Common Risks & How to See Through the Sales Pitch
The benefits of an online system for your real estate transaction management process are clear—but what's not as obvious are the risks and how to spot them.
As such, it's crucial to understand how you can evaluate a product effectively with the risks in mind so that you don't end up in a year-long contract or worse, in a system that holds your data hostage.
To help you better understand the risks involved, consider the following eight common risks when evaluating a new transaction management system for your real estate company.
1. Change can frustrate agents and admins.
Changing the way that people work is always a complicated process and should be done with the utmost care in mind. It's necessary to think about how well admin and agents know your existing process, how comfortable they feel navigating it during the most complex transactions, and how loyal they have become to it.
Changing processes, tools, or requirements can cause confusion and frustration when things become complicated. Unexpected and undesired complexities can be especially tricky for part-time agents and users who consistently rely on retrieving data in a specific way.
Changing a system can also cause defensiveness when the change negatively impacts how agents work with their clients, and this can lead to closing delays, angry customers, and a negative experience for everyone involved.
Finally, changing systems often requires the users to schedule a time for training. However, that training may not take place until after an agent would have needed to use the system. As busy brokers and top producers know, appointments and requirements don't wait for your new system to be up and running with agents trained, which means that the overlap of old and new processes can be challenging.
2. Paying for redundant features can be a waste of money.
Paying for redundancy that only adds complexity is certainly not ideal—but it happens far too often when online systems try to be everything under the sun. If your agents are already using personal tools and systems, or tools and systems provided by their associations, consider if you need to move forward with a new product that offers the same features that they already have and may already love.
Additionally, extra training is generally required to help agents navigate a new system that includes dozens of complex features so that new users can learn how they properly work together, or when they should use the tools they already have. In other words, there is a significant risk with redundant features built into your new tool because that redundancy can be confusing and cause added complexity to the interface.
3. All-in-one systems can provide everything, but often don't do anything well.
If you do need a more comprehensive set of tools, perhaps because agents don't have access to tools provided by an association or real estate department, then you need to identify if a purpose-built system or all-in-one system makes sense for your company.
Products that are built around doing one thing perfectly often work better for most businesses in the long run. Many brokers don't think twice about a single-purpose accounting system, CRM, or email client for a good reason—they do what they're built to do, and they do it very well. Adding a CRM to your accounting system doesn't seem to be helpful, and the same principle applies to transaction management.
However, many products in the transaction management space want to include as many products as they can inside the same system so that they can sell a single product for more. The all-in-one nature is often a source of poor user experience, frustration, and unnecessary complexity because they require your agents and admin to change the way they prefer to work.
While they may seem like a good fit for your needs, keep in mind that the more that one system becomes the central location, the more often they are difficult to learn and use. Worse, this risk can create more work for your admin and decrease agent willingness to adopt the system. And since most all-in-one systems inevitably contain a lot of clutter, your agents and admins will have a harder time getting their regular, day-to-day work done quickly and efficiently.
Purpose-built systems excel at performing core features; letting your admins and agents perform these frequent operations with ease and with speed. A mature, effective system will play nicely with other systems that you, your agents, and admins may already use and love. It will allow you to choose the best complimentary purpose-built tools for each critical area of your business rather than settling for an average or below-average system that tries to fulfill all your needs.
Be aware that the inspiration for packing a large number of features into a product often comes from the marketing department rather than from the customer. Salespeople will usually sell the all-in-one as simple, and while it can be a great fit for some, it's imperative to evaluate the risks and workflows that come with them.
4. Committing to a contract early can be a costly mistake.
Moving forward with a real estate transaction management system is meant to improve your agents' ability to close more deals and provide better, more consistent, client services. However, if your agent's don't adopt the new system, or only use it occasionally, you now are forced to use two separate systems at the same time.
To avoid this risk, make sure you understand what agents and admins need in a system and how a system will help them. Adopting a new transaction management tool for reasons unrelated to the needs of your office is likely to yield inconsistent usage and less than ideal adoption rates.
The possibility that agents won't adopt the system is a critical risk to address. Even the most seemingly-perfect system can't help you if your agents and admin won't (or can't) use it for their daily operations.
A product demo is a great way to get a quick overview of the product, and you should schedule one. However, when information is withheld, such as pricing, contracts, and features, it's a sales pitch, and it's not geared toward your needs. A free trial, particularly one that is not feature-limited, will allow your admins to test the system more thoroughly, and help you determine with more confidence whether it has the features your business needs.
Avoid pushy salespeople, false promises, and "promised features" by testing the system for yourself. Sign up for a trial, create users for admin and agents, and run a few real transactions through the system. Most brokers will know within minutes if the system is a good fit.
Keep in mind that you shouldn't be asked for credit card information or a commitment at this stage. Often, companies count on you forgetting to cancel a trial, so consider reputable companies who genuinely want to offer you the ability to try out their product without strings attached.
5. Annual contracts auto-renew, keeping companies locked-in.
The most significant risk to your agents, company growth, and ultimately the bottom line is an annual contract. There is often a reason why products and salespeople try to sign you up before you're able to test, train, and set up the new system.
Be aware of an annual contract and offers of free training or other free incentives. Moving forward with a yearly contract agreement forces you to allocate funds, time, energy, and your data to a system that may not help you grow the company or provide better services.
Finally, always ask when the annual contract renews and ask to see it in writing. Online cloud-based systems in every industry are known to employ deceitful tactics when it comes to getting the sale—and the 12-month mark of an annual contract doesn't mean you're able to leave. Often, those annual contracts renew well before the twelfth month.
6. Cancelling a system can be a monumental challenge.
Think about your business goals for your real estate company. Is the system meant to help you take it to the next level? Is the system a good fit for you now, but not in the future? A system should help you grow, and it's not always a good fit for every stage of that growth.
Are you looking to sell the brokerage at some point? Franchise the company? Regardless, you should make a point to find out what it takes to cancel the system when the time is right and what will become of your data in the event you do cancel. Be honest about future planning and understand how you will cancel the system at some point.
7. Transaction data may be held hostage by the product.
Once you have identified how to cancel the system, find out what your options are for retaining access to your data, including how you can download the data and store it for compliance purposes. As a broker, you're tied to the data that you manage and review. Many systems do not allow that data to come out of the system quickly, and instead, they keep it locked up so that you must stay with the product.
Salespeople can be pushy to hit quotas, not actually help you.
Product demos are an important way to see what a product offers, but they do not replace testing the system with agents and admins on real transactions. In fact, if information about the product is withheld until the end, or the salesperson is unwilling to break from the demo script, it’s often safe to assume that the benefits they promise are inaccurate or not specific to your needs and office. Use the following five tips when speaking with any real estate transaction management product salesperson:
Only choose a system that's a good fit as it is today—not based on what can happen later or when you "start paying." You should be excited about what you see, not what a salesperson has promised.
Ask if you need to commit to a long-term contract with the provider, or will you be able to pay for their product month-to-month and cancel anytime without incurring penalties.
Ask to try out the product for free to help you determine if it's the right fit. Make sure the free-trial duration is long enough and offers all of the features without restriction.
Verify if the pricing is based on the number of users, number of transactions per month, the amount of data stored, or something else. Determine how growth and changes in production and agent count will change those costs.
Will your costs go down when your business is going through a less productive period? In other words, can you downgrade your pricing plan at any time and upgrade it back when needed?