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The hidden opportunities for your explosive growth in a down market

(BUSINESS NEWS) When the market shifts, many panic, but there is more to success than survival, so let’s talk about the hidden opportunities most will miss.

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Every difficult market, regardless of the challenges, generates losers, survivors and winners. Experienced industry veterans have learned that faced with the threat of a serious market slowdown, cutting costs and controlling expenses are essentials to survival.

Braking early is better than braking too late. But under adverse conditions, making great gains – winning – requires more than just braking. Being that big winner is a matter of recognizing the upside potential in a downside market and stepping on the gas not just the brake.

Recognizing the opportunity

How does one recognize the upside in the downside? The answer is linked to two other questions: Where is the opportunity? Where is the competition?

In the context of the current slowdown and existing market conditions, what then is the opportunity? For sure it must be consumer defined.  

Here are five key consumer-defined opportunities in the current business environment:

  • Better value
  • More consistency
  • Greater reliability
  • Higher professional accountability
  • Responsiveness

Better value

The problem is simple and clear. Today’s consumer seeks value through better (lower) pricing, through higher quality and through convenience. In the absence of a clearly defined difference in quality consumers are increasingly pursuing better value through more favorable pricing.

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Convenience is an attractor but not the service solution – convenience brings consumers in – alone it does not sustain relationships. What brings the consumer back is the service experience and value through favorable pricing, superior quality/qualities (features) or an attractive combination of price and quality.

While the vast majority of consumers see little differences among real estate service companies, most consumers are willing to pay more for services (and products) when they are certain of superior quality. And in matters of greatest importance consumers actually have a bias toward higher priced goods and services. Today consumers see little difference in quality from one company to the next. The focus therefore is increasingly on price as a means of achieving value with a growing feeling that services are over priced.

The opportunity: Deliver better value by offering better pricing or delivering measurably superior service quality and satisfaction.

More consistency

Not only is service delivery different from company to company within the industry, it is different from office to office within the same company, it’s different from agent to agent in the same office and it is frequently different from morning to afternoon with the same agent. Service standards and service delivery processes are virtually non-existent.

Traditional industry standards and processes are typically focused on prospecting (customer acquisition/capture), and sales activities i.e. the promise of service. Service delivery and all the details of service (promise keeping), well, that’s up to each independent contractor. The industry enjoys hiding behind the myth that standards cannot be imposed on independent contractors. The outcome for consumers is understandably confusing, and often frustrating, creating relatively low percentages of strong customer service loyalty.

The opportunity: Manage service delivery not just sales and production; adopt consumer-centric standards of service; implement service systems and service processes.

Greater reliability

Consumer dissatisfaction is more frequently a reflection of an agent not applying existing skills and knowledge than it is related to an agent not knowing what to do or how to do something. Failure to keep a promise, to perform defined tasks, to prove to be undependable destroys trust and undermines the foundation of a professional relationship.

Possessing professional skills and resources is not enough. They must be effectively employed and applied.

The opportunity: Adopt and promote a culture that praises, recognizes, and awards the reliable application of skills, resources and knowledge – keeping the promise of service; offer ongoing skill development training relative to understanding and meeting customer/client needs; reliability and dependability are the foundation of trust and long-term relationships.

Higher professional accountability

Consumers frequently express frustration regarding their agent’s or broker’s accountability and responsibility to report activities and results. It has been said that Accountability is the scarlet letter of the industry – badge of shame because of its absence. Excellence and high levels of performance are not possible in any endeavor without accountability (being answerable).

A wise old woman once offered the following advice, “If you want teenagers to behave well at the party, keep the room bright.” That advice illustrates one of the most important principles of influencing behavioral change – “visibility of consequence.” The more highly visible one’s behavior becomes the greater the likelihood that it will be on a higher plane; more secretive, less visible environments do not tend to bring out the best in people.

While there tends to be high visibility of consequence in most organizations relative to sales and production the same cannot be said related to service delivery and customer satisfaction. High accountability is one of the benchmarks of a professional… some would say accountability defines professionalism.

The opportunity: Implement a system that offers service performance assessment and customer feedback (in real time) including an analysis of both the overall service satisfaction results and the details; create a functionality for comparative analysis at multiple operational levels i.e. agent, office, company to benchmark progress; reach for high visibility of consequence throughout the organization – customer satisfaction and service excellence is a team sport.

