Ed McMahon: A pulse, a passing grade, and a business card
Carnac the Magnificent: Name the three things required to become a real estate agent
Inspiration
Lots of talk these days about the brokerage of the future. The brokerage model is under intense scrutiny. This is a good thing.
In fact, I’m inspired by those who seek a better way.
Still, a dark cloud hovers.
One that continues to rain on their progress.
Grab an umbrella
Over a recent dinner discussion, my guest – a broker who oversees 1,500 agents – asked what I would do if I were to start a brokerage from scratch.
We had just ordered appetizers. By dessert, after answering dozens of questions, he got to his biggest concern: the agents. He wanted to know what kind of agent I would recruit, what their qualifications would be and how I would overcome the pervasive technological, social and professional illiteracy inside the agent family.
I suggested we have a liquid dessert.
Yelppos!
Seriously, I told him, I’d invite all tiers. From top producers to relative newcomers. All would be welcome to interview.
But there would be standards.
They can leave their black book at home. Like Zappos, my brokerage would have an internal culture born from my beliefs, standards and morals and grown by people who share in those beliefs.
And if an account executive at Yelp needs to have a college degree and at least a year in sales to sell web ads to restaurants, well, then I can require at least as much of people who will be selling shelter to families. I know, hard ass!
But there is more to it. I ask myself all the time how it is that despite the billions earned through the transaction of real estate, why so many in this industry dangle by a thread above the abyss of poverty? But I guess it’s pretty obvious why that is. Few own major market share. Everyone scrapes by. Agents spend inordinate amounts of time warding off knuckleheads and brokers provide little in the way of true leadership and value back to agents. Consumers can’t distinguish one brokerage from another… because almost all of them hire too many lame agents.
This is simply no way to run a business.
My agents must be different. Better. Smarter. If I can’t get them, I don’t do it.
Raising the bar
Consider the technology knowledge, communication skills, multitasking ability, social networking finesse, customer service mojo and killer salesmanship that define today’s best agents.
Consider the combustion of consumers energizing the online marketplace and the myriad of platforms through which to communicate with them.
Consider the new opportunities that are almost too fast and too furious to keep up with.
Consider the torrent of technologies that allow every broker to strip expenses off their P&L like layers of dust caked on a collectible.
My agents would be all over this stuff.
My guest asked me if I wasn’t being a tad unrealistic, if it was reasonable to expect such things
I sipped the last of drop of my Grand Marnier.
Then chose these words carefully.
“Why not” ?I said. “Shouldn’t we aim higher?”
Doesn’t the real estate customer deserve at least that?
Local, Mobile, Social and the future of real estate
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Well said. My background before RE was in HVAC. I ran the family business for 10+ years. Our clients had their “favorite” tech but knew that if they weren’t available that anyone in our company would give them the same great service. My techs weren’t out to build their own brand, they were there to serve the client. If the RE business was run like any other business out there the clients would be better served.
I never had a tech worried that someone in the company would steal “their” client because they knew that it was the company’s client. Sure, we had techs that earned their own contractor license and opened their own shop. Good for them! Agents can do the same … earn your broker license and open your own shop.
In my lifetime I have only been employed by a company for 6 months. I was happy at the brokerage I was at because they kept telling me I was still self-employed and had total freedom. When I finally came to the realization that even though I was having the “independent contractor” smoke blown up my ass that I was in fact an employee and was not able to have total control of my own business I got my broker license and left. The whole business model of the traditional brokerage finally became clear to me.
Keller Williams almost has it right with their team concept but that’s still a Ponzi scheme. Each team should be an independent brokerage.
@Marc
You said:
“I buy BMW’s from Coast BMW. I love the product. I also love Scott my sales guy who I consider a friend at this point. But I also love Coast – the dealership too.”
The difference is you probably spend time in the service department and in the dealership seeing and interacting with other parts of the organization. That is the difference. Perhaps at some brokerages you may interact with other people in the company, other than just the agent.
