The inappropriateness of using the emotions of fear and greed to prospect

by Alistair Helm in


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Many years ago, just after I had bought my first house I was visited by a salesperson who on the front door step started to tell me and my wife about the spate of burglaries in the area. The emotion he instilled in us was one of fear.

He used approach this to convince us to sign up for a burglar alarm that we could barely afford. This tactic taught me a valuable lesson – be wary of self-interested groups playing on your emotions.

The other day a leaflet was dropped into our letter box from a local real estate firm – its emotional message was not couched around fear but around greed!

Here is the leaflet:

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and on the reverse: 

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The text of the message:

The Reserve Bank wants to dampen the Auckland Market. What does this mean for you as a home owner?

Strategically you can use this to your advantage. Consider this… sell now on a higher market with a long settlement, so you are in a position to buy in a lower market next year.

If you are considering a move then call us urgently and we will explain how to ride this wave with success.

On second thoughts maybe the emotional tactic is two fold – fear at the impending crash, which is likely to follow this action by the Reserve Bank and greed at the opportunity to sell now, buy later ‘short-sell’ tactic. All we need is the herd instinct to complete the three main emotional motivators of stock markets and business behaviour.

So here we have a case of future forecasting by local real estate agents. Next year according to them the market is going to be ‘lower’ – the inference being in terms of prices.

Big call!

There is no sound statistics to back this up and therefore there is no basis for a real estate agent to make such an assertion. Selling a service based on possible gain from market movement is neither professional nor ethical. Selling based on emotion is not appropriate.

I propose to bring this to the attention of the Real Estate Agents Authority as in my mind it breaches their Code of Conduct 6.4 “A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client”.

 


When does prospecting become stalking?

by Alistair Helm in


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I have highlighted in the past what I see as the glaring inefficiency of the real estate process. How fully two thirds of agents time is spent prospecting for business. How this entails the time-honoured but seemingly out-of-date processes such as door-to-door selling, mailbox flyers and newspaper adverts.

So imagine my reaction when for the fourth time I get a flyer in my mailbox from the same local agent. A mailbox I should add that has a clear “No Junk Mail” sticker.

It has driven me to ask the question, is this agent stalking me?

It all started a month ago when the door bell rang one day and an agent greeted me on my doorstep to tell me who she was and the fact that she was new in the area. She naturally asked me if we were planning on selling. On being told no; she then went on to ask if I could recommend her to people I knew in the area!

I was taken aback by this approach. I thought door-to-door selling went out with the advent of supermarkets, but to ask me if I could recommend her to other people!

I thought afterwards how un-productive and potentially damaging this process is. With no track record of success in the area, knocking on doors to introduce yourself to my mind smacks of desperation.

Anyway 2 days later I get a follow-up note again in my letter box – not personally addressed I should add; basically reiterating what she had told me and enclosing a fridge magnet - how original!

A week or so ago – another flyer from this agent appeared, full of statements of the 'success of the company' she worked for – 'top company' here, 'award winning' there etc – it also featured a property she had sold – not a property remotely similar to mine nor even in the same suburb – another flyer destined for the bin.

Yesterday I get a newsletter from the agent. Full of quotes from media article and economist quotes, the usual story of ‘great time to sell’, ‘loads of demand in the market’ and then a selection of property ‘on the market’ – not properties she is selling, just properties for sale.

So as I said at the beginning I feel like this is tantamount to stalking. I have a clear message of ‘No Junk Mail’ on the letter box yet she (or someone on her behalf) keeps dumping these flyers in my box. Nothing in the content of them is in any way relevant and instead of endearing her to me, I am getting frustrated and will be going to go out of my way to avoid her.

Now at this stage, I should stop and be constructive. Stop.........Pause and be constructive... OK!

So here is my advice to her. If I was in her shoes this is what I would do?

