Real Estate Selling
( Originally Published 1924 )
In what way can the real estate salesman become familiar with the commodity which he sells? What are some of the elements affecting value of property? What is meant by the fundamental attitude of the sales department? What are the steps in a sale? How are attention and interest secured? What are the essentials of constructive selling? How may belief be created? What means can a salesman employ to get action? What appeals may be used in selling real estate?
THE real estate dealer, in every capacity in which he serves, is obliged to play the part of salesman. Perhaps in no other profession does salesmanship play a more important part. When the dealer is dealing with tenants, he "sells" them the property which he manages; when he secures a loan on real estate, he first "sells" the lender on the security of his loan; and when he insures property, he "sells" the company which he represents. Thus the attitude of selling pervades the other departments as well as the one operated for the sole purpose of sales. The necessity for a constant and applied study of salesman-ship is, therefore, obvious. However long and diligent a study is made, the subject can never be exhausted. For salesmanship is an art which deals with human nature very intimately, and human nature can never be quite encompassed. Some general principles, which through years of careful study have been observed, may be pointed out with certainty.
Knowledge of Commodity a Necessity. In the first place, the salesman must be accurately acquainted with the commodity which he sells. This does not mean a casual relationship, but an intimate contact with all features. In real estate selling it means first, a knowledge of the land itself, its topography, layout, and qualities. In the second place, it means a knowledge of the improvements on the land, their adaptability to their situation, their age, their condition, and so on. The real estate broker, in particular, ought to be able to visualize as many buildings as possible in his city; he ought to study them for that purpose. And, finally, a knowledge of his commodity means that the real estate dealer ought to know how the land in his community could be utilized. A prominent real estate dealer in one of our small cities keeps a file of unusual lots, showing how they might be divided up and utilized to the best advantage. When a customer comes into his office and asks for a certain kind of property, this dealer has an advantage over his competitors inasmuch as he may be able to suggest something carved from the irregular unutilized lots. His advantage in case a customer desired an unusual lot is obvious.
In addition to knowing the commodity itself, the real estate man must be acquainted with values and the elements which affect them. These have been discussed in the chapter on valuation; it is sufficient here to point out some concrete applications of the general principle. It is a great aid in selling a piece of property in a choice residential section, for example, to be able to point out the residences of prominent people. Such a procedure establishes beyond controversy the standing of the community. The same principle holds true of all communities; their standing is known as soon as it is known what "company they keep." In addition to knowing the owners of residences, the dealer will find it to his advantage to know as much as possible about the houses them-selves, their construction, the number of rooms, and so on. A file should be kept showing all information possible about the residences of the community or city so that at the instant a place is put on the market, the sales-man has at his disposal the information necessary to make the sale. Acquaintance with such a file would be as indispensable to the real estate salesman as knowledge of his catalog to the traveling salesman. This will be evident again in the consideration of facts as a means of inspiring confidence. Land and buildings are his stock in trade; ignorance of his stock is no less a fault on the real estate dealer's part than it would be on the part of a grocer or any other dealer.
There are three ways in which this intimate knowledge of real estate necessary to the dealer can be secured : (I) by studying the map ; (2) by talking with others about real estate; (3) by personally studying the city by actually coming into physical contact with it. In order to train his salesman one dealer sends them out to walk over certain blocks, to make maps of them, including the name of the owner of every lot and the type of construction of every house. Block by block the salesman familiarizes himself with every foot of the territory which he is going to sell. This is intimate personal con-tact. Having walked over the streets and charted them himself, the salesman has established them in his mind. Such a map discloses at a glance every vacant lot in the district and saves the time of the salesman and the customer as well. Moreover, the knowledge thus gained can be checked up and verified and corrected by talking with those who live, work, or own property in the section. This method also gives opportunity for learning the history and other intimate facts about the different parcels. Sometimes their values may be considerably affected by such considerations. A study of the whole map of the city enables the dealer to unify his conception of it and to place the different sections in their proper settings.