But if your experience at Coast was totally based on the sales guy; Your sales guy met you with the car (not at the dealership), and when you needed service your sales guy came and got the car and returned it so you had absolutely no interaction with anyone else at Coast, you may not love them so much. You might not even remember the name of the dealership if it wasn’t on the rear of the car somewhere.
The relationship seems to be with the agent, at least in real-estate.
Hi Danelle,
Is it possible that I care about Realtors so much, that I’m willing to push people outside their comfort zone at the risk of them getting mad, only to help the industry? You don’t know me so I’ll give you the benefit of the doubt.
Agents are paid in may different ways across the U.S. From 100% commission all the way to a monthly salary with a bonus based on client satisfaction surveys and everything in between. There would still be many different ways to be paid if the educational bar was raised for agents.
It’s entirely possible that we agree in more ways than we disagree. Yeah, selling skills are needed when there’s selling to be done, no matter what the industry. But buying/selling real estate has become, over the years, a different kind of transaction v. a simple retail purchase.
The difference is subtle to some and to others the difference is huge.
It’s the difference between these two statements:
“I sell houses” v. “I represent clients.”
It’s a cultural shift.
Some agents have already made the transition.
The client has already decided to buy or sell and now needs representation.
Barret says: “The relationship seems to be with the agent, at least in real-estate.”
And herein lies the problem. The brokerage has given a false sense of control over to the agent and the agent acts as if they are the be-all-end-all of the company.
The agent is but an arm of the brokerage. Without the head the arm doesn’t move.
The current brokerage models have allowed an industry full of arms to steer the ship but without the head how do those arms know where they are going?
The brokerage represents the client. The agent is a representative of the brokerage. Somewhere along the line that fact has been forgotten.
“I sell houses” v. “I represent clients.”
… and that is the difference between a professional and a Professional. No degree necessary, only the mindset is required.
James,
Not quite. I wrote a blog post for Marc’s readers and linked to it, with Marc’s permission, many comments ago. Here you go:
http://ceforward.com/?p=127
James,
Thanks for your contributions. It’s a pleasure to read your insights.
Regarding the degree, the bain of this discussion.
That little piece of paper means something in society. It has equity. No different than the equity a GRI, CRS has in real estate. Perhaps more.
I realize that in the long run, that piece of paper doesn’t guarantee loyalty, or morals, or define someone as being smarter than anyone else. One of my best friends in life never completed college but is my one true mentor in all things business. John is the smartest businessman I know. Period.
I am a marketer at heart. A marketer understands what the public wants, provides it and brands around it.
As a marketer I have learned that the very things people in real estate pride themselves on, harp on, repeat over and over as their core attributes, are not necessarily what people want. Granted, people like receiving those things. But those things are considered ubiquitous. Like smiles. Caring. Shoulders to cry on. Hands to hold. etc. Every agent says they provide these things.
But read surveys of what consumers really want from agents — it’s a prompt return phone call.
There’s something else you learn when you market the public. They hold real estate agents in low esteem. Despite all of real estate’s combined good intentions, pretty faces, hands for holding, shoulders for crying and good hearts in the rights places, all can’t seem to move the trust factor up a notch below bottom on any survey.
Folks, this sucks because the work you do is important. But the more you smile, hug, kiss and drive pick up trucks around and try to build brand around that, the more that bar is going to sit at the very bottom and the harder you have to work to build a customer base.
People need phones. Apple manufactures phones. But folks Apple never tries to sell phones. They sell something completely different. They sell lifestyle. Design elegance. Cool. Identity. The stuff people really want.
I actually believe a brokerage can do this too.
Look, I didn’t make this up. I don’t set the rules. And I don’t determine what works and what doesn’t. I just see what’s out there and try to figure out how to change it and work with it.
That piece of paper that everyone seems to reject here, means something to the public. I don’t know why exactly. I can’t even explain it. It just does. Even though some of the wealthiest, most successful, most wonderful, beautiful, amazing people don’t posses it. And succeeded without it.
