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What Is Your Value Chain?

Late last year, I read a Real Estate Business Online article entitled, Purplebricks already effecting ‘dramatic change’ in commission-charging agents’ behaviour. It quoted Purplebricks global COO Neil Tavender stating that since entering the Australian market, Purplebricks has caused traditional agents to reflect significantly on how they operate.

Tavender was quoted as saying, “We have seen in some instances where commissions have come down from 2.5 per cent to 1.8 per cent. But obviously with the fixed cost models that they have, with premises and associated costs, that is not a sustainable future.

Personally, I think this is a bit of a stretch. In states where the market was tanking, WA for example, you hardly hear of Purplebricks. Pittard has clients across Australia and none have raised Purplebricks as being a threat.

The fact is, weak real estate salespeople have been discounting their fees to win business long before Purplebricks came along. The recent boom in some states was the reason some salespeople discounted their fees – they wanted to win listings and discounting was the only way they could see to do it.

But Neil Tavender does make a good point: discounting is not a sustainable future.

If you feel that you must discount to win business, if you think that fee is all you’ve got, you have no alternative but to be cheap. And no matter how cheap you are, somebody will always be cheaper.

A better way to win business at a fair fee is to prove your VALUE CHAIN. Your value chain consists of things you can do for sellers that other agents do not do.

To create a value chain, think: why should sellers list with you?

You say you are good, but in what way?

Salespeople often give this little thought. The result is that they look the same as their competitors. When you look the same, you can only compete on fee and giveaways – lower your fee, or perhaps throw in some premium advertising.

Cutting your fee, or adding incentives, cuts into your profit. It demonstrates a lack of business acumen. And if you lack business acumen, how could you expect sellers trust you to sell their properties?

Think about your value chain – it’s the key to winning business with a fair fee for your hard work. Leave discounting to those who have no value to offer.

Gary Pittard

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