( Real Estate Consultants and Expert Knowledge ) In Part I of this article, we discussed three primary ways real estate consultants differ from real estate sales agents. While consultants approach a consumer’s real estate situation in an unbiased manner and evaluate primary and secondary objectives to be achieved, the results/outcome may have nothing to do with listing or selling a property.
Perhaps the greatest differentiation between sales agents and real estate consultants is the manner in which they’re compensated and the unbundled way they’re paid only for the activities they perform to assist the consumer. This approach is not only cost-effective for consumers, but can prove time-effective for the real estate professional. Let’s first tackle how activities can be unbundled/segmented, followed by various compensation models that could apply.
Unbundled Tasks Performed Based On The Consumer’s Need And The Consultant’S Level/Area Of Expertise:
After the consultant thoroughly evaluates what the consumer wants to achieve and how logical it is that results can be reached within the consumer’s preferred timeframes, it’s time to map out a game plan and review it with the consumer. This would include the activities/steps to be tackled, timeframes for accomplishing each and the resources required as well as the level of expertise needed to achieve each. Unlike the sales agent who, by virtue of his/her license is able to tackle any potential sales opportunity, the real estate consultant assists consumers based on providing only the service needed and only those that fall under the consultant’s area(s) of expertise.
For example, a real estate consultant who specializes in the analysis of income property might be ill-prepared to tackle a move vs. improve analysis for a home owner. Conversely, a consultant who works primarily with first-time buyers to determine rent vs. buy might lack the expertise (or inclination) to crunch the numbers on a profit and loss statement. Even though these are distinct, narrow consulting niches, they’re all polar to the primary function of the person whose focus is to list or sell something.
Differing Forms Of Compensation:
Unlike percentage commissions for listing and selling that tend to fall within a somewhat predetermined range in most market places, real estate consultants are compensated by the level of expertise employed as well as the demand for that type of specialty or niche skill. A comparison is the way various specialty attorneys are compensated. When recently seeking the assistance of a patent attorney, I was amazed to find that his hourly fee was virtually twice that of most generic attorneys in his market. Why? Because he had a tightly-niched specialty within his field that made him unique. I call this factor the “uniqueness quotient.” To the degree the professional can provide expertise that’s tough to duplicate so will be his/her ability to command fees on the high end of the scale.
While the real estate sales person may tout being unique by virtue of a certain marketing campaign, slogan, or catchy gimmick, being compensated in the same way for the same work done (listing or selling) makes it tough to beef-up the uniqueness quotient, short or long term.
In the third and final installment of this article, we’ll provide you with questions you ask the real estate professional to determine if he has the credentials and experience to back up his claim as a real estate consultant.