I’ve become fascinated by what companies do when they are having serious problems, especially when they include advertising as part of their survival strategy. My fascination stems from how many of these “We’ve got to turn things around, fast!” advertising campaigns merely confirm to the public that said company is not just in trouble, but their demise is already a done deal. Cases in point, Coldwell Banker and realtors in general.
Here in Utah Coldwell Banker has been running a primitive ad campaign. That is, they have primates in them. One billboard features an edited photo of a 700 foot tall gorilla strolling through the Salt Lake valley accompanied by the words “Welcome to our jungle.” Another has a gorilla on one side of the billboard and a smaller monkey on the other side and in the middle reads “Who would you rather have on your side?” The message is obvious–we’re really big and so we can get things done and get them done right, and nobody else can do it as well as we can.
That’s a great message, but it’s not very convincing. People have been selling their homes on a for-sale-by-owner basis for decades, and with the Internet it has become even easier. Not only can you list your home online, but you can find all sorts of resources to step you through the process of closing the deal. As home owners become more educated, the knowledge and experience formerly only found in realtors has become more commonplace, and therefore the services realtors provide less valuable. However, realtors are used to making 6% and don’t want to give that up. I wouldn’t either. But instead of promoting value-add services or trying to convince people that if they sell with a realtor they’ll make more money than the realtor’s fees, they release ad campaigns designed to convince people of something people don’t care about. In this light, the ad campaign communicates something entirely different than what was intended, that is “We’re really big, slow, and clumsy, and we’re desperate for revenue because such a big beast needs a lot of sustenance to keep going.” The billboards have convinced me that Coldwell Banker is feeling the pinch, is desperate to keep revenues up, and is beating me over with their awkward gorilla fists crying “Please, please, I am important! Don’t leave me!” But they don’t give me any reasons why I should believe them.
There is a wider campaign going on for realtors in general. I’m not sure who is behind it but I think it’s the National Association of Realtors. My favorite line in the ad is “Selling a home is not a do it yourself project.” or something like that. Every time I hear it I laugh, because it sounds so desperate. Ah, ok, I’ve found some great info online related to this campaign. This is even more desperate than I remember.
As technology increasingly allows consumers to get information previously provided solely by a real estate agent, we need to remind buyers and sellers that REALTORS® add value to the transaction far beyond simply providing information.
Well, that confirrms what I was saying about the Internet. The thing is, do realtors really add value to the transaction? If I’m selling a $400K house are they adding $24K worth of value?
The spot, “Don’t Try This At Home”, targets FSBO’s with a hard-hitting message: Homes sold by a real estate professional can sell for up to 16% more than those sold by the owner.
Interesting. I didn’t get the 16% from the ads I’ve heard. You see, that means something to me, but maybe it’s just poor execution of the ads, because I’ve heard the ads several times and never heard that part.
A third spot, “Entrepreneur at Heart”, features actual REALTORS® from around the country. As the epitome of small-business owners, REALTORS® are entrepreneurs who don’t get paid until the transaction is complete. In their own words, NAR members talk about what it’s like for REALTORS® to be out on their own, every day, in an increasingly competitive marketplace. They also discuss the pride they feel in helping people achieve the American dream of homeownership.
I’ve heard these ads and they also make me laugh because they take the tact of saying “C’mon, we’re such nice people, please keep giving us money even though you don’t get anything out of it. After all, we’re active in the community.” It makes realtors sound like a charity case. This is the same approach people who support “Made in the USA” campaigns take. Sorry, I’m not going to pay 25% more for a product of lesser quality just because it’s made in the USA, and I’m not going to pay 6% of what I sell my house for just because it will help a realtor continue to be active in his community.
What realtors need to understand is that the market is changing, and they can adapt or they can go find a new job. People simply will not continue to pay 6% unless they can be convinced that the services a realtor provides will pay for themselves. And statistics are somewhat comforting, but not convincing. Why? Because it’s so easy to disprove them. Here’s how it works–neighbor A up the street sells their townhouse up the street for $200,000 using a realtor and pays a $12,000 commission. Two weeks later neighbor B sells his townhouse just to the left of you without a realtor for $205,000 and pockets over $12K more than neighbor A. If you’ve just seen this happen in front of you, and you’re thinking of selling your house, are you going to go out and hire a realtor to sell it for you?
Some realtors are adapting. Take Assist 2 Sell for example. They get a $3K commission, no matter the size of the deal. Maybe they don’t provide all the services a realtor does, but they don’t take $12K either.
But chances are there will be a large fallout over the next 15 years with realtors, resulting in perhaps 10% the number of realtors we see today. Those who are the most skilled and offer the most value with survive, while others will be shaken out of the market. Some will adapt and create new ways to sell homes if they haven’t already. But one things’s for sure–if there isn’t real value to be had then no amount of advertising will save the industry.