How to Put Cash In Your Pocket Everyday When You Are a Real Estate Agent

With the upside down market that the United States is presently experiencing, agents across the country are wondering how they are going to stay in real estate when they have no cash flow. They are still taking on listings in record numbers, but many agents are reporting that they have no income. The houses are staying on the market an overwhelming long time, and most are not selling under their watch, only to be listed by a competitor, leaving the agents with a lot of expense and time invested and no income as a result. The sellers are more anxious than ever before and are becoming difficult to deal with. They expect the agent to pay more and more marketing fees and spend more and more time with them discussing options all in an effort to get the house sold. And, due to the amount of inventory that most agents are carrying, they still feel the need to keep their assistants, even though they can not afford them. The latest joke in the industry is that you want to be the first born, second wife and the third real estate agent.

So, what is an agent to do? How do you turn a dismal market into something that produces revenue when your whole income is dependent upon happenings that you can not control? Many feel real estate is a game of risk; chance and what some agents call luck.

Luck. Risk. Chance. But is it really? Does it have to be all of these things that keep a real estate agent out of control of their own income and destiny? Other businesses don’t operate that way, so why does a real estate agent have to have a lack of common sense and as a result a lack of income, the same common sense that runs most other businesses in the U.S. today?

The only way to put common sense in real estate is to shift the responsibility of the sale to the homeowner and for the real estate professional to assume only the responsibility of “marketing” the home, not the expense of marketing the home. Marketing it in places that they have access to as brokers or in venues in which they get a discount when they advertise in bulk. Many MLS sponsored sites and real estate magazines require an agent to be the advertising party. But these advertising firms don’t get paid on contingent behavior, they take a retainer or money due upon advertising as they know that their responsibility lies in delivering the product, not making the product perform certain results outside their control.

In my opinion and in the majority opinion of the over 9,000 clients that I have served over the last five years, all homeowners with a need or desire to sell, want three things. They want the expertise of a seasoned agent who knows the avenues in which to list a home, how to advertise the home so that every buyer in the marketplace has the opportunity to see it and a seasoned agent skilled in contract negotiations to take them from offer to closing. However, they don’t want to overpay for a strategy that hurts them when the desired end result does happen: the sale the home.

In an attempt to turn the legacy of real estate around, we should take a serious look at other businesses. Our efforts and resulting compensation should be based on a reasonable fee structure wherein we are paid a fee upfront for our time and behavior that leads to a successful transaction between a buyer and a seller. Instead of gouging a few people to make up for all the ones that did not get to a successful transaction we should charge clients a reasonable amount based on effort and merit.

By charging people for our time upfront, we will create a positive cash flow and a more respectable industry. This way we can relate to and meet our client’s needs instead of the typical reactionary cycle of churning and plowing just to keep a listing or to force a transaction between two unwilling parties. The future is ours to change in real estate. As real estate agents and the stewards of our industry we should see to that change.

Rhonda Duffy and Mike Costigan have opened a business to help agents understand their role in the transaction as well as to help them make their business profitable. You can view the details at Cash On Demand Realty System – Real Estate Agent Coaching and Training

Rainmaker Conference Went Well.

We had our 2nd annual conference in New Orleans this last weekend and everything went well. Rainmaker is my licensee company that we have now populated in 54 cities around the U.S. We had a great time, learned about all the different markets across the U.S. and what is going on with them. Here are some comments from the group.

All,
It was wonderful seeing you all and I appreciate you all for your fair and honest interchange of ideas. It feels great to be part of a professional and ambitious group as this one. I look forward to seeing you all next year.
Regards,
Michael Poncher

Frank @ Rhonda,

I wanted to let you guys know how much I enjoyed the conference. I learned a tremendous amount. I learned more in those two days then I did my first year in college! I appreciate the knowledge you have passed on to me. Rhonda-you are an amazing woman! Hillary Clinton doesn’t have a thing on you. My vote is Rhonda Duffy for President! (Repub nominee of course). And I’m serious about that.You inspire me and I want you to know that. I enjoyed bonding with the other licensees as well. It is a great group of high quality individuals. Again, thank you for your wonderful hospitality. Talk to you soon.

Tiffany Hager
Hager Realty
“A Better Way”

Frank and Rhonda,

Thanks so much for hosting another successful Rainmaker conference. This year was much different for me as it seems I’ve moved from “Newbie” to “Veteran” in just 1 quick year, but I benefited from the conference nonetheless. As Mike Poncher said… just the energy of being around other like-minded and motivated licensees is reason enough to come. As always, Rhonda you gave some valuable tips, insights, and coaching as I look to move my business to the next level before the next conference. I truly appreciate your willingness to share your knowledge and experience, especially given the circumstances with all the things you have going on with Duffy Realty and your other ventures. For me, year 1 was the “How to be a good Realtor” year, while year 2 will be the “How to be a good real estate brokerage business owner” year. I look forward to taking the learnings from the conference and applying them to a great 2008.
Thanks again,
– Don

You can view all of the cities that we cover in the U.S. at

Atlanta is the #3 Fastest Growing Area in the U.S.

