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Real Estate Brokerage

How you can capitalize on any recession

(BUSINESS) Some see their local market struggles and have fear, but this is a case for quality control and accountability as the cure.

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home buyers

In October of 2000 three Americans, George Ackerlof, Michael Spence and Joseph Stiglitz, were awarded the Nobel Prize in economics.

Their work essentially focused on information economics and the implications of asymmetric information – when the party on one side of a transaction has much better information than the party on the other side i.e. producer vs. purchaser, seller vs. buyer, insider vs. outsider.

In other words, a service provider possesses greater information regarding his/her true capabilities than the consumer deciding which provider to choose.

How does the side with the greater information effectively use and benefit from information advantage?

These three Nobel Laureates demonstrated more specifically that consumers prefer, have higher confidence in and are willing to pay more for products and services backed by a “guarantee.” The assumption on the part of the consumer is that value and quality are related to assurances of consistency and reliability. Consumers believe that the manufacturer or service provider presenting a “guarantee” is more likely to perform. This greater certainty offers greater value.

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The notion that consumers prefer and will pay more for services and products that are guaranteed is not difficult to understand. Taking advantage of this principle to attract more clients and earn higher fees by guaranteeing service performance is, however, not easy to execute. It is especially difficult in an Independent Contractor culture.

The risks associated with guaranteeing a product or service only make sense when systems, processes, and controls are employed; when accountabilities are increased and problems or defects are reduced.

In the case of real estate service, how can any organization manage, control and otherwise influence behaviors where most activities take place “out of sight and beyond reach” by independent service providers? And if imposed standards, processes and controls solve one problem might they not create another – agent retention?

According to the three Nobel Laureates, attracting more clients and earning higher fees as a result of offering a greater certainty of better service is not a hopeful business assumption… it is an economic reality!

How can you capitalize on this reality?

The first step is to provide the leadership team, sales professionals and support staff with a clear understanding of the principles of consumer-centric service – presenting foundation education. In an industry that is frequently provider-centered, this is not an automatic.

From here it’s basically an eight-step process:

  1. Develop consumer based standards of service
  2. Create and implement a defined service process (each step)
  3. Implement a system for delivery consistency
  4. Measure performance with detailed metrics
  5. Commit to benchmarking and ongoing analysis
  6. Provide timely, multiple level performance feedback
  7. Offer recognition, awards and rewards for high achievers

But does this really work?

During the past two years thousands of real estate sales people and their managers have voluntarily elected to implement just such a process. They are attracting more clients, keeping them longer and creating higher levels of service satisfaction.

For example, the Quality Service Certified® (where I am the President and COO) real estate professional follows a defined service process, delivers it in writing to every client (every time), guarantees performance and submits to a service evaluation survey at the end of every transaction for heightened accountability. Do prospective clients see any advantage? As a consumer wouldn’t you!

The breakthrough: Service

When service performance results are compared between QSC agents and non-QSC agents who are from the same company, some interesting differences are noted. QSC agents are achieving 15-35% higher levels of client satisfaction and reducing dissatisfaction by as much as 80%. Additionally, clients are indicating a 50% greater likelihood of doing business with and referring business to their QSC agents over non-QSC agents in the same company, in the same markets at the same time.

Independent validation of service results through outside organizations such as Quality Service Certification, Inc. and Leading Research Corporation add the kind of credibility that is very difficult for an organization to generate when judging itself.

Quality control and greater accountability are essential ingredients in delivering measurably better service. In these uncertain times, prospective clients prefer and will pay more for products and services that offer greater certainty. But certainty requires more than a promise to perform.

Quality control, greater accountability and the systems supporting these objectives, can be developed through your own investment and creative efforts, or you can partner with an organization that understands your business and possesses existing resources.

Rx for recession… control service quality and raise professional accountability.