So as a marketer, as a businessperson, as someone looking to bring something different to the marketplace, I have two choices – recruit well-intentioned agents who babysit their clients like a lioness, or enlist a team of highly degreed communicators, with business degrees, real estate degrees, english and marketing degrees who also drive trucks, hold hands, have shoulders and care.
I believe that the combination of all these things together, united within a killer culture, led by vision and passion, fairness and team – and marketed correctly, a line would form outside my door. Especially if within those doors are a restroom describe in my post here – http://bit.ly/aKmQXA
Yes, I read your post last night. Unless I’m missing something here, the requirements your 8 points defining a Professional are met by every licensee who is also a REALTOR (to cover point #6 and #7).
However, anyone can meet all 8 of your points and still have the used-car-salesman’s mindset.
Hi James,
Yes you’re right. But that still doesn’t mean we should abandon raising the bar. Used car salesman’s mindset can transform with time.
@Barrett,
You’re dead right. I do and did spend time back in service. Scott, my salesman made it a point when I bought my first car to introduce me to everyone in the organization who will forever be my touch points. I met the owner to the manager to the service guys and the technicians. Even the 6’6″ detail kid working his way through Cal Poly who washes my cars each time they come in for service.
I’ll probably never deal with him but I know he’s getting paid to be invested in me. And that matters.
How many agents who bring their clients into the conference room to close a deal introduce these clients to the broker? Or the transaction coordinators. Or all the other folks in the operation who touch the process and make sure everything goes down right?
If my experience was just based on Scott my sales guy, you might be right. If Scott left Coast to go to another BMW dealer, I’d follow him. But Scott made sure that I got tight with the entire organization. In that regard, he does right by them which might explain why he’s been there as long as he has and not going anywhere. They do right by him. And further explains why I and so many others are loyal to both and why they both endure even when other dealerships aren’t.
This can happen in real estate. In fact, it already is in pockets all over the U.S.
Marc, honestly, I think the only people who care about the paper are people that have one and they only care because they want to believe that that paper makes them inherently better than the guy that doesn’t.
Maybe I think that way because I don’t have one and am trying to make myself think that I’m as good as the guy that does … I guess it goes both ways.
I do understand where you are going with this. Build your brand around having “the best and the brightest” … I get it. You need a unique selling proposition.
I believe the conversation took your idea and ran off to the side focusing only on the degree aspect. It was twisted into being stated that a degree should be a requirement for licensing. This I do not agree with and that is where my comments were directed.
I don’t buy Apple products either.
James,
I don’t think a degree should be part of licensing. I’m with you and others on that. That’s unfair and would rule out many good, smart people who took a different path to get where they are going. And I agree too, those with degrees certainly do look upon others with degrees with a certain reverence that others do not.
So, like agents who pose with dogs aiming for dog lover clients, I would market my brand to the degreed constituents of my marketplace. Listen, a brand cannot be all things to all people. Case in point you are not a Mac. Most of the world isn’t. But Apple proved it can make a boatload of money selling products to 10% of the population.
That’s what I can prove. A professional slated brokerage, with x number of MBA’s and BA’s targeting alumni and providing services that stimulate their arrogance and prejudice.
It’s not different that a brokerage in some NorthWest rural suburb operating out of a mobil home with agents who drive battered pick ups. That brokerage built a brand and is of the people.
I would the very same thing. Only different. And not try to be all things to all people. Nevertheless these service would be available to all.
Even PC’s!
Jillayne: Sorry but I don’t agree. You can learn every skill there is but you cannot learn a personality.
For someone to convert from a self-centered sleazy-salesman type to a client-centric Professional would take a life event of catastrophic proportion. We’re talking about being born again here.
If your definition of raising the bar includes the requirement of a degree then I cannot and will not agree. As a broker and business owner it is my job to bring people into my company that will treat my clients with the utmost respect and fiduciary. The rest of the skills needed can be taught. That is raising the bar.
Marc: You snuck in on me again … I agree with where you are going on this. Target your market and build your brand around what that target market is looking for to earn their business. Marketing 101. Any smart businessman would do the same.
