Waging War on Real Estate s Discounters By Bernice L. Ross, CEO, RealEstateCoach.com

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1 Waging War on Real Estate s Discounters By Bernice L. Ross, CEO, RealEstateCoach.com During today s session, you will learn: 1. Ten strategies to combat commission compression 2. How to create your personal Strategic Marketing Plan 3. How to successfully defend your commission if necessary What Your Competitors Call Full Service: Three Models Model #1: One to two percent commission Signs, advertising in local publications, word of mouth, MLS. There s not much else. Model #2: Full Service with Flat Fee Signs, advertising in local publications, word of mouth, MLS, traditional Homes Magazine, IDX Platform; Information without obligation addresses and all pertinent information advertised on all listings; Pay-per-click program; All negotiations, inspections, and closing are included. Ten Strategies to Combat Commission Compression Strategy #1: Your primary objective is to help the seller obtain the highest price possible in the shortest time. Maximum exposure equals maximum price. Helpful Script: To obtain the highest price possible, you must have maximum exposure to the marketplace. You can achieve maximum exposure by doing the following. First, all brokers will place your property in the MLS, put a sign in the front yard, advertise on the web and in print media. With your permission, may I show you how my strategic marketing plan helps you obtain the highest possible price in the shortest amount of time? Strategy #2: Conquer the Competition with Traditional Marketing Strategies How to do it: Track results, refer people to your website, take your picture off your mailers, and use the 25 X 4 x 5 mailing program. Helpful Script: Good morning. My name is Bernice Ross from Prudential Select Properties. Mr. and Mrs. Jones have asked me to personally invite you to their open house on 123 Main Street on Sunday from 2 to 5 PM. We ll be serving refreshments. Will you be able to attend?

2 2 Strategy #3: Capture over 90% of your leads with Call Capture (IVR) technology. See this link for more information: Helpful Script: Mr. and Mrs. Seller, many companies advertise your property on the web and in the newspaper. Did you know that in most offices that 90% of all those leads are lost since the person answering the phone fails to obtain the callers number? (Wait for a response) To obtain the highest price possible for your property, your real estate agent must capture every potential lead. My 800 Call Capture system obtains accurate contact data over ninety percent of the time. Before you listing your property, call my 800 number and then call the offices of my competitors to see who does the best job in obtaining your phone number. Is that a strategy that works for you? Strategy #4: Respond to inquiries in a timely fashion Helpful script: Mr. and Mrs. Seller, buyers want an immediate response to their web inquiries. Before you determine whom you will hire to market your home, please any other agent you are considering about one of their current listings to determine who gives you the quickest response. Strategy #5: Virtual tours and more Strategy #6: Knock out the competition with a killer personal website Strategy #7: Multiple Pictures on Multiple Websites Free sites include CraigsList.com, E-bay, Oodle.com, Trulia.com, and Foreclosure.com. Consumers want 3 things when visiting agent websites a link to the MLS plus buyer and seller information. Strategy #8: Put Alexa to work for you 2

3 Strategy #9: Resources to Differentiate Your Services from Competitors 3 Strategy #10: Use Proven Top Producer Strategies product knowledge, integrity, written plan, unique selling proposition. Create Your Personal Strategic Marketing Plan I. What does Prudential Real Estate do nationally to distinguish itself from competitors? II. How does Prudential Select Properties differentiate its services from competitors? III. What makes you unique? IV. What unique ways do you currently use (or would like to use based upon today s presentation) to market a seller s property? IV. Make a list of these ten points to construct your personal Strategic Marketing Plan. 3