#accountability

Kevin is a Co-Founder, President & COO of Quality Service Certification, Inc. (QSC) and earned an MBA from The University of California – Irvine. With over 20 years of Real Estate experience, his primary focus is on consumer research, developing better service management systems, and sharing the importance of consumer-centric service standards, transparency and accountability to create measurable and meaningful differentiation and long term advantage for those professionals that put customer needs first.

Real Estate Brokerage

Housing trends continue to surprise everyone during pandemic

(BROKERAGE) Despite whispers, then shouts, to the contrary, the 2020 pandemic did not drive droves of people seeking housing out to the suburbs.

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Apartments and other urban housing doing surprisingly well during the pandemic.

Some things are counterintuitive. People think something’s going to happen a specific way, then they start making predictions, in-person and all over social media. The next thing you know, people start accepting it as truth.

One problem with this rumor mill, though, is that unproven narratives often turn out to be false, as is the case with the COVID-19 housing market narrative suggesting that the suburban housing market is booming, because people are desperate to escape the more densely populated, virus-laden areas.

Zillow’s recent housing report shows the 2020 housing trends through June of this year. The data shows that housing sales are proportionally similar to recent years in both urban and suburban areas. Both areas are strong seller’s markets at the moment, in fact.

The Zillow report also highlighted some comparative analysis between the two markets, noting among other things,

“…suburban markets and urban markets have seen similar changes in activity in recent months: About the same share of homes selling above their list price, similar changes in the typical time homes spend on the market before an offer is accepted, and recent improvements in newly pending sales have been about the same across each region type.”

Austin Realtor, Jordan Wade, with Luisa Mauro Real Estate, confirmed that this report rings true in the central Texas market.

“Our urban sales for 2020 are proportionately similar to years past. When the initial lockdowns went into effect earlier this year, I thought it would negatively impact the overall market with reduced sales, but that’s just not the case. We have clients regularly contacting us looking to purchase in central Austin as well as the suburbs. Both urban and suburban markets are going strong.”

The Zillow report delves deeper into the housing market specifics. While overall, the market demands in urban and suburban areas stayed consistent with last year’s percentages, some smaller trends in 2020 appear to be a continuation of 2019 buying trends. Among those continuing trends, for-sale homes in suburban areas receive about three times as much traffic as downtown listings, yet interest in single-family homes has stayed about the same as last year, too.

Markets in the major metro areas, such as New York and San Francisco, are the exceptions. Each of these historically desirable market areas have seen drops in home values (4.2% and 4.9%, respectively), with houses staying on the market up to two months longer than previously, and more new listings for sale in urban areas.

However, this is not true of other major cities: Miami, Los Angeles, Seattle, and Washington, D.C. It’s worth keeping an eye on these trends in upcoming months.

As Wade concludes, “We’re keeping our eye to the future as we learn about long-term effects of the pandemic, with more people working from home. That may eventually mean people will be looking for more square footage than a downtown condo can provide. However, we’re not seeing that yet.”

If we’re counting the lessons that 2020 is teaching us, perhaps we can include that things can change quickly, and things are not always what they seem. It makes sense to slow down, study the data, and reassess our assumptions. Things still may change, of course. They always do, after all, though not always how we predict they will.

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Real Estate Brokerage

The impact of the pandemic on your homebuyer clients

(BROKERAGE) While the pandemic has impacted many changes, you can reassure your clients that the homebuyer housing market is doing surprisingly well.

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For sale house reflects homebuyer growth.

This year, a great many things have been impacted by the pandemic: Company closures, setbacks, etc. The one thing that may actually be surviving well is the housing market. A news release put out by Down Payment Resource stated that 81% of homeownership programs have funds available for the eligible homebuyer. This organization assesses the market around the country and reports on the conditions it finds.

