• Charlie Parker
• Thomas Cooke
• Graig Griffin
• Leslie Norris
• Editor/Guest

This week, I am in Las Vegas for some real estate training. The teacher is Mr. Mike Ferry, one of the industry’s best-known trainers, and this program is for high-producing residential agents (100 or more deals a year for many of those in attendance) who want to continue to improve their business.

Mike is a coach who has applied decades of experience with the world’s best agents into creating some very specific routines that have proven highly effective. Though the bulk of these educators cater to residential agents (it’s a numbers game -- there are far more residential agents than commercial) and I don’t sell homes, I still like to take the home-selling classes periodically to stay sharp and maybe find an edge or two that my peers have not discovered.

When I started in real estate back in the early 80’s, my broker was Gretchen Hau at Century 21 in Las Vegas. Yes, I wore the gold sport coat, though I used it most effectively to impersonate the produce manager at my local Albertson’s grocery store. Gretchen was a seminar junkie and somehow convinced me to spend darn near every dime I made the first couple of years on sales classes — and lucky for me she did. While I had little acumen for selling homes, by the time I switched to commercial, I had accumulated a seriously powerful education in sales training.

As I got into the commercial side of the business, I noticed how few of my competitors had any sales training at all. I was also able to look back at residential agents and see how few had a high degree of technical competency that was common to their commercial counterparts. There was a definite snobbery that came with being a commercial agent, as if somehow I was more of a businessman than my friends helping people find homes. After all, I didn’t have to work nights or weekends and my clients made their decisions based on logic, not emotion. I was amazed at how different the methods of the agents were, depending on what they were selling.

I wanted to understand how one kind of license could produce agents with general characteristics so different. Here is some of what I came up with:

Product

• Residential agents are all selling a product with the same basic purpose (lodging). Primary differences are geographic area and price range.
• Commercial agents peddle a wider array of products: Retail, office, industrial, and hospitality, offering a business environment for investment and land for cash flow, appreciation or development specialty uses such as water rights, rights-of-way, gaming, governmental and public service (schools, airports, etc.)

Use complexity

• Once basic specifications are met, residential agents must find amenity packages that please the client (schools, services, neighborhood qualities).
• Commercial agents must assist in evaluating how a business will do in a given location. Retail can be very subjective while industrial is more straightforward. Investment properties must be judged on a price versus risk basis. Elements such as zoning, utility capacity and traffic counts can create a highly complex evaluation when done properly. Commercial users also face business competition and market trends. If a neighborhood becomes less desirable, the homes do not become less functional, but commercial locations do lose viability when things change.

Decision process

• Residential agents first meet basic property criteria and then generally seek an emotional decision on whether the house will be a home.
• Commercial agents typically work on a wider array of criteria and then assume that the decision will be made logically. I foolishly thought that I would be escaping the emotional decision by moving to commercial...

The players

• Residential agents usually have a pretty small group of participants outside the homeowners. There (hopefully) could be a lawyer, tax advisor and inspector.
• Commercial deals can have a bunch of attorneys, CPAs, engineers and contractors in addition to a much larger group making the decision (boards of directors, company divisions and even related businesses such as service providers).

The documents

• Two decades ago, residential agents had it easy. There was little required from them, and a closing package was just a few pages. Today, however, the average home file can dwarf even a complex commercial lease dossier. Requirements for disclosure, fair housing and lending documentation are staggering. Standardized forms are now excellent and thorough and readily available.
• Commercial document sets vary widely and naturally expand with transaction complexity. Generally, there are more lawyers involved to help with the contracts, and business owners often have a high degree of expertise and sophistication. Commercial transactions are much less regulated, and agents have more freedom in how they put deals together. Efforts to create “boilerplate” contracts just don’t offer more than adequate language -- the representation team and legal counsel truly matter more.

Client acquisition

• Residential agents can define a group of prospects easily but face more competition. Everyone knows someone who can sell them a house, so Realtors have to master the art of differentiating themselves.
• Commercial agents can use some of the same prospecting techniques but will have a smaller group to work from. Not too many people know a good commercial broker and I believe it’s because we are not good at marketing ourselves.

There are many more ways to compare, but it’s easy to see that from a pure number of factors that commercial seems more complex. Commercial deals do have more moving parts (we must manage the process), but residential transactions get a more critical “gut” evaluation (we must manage the people). Also, the larger the commercial deal, the more help we usually get from allied professionals, but larger home sales rarely bring in the cavalry.

The available training adheres closely to these differences; commercial-specific sales training is quite rare, and master-level education for the technical aspects of home selling is equally scarce. The truth is that in today’s world, the skill set required for an agent of either discipline to be excellent is quite large, requires a great team and to be outstanding requires real commitment.

I had a conversation with an agent who will sell more than 200 homes this year. I marveled at his organization and time-management skills; he reeled at the wide variety of deal types I will complete, each one with a unique contract and process. I bet I could learn volumes just shadowing him for a week as an apprentice and he could benefit greatly from observing how to build on his technical competency. I also realized that some challenges I have faced came from clients who were expecting me to act like the person who sold their home.

I will be in Vegas all week and in my next post I will share what I have learned from the best of the best in home selling.