BTW, all my computers run on Linux. I’ve never been one to run with a crowd!
Marc – I love my brokerage and am happy to educate consumers on who we are and what we do. Generally they are sold on me after that the only thing I need to sell is some real estate. I need to meet some of these consumers that are interested in brokerages. I work in real estate with consumers all day and the topic never comes up. Buyers want to see one of my listings because they are interested in the house or condo, they never ask about the brokerage. I don’t think real estate is about brokerages at all at least not on the consumer level.
Teresa,
We are simply not communicating. You continue to talk about you. What you love. What you do. Your customers and what they care about. If for any reason you feel I have in some way written this as a slight to what you do as an agent I sincerely apologize. That is not the case at all.
This is about me. My world. My brokerage. The thing I’d build, how I would build it, the culture I’d evoke, the types of agents recruit to cultivate building a different kind of brokerage that I could market to a segment of the community.
This is about brokers who are reading this and looking for some ideas on how to help them build something better.
This is about agents who are in search of a better brokerage. One that matters. One that helps them. Supports them. Evolves them.
I respect the fact that you don’t think real estate is about brokerages. And given your wisdom coupled with my own observations about real estate, you might be right. But that very reality, that vacuum, that which isn’t, is what I live for to make an is.
This is about creating a brokerage that matters. See what happened in Tucson today? 450 agents left Realty Executives. It’s not because the brokerage doesn’t matter, it’s because the Realty Executive brokerage doesn’t. To anyone. Even the agents.
I fundamentally believe in the brokerage. And hope to submit even one nugget of hope or one watt of an idea that might help their light shine a little brighter in their marketplace.
You have done a great job representing you. But this is about the types of places the you’s of the world can work from that do more than provide a desk and a yard sign.
@James,
The model has been broken for some time. Two of the largest and still growing brands in the business are Keller-Williams and RE/MAX. Both business strategies focus on the “Agent” and not the brokerage. They rely on the agent “Branding” themselves under the Keller-Williams or RE/MAX brand.
As an recently ex-RE/MAX broker/owner (another story entirely), it was clear the focus was on the agent and not the firm. One reason I am no longer associated. The entire culture did not foster “team”, but rather little chiefdoms around the agents.
I think you may find that the real top producers in a certain market are about their personal brand (brokerage) and not the brokerage brand.
Marc – I did misunderstand but I don’t feel slighted. I like your ideas and understand that it is your dream brokerage. It looks like you would find some agents who would work with you. I would work with you in a heart beat but I don’t think I could be part of your brokerage as an agent. You have decided what a perfect brokerage looks like and from an owners point of view and it would be a wonderful business to own.
Cool.
This may not be perfect, but it’s what I would do.
But know that I would work hard to get you to join.
I wouldn’t give you 90%.
Or the big office suite.
But I’d prove to you there are more important and better things than that.
Oh but that is why we don’t understand each other. I can’t sit in an office. I have an office at home but spend much of my time in the car, in houses or in coffee shops. Business does not happen in real estate offices. I don’t need an office, but I do need the 90%. Do you understand my job, or how I work? No you do not. You never asked. That is why I would rather own a brokerage like yours than be an agent in one like yours. It would be a great business to run and own.
Barrett: Agreed, and that is my point. Those agents that have built a self-sustaining practice and branded themselves need to open their own shop. They have, in essence, built their own brokerage inside of another company.
Teresa: You said, “That is why I would rather own a brokerage like yours than be an agent in one like yours. It would be a great business to run and own.”
With that statement you have just proven my point … And Marc’s this is his blog after all!
Teresa,
Good points. Great points actually. An agents don’t need an office. Or a chair. And I know they need the 90%. If I were to start asking questions I would ask, how much of that 90% gets sucked up in product and expenses that must be purchased singularly by an agent that could be bulk purchased by a broker across the gamut of products. I know this is not novel but there’s value if the brokers is supply his agents with the best tools and absorbing the cost. Under that premise, an agents 70% net = the old 90% gross.