While they have noticed a small drop in those available programs, most of those dips turned out to be temporary and focused at the city and county levels. However, at the state level, these programs have remained open and have not needed to pause business during the pandemic. This has been contributed to a great deal of uncertainty about the world’s condition. This uncertainty does not seem to have affected the homebuyer market, though. Housing finance agencies have reported that they are doing as much or more business than they were at this time last year. The report recorded that, starting this past August, less than 2% of the DPAs had temporarily paused their programs due to the pandemic.

When analyzing the forbearance trends this year, DPA is reporting that the small increase at the beginning was just caution from consumers. Since then, they have slowed down and reports from the summer are showing an increase for the 8th week straight. The only dissenting comments are coming from CoreLogic, who states that delinquency rates are starting to rise.

The HPI reports an increase in the share of down payment and closing cost assistance programs. Upon analysis, all the numbers appear in the majority. The down payment or closing cost assistants’ programs come in at 78%. The only decrease they have recorded is in the first-time mortgages and the programs for Mortgage Credit Certificates (MCCs).

Overall, things are looking up for the market, at least by the numbers. However, you’ll still probably be facing some concerns from your clients around the volatile nature of the pandemic. This changing world is a scary place, but optimism remains.

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Real Estate Brokerage

Don’t settle for mediocrity: How to be a better leader

(BROKERAGE NEWS) There tends to be two camps of leaders, those who lead from strength and those from weakness. But who says you can’t do both?

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Leader in a meeting

A lot of leadership literature has become “strength’s focused” – using inventories like StrengthsFinder (developed by Gallup). The logic in many ways, is sound. Capitalizing on your strengths as a leader and those of your team is significantly more effective than attempts to cover perceived flaws or weaknesses.

The business world has been cited for being too focused on weaknesses (and now parents are too). This a natural inclination for people. For leaders however, we should be bringing our strengths (and the strengths of our teams) to work and making “it” happen.

However, an over focus on strengths isn’t without its own challenges. Tony Schwartz writes for Harvard Business Review, a “well-rounded leader” has a greater opportunity to be more effective. As we seek to leverage our “strengths” let us not forget the complexity of our skill set and how those negatives we see about ourselves can become assets – resources – that we use to manage ourselves and our teams.

Metaphors are common in leadership articles, so I won’t break tradition.

Much like in physical exercise, poor form often causes the overuse of a muscle versus a group of muscles. Poor leadership form, while doing the lifting, leads to an overuse or over-reliance on what is good and comfortable for us.

A pragmatic leader may find themselves unable to make dynamic change move forward. Today’s leaders have to deal with a more complex environment in terms of technology, skills, and demographics. One style of leading will simply not be enough.

The big lesson here is to workout things you don’t think are your best strengths. What are ways you can take those weaknesses and utilize them? How do your rebranded weaknesses make you a good leader for a project or a team? Create opportunities to use your “positive opposites” – those weaknesses that you have rebranded.

PRO TIP: Find a mentor, find a coach, or keep reading about leadership.

You may never be able to develop those skills as strong as your primary, but you will have more leadership muscle to work with. You’ll be delivering a better leader to serve, build, and develop yourself or the organization.

Schwartz discusses the role of choices. We make a lot of choices as leaders – resources, people, what risks, what resources, what costs. When we make those choices working with clients or employees we are always using our mental tool kits.

It doesn’t hurt us to have more tools, most of the time, to allow us to handle situations.

SIDEBAR: It is important to recognize that we only have a limited amount of time. You’re still going to benefit more from developing your strengths – but don’t forget to work out those rebranded weaknesses (the triceps of leadership!). I love an 80/20 perspective – spend 80% of your learning time focused on building up those strengths, spend the other 20% on flexing those rebranded weakness.

A well-balanced leader is not a one-trick pony – they are leaders who can take an organization through many life cycles. If you seek to be some kind of leader, take some time to appreciate your own mix of strengths and weaknesses, and the unique qualities that you bring to a complex world of complex organizations.

Leadership is a whole person endeavor, and don’t skip those weaknesses (just like leg day!).

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