Selling Versus Service. The fundamental attitude of the sales department is very important. There was a time when the conception of salesmanship was that it consisted of a hypnotic high-pressure procedure by which the prospect was persuaded, coerced, frightened, or in any other way compelled to acquiesce in the wishes of the salesman. The only consideration in the mind of the salesman was how to get the name "on the dotted line"; the salesman who could successfully browbeat the largest number of customers was the one who was considered most successful. But that day has passed. There are still high-pressure salesmen and hypnotized customers, but the salesman who goes out today to build up a business scorns such methods. He realizes that the only successful business is one that is built upon repeat sales and the confidence that is secured by satisfying customers. The attitude of such a salesman is one of service rather than one of sales; he thinks of his article as supplying a need of his customer, and of his job as a salesman as that of diagnosing the customer's need and supplying it through the sale of the property. This is true in selling many other commodities as well as real estate. Service is playing an increasing part in salesmanship; equipment and commodities are sold for what they will do for their buyers, and salesmanship must think in terms of service. The premium for selling represents a payment for ideas, for the solution of other men's problems. It is not difficult to sell a man a piece of property if it is what he wants and is offered at a price that is fair.
The real estate salesman's task, then, is one of diagnosing the needs of his prospects and matching those needs in the minds of his prospects with the goods he has to sell. If it is a residence that is wanted, either the house must fit the customer's desires, or the salesman must find means by which it can be adjusted to the customer's need. There may be a demand, for instance, for a fireplace but no fireplace in the house. Then the salesman must be thoughtful and considerate enough to figure out how much the provision of a fireplace will cost, or to show the customer that it would be to his advantage to do without such a luxury.
This amounts to saying that the real estate salesman must take the buyer's point of view; there can be no justification for any other. The man who keeps only his profit in mind is an exploiter.
Many lines of business have already come to this point in their progress. It was formerly a watchword of business to "let the buyer beware." The burden of protection lay entirely on the shoulders of him who bought. The result was constant bickering and higgling in the market place. Today the burden of selling is placed where it belongs, on the one who sells. He is more qualified to know his goods, and he is not ethically justified in taking an advantage of that superior knowledge. The buyer must be adequately protected. This spirit is shown in the adoption by department stores of such phrases as "No sale is complete until the customer is satisfied."
At a meeting held not long since a prominent real estate dealer made the statement that he had never lost the resale of a property he had once handled. When other companies get such an attitude, they will increase their sales, and the level of real estate transactions will be substantially raised.
The Steps in a Sale. While, as has already been suggested, salesmanship is dealing with the uncertain element of human nature, there are some principles which have been evolved as governing the psychology of a sale as a whole. Not every sale is made by this particular process, but it is helpful to have it in mind. Careful analysis shows there are five stages through which the mind of the disinterested prospect must be made to travel in order to bring it to purchase. These are: (I) attention, (2) interest, (3) desire, (4) belief, and (5) action.
In nearly all real estate selling attention and interest are secured through advertising of various kinds, by means of which a latent desire on the part of almost every one for a home or for a certain sort of investment is appealed to. The way in which the advertisement se-cures attention and holds interest will be discussed in the chapter on advertising. It is sufficient to point out here that these two states of mind do enter into every trans-action.
Desire in a general way may be taken for granted in those who make inquiries. In such cases, the task of the broker is very much simplified in that all he has to do is to match the characteristics of the property he has to sell against the needs of the prospect and thus satisfy him. When the property does not meet those needs, the salesman must effect some compromise between the two so as to give as nearly complete satisfaction to the customer as is possible, emphasizing in the prospect's mind the features which are present rather than those which are absent. Not that any unpleasant features should be ignored, but they should be minimized.
In a large number of cases, however, the desire must be aroused. It is in such cases that salesmanship becomes really creative. A tenant may be satisfied to settle down in a rented apartment for life, but the salesman paints to him a picture of ownership so attractive as to arouse desire, and the tenant becomes a land owner. The investor wants to put his money in bonds that are quickly convertible and as safe as possible, but the real estate salesman shows him the attractiveness of real estate in-vestments, the contribution he will make by building up homes in the community, the surety which is based upon the land itself and the primary necessity for a home with the result that the investor puts his funds into dwellings or mortgages.
There are two essentials in such constructive selling: (I) it must be carefully planned in all details, and (2) it must present a picture. If the salesman wants to sell a home to the tenant, he must think out the whole plan of payment, the cost of insurance, the length of time necessary to pay for it, the relationship of the payments to be made to the purchaser's income, if it can be ascertained, and to the rent he pays. A great many people who have never owned property are unfamiliar with plans of financing and the details of ownership, and nearly everyone is pleased to avoid the trouble of figuring out such details and constructing the plan as a whole. Consequently when the salesman does that for them, he has rendered a service which makes acceptance of his suggestion very easy. The same principle holds true of investors. They like to see the results of a plan as a whole the end which they will have attained after ten or fifteen years.