Here is an interesting article from Money magazine.

Atlanta is the #3 Fastest Growing Area in the U.S.

Handling Realtor Bias…

This is an email exchange between me and a potential client’s sister.

Her email to me.

I have referred my sister to your site as an option to consider for relisting her home (the agent contract is expiring on Feb 10th). She and I have both read the information on your site and are impressed by the way that the process has been streamlined and “formula-ized” to save money for the seller, especially in today’s market.

I have heard only one person express concern over using Duffy Realty as the listing agent. The concern was that a friend had listed a home with Duffy and the perception was that other agents black-balled the house, deliberately avoiding showing it because of the “discount” listing. When he ultimately changed to a full-service agency, his traffic seemed to increase noticeably.

Of course, there could be other variables at play, but it’s not difficult to imagine that full-service agents might band together and boycott a listing to “protect their turf,” forcing sellers back to the full-price brokers.

How do you handle this type of objection?

Thanks
Laura

My response to her email./strong>

Hey Laura:

I absolutely agree that agents may perceive that they need to protect their territory. Real estate has changed and it has changed forever. When I started Duffy 6 years ago, I had the thought that I would change my company name if I felt that clients were being hurt by being listed with me, that way I could serve the public and stay ahead of the game. However, I have watched the results of sales over the years and found just the opposite effect. We sell 2.5 times more of our inventory than any other company in Atlanta which we can prove in writing. Of course, I believe that my clients are more empowered to succeed and are given more tools to do so than other listings, and that is why we sell so many more homes, but that is another story for another day.

We do hear that agents say to other agents and prospective seller clients that they do not show Duffy homes. That does concern me since boycotting is a federal offense. I have spoken to other brokers of almost all large companies about this and they tell me that they tell their agents that they do not condone that behavior. On top of that, most agents are in a client relationship with their buyers and they are hired to find the best home for the buyer. So, in many ways, I don’t believe that they actually perform in such a manner with the client or at least that leads me to feel sorry for their buyer client if they actually do tell their client that they will not show a particular home to them. I just can’t imagine that a buyer would continue to work with an agent who refused in any way to show a home that the buyer wanted to see. And, because we use the same forms, same processes and sam e rules as any other brokerage in Atlanta, they have no reason not to show our homes.

However, we did do a survey a few years back with our own buyers. What we found when we surveyed was that buyers do not care who has the house listed. That was an overwhelming 100%. The other interesting survey percentage was at 95% which was that the buyers actually sent the list of houses that they wanted to see to their agents from the internet and that is what they expected to see. They did not expect that the agent knew about any home on the market that they did not know because EVERY listing is on the internet that is listed in the MLS(s).

And, from my experience in the last 15 years of being an agent, consumer advocate and money advisor, I totally agree that agents have lost power in the process of selling real estate and that the buyers are calling all of the shots. Of course, the winner in the transaction is now the buyer and seller, not the agent. I like it that way!

Thanks for considering us and if I can answer any more questions for you, please do not hesitate to write or call me.

Her response back to me.

Thank you for your considered response. I am impressed by your business model, and your thoughtful reply confirms my first impression. My sister’s contract is coming up on Feb 10th and she will be reaching out to you in the next few days to list with Duffy.

Thank you!

Laura

Tiffany, Duffy’s Customer Support Manager Gets Married!

Congratulations Tiffany Reynolds, now Tiffany Schrader. The wedding was in Cocoa Beach, Florida on February 2, 2008.

Our Team at Duffy Realty

Our St. Louis Licensee gets press in St. Louis Buisness Chronicle – She makes a good point!

cheryl-johnson-sized.jpg

Enjoy!

Cheryl

Just some facts before you read this article.

FYI:

Cheryl Johnson of Johnson Realty
*101 Listings Sold in 2007
*95.29% (Actual Sale Price versus Listing Price)
*76.82 Average Days on Market

Gillian Nero of Dielmann Sotheby’s International Realty
*9 listings Sold in 2007
*90.60% (Actual Sale Price versus Listing Price)
*100.5 Average Days on Market
* Source MARIS (St. Louis MLS)

Not only do our listings sell FASTER, but they sell for MORE! AND- that doesn’t include the nearly $1,000,000 in commissions we save our clients.

Friday, February 1, 2008
St. Louis real estate agents compete on fees, levels of service
St. Louis Business Journal – by Matt Berkley

MARK GILLILAND
Cheryl Johnson charges a flat fee of $500 for MLS listings, plus .34 percent commission at closing.
Cheryl Johnson has no problem confessing what she sees as one of her profession’s dirtiest little secrets: “If a real estate agent really knows what they’re doing, they don’t need to charge as much, because what we do truly isn’t that much work.”