I am simplifying to a make a general point.
Someone like yourself might make a better partnerbroker owner.
And even for the agent that works from home (something I would advise) they need to come to the brokerage at some point. I’d want to create the place they’d want to come to and bring a client.
I love our offices. I even took some photos of it and put them on the company facebook page to show everyone that wonderful old building that has been converted into office just like those wonderful lofts I sell. I wanted to show it off.
There is no reason to go there and I never have to. All of my paperwork is sent electronically. I sometimes go in for mail, I don’t like using my home address and I get my checks faster if I walk or drive that mile to get to the office.
Even though I love the space I rarely have a business reason for using it. I suppose I could do more of my writing there. I talk to my broker almost every day. we use blackberry messenger and chat at random times during the day, make comments to each other and ask each other questions or even gossip. We probably communicate more than most.
In your dream brokerage I would have to stop working and go into an office for some reason. Again your dream not mine.
Oh. I like your idea of saving money by buying in bulk. What is it I buy? Hmmmmm Own a grip of lock boxes, have custom riders that my neighbor who is a sign maker makes for me . . no way to save on those in bulk. My sign posts are rented. I don’t want to put them in take them out or store them. I don’t use enough of anything that justifies giving up 30% of my commission. Find something I need and want like health insurance for example and I will happily give you that 30% or maybe more. Disability insurance would be nice too. scared me to death last winter when I fell on the ice at a clients home and realized that I might not be able to work. . .
Barett made me think a minute – what happens when all these indie agents who succeed in building brands beyond the brokerage, decide they are so hammered, they need to grow and the only way to do so is to clone their vibe or risk losing what they built?
Teresa, if I could build what’s really in my head, you’d come to the office. But if not, as long as you or the global you, were out there supporting the brand I created and leveraging what I and everyone at the firm built, that’s what I’m talking about.
T-
I’m thinking:
The endless array of cool apps available that could improve services and brand identity.
Hardware. Slick Macs. IPads.
Closing gifts that evoke serious emotion from the clients
Ongoing customer services well beyond the sale
Advertising
And many other things that I’d like to try and save for future posts. Man I think I wrote a dozen blogs posts of ideas here today alone!
I don’t even think that way. I have always provided my own hardware and software. Never had a broker provide anything like that. That would be very cool. Affordable health insurance would be better but no one can do that.
Social Networking is about lead generation and follow through. You made one point and only one point concerning the Real Estate business. Agents should answer the phone or at least return phone calls promptly.
Let me throw out a couple of other old timey sayings: You don’t make money by selling Real Estate you make money by buying it. The second is that no one ever made money sitting in a Real Estate office.
Let’s say that Mike Ferry has given Real Estate a bad name, which he has. His business model is an absolute rip off, and the guy should be jailed. His message though is that you have to connect with people, one on one, to get a transaction going. Real Estate is a belley to belley business. No matter how badly you want to sell Madison Avenue, Real Estate sales is a people business.
More importantly every agent should believe in the business enough to invest in it. If it’s such a good deal why don’t you buy it. You will hear that a thousand times in Real Estate sales.
My standard answer is that I would have to sell something first, and my project isn’t finished yet. You have to be in the business to promote the business.
Lastly you have to be an absolutely consumate self promoter. In order to do that you need to be in front of people. I can sit here and blog all day long for lead generation, but it does me no good until I get in front of people.
There is a long list of things you need to do to be in the business of building a Real Estate; that’s what it’s called. You are building a Real Estate, and sharing with other how to build a Real Estate.
That’s the mind set you keep referring to. Sharing, and helping is what the business is all about.
Marc,
You’re a very smart and inspiring guy. But have you ever run a real-estate business? I have, and I ran one that had many of the things you talk about, except maybe the IPad ;>).
I invested over a 4 year period probably a couple hundred thousand dollars. My office was the highest tech office in the area. My agents had the latest and greatest technology at their disposal. We had training, both live and video. When my franchiser did training for technology, my little office was one of the examples they used to show what was possible.