I would take a catchment area of say 100 homes across 4 streets within the area I would want to build my business. I would through access to the data of sales information from the likes of Terralink, Property IQ or REINZ which all agents have, collate all the data on these 100 properties. I would remove from this prospect list all properties that have sold in the past 12 months. I would also remove all properties that have not sold in the past 25 years. I would also remove all current rental properties.

I recon this would give me around 35 homes. To these 35 homes I would develop a personalised letter addressed to the homeowner by name with their address. Far too many agents do un-personalised communication, which in today’s digital world makes a distinct and memorable impression.

The letter would introduce myself and provide useful insight into the hyper-local market highlighting the immediate area around these 100 homes. I would present data showing the number of sales and how that has changed over the past 2 years. It would also show the range of prices and some of the properties – a quick walk around the area with a camera phone would be sufficient and give a consistency to the look of the photos.

The letter would close out with a call-to-action of my availability for a no obligation chat to discuss the best approach to marketing your property if you would be interested in selling.

For me as a recipient of such a communication I would feel engaged for the following reasons:

  1. Personally addressed shows care and attention

  2. Written communication rather than a door knock is respectful to not intruding and respect for people’s time

  3. Insightful information shows a willingness to offer value

  4. Insightful information demonstrates someone who knows their business

  5. Local relevance makes it more valuable and interesting

  6. Focused targeting means more efficiency and less of a scatter-gun approach

  7. Offering advice rather than saying the more blunt and somewhat desperate ‘list with me’ engenders more empathy

In my mind doing the research to send such a letter to 35 homes might take 3 days work – but if I can gain 1 listing from that, it would be a good starting strike-rate, especially if the following week you target another 4 streets and another 100 homes.

I am not advocating this approach as I feel the whole process of real estate needs reinventing but given the fact that the industry is slow to change, if I were to be a new agent this is what I would do and thereby avoid being judged to be a stalking agent!

Now here is the thing!! 

Having written this article I was stunned by the coincidence for through my letter box today I received a glossy 4 page brochure from another local agent – one I am happy to identify Brent Clarke at Custom Residential. Whilst not a personally address communication the content of the brochure is spot on and whilst I have no other assessment criteria beyond this brochure I would confidently state that I am at least 10 times more likely to call Brent than the other “stalker” agent, as well as way more likely to share Brent’s brochure with other people, whilst I unfortunately will not share anything but negative experiences for the other agent.

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Brent’s brochure engages me with what he describes as a ‘Local Property Report’ – something that lives up to the name as it provides a simple but compelling two pages of 9 properties per page for houses sold in the two streets that border our house – perfect hyper-local information. The brochure goes on to provide insight into what is happening in the local market with pertinent thoughts around population growth, transportation, interest rates as well as building consents.

This is smart marketing – providing valuable insight, a demonstration of professional knowledge. Such a contrast to the desperation of door-knocking and endless flyers and of course, lets not forget that fridge magnet!

 


Open homes – questionable value for sellers so why are they so common?

by Alistair Helm in


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In my recent analysis of the inefficiencies of the real estate industry I estimated that an average real estate agent spent 13% of their working week undertaking and organising open homes – that would amount to around five and a half hours. On reflection I would now like to add this segment of their working week to the 64% of their time spent by prospecting for new business. Why? Because open homes are largely a profiling and prospecting tool benefiting the agent more than the vendor.

Don’t take my word for it – ask a real estate agent. Steve Koerber, a respected and highly professional agent I know wrote in a post a couple of years ago that “The truth about open homes might set you free”. He stated that based on his calculation an open home had about a 5% chance of achieving a sale.

In rereading his post again the other day, I was reminded of a real estate training session I sat through a number of years ago run by a highly charismatic auctioneer and trainer.

