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For the last 5 years, I’ve been actively trying to lower the cost of selling a home. I’ve worked in discount, fixed fee, set fee, limited service, and for sale by owner assisted business models and service models. Some of them failed, some continue to prosper. However, I couldn’t understand, why any homeowner, when presented with the opportunity to save literally thousands of dollars, would choose not to? Why hadn’t, with all this information out there, the discounters taken over?

Don’t get me wrong, I firmly believe there is “fat” in the real estate transaction, I also believe there are some very good real estate agents that bring so much value to the transaction they deserve every nickel of their commission. This bifurcation of my beliefs troubled me for more than 4 years, until I read a book by Michael Silverstein, called “Treasure Hunt”, he mostly talks about products and how consumers look for “Value” in purchasing decisions. What struck me was when he focused on the emotional aspect of purchasing. That was my “eureka” moment. Homeowners’ select brand, office, and agent based on the level of emotional satisfaction they perceive they will have at the end of the sale.

I wasn’t really amazed at this, I’ve often known that emotions play a big role in decision making, but I couldn’t believe that, given the almost impossible task of being able to tell one real estate service offering from another, that consumers wouldn’t make the money-saving decision. I researched this some more on my own with several past clients and some people who recently sold their home. The question that interested me the most was: “How did you know which agent was best”. I was surprised at the answers; “She seems to be the most genuine” or “ReMax is a big name out here and they sell all of the homes”, this is not from simple minded country folk, but people with advanced degrees, and finance backgrounds. My little informal survey is far from scientific, but there is further support for these findings. NAR’s own survey shows that the traits that consumers found most important when selecting a service provider were Honesty and Trustworthiness. Wow! Knowledge, experience, competence, anything that could be measured or proved took a back seat to these two very subjective qualities.

I was further amazed to find that many of the people I talked to, only wanted to talk to agents from a certain brand, and none of them wanted to associate their home with a discount brand. Hmmm. Are people crazy?

It’s very interesting feedback. I hear real estate agents all the time justify their existence, and their commission, as being one of experience, knowledge and risk mitigation. However, what I really think is more important is that they client has made some emotional connection with them, and the client either relied on their own judgment or the judgment of others (referral) to validate their decision.

Referrals still top the list as a source of leads, which given these findings isn’t a shock. I don’t think these trends are going to magically change overnight, even with the onset of internet, until a brand presents itself that understands the emotional connection that homeowners have with their agent.