Are You Competing on Price or Value?
It’s no secret that there is tremendous downward pressure on commission in the real estate industry today. It’s easy to understand why, as so many sales professionals are competing on price… rather than value.
Where does downward pressure begin?
Well, consider the mindset of today’s home buyer and seller.
Due to the amount of information the average person has access to, many buyers and sellers believe they know as much about the real estate market as just about any real estate sales professional. Actually, that’s not true. The truth is some think they know more than most sales professionals!
Many buyers and sellers also believe that all real estate professionals provide the same service. For example: Have you ever come across a buyer who only purchases through the listing agent due to the belief the listing agent will cut their commission, and the buyer can save money? Have you met a seller who is convinced the only requirement to selling their home is to be on MLS?
The real estate industry has become somewhat commoditized in the consumers’ minds, and when any industry becomes commoditized, it inevitably experiences downward pressure on price. This is why we are seeing mere postings on MLS, agents negotiating lower fees and alternative commission models popping up.
So where does a solution begin?
First, understand that not everyone wants the lowest price.
I read a consumer study that revealed only 10% of consumers want the best price, while the remaining 90% want the best value. This 90% group are willing to pay more provided of course, they can see value in paying more. This must be true or we wouldn’t have 5 star hotels, luxury cars, high end restaurants or expensive clothes. However, if the consumer thinks they can get the same product or service from different businesses then, of course, everyone wants the best price.
To earn your commission, you must be able to communicate your value. One of our long time coaching clients sold over 130 homes last year and took 100% of her listing at 6% in a market where 4.5% – 5% is very common. How is this possible? She has the ability to communicate her unparalleled value. She can convey her proven track record of selling homes for more money, and in less time, than the market averages. By focusing on the results she’s already produced for others, she educates her prospects rather than sells them. Most importantly, she believes in the value she brings to her customers.
“Being slightly remarkable is a losing strategy.” Seth Godin
If you can’t communicate your value and differentiate yourself from your competition, you may find yourself spending your career competing on price rather than your value. I would love to know what YOU do to communicate your value. Please share in the comments section below.