I overheard a number of fellow agents at a conference railing against the discount brokerages and agents. The concerns of a lack of professionalism, the creation of bad industry reputations, and what could only be described as fear of a potential loss of business to the unskilled, seemed to create a common thread throughout the conference.
And yet, I could see no real cause for this angst. Was it just me? Was I being too naive?
Twenty five years ago I had the privilege of attending a business course put on by KPMG. For those who aren't familiar, KMPG is one of the world's foremost business consulting firms. At the course, I learned that there are three fundamental components of competitive service/product delivery - High Quality, Low Price, and Great Service.
You can legitimately provide any two of the three in combination and your business will grow and be sustainable. Provide only one of the three and you will probably go out of business. Try to provide all three and customers and clients will love your business until you are unable to profitably continue and then will flee like rats from a ship when one or all three start to slip.
The relationship is simple:
Model 1: High Quality + Low Price = Low Service
Model 2: High Service + Low Price = Low Quality
Model 3: High Quality + High Service = Higher Price
Don't believe me? Look around and you will find sterling examples of long-time businesses that build around these three models.
Example 1 - Try any discount retailer and you will find model 1. Despite marketing to the contrary, they tend to provide "name brands" at low pricing with a significantly lower quality of service delivery. Anyone who has stood in line at box store with six express lane, waiting for the two available clerks to get through the line will attest that service is secondary to what they provide. Try one of the large discount grocery chains, and you find the same model where you are required to bag your own groceries. Heaven forbid you are a senior or disabled person with motor skill challenges. These companies are shining example of success, dominating in their fields.
Example 2 - You can get in and out of almost any fast food joint with a full meal for the family in under thirty minutes. Faster if you use the drive thru windows, and today you can get it arguably cheaper than buying good quality groceries and cooking yourself. Even though there are healthy choices available, all in all, these food chains are not considered healthy by nutritionist after clinician after doctor. Yet every year, more and more pop up in the strip malls and shopping centres around the world, proving them a successful business model.
Example 3 - The world is full of high-end shopping meccas with companies that are synonymous with quality and hi-touch service. Places with names like Tiffanys, Coach, Holt Renfrew and many more. Restaurants thrive in every community that provide high quality and treat you like royalty. Places like Boa in Malibu and Jean Georges in Las Vegas, where you vow to return next time you are in town despite the hit to your pocket book. The experience is that good!
Each of these models work. It just depends on what you as a consumer are looking for. And that goes for the real estate industry too. Which kind of agent are you looking for?
Do you want the no frills DIY model of discount broker? Maybe that is right for you. A model of putting your house on the market with the lowest cost to you, with few strings attached. It may also mean, putting up your own signage, conducting your own open houses and showings, and representing yourself, just like bagging your own groceries. Nothing wrong with that model – you should have a good idea of what you’re doing though.
Are you looking for someone who has a "Wham bam, thank you", low touch, high turnover model? They will show you four or five listings and you get the opportunity to make a quick and fast decision. Or you ride the wave of a REALTOR® who has fifty to sixty listings at any given time and you do not need to worry about seeing them until an offer comes in. This model works too.
Or do you prefer a REALTOR® who provides high touch service, going the extra mile when you are not sure of the next steps. Someone who will take the time and patience to explain processes. Who will show you homes until you find the "right" investment for your family. Who will put your schedule ahead of theirs to help you sell your home?
All three models are successful. Any can work.
And, not everyone enjoys the experience of a box store despite the potential savings. Not everyone can tolerate a fast food diet and stay healthy. Some prefer to pay a higher amount to ensure they get the best quality of help in these large transactions that they receive the best representation, and their agent is looking for long-term relationships to meet their needs beyond today.
Which REALTOR® is best for you? You decide.