A Champion Agent has the mindset and sales skills to be able to defend their value in the marketplace. One of the most significant challenges facing Agents is the constant downward pressure on real estate fees. We have seen an erosion of fees charged by Agents and companies at epic proportions.

A Champion Agent clearly understands what they are worth and doesn't need to adjust their fees to attract clients. There are millions of prospects you can work with if you are willing to work for free. The number of potential prospects is unlimited. I could book myself to speak every day of every year if I was willing to speak for a lower fee or, in essence, give away my intellectual property for free. It doesn't take much skill to attract clients and prospects if your sole reason for attraction is price related.

The purpose of a service business is to provide service for compensation, and Real Estate Agents are in a service business. I assume that we all are providing some level of service that is valuable to consumers in the marketplace. The key issue is then, for what compensation? The discounter's main strategy is to declare that we are all the same; we all provide the same level of service; there is no difference between them and the full commission level Brokers. I would call that the Southwest Airlines argument or the Charles Schwab argument. Extrapolating that theory to real estate is ludicrous.

The media often uses the analogy of the financial services industry or insurance industry to illustrate their point of how fees have decreased based on the technological advances in the world. To compare a stock transaction, life insurance policy, or airline seat from LA to Boston with the services of a Real Estate Agent is inaccurate.

If you decide to buy 1,000 shares of Microsoft stock, those 1,000 shares are exactly the same whether you purchase them from Merrill Lunch, Charles Schwab, any other brokerage firm, or do it yourself online. The shares of Microsoft are truly a commodity. An airline ticket for a trip from LAX to BOS is just a seat on a plane leaving on a certain day at a certain time from one location to another. There are subtle differences between Southwest, United, and American Airlines. It's merely an airplane seat or a commodity. While many consumers view our service as a commodity and discounters try to portray our service as Real Estate Agents as a commodity ... it's not.

A commodity is something that is selected for use or purchase solely based on price. For most human beings, a bushel of wheat, 2 lbs. of Gala apples, a gallon of milk are all commodities. The brand name or store you purchase it from matters very little to us. Prescription drugs have also gone the way of commodities. We often use the generic equivalent to the name brand because it costs us less on our co-pay. All of these are examples of commodities.

The service of a Real Estate Agent and the product of a home are not commodities. Let's look at the home first.

Any home that you buy could never be equated to apples, an airline seat, or 1,000 shares of Microsoft. A home has differences in location, school district, finish work, lot size, decorating, emotional appeal, prestige, amenities, floor plan, placement on the lot, landscaping, color scheme; the list is really endless. All of these factors converge to determine sales price, future appreciation, and demand for the home. There are really far too many variables on a home to ever consider it a commodity. All of those variables need to be evaluated by someone – either the Purchaser or Seller or Agent they select to represent their interests.

As Agents, the service model we use individually is not a commodity, either. There are differences between Agents in sales skills, marketing skills, demonstrating the property skills, negotiation skills, value and pricing skills, and communication skills. There are differences in market knowledge, transaction process knowledge, and inventory knowledge. There are differences in strategy, philosophy, and track record of results. All of these differences create greater value for some Agents' services than others. The way a Champion Agent combats the erosion of fees is not to lower their fees to compete. It's to raise their own personal conviction of the value of their services in the marketplace.

Whenever price is the question, value is the answer. When consumers question your price or fee for service, what they are really questioning is the value. They are essentially saying, "I don't see the value for the fee you charge." You don't win by then lowering your fee to compete. Most Agents provide more value to the consumers than we give ourselves credit for. We have never really attached or defined the value for each of the services we provide to our clients. The barrier that exists before one can become a Champion Agent who can charge an upper level fee for their service is belief. It is believing that your service far exceeds the cost. It's your mindset of belief in your value. One way to enhance your mindset is through regular affirmations of your value. Being able to say and believe in your value is one of the initial steps to higher fees and less price competition.

Published: December 31, 2010

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Dirk Zeller is a sought out speaker, celebrated author and CEO of Real Estate Champions. His company trains more than 350,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. The Real Estate community has embraced and praised his six best-selling books; Your First Year in Real Estate, Success as a Real Estate Agent for Dummies®, The Champion Real Estate Agent, The Champion Real Estate Team, Telephone Sales for Dummies®, Successful Time Management for Dummies®, and over 300 articles in print. To learn more regarding this article, please visit www.realestatechampions.com.