Saturday, August 18, 2007

Are we our own worst enemy?

I think in many cases the answer is yes... we are.

I recently signed up with a site called Hungry Agents. It was recommended to me by another agent. But, as I looked over the way they do business, something occurred to me. Their business model commoditizes real estate agents. They also don't seem to be aware of the difference between real estate agents and REALTORS (R), but that is another post (one day).

For those that aren't familiar, the basic premise of the business is that sellers sign up for the service. They put out the selling of their home to bid by real estate agents. There is a form online that real estate agents fill out stating what percentage we are willing to take the listing for, as well as the percentage that we suggest be passed along to buyer's agents. There is a minimum level of service required for the percentage we quote.

All of that is fine and good. The problem is this...

All that the seller sees is the percentages that the agent quotes. They don't see the agent, their prior performance, what else they might do (the minimum standards are pretty slim by my standards) or anything else. The listing is reduced to only being about the percentage.

My firm offers an "unbundled" service option for $3100 plus buyer's agent commission (we always recommend 3%, but the sellers have the option of making it higher or lower). With the exception of a CMA, the unbundled program offers the minimum basic services required by Hungry Agents. But, for a traditional listing, we offer a lot more services. I would bet that just about ANY full service agent offers way more service than is required by Hungry Agents. But, the problem is that sellers using a service like this see EVERY AGENT as offering the same level and type of service, and EVERY AGENT as being an interchangeable cog that functions the same. We are a commodity. Our service is nothing more than the service of our least capable competitor. Like gasoline.

As I said in Do you have a Unique Selling Proposition, if we don't differentiate, we are a commodity no different than gasoline or concrete. And, for commodities, the only way to set one provider apart from another is price. That is it. The worst thing we can do is turn our service into a commodity.

Final note... I don't really mean to pick on Hungry Agents. I am sure that they are not alone. In fact, there are a lot of companies that are also commoditizing our service. They don't separate themselves from the crowd, and so all they do is cut price. The only reason I highlights HA is that they were the unfortunate souls that sparked the thought.

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