It's time for your wake up call...
Rob Hahn of The Notorious R.O.B. put a post up about a week and a half ago that has been sticking with me ever since. The title of his post, “The Real Estate Story Awaits the Next Chapter” was in response to a post written by Brian Boero of 1000watt Consulting entitled, “The end of the real estate story?” Why do I feel the need to give you all of the information on where this info. came from?
Because my fiancee and I were part of the “dinner conversation” in real life that Brian wrote about… and because I don’t believe that Brian (as much as I love his writing – and 1000watt is our company consultant that we couldn’t work without) really “got” what Amanda and I had to say. Here’s the basis of the 1000watt post:
“Have we reached the end of the real estate story now that FSBOs and discounting have lost their menace?”
A. Real estate is exceptional. The complexities and emotions that characterize the real estate transaction will forever shield it from structural change. Bill Gates, Barry Diller and about a billion dollars in VC have been thrown against the barricade with no transformative impact. The story is over.
B. We’re due for a cataclysm. The forces of change, of technological innovation, of inchoate consumer frustration, are stacked high against the dam of Real Estate As We Know It. It will not – it cannot – hold. The story is far from over.
My dinner pals were in the “A” camp. I argued for “B.”
I believe that the “camp” that Mrs. @homepartner and I were in is was more along this line.
“Real estate is exceptional. The complexities and emotions that characterize the real estate transaction will forever force the agent to provide a level of empathy and understanding that cannot be provided through technology, social media, or any other “quick fixes” discussed so often today. The story is FAR from over, but elements of “real estate basics” will transpire throughout its evolution.”
The model is flawed. As we are quick to point out, the largest amount of profit money (actual dollars) are generated from the lowest splits. It’s the “quick buck” element and like a virus… use, consume, move on. Not all companies “filter” leads to the bottom quartile, but this “earning potential” does hinder the company desire to elevate agents to “superstar” earning status.
However, there are a number of non-measurables that you need to incorporate into your model. The top agents (let me rephrase that – the IDEAL top producing agents) provide the following:
1. Signage
2. Marketshare statistics
3. If they’re good pricing agents, good Sales to list price ratio
4. Brand Awareness through direct mail, signage, etc.
5. Mentoring of lesser agents
6. Pride in brand
7. Leads via advertising, online and print
8. WOMM through client interaction, marketing, listings, etc.
There’s more, but I think that you get the idea.
The top producers DO however cost much more. Support, marketing, IT, manager interaction, coaching, etc. The top agents tend to take advantage of many of the programs, trainings, and tools that a company has to offer as well, not even touching on the fact that top agents tend to take up more physical space with assistants, team members, and often times spend more time in the office.
I talked to a broker out of Miami the other day that actually thrives on the lower producing model. He spends all kinds of money on leads from sources like Homegain, sells the leads to his agents at 50-65% splits, and trains them to follow directions exactly from listing presentation to buyer interview. As soon as an agent begins to think “outside the box” and is set to pass the 65% split, he lets them go, keeping their database… talk about your churn and burn.
Here’s my thoughts for the office of the future:
1. Get that office full of great, team-playing, top producers together.
2. Get some killer marketing, IT and coaches together to support them.
3. Invest in the absolute BEST CRM system on the market
4. Hire about 10-15 Virtual Assistants to serve them with all of their paperwork, showings, generating feedback, and overseeing marketing projects.
5. Go to the best website company out there and have them create “The Best” website for your company complete with co-branded agent sites that reflect the company brand to some level – all will utilize the same backend.
6. Hire a professional PR company that will write all copy for the agents that would go out to their clients (newsletters, blog posts, etc.)
7. Get involved in every single local organization that you could (softball teams, chamber of commerce, school programs, CSR campaigns)
6. Institute a “split program” that would start at X% (to help cover your expenses) and charge accordingly for the following
% per transaction to cover the VA’s
% per transaction to cover their website
% per transaction to cover a marketing fee
etc…
I’m a firm believer that if you got a group of top producers together, told them they were going to get x,y,z for their % split and (—this—) is what I’m going to do for you to make your job easier… they would join and would do so happily.
As i said at the Leading RE event, “the time for this us versus them mentality from the broker is dead and over with. If you approach your business like this, without love for your agents, they will leave you… and i’ll have no sympathy for you.”
Unfortunately, this type of office would take money to startup and this isn’t the market to do so. But I am confident that 95% of the really good agents in this market would not balk at paying an additional % out of their commission check if they perceived VALUE for what they were paying.
Matt Dollinger
www.theyoufactor.com
Just a fantastic post, Matt.
I still think there’s one more final step that the Brokerage Of the Future will need to consider, and that is full equity partnership. The bigtime rainmakers just don’t have enough incentive to stay with ANY brokerage unless at 100% splits — the Keller Williams model.
The only way to reverse that is to give them equity partnership, enough to make them want to sacrifice a bit of income to build significant wealth in a company that can one day be sold/expanded/whatever.
-rsh
Great post and insight, this deserves comprehensive feeback.
From my experience as a 2nd real estate professional beginning with my mother Barbara Loomis (God rest her soul, passed away in 1996 at 48yrs of age), my brother Darryl Loomis (entered into RE at 21yrs old), and myself Maury Loomis (Computer Information Systems major and now full time Broker with 10 year experience), I offer the following comments:
1. Killer Marketing and Community Advocate online & Social Media etc. is a must.
2. Trained agents that followup with prospects is MANDATORY!
Just lost my post…darn!
The bottom line: Clients need Leaders/Agents that are passionate about their clients.
It sounds great and I wish someone would give it a go. But great agents are very independent, and the structure above sounds like it would take a lot of consensus and agreement (how/where to spend those marketing dollars) – but then again, maybe that’s where great management comes in?
Great post! The argument has become so un-civilized in some discussions. And of course, I must dis-agree with your point, though so eloquently stated.
In fact, in your next post, don’t you talk about the Billion$ spent on trying to undo this very model? Unsuccessfully, if I recall?
The concept of agency has stood the test of time precisely because of its simplicity: “I stand for you.” – or – let me handle the grunt work so you can get on with your life; I’m an expert in this so let me handle it while you do what you do best. Not just in the history of American real estate. The concept dates back to Feudal England. Not everything British is hogwash.
And to your argument for a brokerage model offering superior end-to-end service from online property shopping to comprehensive contract administration, but with less experienced agents following a script and a check list: what happens? You get a first rate website (with corresponding back office) run by a third rate group of order takers. I won’t name names, but you know my favorite example of this model HQ’d right here in Chicago.
How ’bout a model that supports agents just starting out AND the top producing pro’s?
And don’t get me started on the myth of the 100% agents…
There is a guy in Denver on a mission to change the face of Real Estate. He is smart and dedicated to different kind of service. I think you two should meet. DM me on twitter if interested for collaboration conversations.
I guess my question is: why would a talented, rainmaking agent want to work for a brokerage firm rather than going independent?