Every week, we ask a real estate professional for their Short List, a collection of tips and recommendations on an essential topic in real estate.This week, we talked with Marina Krakovsky, the author of the new book “The Middleman Economy: How Brokers, Agents, Dealers and Everyday Matchmakers Create Value and Profit,” about the continuing implications of Internet technologies on real estate professionals.
Twenty years ago, when the Internet first reached consumers, many predicted that middlemen like real estate agents and brokers would become obsolete, because the Internet itself would connect us all. Clearly, that hasn’t happened – but the Internet has had profound effects on buyer and seller expectations, which have caused changes in how the modern real estate professional must do business to succeed.
4. Some of Your Clients Expect You to Be Their Concierge – The MLS has been supplanted by publicly available listings. So, for many homebuyers, the historic real estate problem of too little information has now been replaced with the modern tech problem of too much information. Buyers are drowning in online choices. That problem calls for agents to play the concierge role, which means patiently guiding clients through a complex, high-stakes transaction. Real estate agents can’t properly serve clients by leaving them bewildered about any part of the real estate process, with no roadmap to guide them on the biggest sales transaction journey of their lives. Sellers’ agents can play the concierge role, as well, doing the marketing and sales more skillfully and more efficiently than occasional sellers are able to do on their own.
3. Some of Your Clients Expect You To Act Like A Wedding Planner – We’re so used to using Google, Yelp and other publicly available Internet tools that we forget that some of the most valuable information remains private, in the files and minds of experts. As someone who helps buy and sell houses day in and day out, you should know far more about who does the best work for your clients – from specific mortgage brokers, home inspectors, and title and escrow companies, to painters and general contractors.
The best real estate agents don’t just close deals; additionally, they’re able to use their unique position in the middle of it all to monitor and report on the dealings of all these players. Agents who don’t properly vet the people they recommend and don’t follow up with clients to see how well these other professionals did their jobs are failing to harness the power of being in the middle – and failing to live up to their potential in the eyes of their clients. Real estate agents can learn a lot from wedding planners and travel agents – the good ones – whose business depends on high-quality recommendations. So step into the roles of certifier and enforcer, making sure that all the professionals you’re recommending to your clients are truly great at what they do and really put forth full effort.
2. Some of Your Clients Expect You To Use the Tools of The Internet to Save Time and Money – Clients don’t care about the high costs you incur to promote your business in a highly competitive and volatile industry – they want your costs to benefit them. They also know that the Internet and related technologies (from social media to electronic signatures) have reduced transaction costs, and many rightly expect you to take full advantage of these efficiencies. A well-stocked toolbox in the hands of a skilled carpenter creates far more value than the same toolbox owned by a weekend hobbyist. Likewise, as a seasoned real estate professional, you can view the tools of the Internet as a complement to your expertise and business relationships, not a threatening substitute for it.
1. Some of Your Clients Expect an a la Carte Menu of Services – Customers have long grumbled about agents’ high commissions, but never more so than now, because many can and prefer to do some things for themselves. So a responsive approach to being a middleman is to find the modern sweet spot between the extremes of a full-service brokerage on the one hand and do-it-all-yourself on the other. For clients who want to do some of the legwork themselves (finding a house through Trulia and Zillow and open houses, doing their own comps), some innovative brokerages offer a menu of discounted services; the key isn’t to offer an inferior service, as the word “discounter” implies – it is to offer a choice of services, each with its own price, and to do each of those services well. No matter how you price your services, at the end of the day your clients have to feel even after you’ve taken your cut that they are still much better off than if you hadn’t been involved; there’s no better way to get repeat business and referrals.
A Silicon Valley social science/business expert, Marina Krakovsky is the author of “The Middleman Economy: How Brokers, Agents, Dealers and Everyday Matchmakers Create Value and Profit.” As a speaker who can tailor concepts to specific industry sectors, Marina presents to corporate groups that include Google. Her written work has appeared in Discover, the New York Times Magazine, Scientific American and Scientific American Mind, O, The Oprah Magazine, Psychology Today, Slate, Stanford Magazine, the Washington Post, Wired and other publications.