4 Remember: Each point should be related to the seller s goal of obtaining the highest price possible in the shortest time. Sample Ten Point Marketing Plan To obtain the highest possible price for your property, maximum exposure to the marketplace is critical. At Prudential Real Estate, we help you obtain this goal in ten important ways: 1. Prudential Real Estate provides your property with maximum exposure to web buyers. In 2004, the Internet replaced for sale signs as the primary way buyers find property. Prudential Real Estate s exclusive agreement with Yahoo!, the most recognized and valuable brand globally, reaches over 345 million users in 25 countries and 13 languages. This enables visitors to the Yahoo! Real Estate website to connect directly to a real estate website of a Prudential Real Estate Network member. Maximum exposure of your listing results in maximum dollars in your pocket. 2. Expose your listing to more high probability buyers Prudential.com matches your property to the criteria entered on our website or through Yahoo! Real Estate. The moment there s a buyer whose criteria match your property, the system automatically sends them your property information. This provides you maximum exposure to high probability buyers for your property. 3. Save time and money At Prudential Real Estate, easy one-stop shopping for highly competitive mortgage, title, closing services, insurance, and home warranties saves you time and money. 4. Give your property maximum exposure to your local marketplace Four types of open house give your property maximum exposure to the marketplace. 5. Capture more advertising leads Never Miss a Lead call capture gathers accurate contact data over 90% of the time. 6. Reach the best-qualified buyers for your property Targeted niche marketing program reaches high probability buyers for your property. 7. Obtain more highly qualified Internet Leads A typical Internet lead is defined as first name, last name, and address. Prudential Real Estate s Platform collects more information such as a confirmed address, phone number, purchase timeframe, pre-approved mortgage, agreed to terms of use and much more. Your Prudential Real Estate sales professional receives consumer leads who are informed and who have requested to schedule a sales professional to show them the home of their choice. 8. Reach more web buyers with multiple websites Posting your listing to four different websites reaches the most buyers for your property. 9. Your own website Your property will have its own website that uses your property address as the URL. This makes it easy for buyers to locate your property on the web and to receive information customized to your neighborhood. 4 4

5 5 10. International exposure for your listing Reach an international market by working with Prudential Relocation s Global Mobility Services which reach buyers and sellers around the world. The best service and the best marketing mean a faster sale and a higher net price to you. Can you afford anything less? Calculate the Seller s Proceeds Follow these steps to determine how much the seller will receive after deducting commissions. 1. From the MLS, add together the list prices for each property your firm has sold in the area during the last six months. (You can do this for your personal listings as well.) Use initial list prices rather than any price reductions. This will give you the total volume listed. 2. Repeat the process, except add together the closed sales price for each listing your company sold during the last six months. This will give you the total volume sold. 3. Divide total volume sold by the total volume listed to calculate the selling percentage rate. Total volume sold Total volume listed = Selling percentage rate 4. Multiply the list price of the seller s property by the selling percentage rate. This equals how much the seller will net before paying commissions. Seller s list price x Selling percentage rate Seller s proceeds before commissions 5. To determine the seller s proceeds after commissions, calculate your six percent commission and subtract it from the seller s proceeds before commissions. Seller s proceeds before commissions - Six percent commission Seller s proceeds after commissions (Please note: the seller s net profit is calculated by subtracting the commission, the balance of the closing costs, and any existing loan balances.) 6. The final step compares the seller s proceeds after commissions to see which company nets the seller the most money. EXAMPLE: List price: $200,000 Your commission rate = 6% 1. Total volume listed by your firm = $6,765, Total volume sold by your firm = $6,595,000 5

6 3. Divide total volume sold by the total volume listed to calculate the selling percentage rate. 6 $6,595,900 = Selling percentage rate =.975 $6,765, Multiply the list price by the selling percentage rate. List Price = $200,000 Selling percentage =.975 $200,000 x.975 $195,000 = seller s proceeds before commissions 5. To find the seller s proceeds after commissions, subtract your six percent commission. ($195,000 x.06 = $11,700) $195,000 - $11,700 $183,300 = Seller s proceeds after commissions 6. Repeat steps 1-5 for each of your competitors. The Waging War Listing Consultation from RealEstateCoach.com Step 1: Thank you for the opportunity to discuss the marketing of your property! Step 2: Build Connection Step 3: Ask for the Relocation or Buyer Business Step 4: Determine what is motivating the seller to move and where are they moving? Step 5: Ask About Their Goals Step 6: Differentiate Your Services The 5 Ps What All Brokers Do Pound a sign in the front yard Place it on the MLS Put an ad in the paper Post it on the web And Pray it sells! 6

