Conventional Wisdom
Most brokers believe that listings are the life blood of the real estate business. I agree that listings are critically important to a firm’s financial health. However, I think too many brokers came to this belief in the days when they controlled all the information about, and access to, houses for sale in the market. These days, with the ascension of Zillow and Realtor.com as the preferred shopping platforms for home buyers, the firm with the sign in the yard matters less and less.
The Internet Has Leveled the Playing Field
Let’s face it, on the internet, houses are houses. The size of the listing firm and the market share they enjoy are of little consequence to a home buyer. They want the house that works for them. They could care less whose sign is in the yard. In contrast to someone who is obsessed with Mercedes Benz cars and who will only buy a Mercedes Benz product, nobody is going to restrict themselves to only buying a house listed with a specific real estate firm.
The Professional They Choose to Collaborate With Is Paramount
A prospective home buyer may choose to only buy a house with the assistance of an agent whom they have a relationship with. Or, they may seek out a relationship with an agent from a specific firm because the brand promise resonates with their personal sensibilities and desire for a successful purchase or sale. In either case, making the sale had nothing to do with which firm’s sign was in the yard.
A Commission is Still A Commission
From a firm’s cash flow perspective, list side commissions matter. However, in the age of compressed commissions, they are of no more value, and often of less value, than a buy side commission. This fact further confirms my thesis that in the real estate world of today, the ability to create long term value-added relationships that generate referrals, is infinitely more valuable than any number of listings.
Listings are the natural byproduct of working by referral. They are far more often the result of a relationship rather than the cause of one. I will go even further and say that a brokerage or agent obsessed with listings is too often obsessed with earning both sides of the commission. There is nothing wrong with earning both sides of a commission provided it occurs as a natural consequence of meeting the needs and exceeding the expectations of both your buyer and your seller. Double popping a listing should be the result of an agent’s obsession with the needs of their client, not simply greed.
Transactions Vs Relationships
A focus on listings is too often the result of a transaction based mindset rather than a relationship based mindset. The current environment in 2019 is that we still have more buyers than listings to sell. The scarcity mentality that is infecting so many markets right now is resulting in a proliferation of ‘pocket listings’ and off-market ‘coming soon’ listings, that in my opinion, further devalue our profession in the eyes of the public. The market will turn again, possibly sooner rather than later. The licensees with transaction mindsets will be left behind. Those of us focused on relationships will continue to thrive.
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