But when the market turned, all that didn’t matter to most of the agents. They went looking for the cheapest deal. Now they work for someone who they pay $50 per month for a 70/30 split and they get nothing, nada, in terms of technology, website, nothing.
Clients became about selling my house and getting me the most money. Buyers were about finding the best deal. Sure I got a lot of clients who were impressed with the technology, but the truth is, were they willing to pay for it? No.
I still think the way you do. I think how great it would be to have a cool office in an old warehouse with old wood beams exposed and a coffee bar in the middle. A totally open air type environment with a conference room in the center enclosed in glass walls. And the obligatory giant flat panel on the wall so you could look at properties with clients.
But the fact is I know now all this cost money…lots of it. And right now I don’t know if buyers and sellers appreciate that or if agents are willing to forgo some of their commission or pay a higher fee to have it. At least not right now, in this market.
Somewhere there is the sweet spot, where all this comes together and I would like to learn how they are doing it.
@Barett,
Thanks for that!
No I never ran one. But I sorta think having not run one would be an asset while having run one a hinderance. Some of the greatest disrupters to any industry are those folks who venture in from the outside with eccentric ideas and no sense of where the boundaries of what you can or can’t lie.
Everyone from Disney, to Hershey to Gates, and Jobs and Rich Barton, Glen Kelman and Sami Inkinen.
Crazy ideas, ideas people disagree with, etc., start off as crazy but do end looking like genius when passion, commitment, drive, and common sense turn it into success.
There are agents right now who have already disenfranchised themselves from their brokerage and have built perfect little models and brands of own locally who have already done what I have described. All they would need to do is call themselves a brokerage to prove every point I’ve made.
There is a sweet spot. Teresa Boardman has already created it. She lives it and runs it. If we can view her business as a brokerage, which it is in a way, it’s what I described. And more.
David,
I so appreciate your comments but I feel as if your comment belong on a different post. This post is not about social media bro or the common sales cliche’s that drive boiler room operations. Sounds to me like you are a decent guy but an old school salesman and I’m cool with that. But this post is about branding something exceedingly different that sales. It’s about creating something unique and special that targets a certain audience and hammers on details, features and benefits and delivers time and time again.
Social media? It’s a marketing, advertising and communication tool. That’s it. I place little stock in it beyond that descriptions. Perhaps we see eye to eye on that. I’m not sure. Not getting your point.
Sorry Bro, but this is exactly the place for my comments.
You’re talking tech, and information, when you should concentrate on Real Estate as an Industry.
You aren’t getting it because you, like thousands of others, entered a Real Estate sales arena hoping to get paid.
Real Estate is a way of life. You breath it. It’s a passion. The properties, figuring the angles, building the equity, are all about what I call my Real Estate addiction. My life is waiting for the next deal, or better put, making the next deal happen.
It’s not a commission sales position. The money is in the deals you do for yourself. It’s always about the next deal, and that’s why it’s a 24/7 gig. You just never know when the ship will come in.
It’s also about the juice. You haven’t lived until you have that $1.2 million dollars on the line hoping the deal works out. You haven’t lived until you’ve lost the $1.2 million dollars, or only thought you had.
You don’t learn it in a class room. You either have it, or you find another way of life.
David,
I meant this particular post. Sure, this is a good blog destination to discuss these things- social media, etc., but it’s not the correct blog post. But if you think it is, that’s cool. I can honor that. And go with the flow.
You wrote “You’re talking tech, and information, when you should concentrate on Real Estate as an Industry.”
I happen to think both are symbiotically tied together. In fact, name me another industry that is more tied to technology and information that real estate? I posit that real estate is as much a digital and technological industry as it is a social and huggy kissy industry. It’s all these things.
You wrote “You aren’t getting it because you, like thousands of others, entered a Real Estate sales arena hoping to get paid.”
