Sometimes the best ideas are the hardest ones to get people to buy into.
We are all creatures of habit. Our familiar daily routines provide a certain comfort and stability. That’s great, but it can also mean that any new idea or new product is just too hard to consider.
At our company, Woodward Asset Capital, we thrive on change and innovation. We are driven by the idea that there are better ways to do things, which will benefit us all.
That’s why we acquired Homesource Realtors earlier this year. We had been working with Homesource since 2009, building and tweaking a real estate sales model. We didn’t really intend to disrupt the industry; we just find that some innovative practices yield better results – more money, faster home sales and happiness all around.
That’s good, right?
We introduced an electronic negotiation platform for submitting offers. We created a shorter contract between real estate broker and homeowner, believing an alternative approach would make selling homes easier and less stressful.
Good, right?
We didn’t think our model was so drastically different that it was truly outside an acceptable norm but our next enhancement was viewed as a game-changer…and not in a good way.
We had a great concept, solid marketplace momentum and research to back the majority of our value propositions. Previous experience had shown that we would need to make small adjustments but other than that, we were ready for success. On paper, we were golden.
It’s common for entrepreneurs to tweak the business model until they reach success, and that’s where we were headed. So we’re tweaking. We’re just scratching our heads, wondering why this last change we launched didn’t meet with resounding success right out of the starting gate.
The sellers we talked to loved the idea. Buyers thought it was a great innovation and actually made the transaction more transparent. The resistance came from the established agent community. And it focused on how they would be paid.
Not whether they would be paid – how.
You see, our original model had the buyer paying a premium to compensate the Realtor. For the longest time, payment has come as a commission from the seller.
Under our process, the home was listed at a lower amount, without a commission, and the buyer would pay a premium on top of the reduced list price. In the end, the home would be sold for the same value but agent compensation came from a different angle.
Big deal, right?
Apparently it is.
Our first listing had incredible interest with multiple showings but as our short term listing expired with no offers, our seller opted to list with a different agent at a higher price (including the commission). In what we refer to now as our “$9,000 lesson,” we understood that all of the enhancements we had made to the sales process for SellerNation were neutralized by one aspect that agents refused to understand.
The house sold the day after our listing expired, with multiple offers on day one.
We learned a few important lessons. First, be willing to try new things but also be willing to pull back on those that don’t meet expectations.
Second, sometimes the market isn’t ready to realize a great idea. This doesn’t mean it’s a bad idea, just that its time hasn’t come yet.
Although we still believe that a buyer’s premium is a better financial alternative to the standard commission, the foreignness of this idea could prevent the success of the business overall.
SellerNation has too many other great features and benefits to let one aspect hold us back.
It’s a little like raising children. You have to be comfortable letting the plan veer as it needs to. You need to choose your battles.
We didn’t want to believe that agents would place their own interest (financial and professional) ahead of their clients, but alas, people are only human.
In order for SellerNation to deliver the fullest benefit to our clients we would have to pull back on the buyer premium and revert to a standard seller paid commission.
No harm, no foul. The industry just isn’t ready for this innovation quite yet.
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