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The real estate landscape is undergoing dramatic changes, especially following the recent National Association of REALTORS (NAR) settlement, which fundamentally changed the commission structure.
The proposed changes, which still require court approval, would eliminate commissions, remove them from the Multiple Listing Service and require buyer’s agents to sign a buyer’s broker agreement before showing a home. These proposed changes have sent ripples throughout the industry, sparking speculation and fear-based confusion.
In these turbulent times, real estate agents face a critical choice: chase sales through discounts or enhance their services and the intrinsic value of their properties.
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In light of the NAR settlement, agents are at a crossroads. A path marked by discounts leads to an unstable future where value is compromised. The alternative, and the path I advocate, is to focus on delivering unmistakable value—whether real or perceived.
This means elevating every aspect of the customer experience, from the initial consultation to closing, ensuring customers understand and appreciate the unique value you offer.
Below, let’s take a look at some case studies of businesses that took the discount route and lost brand value and customer loyalty. Then, we’ll look at what you can do now to avoid these pitfalls as the industry adapts to a post-commission settlement world.
Death of discounts
DiscountThis seemingly sweet shortcut to improve competitiveness actually opened a Pandora’s box of unintended consequences. This path is littered with hidden pitfalls that devalue your brand and evaporate customer loyalty.
This path, while promising quick profits, often results in the silent erosion of what matters most: your reputation and relationships in luxury real estate.
Robinson’s May
consider dying Robinson’s May. The reputable department store has begun slashing prices to compete with discount giants in the hope of attracting bargain hunters.
However, the strategy inadvertently deprived the brand of its niche, turning it from a cherished shopping destination to just another player in the discount game—a decision that led to its demise.
In the high-stakes world of real estate, the story is a stark warning. Lowering the bar for price competition may undermine the uniqueness and appeal of premium services.
Once values are compromised, regaining lost status requires a steep climb, often resulting in a downward spiral reminiscent of Robinson’s May.
pet network
s failure pet network is a stark symbol of the dangers of over-reliance on discounts. The company launched with much fanfare during the dot-com bubble and heavily discounted its products in an attempt to grab market share.
However, this strategy eroded its profits and failed to develop a loyal customer base, leading to its infamous collapse.
This narrative warns real estate professionals not to drive down prices to attract fleeting attention. In a field where quality and trust are cornerstones, short-term gains from discounts can undermine long-term relationships and brand reputation, turning potential lifelong customers into fleeting visitors.
Bed bath and more
legend Bed bath and more Coupon strategy is also a cautionary tale about the tempting but dangerous temptation of discounts. The retailer’s signature coupons, designed to draw people into stores, have become a necessary crutch when customers shop. This reliance eats into the brand’s profit margins and distorts customer perceptions, making it challenging to sell any product at full price.
JCPenney
this JCPenney The “fair and equitable” pricing collapse highlights the dangers of trying to recover after going down the path of discounting. It teaches us that consistency in value, rather than deep price cuts, builds customer trust and loyalty.
avoid pitfalls
Now is a time for real estate professionals to reflect on their long-term brand and customer relationship strategies. As the industry adapts to new commission models, maintaining a commitment to quality and value can set agents apart in a crowded market.
Here are eight specific strategies and tactics to start implementing now to position your business for future changes to your commission structure:
1. Master the Buyer Broker Agreement
Become an expert at interpreting buyer’s broker agreements. Make sure you can clarify the benefits and protections so customers feel safe and informed from the start.
2. Adopt a customer-centric approach
Shift from viewing interactions as transactions to treating everyone as a valued customer. This involves understanding their unique needs, preferences and motivations and creating a more personal and engaging experience. Professionals build relationships that go beyond transactions.
3. Craft a compelling buyer presentation
Develop a compelling buyer brief. Highlight your unique services, market knowledge and success stories. Use visuals and data to reinforce your expertise and the value you provide.
4. Polish your speech and dialogue
Refine your script and dialogue to make sure they are clear, persuasive, and appropriate for your market. Practice delivering them until you can deliver them effortlessly and with confidence.
5. Make rewards clear
Be prepared to explain your commission structure in an elegant and transparent manner. Enhance the value of your services by helping clients understand how you get paid and the value you provide.
6. Optimize your workflow and follow-up work
Streamline your operational workflow and follow-up processes to ensure nothing is missed. Update your CRM tools to automate alerts to keep customers informed at every stage while enhancing your value.
7. Emphasize your fiduciary responsibilities
Make your fiduciary duties a key part of your value proposition. Explain how you put your clients’ interests first and increase their confidence and trust in your professional integrity.
8. Stay calm and professional
Adopt the philosophy of stoicism, focus on the things you can control, and release worry about the things you can’t control. You cannot control the outcome or consequences of a NAR settlement, the interests of the Department of Justice, or the actions of your brand or broker, but you can control what you will do and how you will respond.
In the current climate, resisting the urge to discount while investing in service, expertise and customer experience is not just a strategy but a value statement. This is about showing customers that every penny they invest is worth it – not because it’s cheaper, but because it’s demonstrably better.
Chris Bollingerfounder and managing partner RE luxury leader, is the profit voice for the elites in the luxury real estate industry. He is a consultant, national speaker, consultant and leadership coach.
