What Do Real Estate Agents Really Sell?

I recently came across the video above by Simon Sinek and it really got me thinking. I was so inspired that I clicked through to Simon’s blog and signed up to get updates to all of his posts in my Google RSS reader.

Today was a busy day. After working on a contract counteroffer, updating the website  and dealing with my internet service going down, I decided to unwind for a bit by getting caught up on some of my favorite blogs.

I was not prepared for what I found.

Usually I skim through the posts, occasionally leaving a comment or smiling at the pictures posted by some of my blogging friends.

I wasn’t prepared for such a thought provoking article just before calling it a day. But, Simon’s words really hit home for me.

It got my wheels churning as he talked about how companies like Kodak went from being market leaders to insignificant players because they focused on the wrong thing. Simon explains that Kodak actually invented the digital camera in 1975. Afraid that it would eat away at their film and film processing sales, they tried to bury the discovery.

Simon’s point is that markets exist because customers have a problem that needs to be solved. They don’t care about the product. They care about solving the problem. Instead of focusing on protecting their products, Kodak should have focused on the problem their customers had – how to help people capture their memories so they can be saved for years to come.

The Real Estate Industry is Changing:

The reason Simon’s article fired me up so much is that I immediately realized how the concept fits into the changing real estate industry.

So many agents are holding onto the past. They think that when sellers hire them that they are being hired to create fancy brochures, put a lockbox on the house and a sign in the yard. They believe that they are being hired to advertise the listing and get the word out to other agents and home buyers.

But what happens when any seller can go online and publish for free everything anyone wanted to know about the house?

Guess what…they already can. Have you heard of Zillow or Trulia?

Granted, there isn’t currently a website that aggregates all of the home listings outside of Realtor.com, and a home for sale must be listed with a real estate agent to get onto Realtor.com. But it’s just a matter of time before that will change. The real estate industry is holding tight onto MLS listings. But eventually the listings will be everywhere, and a seller won’t need an agent to get the exposure that the MLS brings today.

Many real estate agents similarly think that buyers are hiring them to help them find a house. They think that buyers need them to sort through all of the listings and help them chose the best home out of the bunch.

But buyers are pretty smart, and they know what they like. They can now screen through every home listing on Realtor.com. They can look up prior sales history in the tax records and can see into the backyard using satellite maps.

So why do buyers and sellers still need agents?

What Problem do Real Estate Agents Solve for their Clients?

Real estate agents need to understand what the problem is that their clients have and how they can help their clients solve those problems.

As I see it, the primary need for both buyers and sellers is really consulting.

People need help navigating the complicated process of buying or selling a home…the largest financial transaction that most people will every make. And since most people only do it a handful of times in their lifetime with years between each transaction, they don’t have the chance to master the details involved to protect their interests.

Don’t get me wrong, my seller clients get those fancy brochures, a big yard sign, advertising all over the internet and even video tours.

But the most important thing that I offer my clients is advice. Advice on what to put away before they go on the market. Advice on new paint colors. Advice on repairs and if they should even move now vs later. And most importantly, advice on what price they need to list their house and when they need to consider a price reduction. Later, I give them advice on how to respond to a contact, what they should agree to fix after the buyers get a building inspection and how to manage getting moved out of their house and into a new house all on the same day.

My buyer clients get listings emailed to them and the door unlocked so they can look around without the sellers or listing agent looking over their shoulder.

More than sellers, buyers are already reacting to the changes that the internet has brought to the real estate industry. Buyers no longer wait for their agent to call them and tell them about a new listing. Buyers are on the internet searching through listings everyday. Today, they often are the ones telling their agent about a new listing that just hit the market rather than the other way around.

But buyers still need advice too. They need to understand how a subdivision has sold historically. They need to understand how a seller is likely to react to their offer. They need help picking a lender, deciding if they should get a stake or spot survey and what repairs to ask the seller to make after they get their inspections.

Buyers and sellers need a consultant.

Could they do the research to learn how to handle all of these details on their own?

Sure. But, reading about negotiation strategies and being able to execute them successfully are two different things. The biggest things that real estate agents bring to the table is experience.

What do you think?

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Tagged as: Video