He related a similar story although he was much more positive of open homes. His mental imagery for the attendees (largely rookie agents) was to reflect on the fact that that only 1 in 30 visitors to an open home were likely to be a buyer. So rather than get despondent, think of each visitor as coming in the door to give you money! He stated that based on your prospective commission of $12,000 that you as an agent were going to get for selling a house, each open home visitor was actually worth $400 – his imagery was to whisper a mental “Ka-ching” to yourself each time another visitor walked in “Ka-ching $400” - one step closer to 30 people in total!

Despite this inefficiency of hosting open homes, properties for sale still need to be viewed, as I am sure very few buyers would buy sight-unseen. Far more efficient is the process of scheduled private inspections arranged for serious buyers. This is by far and away the most common process for real estate across the globe. Sellers don’t need to waste time and effort for weekend viewings that are for the primary benefit of nosey neighbours and profile seeking agents.

An inspection professionally arranged between a serious buyer and the selling agent adds professionalism to the real estate process.

But hold on, ask yourself, does the agent need to be a part of the inspection process? Why not allow committed buyers to meet committed sellers. Not to usurp the process; but to allow a more relaxed and engaging interaction. Such a system is advocated by 200Square – the innovative real estate company whose approach to selling property is using a licensed real estate agent to facilitate the transaction whilst allowing technology and smart buyers and sellers to undertake the components of the process where the agent really adds little value – inspections and open homes. In that way they can offer a full service licensed real estate solution at a fraction of the cost of traditional agents.

Coincidentally 200Square tweeted today the feedback from one of their buyer clients, demonstrating that removing the agent in the process of the inspection removed pressure and created a relaxed opportunity to view the property guided by the sellers.

Time for a change? time to question the value of some components of the real estate industry process in order to increase efficiency and add value.


Online marketing is the new prospecting tool for real estate agents

by Alistair Helm in ,


Transient

The time honoured approach to prospecting for new business by real estate agents has largely consisted of door-to-door leaflets, local business networking, endless coffees and the ubiquitous press adverts comprising smiling faces alongside successful sales results.

Today - more and more the power in prospecting is online and the leading property portals around the world are reaping the rewards as they deliver just what agents want – sellers.

I came across the excellent, simple and highly effective advert from Zillow in the US which succinctly ‘sells’ their Premier Agent service, which provides a profiling of agents as a prospecting tool.

Here in NZ there are just under 9,000 active agents. All of them are self-employed contractors who whilst operating under the banner of their chosen branded company are solely motivated to become the most successful agent in their chosen geographical area. This hyper-competitive environment is what keeps on attracting people into the profession, yet it is also what makes real estate so challenging for new entrants. This has been the rich harvesting ground for the print media for the past decades and now become the cash generating machine for online property portals as the last of the print media for real estate finally dies.

Building a profile is tough as a rookie agent, as is it is for an established agent competing against all the noise of rookies trying to raise their profile.

It reminds me of a piece of advice I heard back in 1995 when I was first investigating this industry and undertook the real estate salesperson course at the time.

I was told that there wer three things you needed to be a real estate salesperson:  (i) the money for the course – c. $1,000 at the time (ii) a car to take people around to see houses and (iii) a house. This last requirement was nothing to do with a home-office, and everything to do with the fact that if you could not generate any leads in the first couple of months, you could always list and sell your own home. Not to save the sales commission fee, but to be able to then showcase that you had a listing – and thereby demonstrate achievement of the first rung on the ladder!

This new online profiling tool is being marketed in NZ on realestate.co.nz as the featured agent service which places an agent advert adjacent to the listing result – spend enough with the company and you also get a photo adjacent to all your listings – why is it that real estate is one of the few industries where everyone is driven by their image, on the business card, online etc?? (a question for a later post I suspect).

In Australia the leading site of realestate.com.au has grown a business nowadays turning over in excess of A$250m from advertising of agents and listings with a company solely focused on online real estate valued in excess of A$2 billion.

It is clear that all types of real estate marketing, albeit property related or agent related is moving online at a pace so clearly it begs the request that the last to advertise in the newspaper, please switch off the machine!