Responsiveness

Responding to requests, taking action, answering in a timely manner, fixing things – making them right when they go wrong, timely communication of results… these are the expectations of today’s consumer. Despite the availability of communication and technology resources (cell phones, email, laptops, PDA’s, voice mail and the internet), each new study confirms a wide gap between consumer expectations and real estate industry’s typical response time.

While many industries suffer criticism for lack of responsiveness, communication inefficiencies, and growing insensitivity to customer needs, the real estate industry is far from taking a leadership role in creating new standards for professional service delivery.

The opportunity: Set standards for communication, consumer inquiries and client requests; employ available technology to more efficiently route calls and monitor results; create consequences and visibility for success and failure; implement a system for early intervention related to service complaints, problems or more serious issues and threats.

How to assess the competition

The opportunity (recognizing the upside in the downside) must also include assessing the competition and taking advantage here as well.

While there continues to be a fair amount of industry talk about the need for improving service quality, for increasing customer satisfaction and for delivering a better value proposition, in general it remains just that… mostly talk! Industry focus continues to remain steadfastly fixed on lead generation, customer acquisition, sales and production and selling more services.

5 fatal flaws to exploit

Where’s the competition? Here are five fatal competitive flaws to exploit:

  • A focus on prospecting and sales/marketing/productivity
  • Customer service and satisfaction remain solely the agent’s responsibility
  • An absence of standards and measurements for service
  • Failure to adopt systems and technology to manage service delivery
  • The Manager’s job does not include managing service and the customer experience

Focusing on prospecting and sales

Companies continue to focus training, coaching and marketing resources on lead generation, customer acquisition and selling techniques i.e. teaching real estate professionals to become great promise makers. Keeping the promises of service – the actual delivery of service – remains up to each individual independent contractor to determine the how, when, where, if and what will be done – working it out on his or her own.

Taking advantage of the competition: When given the choice between a great promise maker and a great promise keeper, consumers prefer the latter. Training, coaching and marketing resources must offer systems, processes and disciplines related to great promise keeping not just great promise making. Ironically, the measurable results of great promise keeping (great service delivery) give real muscle and credibility to the promise of great service i.e. puts promise making on steroids.

Service is the agent’s job

Many companies continue to hide behind the notion that agents are independent contractors and cannot be held accountable for the details of service delivery. This is simply nonsense. Consumers have a relationship with and expectations of both the service professional and the company. Challenges, rewards, risks and future opportunities are intertwined. Meeting consumer needs grows increasingly complex requiring more specialized talents and resources. It is through partnership between company and professional that those needs are met. Service is no longer an individual event. It is a team sport.

Taking advantage of the competition: Service as a team sport demands mutual accountability for the real estate professional, the company and all support personnel. The mission of service excellence for the consumer needs to be communicated, understood and accepted as part of partnership mission. Success depends on the performance of many and mutual accountability is essential for success.

Service is not a key performance variable

Most companies measure sales, productivity, revenue, expenses, profitability, recruiting and retention – each is important. And if the business enterprise sees itself fundamentally as a sales organization then the measurement can stop there as it does with most real estate companies. If on the other hand, the business views itself as a service organization, then service must be defined, standards need to be developed with progress measured and assessed. Every human endeavor of importance includes measurement.

Taking advantage of the competition: Companies that are serious about their service measure their service results. In a service business, service is the product. Standards for delivery and assessment must be consume-centric (consumer centered and defined; sometimes in conflict with company and agent interests). Setting standards, measuring results and benchmarking performance for progress – many remain afraid…early adopters are already experiencing the advantage.

Service is an art not science… it can’t be managed

Quality service delivery is the new science. Most other industries are farther along in recognizing that quality service delivery is essential to business survival. Real estate companies continue to develop and invest in systems and technology related to accounting, transaction management, telecommunications, Internet strategies, websites, PC/PDA devices, and lead generation. Service delivery, the customer service experience and long-term customer relationships flounder.

Taking advantage of the competition: Systems and proven technology for managing service delivery exists. Measurable results can be achieved relatively quickly in terms of increased revenue and expense reduction. Customer retention, risk management (fewer threats, claims and suits), savings in E&O premiums, productivity improvements, higher e-lead conversions and increases in referrals and repeat customer sales are all being realized.

Managers have other priorities

Recruiting, developing and retaining agents, marketing activities, sales, productivity, revenue, (sometimes expense control and profitability) and with increasing frequency the sale of “other” services are commonly included as a branch manager’s responsibilities. Rarely does one find managing service delivery, the customer service experience and customer satisfaction included in such a job description. The system remains flawed.

