that make a great real estate agent—one who gets her deals to the closing table—leaving a stream of satisfied buyers and sellers in her wake.

Which is, in my humble opinion, something we need more of in our industry.

But, that soapbox aside, I can easily see a model where real estate agents are paid a salary to do the job their buyers and sellers hire them to do. The companies that have the best tools, training and systems in place to serve their customers will naturally get a larger share of the local business, assuming they have a decent marketing department. Sure, there would be a sales force, but most real estate license-holders would focus on taking care of their current customers, rather than on the pursuit of new ones.

This little blog isn’t meant to be a manifesto crying out for change, or anything like that. Personally, I like being paid on contingency because it means if I do a good job for my customer, I get a juicy paycheck, due to the risk I agree to take by working on contingency. And I like juicy paychecks. But if I were to open my own real estate company, I’d seriously consider a salaried model, simply because that’s the sort of practitioner I want to attract—one who would rather serve than hunt.

Just a few rambling thoughts on a chilly Monday morning...

The Salaried Real Estate Agent—Part II

Last week I posted a blog questioning whether or not a salaried model of selling real estate could work. Personally, I think it could, and will even go so far as to say that the public might be better served under that model. And I’ll probably expound on that opinion in the near future.

But not surprisingly, most respondents didn’t much care for my idea of the salaried real estate agent. Various objections were raised, including the rather ego-centric one of But I don’t WANNA work on salary! I like being my own boss!

And hey, I agree—I, too, enjoy the pay-for-performance compensation structure of the traditional real estate model and I love the challenge of never knowing if next month will be my biggest ever...or, um, not even close. And I most certainly have no desire to punch a time-clock.

But that wasn’t really my question—whether or not we like the idea for ourselves. The question was whether or not it is a viable business model. And again, I’ll likely pontificate more on that later.

For now, though, let me ask this question. Would you have gotten your real estate license and gone into the real estate business if:

The average SALARY (that is, guaranteed pay) was $75,000 + benefits & bonuses, and

You had no sales responsibility (that is, your job was to manage the transaction, not procure business)?

Just curious—your thoughts? (And no, I’m not thinking of opening up my own salaried shop—egads! SO not my thing to manage people!)

The Salaried Real Estate Agent, Part III—

Sales and Service: Two Very Different Skill Sets

Over the last few weeks, I’ve posted blogs about the concept of the Salaried Real Estate Agent. Most who commented on my blogs didn’t much care for the idea. And that’s cool—it’s what I expected.

But the negative comments really got me to thinking. What’s so darn special about OUR industry that the business model used by most other industries couldn’t possibly work for ours? And let’s be honest, our industry isn’t exactly setting the world on fire with the retention and success rates of our practitioners...

Just so’s you know, I like being paid on contingency—always have. My first real job was waitressing and I loved the idea of working for tips. My last job before I went into real estate was as an outside SERVICE representative in the employee benefits field where I was paid a salary + bonuses for every client I SERVICED (hold that thought). I liked those bonuses, so I took on as many clients as they’d allow, to the point where I had twice as many as any other SERVICE rep. I loved it.

In that employee benefits job, there were sales reps and service reps. The sales reps did what you’d expect them to do—they lunched, schmoozed, networked, cold-called, warm-called, popped-by, mass-mailed, advertised, etc. We service reps managed the business the sales reps brought in—as soon as the ink was dry on the contracts, those clients belonged to us, and the sales rep moved on to the next prospect.

The system worked well. The salespeople made rain; the service people took care of the customer. We service reps didn’t just work 9-5—it was in our job description to accommodate our clients even if that meant doing onsite employee meetings at 3am for the night shift. We had our own window