Johnson, broker and owner of Town & Country-based Johnson Realty, is one of the new breed of real estate agents who has chosen to abandon the industry standard of charging 6 percent commission fees. The standard fee is a practice some agents and consumers feel has become antiquated due to ever-increasing technology and access to information.

Fueling the fire against conventional agents are Web site operators such as For Sale By Owner, Help-U-Sell Real Estate and Redfin, which offer a variety of services a la carte, with flat-fee MLS (multiple listing service) listings starting as low as $49.50. Lynn Wagner, flat-fee specialist for soldbyme.com, has seen the local do-it-yourself market rise dramatically in the past two years.

Although flat-fee-service companies still make up only about 2 percent of the St. Louis market, according to Wagner, they have grown to more than triple that in larger metropolitan areas. A 2007 National Association of Realtors profile of home buyers and sellers showed that 81 percent of sellers use full-service brokerages, 9 percent choose limited services and 9 percent use minimal services, such as simply listing a property on an MLS.

“Real estate agents are more of a support team now,” Wagner said. “In the St. Louis area, people are more educated and don’t need help with the paperwork. Those are the people going towards the flat fee.”

With offices in Westport, St. Charles and Chesterfield, Soldbyme offers a basic flat-fee MLS listing of $399, listing around 200 St. Louis clients at any given time. Although companies like hers do offer counsel, Wagner said all the basic work — inspections, open houses, negotiations — falls entirely on the homeowner.

On average, Johnson of Johnson Realty spends only about four hours total for filing, listing, contract negotiation and bringing a home to close. “That’s no different than what any other agent would spend, but a lot will try to make the process seem so hard because they have to justify a high price,” she said. Rather than indulge in her share of the commission, which she said still bounces around 6 percent in the St. Louis market, Johnson charges a flat fee of $500 for MLS listings, plus 0.34 percent commission at closing. In 2007, her second year in St. Louis, Johnson sold 101 homes.

According to Johnson, it’s important to draw the distinction between full-service firms and full-commission firms. She offers comprehensive services, but she said the title “discount company” infers certain limitations.

Bob Mitchell, president of Florissant-based ValueList Real Estate Services Inc., St. Louis’ largest discount/full-service real estate and mortgage company, quickly dismisses any notion of limited services.

“The only thing we generally won’t do is newspaper advertising; it’s ungodly expensive and it just doesn’t work,” Mitchell said. Instead, Mitchell has found better results for his clients through heavy online exposure.

ValueList, founded by Mitchell in 1994, charges a flat fee for the listing, with bracketed prices from around $1,500 for a $100,000 home, up to $2,500 for a $250,000 home and so on.

Mitchell said that in the event that another agency brings in the buyer, all the client has to pay is ValueList’s flat fee plus what would normally be the buyer’s agent’s commission, generally between 2.7 percent and 3.15 percent. Add those two charges and compare them to a normal 6 percent commission, Mitchell said, and consumers could see savings anywhere from 35 percent to 85 percent.

Gillian Noero, an associate with Dielmann Sotheby’s International Realty in Clayton, believes it’s a myth that traditional real estate agents hold a vendetta against discount brokers. “A lot of discount brokers feel that way because their listings don’t get shown,” she said. “They aren’t shown because the person isn’t paying them enough to get it marketed.

“As far as I can tell, a discount broker doesn’t give an opinion of price,” Noero said. “Some of their listings are overpriced by $60,000 to $70,000, and that’s also why they aren’t selling.”

Mitchell said the flat-fee MLS firms, or “no-services companies” as he put it, experience more prejudice than discount companies like his. Although homes listed as “for sale by owner” aren’t entirely dismissed by agents, Mitchell said those homes rarely are a priority for them when they show homes. Similarly, agents are likely to move listings that pay 2.7 percent up their list at the expense of discounters who offer 2.25 percent, he said.

John Williams, president of the St. Louis Association of Realtors, is quick to recognize the impact of the Internet and how it has empowered consumers. He’s also adamant that despite any criticism, full-service agents will always serve a critical purpose.

“Our service value is on-the-ground knowledge,” Williams said. “It’s one thing to read about how you can buy a house, but it’s another thing to know how to buy a house on a certain street. Information is everywhere now, but there will always be an agent or someone in a position to interpret that data.”

In order to compete with the do-it-yourself market, Noero believes agents need to continue to work on adding service value for buyers and sellers.

“If you can give them good information and be thorough and diligent, you become more than just something that just gets printed off the Internet,” she said. “But if you’re a human version of an Internet printout, then why would anybody bother to think you have any value?”

Matt Berkley is a St. Louis freelance writer.

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Cheryl’s website

www.DuffyRealtyofAtlanta.com