Taking advantage of the competition: Branch Managers’ job descriptions must be expanded to include responsibility for managing the delivery and quality of the product (service). Anything less creates an accountability short circuit (how can the agents’ be held accountable) and sends a mixed message to the organization regarding the true importance of service.

What practitioners are doing to change

Thousands of of Broker/Owners and real estate professionals across North America have recognized the opportunity for change; here is what they are doing:

  • Undertaking an ongoing formal program of service delivery training (promise keeping)
  • Adopting consumer-centric measurements and standards of service
  • Implementing systems, processes and disciplines for service delivery and quality control
  • Utilizing written service commitments and service guarantees
  • Holding managers and agents accountable for service quality
  • Raising the organization’s visibility of service quality results
  • Incorporating higher accountability and measurable standards in agent recruiting and selection
  • Utilizing real time customer feedback and reporting technology
  • Marketing independently validated customer service and satisfaction results to prospective clients, current clients, past clients and prospective agents
  • Offering new levels of agent and office recognition based upon measurable service excellence results

Note from the Editor: The following information refers frequently to “Quality Service Certification,” or QSC, a company which the unpaid editorialist penning this post co-founded. The Real Daily has no financial relationship with QSC.

What are the results?

Real estate professionals (Quality Service Certified®) of companies that have implemented formal quality service delivery training, standards, systems, processes and the use of technology as outlined above are achieving remarkable measurable results.

Ongoing research of more than 500,000 consumers comparing service quality feedback and customer satisfaction results of between “traditional agents” to Quality Service Certified agents in the same companies, same offices, same markets, and during the same periods of time, reveal the following results (see graph):

  • QSC professionals have 50% fewer less than satisfied buyers (51 per thousand versus 102 per thousand) than “traditional agents”
  • QSC professionals have 64% fewer dissatisfied and very dissatisfied buyers (23 per thousand versus 64 per thousand for “traditional agents”)
  • QSC professionals have 57% fewer less than satisfied sellers (67 per thousand versus 153 per thousand)
  • QSC professionals have 55% fewer dissatisfied and very dissatisfied sellers (41 per thousand versus 90 per thousand for “traditional agents”)
  • Clients of QSC professionals are 61% more “very likely” to do business with them in the future and send referrals than clients of “traditional agents”

The economic impact of an effective quality service strategy is clear, measurable and substantial. Service quality impacts every area of business. It also impacts relationships, reputation and results both long-term and short-term.

The upside to the downside

The downside of any market situation creates an upside for those who are willing to embrace change. Success is more than surviving… success demands more too. And while the risks and rewards associated with doing something are not always clear in the short run, the long term risks of doing the same thing or doing nothing are quite certain.

#UpsideToDownside

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

The first affordable housing REIT is here, and it’s Black-owned

(BROKERAGE) The first affordable housing REIT is here – and it’s founded by two of the largest Black-owned firms in the country.

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Sunrise over affordable housing REIT neighborhood

At the beginning of the month, California-based Avanath Capital Management and San Francisco’s MacFarlane Partners came together to launch a new real estate investment trust (REIT). The two firms state that this new REIT will be the first of its kind in that it will be the first publicly traded REIT to pursue a strategy focused on affordable and workforce multifamily housing. The trust – dubbed Aspire Real Estate Investors – is targeting $1.6 billion in investments.

This announcement comes at a crucial time. The economic fallout from the coronavirus pandemic has left much of the country’s working class in shambles. Affordable housing is becoming an increasingly coveted but scarce commodity. Not only do Americans need affordable housing, but they need affordable housing that will be invested in, accessible, and respected.

Avanath Capital Management and MacFarlane Partners – both Black-owned – are two of the largest minority-owned estate investment firms in the country. Avanath Capital was founded by Daryl J. Carter in 2007, and reported $1.2 billion in assets under management in 2018. MacFarlane Partners was founded by Victor MacFarlane in 1987.

Hopefully, Aspire will inspire other firms to follow suit, and invest in meaningful, necessary assets that will uplift working Americans, like affordable housing. If the morality aspect doesn’t do it, then maybe the profits Aspire will reap from being the first of its kind will inspire.

The filing stated: “[The affordable housing sectors] historically have been fragmented in ownership and underserved by institutional capital, yet they comprise a majority of the U.S. multifamily market (by units) and offer strong long-term fundamentals to generate the attractive returns for investors.”