Now I am convinced you’ve entered the wrong conversation. I mean, I don’t profess to get anything other than what and where my creativity leads me but I am not a real estate salesman. I don’t get paid from selling real estate. I’m not even sure other agents feel like they do either. I thing many agents say they get paid by providing a great service to their clients. A sale does indeed ensue. But I think the only thing an agent really ever sells is themselves. Everything else is bigger than sales.
You wrote “Real Estate is a way of life. You breath it. It’s a passion. The properties, figuring the angles, building the equity, are all about what I call my Real Estate addiction. My life is waiting for the next deal, or better put, making the next deal happen.”
Bravo man. And I leave you with this, what we do here is meant to help fine folks like you do that. I mean that sincerely.
The most successful person I have ever known in the Real Estate business, I have known many, never finished the 8th grade. Harold Harvey Chase was a chicken rancher.
The State of Washington took 5 acres of his 25 acre parcel to build a freeway, I-5. He fought the process and won a judgement against the State.
He used the money to buy more parcels along the proposed route, and built apartment buildings. The State was selling houses in the path of the proposed route for $1 if you moved the houses to other parcels. He bought more than a few.
When the economy became bad, in the 1980s, he began lending money.
Of course his children all have advanced degrees, but even in the best of times, have not matched his knack for building wealth.
Now when you talk about building a Brokerage you seem to forget about Harold Harvey Chase, most people do. Even in these web 2.0 times people forget that we all want to have security from a Real Estate transaction. We want to buy cheap, and sell for the highest possible price.
We want our Brokerage to provide all the services Harold Harvey Chase demanded in his dealings. He wanted some one who knew what the heck they were doing.
The idea to buy the houses for a $1 came from a guy who wanted to sell him some dirt. Lending money was an idea from a guy who was trying to do a simultaneous close on three properties. Harold was a chicken rancher who was talked into building apartments by a Real Estate agent.
The point I make all the time is that for as far as the industry has come from Pat Melton’s double wide trailer days, the business has gotten worse. Consumers and agents alike have less working knowledge about Real Estate products, land use, and Municipality Planning than they did twelve years ago. All those things have taken a back seat to the technology.
You’re blogging with a guy who bought the Landmark program from Moore Data when it first came out. I paid $3K for a computer in my home because my Broker’s network sucked. I have a couple of web sites left and converted my others to WordPress blogs. I let go of my Advance Access site a few months ago because since the company got sold, they suck.
You’re going to help me?
Let’s see what you can bring to the table.
David – cool. Many success stories regarding folks with an 8th grade education. Most are entrepreneurs and wouldn’t enjoy working for me anyway.
The Advanced Access Website is product is a digital effigy of the lack of progress in the vendor world. You made a good decision to abandon it.
I’d be happy to help you where I can here and under the context of what I can do within a blog comment section. Would prefer not to bullied into it. Many people ask and receive. I think you will find that most people who read and comment here would be happy to contribute answers too. This blog is all about pushing ideas out, answering questions and providing some solid guidance going forward.
Happy to do that for ya David.
David, you appear to have an interesting perspective on the real estate business in general, but our discussion on this particular post is about brokerage models.
We’re here tossing around ideas to make the business of real estate brokerage more profitable for the company and a better environment for its employees.
You seem to be wanting to discuss real estate agents investing in property for their own benefit. While that is a worthwhile discussion to have it really doesn’t pertain to the topic at hand. If you have some input on the topic we’d love to hear it. If you don’t then please stop trying to derail and distract from the conversation at hand.
I think Marc has been more than tolerant with your rants to this point. If this were my blog I probably wouldn’t have been so polite to someone trying to hijack the stream.
I’m the knuckle head.
Marc, Real Estate is a meat fisted business involving dirt. It’s all about the dirt man, that’s all it’s about. You either know dirt, or you don’t.
A successful brokerage has three parts, Commercial, Residential, and property management. It takes all three to survive. Commercial is the big money.
Residential is housing units that facilitate the commercial aspects of Real Estate. You need housing near job centers. Commercial Real Estate also shows you where the Municipality Planning will spend the most dollars.
