Price vs Value, now the Realtors® turn!
For far too long many the mortgage industry had to try and explain to consumers and their referral partners the difference between “Price” & “Value”. We all know the comparisons, Walmart to Target to Nordstroms. We have all seen that all things are not created equal when it comes to quality of the experience or the value of cost to the outcome received. While some in the markets knew that the quality of a great customer experience and a timely smooth closing may come at a cost of a slightly higher rate of a few more dollars in fees. Often, that bad experience ended up even costing MORE in both time and money and sometimes, the damage done by depending solely on price ended up meaning there was no deal at all and a lost opportunity and damaged relationships. Yes, “Price vs Value” has always been something the mortgage profession and some agents have come to understand greatly, but the large majority of those in the profession saw only price as a determining factor, as if the mortgage process was a simple commodity like a gallon of milk. Even then, people understood that the milk cost more at the convenience store than the supermarket but would value their time and experience over the difference in cost.
So now it’s the real estate community to deal with this situation. How do agents now explain their value? If an agent can’t negotiate their own commissions, how do they ever negotiate for their client’s money? For those buyer agents out there, now that you can just say that you cost your clients nothing, the seller pays you; how do you explain your fees?
For more than 30 years I have discussed with real estate agents the flaws behind focusing on price and not value. Agents would focus on rates and not outcomes, often working with the best liars in their markets. We also dealt with the “Three card law”, a fictional copout that agents used to justify not dealing with someone they knew presented the best value and outcomes. So, imagine if now the mortgage community began interviewing agents by asking what are their rates? Do we now group agents in groups by price? Do we refer agents by giving out three cards to buyers, maybe a 1% card, a 2% card, and a 3% card? Of course not! But it is very interesting to see that what we have always known, many agents are now learning; you have to present VALUE to your client, because if were just about price, everyone would just go FSBO, and we all know how that would go! Questions or comments: [email protected]