7 7 Step 7: Outline Your 10 Point Plan for Helping the Sellers Obtain the Highest Possible Price for Their Property Helpful Script: In order to obtain the highest price possible in the shortest time, you will need maximum exposure to the marketplace. (Hand them the Strategic Marketing Plan) This Strategic Marketing Plan outlines how to achieve that goal. Which of these services would you like to use in marketing your property? Once you have explained the key points of differentiation, ask: Which of these services would you like to use in marketing your property? If the seller asks you to discount, explain this is your full service package that helps them obtain the highest possible price. At this point you can walk away or offer only 4 or 5 of the services for a reduced commission. Price It Right: The Rate of Absorption Dialogue Step 1: Determine the number of total listings in the marketplace for the last six months. This includes actives, sold, pending, expired, and withdrawn listings. Step 2: Determine the number of total sold listings including those that have closed or are currently under contract for the last six months. Step 3: Divide the number of sold and under contract listings by six to determine how many listings are selling per month. Step 4: Divide this number by the total number of properties you found in Step 1. This gives you the Rate of Absorption. Example Assumptions: properties have been listed, placed under contract, closed, expired, or withdrawn during the last six months properties have sold or closed during the last six months. Step 1: Go to the MLS and determine the total number of properties in the marketplace during the last six months: 96 total properties currently active, sold, expired, or withdrawn during the last six months. 7

8 Step 2: Determine the number of properties that have been placed under contract or closed total properties have closed or are currently under contract. Step 3: Divide 72 by 6 to determine how many properties are selling per month. 72 = 12 properties sell each month 6 Step 4: Divide 12 by 96 to determine the Rate of Absorption. 12 = 12.5 % 96 Rate of Absorption = 12.5 percent This means the probability you will sell your property in any given month is 12.5%. The probability you will not sell is 87.5% You now have an important decision to make. Are you going to position your property so you are in the 12.5% of properties that will sell this month or will you position your property where it will be in the 87.5% that will still be on the market next month? Close by saying: It s your choice, what would you like to do? 8

9 Helpful Scripts from Copyright 2006, 9 Reducing Your Commission Objection: Will you reduce your commission? Script 1: Discounters are wonderful! They fulfill an important need in the marketplace for sellers who cannot afford premium service. Script 2: To obtain the highest price possible for your property, you need someone who is a powerful negotiator isn t that correct? (Wait for their response). So if you hire an agent who can t even negotiate a full commission on his own behalf, how effective do you think he will be in negotiating the maximum price for your property? Script 3: Hmmm, so the other agent was willing to lower her commission by 17 percent. Is that correct? Would she be willing to give away 17 percent of your equity as easily as she gave away 17 percent of her commission? Objection: We re thinking about listing our property with an on-line realty company that charges two percent. Script 4: As you can see from this printout, most of the expired listings were listed with firms that discount. How much did those sellers save when their broker did not sell their house? Wait for their response. You only pay the broker when you sell your house, right? There is no savings when there is no sale. When your house does not sell, the amount of commission is irrelevant. Taking More Listings Script #5: List-to-sell ratio As you can see from this chart, sellers who list with me actually receive a higher net amount from the sale of their property than they do from listing with other companies that offer a lower commission. Is netting the maximum amount from your sale a service you want? Script #6: Call Capture Mr. and Mrs. Seller, many companies advertise your property on the web and in the newspaper. Did you know that in most offices that 90% of all those leads are lost since the person answering the phone fails to obtain the callers number? (Wait for a response.) To obtain the highest price possible for your property, your real estate agent must capture every potential lead. My 800 Call Capture system obtains accurate contact data over ninety percent of the time. Before listing your property, call my 800 number and then call the offices of my competitors to see who does the best job in obtaining your phone number. Is that a strategy that works for you? Script #7: Maximum Web Exposure Mr. and Mrs. Seller, in 2004, the Internet replaced signs as the primary ways buyers find property. Maximum exposure of your listing results in maximum dollars in your pocket. Our company gives you maximum exposure on the number one website in the world, Yahoo.com. Is maximum exposure on Yahoo.com a service you want? Script #8: Customized website for your property Your property will have its own website that uses your property address as the URL. This makes it easy for buyers to locate your property on the web and to receive information customized to your neighborhood. Script #9: Reduced commission, reduced service Mr. and Mrs. Seller, this is our premium marketing package that will help you obtain the highest possible price for your property. If you would like to reduce the commission, I can give you a referral to an agent who does not provide this level of service. 9

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