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Real estate businesses and brokers are worried about the drop in buyer agent commissions they may experience this July—and they should be. The National Association of Realtors’ settlement, if approved by the court, would make it more difficult for those who focus on buyer clients to negotiate and receive compensation and reduce commission transparency for real estate professionals and their clients.
I’ve always believed that focusing on sellers is a more efficient use of my time, and with the changes coming to the industry, it’s more important than ever to double down on my seller business.
Sure, consumers want buyer representation, but they want homes even more. Websites like Zillow, Realtor.com and Homes.com make it easy for buyers to purchase a home online. If commissions were decoupled and buyers had to negotiate commissions directly with the broker, what’s stopping buyers from contacting the listing broker directly?
I personally own 3 brokerages with over 700 agents. If we don’t make significant changes to how we work with buyers and start focusing on sellers, our agent commissions could drop to unsustainable levels.
That’s why we’re doing everything we can to shift our focus to sellers to ensure that no matter how much revenue we get possible The buyer’s losses will be compensated by our sellers.
Here are 10 reasons to turn your attention to sellers
1. Be an employer, not an employee
On average, among agents at my own brokerage, it takes 38.5 hours to close a buy-side deal and just 19 hours to close a sell-side deal. The listing agent owns the inventory, and the buyer’s agent spends all of his time showing and selling the listing agent’s inventory.
In this case, the listing agent is the employer and the buyer’s agent is the employee. Employers (listing agents) work throughout the week, Monday through Friday, to build their inventory of listings. The employee (buyer’s agent) spends evenings and weekends (time otherwise spent with family) showing the employer’s inventory.
2. Gain greater recognition in your market
When you work with sellers, you’ll quickly become recognized as a top-selling seller in your community. Your face will be on the signs, rider signs, and agricultural postcards just listed/sold. When neighbors are looking for their own agent, your name will be mentioned.
Notice that most of the neighbors have no idea who brought the buyer? This doesn’t happen when you’re the listing agent.
3. Reputation
The more homes you list and sell, the easier it will be for you to find and generate more listing leads. The seller’s experience is logical, while the buyer’s experience is more emotional. Sellers ask you for statistics and track records; buyers just want you to respond quickly and take them home.
4. Recommended business
More recommended to listing agent than buyer’s agent. There is a perception that listing requires more skill, so clients seek out experts from agents they already know, rather than listing as a buyer. As you gain a reputation for working with sellers, you’re more likely to win more referral business.
5. Easier to predict future income
Based on market statistics, we know how many homes are listed and sold in our local market and at what prices. If we track our own data well, we can know what our business (and therefore our paycheck) is likely to look like three months from now based on our current inventory.
6. 2 transactions per customer
My team and I follow a 2:1 list: every list you acquire should be responsible for generating two sales. The 2:1 formula has been around for decades and with the upcoming commission changes, it will become more important than ever.
Do your best to generate two sales from every listing you acquire, whether it’s a buyer’s sale from an open house, a new listing lead generated by a neighbor, or new business from a social media video of you and the listing .
7. Better marketing statistics and reviews
When you work with more sellers, you’re more likely to make more transactions each year, which increases your statistics and helps your personal marketing efforts. It has a snowball effect.
Sellers want to see your statistics; buyers don’t care about them. Follow sellers and generate statistics to use in your advertising.
8. Gain better control over your income
As a listing agent, you can set commissions for yourself if other agents are involved. If you focus on working with the buyer, you’ll spend more time fighting for your own value, and if you can’t convince the seller to help the buyer pay your fees, you’ll only get what you can.
9. Higher return on investment
In my experience, buyer leads are more expensive than seller leads, and the return on investment (ROI) is lower than ever. ROI on buyer leads is declining.
Ontology: As technology advances, old-fashioned marketing and prospecting methods like door-to-door sales, direct mail, and handwritten notes will become more prominent, and you don’t have to buy leads.
10. A more “unreal” life
Combining all of this, a list-based business can better equip you to live what I call the “unreal” life. This is the professional sweet spot where you’ll spend less time on each transaction, make more money, and grow your real estate business faster with less uncertainty.
No one knows exactly how things will ultimately play out, but I do know that if agents want to beat their local competitors, they will start focusing on having an inventory of listings in their market. That’s what my team, the agency, and I will focus on from now on.
Jeff Glover is the founder real imaginary companyIt is the parent company of several real estate-related companies.
