My friend and colleague JP Endres-Fein, who happens to be the incoming President of the New York State Association of REALTORS, is giving a presentation today at the NAR Conference on how Client-Oriented Real Estate can help reduce risks and ensure regulatory compliance. I am delighted that she’s bringing the CORE concept to a larger stage, particularly by taking an angle that we haven’t really discussed here on the blog.
As a trainer of real estate agents, my main focus on this blog is writing about how CORE can impact an agent’s career by making her better at her job — delivering better service, creating happier clients, and thereby growing her business. And that’s really important. But as a broker with about 800 agents, I developed CORE precisely because I wanted my agents to provide a higher quality experience to their clients — not just because I thought it would be good for business, but because I thought it would be good for eliminating the kind of errors that get brokers in trouble. (It’s at this point I should point out that I’m a lawyer, also responsible for my company’s regulatory compliance).
Here’s what’s always bugged me. A client can walk into one of my offices today and start working with Agent #1, and a different client can walk into another one of my offices later today and start working with Agent #2, and the two clients can have wildly different service experiences. Why? It’s the same company. The agents have access to the same systems, tools, programs — everything my company provides. But even so, the client will have a different experience because the agents are different. No matter what I do, no matter how great the systems I provide are, I still rely on an agent to deliver them. If the agent is great, then it’ll be fine. But if the agent does not pay the same level of attention that I would if I were in that living room giving a listing presentation, or in that car taking a buyer on a showing, or in that conference room managing a transaction, then that client might be getting an experience that I would not be happy with.
That’s a business problem, insofar as I really want clients of my firm to have great service experiences. But it’s also a regulatory compliance issue, because any time two clients are getting a different standard of care, you run into potential problems. Here’s a perfect illustration: several years ago, we had a fair housing problem that came out of two testers visiting two offices on two different days and getting two different issues. It happened that the “protected tester,” the one representing a protected class, just happened to start working with an agent who was not as strong as the agent who worked with the control tester. So what happened? The protected tester had a worse experience, and perceived it to be based on her protected status. But my argument was that, quite frankly, any two clients getting two different agents on two different days are going to get a different experience. Sadly, that’s the state of the industry!
But we need to change that. You can go into any McDonalds in the country and the fries taste the same. Any Starbucks, the lattes taste the same. At the Four Seasons, the rooms always have the same level of cleanliness. So how do those companies, who have employees without nearly the training background and requirements of real estate agents, ensure such consistent customer service.
The answer is this: those companies have systems in place that employees follow which ensure a consistent delivery of service. THIS is how you cook the fries. THIS is how you make the coffee. THIS is how you clean the rooms. We don’t have that in the real estate industry.
Why? A couple of reasons:
First, we don’t train for service. In the industry, training almost always means sales training — how to generate leads. Even worse, most of those sales techniques are the worst kind of manipulative nonsense, teaching agents how to exploit clients rather than service their needs. Alternatively, we have real estate industry training on regulatory compliance, which is mostly at the licensing level and doesn’t teach an agent anything about how to do the job properly — just how to stay out of jail. And then we have “ethics” training, which is great, except that having good ethics doesn’t mean you’re good at your job. It’s like a restaurant that gets a clean bill of health from the board of inspection — the place might be clean, but it doesn’t mean that the food is any good.
Second, we don’t innovate systems for service. We put all our thought and energy into creating innovative new ways to generate leads. Think of it this way: the real estate industry took to the internet 15 years ago, and we’re pretty much still using it the same way we did back then — to generate leads. Our websites don’t give clients service, they’re just designed to generate inquiries. Where’s the innovation on how we actually help people buy and sell houses? And it’s not just technology, because the most impactful innovation in the industry in the last 30 years was the agent-centric compensation model pioneered by Re/Max. In other words, we spend a lot of energy innovating ways to make more money, or divide up the pie differently. But we don’t innovate for service.
Third, we put too much on the agent. We can’t really blame the agents for their inability to handle the myriad responsibilities we put on them. I have written before about the problems associated with thinking of real estate agents as salespeople, but the upshot is that real estate agents have two big jobs: (1) generate new clients, and (2) service those clients. And both jobs require a lot of work and specialization. Most industries don’t put such a burden on salespeople — rather, they break up the sales and service roles. Just look at the mortgage industry: you have one group of specialists to generate business (loan officers) and another to service the client’s needs (loan processors). Different skills, different needs, different people. If we want the agents to do a better job servicing clients, we either need to take away their lead generation responsibilities or make their jobs easier by giving them help on both selling and servicing their clients.
So what do we need to do? At my company, we’ve taken a three-pronged approach to trying to solve the “inconsistency” problem with our client service. It comes down to this:
1. Train for Service
We need to help agents become better at their jobs. They need better skills, they need better knowledge. We’ve created a whole series of classes built around the idea of competency — how to be better at helping clients buy and sell homes.
2. Forge a direct relationship with clients.
Where possible, we have tried to create a direct connection between the company and its clients. It’s amazing to me that so many brokers (including me) have such little interaction with the clients of the firm. So what we’ve tried to do is automate systems that can generate communication between the company and the client, so that we know that the client is getting the information that we want her to have. For example, rather than relying on an agent to run an activity report, we’ve automated it for Monday morning delivery each week. Not only does this make the agent’s job easier, but it ensures that the job actually gets done. Similarly, we’ve written a whole series of “Orientation” pieces for clients that ensure they have been educated about the selling and buying process, rather than relying on the agents to explain it themselves. We’re not trying to eliminate the agent from the process — far from it! — but we are trying to reduce their burden by taking a more active and direct role in servicing that client’s needs.
3. Make agents jobs easier by creating systems to help them deliver better service.
Finally, we believe that we can systematize much of what agents do by using checklists that automate many of their jobs. We call the checklists “Project Plans,” which are designed for every major step that an agent has to take to service a client: listing intake, buyer representation, transaction management, etc. The idea is based on concepts that we came across in Atul Gawande’s great book The Checklist Manifesto, which we reviewed here. The basic idea is simple: using checklists is a great way to ensure consistent execution. You can identify best practices, articulate them into a plan, and then create an enforcement mechanism to ensure that agents follow it EVERY time, so that every client gets the same level of consistent service. Honestly, this is still very much a work in progress, but we’re a lot further along than we were when we first introduced them several years ago.
Basically, the whole point of CORE is to create consistently good service, and as such it does have the intended benefit of reducing regulatory and litigation risk for brokers:
- Better-trained agents make fewer mistakes, which generates happier clients with better results.
- The checklists reduce the cognitive burden on agents, allowing them to focus on more important things.
- The checklists reduce errors that could lead to liabilities (i.e., if the checklist requires the agent to check the taxes, you’ll always get the taxes right or at least have a documented attempt of who gave you the wrong information).
- By making service more consistent, you eliminate potential fair housing problems based on disparate treatment of different clients.
- And direct broker-client communications reduces the risk of agents miscommunicating compliance information.
If you would like to find out more about what we do at Better Homes and Gardens Rand Realty, or would like some copies of our checklists or other materials, just let me know.