The presentation of a picture to the mind of the customer is as essential as a plan. The usual person finds it difficult to visualize to see what he may not have been thinking about previously. He needs unusual stimulus to enable him to picture in his mind the satisfaction he will feel when he sits "under his own vine and fig tree" in a house which is not yet built. One very successful real estate salesman can paint the future home upon an empty lot so vividly that he has sold vacant lots to man after man whom other salesmen had tried in vain to sell ; he made them see the picture.
Creating Belief .—After a customer's attention and interest have been secured and desire aroused for the property, his confidence and belief must be secured. He must be made to see that the proposal is not only good in general, but is also good for him. In this operation there are two aids which the salesman can call to his service facts and testimony. There is no argument so incontrovertible as facts and nothing so likely to inspire confidence. It is one thing for a salesman to tell his prospective customer that the property he is offering is a "good investment." It is quite another for him to pro-duce the financial statement showing a liberal return received from it. When the customer hesitates about the type of the community in general, it may be somewhat reassuring for the salesman to assert that it is a "good, respectable place to live." But confidence asserts itself and stands on its own basis when the customer is told that on one corner lives a judge of renown and on the other a physician of general and wide reputation. If price seems to be the difficulty that prevents signature to the sales agreement, there are few arguments that could signify more than the quotation of several prices that have recently been paid in the same community, particularly if there is a tendency upward in the market; the price is likely to advance. If the future of the property is questioned, the salesman should be able to point out with certainty and with definiteness the factors in the community which indicate continued prosperity and advancing property values, taking it for granted, of course, that all such citations are strictly true. In short, the inspiring of confidence is largely an intellectual process and must be achieved by a logical marshalling of the facts that indicate the value of the purchase for the purpose for which it is desired.
A valuable supplement to figures that may be quoted is the testimony of people who are considered authorities on the subject. What some one said about the property shown is sometimes even more important than what some one else paid. Human nature is imitative, and everyone is much influenced by the opinion of others. Naturally testimony from some one in which the customer has confidence is most useful. While testimony from any source whatever may have some value, the customer's decision is most influenced by the opinions of those with whose ability he is most familiar. The value of testimony in general as a sales aid is shown by the fact that it sells even patent medicines, and by the general use made of it by advertisers of standard reliable articles. The current issue of any general magazine will contain in the advertising section the testimony of a number of experts on the superiority of various articles.
It must be said, however, that this part of the sales interview is difficult to handle and requires constant thought and resourcefulness on the part of the salesman. Skill in inspiring confidence and belief comes after much practice and the study of human nature and how it is appealed to. Each new customer presents a different problem to the salesman, for no two people will respond in the same way to the same stimulus. One man must be urged, another coaxed, and the third let alone to reach his own conclusions. The tactful salesman follows the processes of the customer's mind and takes his cue from the customer's reactions. Skill in this process seems almost innate. The salesman must develop an almost instinctive feeling of the prospect's reaction. A constant study of successful and unsuccessful sales efforts will often serve to indicate where the salesman fails to do himself justice and the secret of his successful attempts.
Getting Action. The test of the whole sales effort is in getting action. Unless the action desired is taken by the customer, the effort is a failure. It is probably in this point that more salesmen are weak than in any other. Action requires the will, and some people are very slow to exert their will. Again the appeals of the salesman must be made to each particular prospect in a special way that will bring best results with that one prospect. Special ways of obtaining action may be mentioned. A definite limit of time will sometimes bring action. But it is usually impossible to fix such a limit. Real estate that is on the market is usually left there for a considerable length of time. A more usual occurrence in a real estate sale, and one that is just as effective as the time limit, is competitive bidding for the property. A successful real estate man in one of our larger cities very frequently uses this method of getting action on the part of his customers. When a prospect hesitates, he creates competition by finding another prospect. The danger of the property's passing off of the market spurs the customer to action.
Again the advantage of presenting a complete plan is evident. The customer is likely to hesitate because he cannot foresee the consequences of his act; a complete plan enables him to see his way. The sale of real estate is usually a matter of considerable negotiation and the dealer is tried more as an arbitrator and compromiser than as an urgent force in getting a sale consummated.