Aspire, who filed paperwork with U.S. Securities and Exchange Commission (SEC) already has an initial portfolio of 9 multi-family project investments. Six of these are located in Opportunity Zones – in Illinois, Florida, Texas, North Carolina, California and Michigan that will ultimately cost close to $582.4 million. Down the pipeline, Aspire’s acquisition pipeline totals $1.1 billion.

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Real Estate Brokerage

How do you know it’s time to become a broker?

(BROKERAGE) It sounds dreamy to open your own brokerage and be your own boss, but when is it TRULY time become a broker?

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time to be a broker

Everyone joins the real estate workforce for a different reason. Some to flip houses, others to represent buyers, and so forth. And most are happy with their broker of choice, but for others, the itch to become a broker becomes so great that it cannot be ignored.

But how do you know when it’s time to become a broker? Maybe it’s time for a new broker because you’re unhappy, but it’s also possible that you have the skills and drive to lead your own company.

To find out, we asked three brokers with thriving businesses:

Jennifer Archambeault is the Broker/Owner of Urban Provision, REALTORS®, a growing Texas brokerage.

We asked her how to know when it’s time to create your own brokerage:

It is time to create your own brokerage when the limitations of your current brokerage restricts your personal or professional growth, hinders your ability to serve your clientele at the highest level or you are no longer able to see the value your current broker brings to the table.

Regardless of the reason, it is important to be mindful of your competency and ability to handle the responsibilities involved with running a brokerage and/or managing or mentoring agents.

Is there a tipping point?

There are often many tipping points causing an agent/broker to dream about having their own brokerage, but they often only clue in on one when they are parting ways. A lack of respect or dissatisfaction within your current company, the inability to come to terms on differences with management, not seeing eye to eye on the company’s mission or vision and not being able to serve clients to the desired standard often top the list of tipping points if the agent leaves disgruntled.

However, there are times it is purely a natural transition having nothing to do with any reason mentioned above and solely taking your career and income to the next level.

Is it better to do so because of a gap in the market or because someone’s independent streak is unavoidable?

Personally, I think it is the latter more than the former. Gaps in the market will change over time but often the desire to be independent doesn’t ebb and flow as easily. If someone’s independent streak is unavoidable they often exude qualities that allow extreme focus to continuously keeping their eyes on a prize.

There are benefits of having your own brokerage, but there are also limitations as well. Some people’s independence can be a hindrance to their business especially when they want to start their own brokerage because they simply do not like or cannot continually follow the rules.

I believe it is better to part ways to build your own brokerage or brand because it satisfies a personal or professional growth need rather than leaving your previous company disgruntled. The latter generally allows for a flawed mindset.

What do you wish you had known before starting a brokerage?

Do not always focus on Plan A because often you’ll end up with the most perfect fit with Plan D.

Being nimble is a must-have quality for anyone in the real estate industry, but owning a brokerage often requires stretching far beyond being nimble and reaching for superhero status. Initially, I believed every agent could be molded into a specific model or a way of doing business but quickly realized that there is a not a one size fits all brokerage regardless of someone with decades of experience said so.

The perception of a brokerage with a large number of agents on the surface implies success. However, the old saying quality over quantity rings very true in a brokerage setting. Stop worrying about what others are doing – be different because that’s how you get noticed. Do what you do well and what works with your clients, for your personality or in your marketplace.

Tyler Forte, Co-Founder & CEO of Felix Homes saw a need to marry technology and real estate.

Here is his take on starting a brokerage:

Prior to starting Felix, I was a venture capital investor and I can tell you that any successful business, whether or not it’s a brokerage, is started because the status quo does not solve the market’s distinct needs.

Speaking specifically to why we started Felix, home sellers are facing a number of challenges that the traditional brokerage model does not address. When I sold my home last year, I saw firsthand how the home selling process is broken. I knew that starting a disruptive real estate brokerage was what I needed to do in order to make the experience of selling a home better.

The challenges homeowners currently face include hiring an agent who does not have their best interest in mind, to the uncertainty of not knowing if their home will be sold and for what price. At Felix, we are looking to provide consumers with the best home-selling experience period.

As far as the challenges we faced when starting a new brokerage, there are many. For one, the real estate industry is slow to adopt new innovative models. This is because current incumbents have built moats around the data and distribution of homes all at the consumer’s expense. In addition, because real estate is governed on a state-by-state basis, educating ourselves on the laws and regulations of each state was a challenge.

Jeff Brown, Owner of BawldGuy Investing has been a broker for decades and is never ever EVER shy about telling it like it is.

