From Listed to SOLD - How to Sell Those Listings You Work So Hard to Get!

QUESTION: "Should I try to enforce a "pre-qualified buyers only" requirement on my listings? If so, how?"

JA's ANSWER: Every once in awhile I'll hear an agent say that he (or she) restricts showings on his listings only to buyers who are already pre-qualified for the purchase price. His rationale is that it's inappropriate to inconvenience a seller by allowing showings to buyers who in all likelihood cannot or will not purchase the property.

I disagree - I think it's simply a matter of setting appropriate expectations with a seller. In 12 years, I have never had a seller ask me to screen buyer showings, probably because I warn them upfront I have no control over who looks at their home. Some will be real buyers, some will be agents previewing the competition for their upcoming listing and some will be buyers out for the first time who won't buy for six months. 

"However," I continue, "any activity is good activity, even if it doesn't result in a sale, because the home has been exposed to one more (actually probably two or three more counting the Realtor & buyers) and exposure is always a good thing. We should do everything we can to encourage showings, rather than look for ways to trim them down. I'd much rather risk your being a bit inconvenienced by lookie-loo's than miss a previously lukewarm buyer who suddenly turns into a red-hot one."

My sellers ALWAYS say - "Of course! We want as many people as possible to look at our home!"

As a wise (wo)man once said... "Unseen is Unsold!"

www.SellwithSoul.com

I'm watching Jason Crouch's featured post today entitled: "How many other professionals work on contingency all the time?" The premise of the blog is to explore other compensation models that don't require us real estate-types to do so much work for free.

Good stuff.

However, what I don't see discussed (much) in the post or comments is an acknowledgement that part of the reason our fees are what they are is that we're paid on contingency AND THAT'S WORTH SOMETHING! Working on contingency is risky and is therefore entitled to a higher compensation structure.

If we remove the risk associated with our compensation, it follows that we should also reduce our fee. More RISK = More REWARD. Less RISK = Less REWARD.

And I'm not sure that's what we, as entrepreneurs, really want. We got into this business because we thrive on the challenge of working on commission... which by its very nature, involves risk. Maybe we're not so enamored with our entrepreneurial-ship these days when the risk seems to outweigh the reward, but just a few years ago it was FUN! We LOVED it.

And we can't have it both ways.

Many in our ranks have abandoned their real estate careers in favor of a guaranteed paycheck - and all the goodies that with that like benefits, paid vacation and oh, yeah, weekends off. Of course, also included in that lower-risk job is a boss, an inflexible schedule, a salary cap and perhaps excruciating boredom, ‘specially after the thrill of being your own boss.

If we want some semblance of guaranteed pay, we must be willing to forego some of the potential upside of a contingency-based pay scale.

Frankly, I'm probably fine with that, although my tune might change when good times return. And maybe that's okay. Maybe in today's less certain market, it makes sense to charge upfront or by the hour, and when good times return, revert to the traditional real estate model of a 100% success-based model when success is much more likely...

Related Blog: Upfront Fee versus Pay for Performance... I'm torn!

Here's an excerpt from Sell with Soul on the topic...

Successful real estate agents can make big bucks. For a career that requires only a month or two of education, the rewards can be tremendous. But be aware of the reasons the economy supports paying real estate agents such high fees...

First ......

... Second, you agree to be paid on contingency. You take the risk every day that the work you do will not be compensated. More Risk = More $Reward$. Less Risk = Less $Reward$. Not too many professions work with no guarantee of payment. Therefore, you can justify higher fees upon success. If you could convince your clients to pay you hourly (good luck), you could charge a reasonable hourly fee and would probably make much less money per transaction. Overall, you might come out ahead though.

So remember that the next time you get a $10,000 paycheck for, say, ten hours of work-that $10,000 is also paying for those flaky buyer clients who run you around and mysteriously disappear. It doesn't mean that you and your services are worth $1,000/hour.

We real estate agents get spoiled by our big paychecks. We actually think we earned that $10,000 check during that specific transaction. Even if a client put you through the wringer for a year, it's not likely you spent more than 50 hours on his transaction. And, $200 an hour is pretty good pay for anyone.

My personal mantra is that "I sell real estate every day. Sometimes I even get paid for it!" It keeps me sane!

So before you get hostile toward prospects who never take you to a closing, realize that real estate fees are structured to pay you for that "wasted" time. Of course, the better your closing ratio, the less you have to worry about such things, but in your first year(s) you will "waste" a lot of time on unproductive people. But, as we will see later, there is no such thing as wasting your time in your rookie year.

www.SellwithSoul.com