But the importance of facts is again evident here. Frequently the presentation of the facts about a case will result in immediate sale. One dealer relates that when a customer inquired about a lot in a particular location and was told that there was only one left for sale in that region, she bought at once. She was afraid to "shop around," and the fact that the salesman knew conditions in the locality better than she did inspired in her the necessary confidence.
It is evident what an important part knowledge of the situation and all the factors that might affect the sale plays in all the stages. Accurate records of sales, not only of the organization itself, but of all sales in the territory in which the company operates, are almost indispensable. Such a step as selling a piece of property that has already been reported in the proper place as sold is fatal to the prestige of an organization, and every office ought to keep informed and make records of all sales as they are recorded in the proper public place.
Appeals and Special Factors. The appeals which should be used in selling real estate depend entirely upon the purpose for which the purchase is being made. An entirely different approach must be used to sell residence property from that used in selling business blocks. It is necessary, therefore, to analyze the purpose of the customer and address to him the appeals that will accord with that purpose.
Then why is real estate purchased?
According to one author there are three motives for purchase, namely, (I) for the purchaser's own use, (2) for income from rents, (3) to hold for resale at higher prices. In the first case, the features which would make the property attractive for personal use should be stressed. If the purchase is made to secure the income from rents, the amount of that income and the indications which point to its permanency constitute the selling points. When purchase is made as a speculative investment to be held for higher prices, the appeal is purely to profits.
It remains to point out some of the special considerations that obtain in the purchase for these different purposes. It is a commonplace of real estate selling that women buy homes while men purchase real estate for business purposes. In selling the home the appeal must be made to the wife; the husband is interested chiefly in such case in the fact that the value must be behind the purchase. This is merely a check upon the wife's choice; unless there is a lack of value behind the property, her choice is final. In any case it is usually decisive. The things that appeal to a woman are : the presence of a fireplace, the outlook, the kind of neighborhood, the finish of the rooms, the convenience of the layout, the step-saving arrangements. A dealer of large and successful experience states that closet space is more and more almost a determining factor with a woman. The sales-man should quickly ascertain the interests of his prospect and stress those things that make an appeal.
In selling to the man, the appeal must be made to the value, the security, and the profits which the property he purchases offers. He is by no means impervious to the arguments which tell with the woman, but these are not so final with him as with her.
The Real Estate Salesman's Place in Building Up the Community. There is an opportunity for the real estate salesman to make a real contribution to his community. This he does chiefly in two ways. (1) By his persistent salesmanship, he increases home ownership in his community. His efforts to sell should stir up in his prospects a "divine discontent" with a renter's lot and encourage the purchase of homes. No greater service can be rendered our nation, probably, than that. The tenacity with which the French nation, for example, have defended themselves against an invader is said to be due to their love for the soil of their small homesteads which they own. It has passed into a proverb that men will fight for their homes but never for their boarding houses.
(2) The salesman furthermore pushes the development of his city by constantly prodding for higher utilization and better improvements. The service which salesmanship has rendered in general in our country by raising the standard of living is present also in selling real estate. The real estate salesman is the first man to interest the stranger in his city and to point out its good features. He is vitally interested in its progress; his living depends upon it. He is, therefore, very logically the man who urges its improvement.
1. In selling real estate, as in every other kind of business, the salesman must be thoroughly acquainted with his commodity. This includes a knowledge of values and the factors which affect them.
2. An intimate knowledge of real estate may be obtained by studying the map, by talking with others about real estate, and by personal observation of the city itself.
3. Two different attitudes are clearly discerned in the sales department. One is that of forcing sales by high-pressure salesmanship and the other is that of selling as a service to the customer.
4. Real estate selling is rapidly adopting principles which have been found to be successful in merchandising other commodities, such as "No sale is complete until the customer is satisfied."
5. There are five steps in a sale ; attention, interest, desire, belief, and action. While attention and interest may usually be taken for granted, the other steps in a sale must be care-fully directed by the salesman.
6. While desire exists in customers who make inquiries for properties, salesmanship may in other cases create de-sire. In order to accomplish this end salesmanship must pre-sent a plan and a picture.
7. Belief is created by the presentation of facts or testimony supporting the statements of the salesman.
8. The customer is led to take action by summarizing the arguments in favor of the purchase, by a time limitation or other competitive factor, and by careful urging upon the part of the salesman.
9. The appeals which are used in selling real estate vary according to the purpose for which the purchase is made.
10. The real estate salesman contributes to his community by increasing home ownership and encouraging higher utilization of real estate.