In B.C., real estate sales reps are getting slammed in the media on a daily basis. While its not unusual to get the bad news bubble stories, recently the pitch of the negative press has increased in its intensity. The government has also jumped on the agent bashing bandwagon… first removing self-regulation from the industry, then imposing a 15 per cent foreign buyer tax to attempt to cool down the market, and then mandating 28 new policies to tighten up control of brokerages and their associates.
The real estate industry has been the greatest creator of wealth in the Lower Mainland of British Columbia in recent years. In fact, Vancouver was just declared Canada’s first city of millionaires due to the property values that owners of detached homes now enjoy. The B.C. government has enjoyed a windfall of tax monies from real estate transactions — the largest contributor to the government bottom line of any industry. The spinoff jobs and industries that rely on the strength of the real estate sector are a huge economic driver, so why the real estate agent loathing?
Real estate agents and their role in the economic engine of our society are greatly misunderstood by the public. The stereotype of the seller of swamp land in Florida, or of the Brooklyn Bridge remain in the general lexicon of public mythology, much in the same way that the snake oil salesman of lore exists. Agents and lawyers share the unenviable position of finding themselves in the middle ground of negotiation and dispute resolution. This is the place where a successful outcome can find the parties to a transaction often walking away equally unhappy. Many consumers are themselves so internally scripted in a “win-lose” paradigm that one of the sales reps in a transaction, be it the seller’s agent, or the Buyer’s agent, will be dealing with an unhappy client. Adding fuel to this fire is the fact that purchasing or selling a family residence is a highly volatile emotional activity. Agents are viewed with a high level of mistrust due to preconceived notions and general misunderstanding of their role and value to a completed deal.
Much of this perception is due to our industry not being good at managing expectations and demonstrating value. In an effort to secure a listing, agents will fall into the trap of allowing the client to take the lead on what they expect. The truth is that it is not the agent or the client who determines the duration of time it will take to find the right match for a property, nor is it the agent or the seller who control what the final price of a successful sale will be. It has been said that the buyer in any marketplace is the one who determines the ultimate value of a property. Agents too often take on the “role” of their clients, rather than keeping to their true role, that of a facilitator to a transaction. The agent is not the buyer or the seller of a property, they are the coach master on the transaction, riding shotgun to ensure that trouble is kept away, and that everyone reaches their destination safely. A seller can demand whatever listing price they like, but it is the buyer who will agree with the price, or counter it. The agent is only there to advise and act according to their client’s lawful direction.
Agents have trouble demonstrating their value to the public. The consumer sees the agent at an open house, or at a contract presentation. Good agents make the process look easy. When the invoice for service arrives, the consumer equates the dollar amount with those two functions and questions the value for service. The truth is that much of an agent’s value is not in the time that was spent glad-handing at an open house or at offer presentation, it is in the preparation work before a deal and the follow up after the agreement is signed to ensure all due diligence is completed by the parties to the transaction.
Certainly the public is legally able to sell their property without the aid of an agent, just as most people are able to change the oil in their cars without a service station. However, an agent is there to check over the entire mechanism and ensure that there is no trouble ahead, or at least advise of potential issues and offer solutions. An agent’s role is vital in keeping a real estate agreement on track, meeting all of the required elements needed to realize a successful completion.
The fact is that despite the amount of data and support now available via the Internet and various services, private residential sales still remain in only the five to 10 per cent range of all transactions in the market. More than 90 per cent of registered sales are done with the help and direction of an agent.
Value can be subjective in cases where only a small piece of the picture is seen. A brain surgeon is not paid by the hour, but rather for his knowledge. It’s important for agents not to be blind to the importance of illustrating their service and its value to their clientele. It has been said that in the absence of value, price becomes an issue. Only 10 per cent of consumers look to price, while the remaining 90 per cent feel that value is the primary concern. This is clearly demonstrated within the coffee shop business. Starbucks came in offering the value of an experience. They tripled the cost of a coffee stop, and yet managed to build a very successful franchise. Manage expectations and sell value.
In the present environment, which seems to be hostile to an industry that has given back so much to the economy, it is clear that the public needs to gain a fuller understanding of the role of an agent, and how an agent is critical to the vast majority of successful transactions each day in Canada. While we may wonder why the agent loathing exists, we must also be proactive in helping the public understand our role, its limitations and its value.
Money, at its root, is an exchange of value. Those who provide the most value will survive, and even thrive, despite all the fear and loathing around them.