How do you know when it’s time to create your own brokerage?

I’ve always contended Dad was right, as you always thought most folks didn’t know when to create their own firm. Over the years I’ve spoken with countless brokerage owners about this very question.

Roughly a third of ‘em actually thought they knew the right time. Me? I did it WAY to soon, though in my defense, I had my dad’s infinite brokerage experience IN the office daily to back my rookie play, stop mistakes BEFORE I made ‘em, and generally mentor the crud outa me.

Most brokers told me they knew when decisions made by their broker bosses just were not what they would’ve done. They usually came a tipping point, where the decision made itself. But again, that was just a third of those with whom I talked. The rest just did what I did, rush in willy nilly. The huge advantage I had was a decades experienced brokerage owner mentoring me daily, in real time, and who, you know, actually gave a damn about me.

So what is that tipping point?

The most often heard tipping point was the feeling of being constrained by their boss’s operating policies. For example, and a gigantic tipping point, was a friend of mine who wanted to run his own office using the Broker-Centric model, not the Agent-Centric model run by the broker for whom he worked.

Is it better to do so because of a gap in the market or because someone’s independent streak is unavoidable?

The latter is merely personality. Sometimes it works to breakaway, and sometimes it’s been catastrophic. Being independent has nothing whatsoever to do with knowing what you’re doing as the person in charge.

The whole ‘gap in the market’ thing has always puzzled me as a reason to open a brokerage. The exception clearly would be that the policies of operation under which you’d run your own office would substantially improve your chances of taking advantage of whatever market gap you perceived. I find that to be uncommon, at least in my experience.

What do you wish you had known before starting a brokerage?

Without even a hint of maybe having a doubt, I wish I’d understood the good news/bad news joke that says: “Well, Jeff, the good news is you’re now the Go-To Guy. The bad news? See the good news.” 🙂

The difference between signing the backs of checks and the front of those checks cannot be overstated. Every single buck stops at your desk, period, end of sentence, over ’n out. Some folks find that to be too daunting.

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Real Estate Brokerage

Customer satisfaction feedback comes best from your own service

(BROKERAGE) How you collect feedback can determine whether your service actually improves or not. #science

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Woman looking at laptop reading customer satisfaction surveys.

Every significant endeavor utilizes measurements and scorekeeping to record activities and progress. The most trivial of human pursuits often involves record keeping and statistical analysis. While the sales and production side of real estate services are measured in-depth, the service and customer satisfaction side of the business enjoys less measurement, scorekeeping, and analysis than one might find associated with the performance of a neighborhood Little League team.

What does this truly say then about the importance many brokers, owners or managers place on service delivery, customer satisfaction, consistency, and service performance?

It’s true that a few organizations do attempt to measure service performance by means of a customer satisfaction survey. Most of these programs are produced and administered internally. The surveys are sent under the company banner and the company tabulates the results.

First, when a customer is asked directly by the professional or the company for performance/satisfaction feedback, that feedback is always more positive than what is obtained by an independent, third-party asking the same questions.

This is known as the halo effect. Consumers are more diplomatic in their response to the person or company that provided the service.

Second, internal service/satisfaction assessment programs typically develop standards and objectives to validate the belief that good service is already being delivered. Thus this positively biased feedback data suits the objectives of the internal program just fine.

It’s just that measurement of those areas of service performance that sellers and buyers feel are important is not taking place.

For those more serious about customer service satisfaction and service performance assessment, there is recognition that the halo effect lessens the value of the data for internal use, and that keeping score of one’s own results has less credibility externally.

Instead, they seek the objectivity and credibility that third party validation of service assessment can provide.

Ironically, even without expert resources and objectivity the attention that measurement brings to the organization will effect positive results and performance improvement. This phenomenon is known as the Hawthorne effect.

The effect was first noticed in the Hawthorne plant of Western Electric. Production increased not as a consequence of actual changes in working conditions introduced by the plant’s management, but because management demonstrated interest in such improvements.

Unfortunately, this phase of initial improvement is not sustainable. Sustaining improvement requires more than measurement and leadership interest. Action steps that result in the actual improvement of the situation must follow collection of data.

Measuring service results and satisfaction in the real estate organization is an important first step. It will certainly gain the attention of the organization and send a serious signal.

Sustaining organizational interest and performance improvement requires more.

It requires systematic and timely feedback, objectivity, systems and service delivery processes, coaching and recognition/awards. But it really all does start by keeping score.

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