Property Management is a cash flow. Along with that Management you need to be able to provide services that relate to maintaining the property, and do tenent improvements.
Over in that corner, about 25% of your business is web development. You’ll need a target market so you can expand your market influence. James is doing REO.
When your agents talk they all need to be experts in what they do, and feel free to refer to each other. The money stays in the brokerage.
Tere Foster here in Seattle has probably the best business model I know. She has seven people and you could have more depending on the office size. Each person has a task and they meet every Monday morning to set the weeks schedule. She has three listing agents, a buyer’s agent, a three assistants to set apointments.
They do provide health insurance, and a monthly salary. They are paid bonuses quarterly based on contribution. A contribution can be based on the referral fee model. At the end of the year they divide up the profits and start over.
That’s a Brokerage, or the way a Brokerage worked in the bad old days.
My brokerage and broker are amazing. I am proud to shout to the heavens that who I work for and what my company’s name and mission are.
I am paid a 70/30 split, all flyers, signs, supras, office equipment, faxes, online advertising, website and brochures paid for. My broker is an incredibly successful Realtor and I couldn’t be more proud to call him my “boss”, even though I am technically an independent agent.
We are a family at the company I work for. We don’t fight, compete, belittle or try to steal from each other. When someone is in pain, we are there. When someone has a personal or medical issue, my broker takes on all of that Realtors work, their files, EVERYTHING and still pays the full 70/30 split.
Although he is not big in the social media world, he is a big part of my little world. And, because of all he does, I am proud to say that I work for Bill Baldwin of Boulevard Realty.
David: Thanks. I can’t disagree with anything you said on that one.
It would seem that Tere Foster’s model is close to what I am thinking about putting together here.
David: Do you happen to know if they do a split as well or are they paying the agents a straight salary? If so, it is paid whether they are producing or not, taken as a draw of commission earned, or not paid at all until the commission has been collected?
James – Tere Foster is a team inside a Windermere Brokerage
Ha! So once again my point is confirmed. Should be an independent brokerage.
Still interested how they work their compensation. Especially if the salary part is true. My guess would be that the salary applies only to the assistants.
Hey Marc,
Would your agents and brokerage support a “full service” approach to consumers? By that I mean core services (mortgage/title/insurance). It is a growing trend – as a way to deliver higher level of service, smoother experience to the consumer and also another way to run a profitable venture. We have all heard horror stories of deals falling apart due to bad loan officers, incompetent escrow companies – the list goes on. For brokerages like us who do it (we think) well, it is a critical part of our model, a way to differentiate in the marketplace and we earn every piece of business through high level service (kind of a way to RTB in mortgage/title/insurance – but that is another topic). Looking forward to your thoughts.
They are a team, within the brokerage, she has probably the best business models I know.
Business model is different from brokerage.
The salaries are set, but the bonuses are paid by contribution.
That is always the problem with teams. Every body thinks they contribute more, and every body gets greedy.
When I mentioned about the referrals it was an idea a Managing Broker suggested to me. It also fits into the Tere Foster business model. Three listing agents can generate a lot of leads for the Buyer’s agent. The buyer’s agent may do more deals. The listing agents can retain the referral fees.
So I asked Tere how it works and she pointed out that they do have weekly meetings. They also scrap a bit about the assistants. The bottom line is that every one works the week, every one contributes, and disputes should be settled quickly.
The best part is that over head gets paid. Health care gets paid. Vacations are paid. People can concentrate on the work, and keep a salary.
You can figure out the nut per month, set your goals accordingly, and move forward.
OK, you want outside of Windermere there is my idol Chuck Cady. Similar business model, within ReMax.
Shees.
Marc asks:
What happens when all these indie agents who succeed in building brands beyond the brokerage, decide they are so hammered, they need to grow and the only way to do so is to clone their vibe or risk losing what they built?
That’s exactly the position my wife and I found ourselves in a couple of years ago. We grew weary of giving our broker 20% of everything, and C21 corporate 6% in fees. For what? We go no leads from the broker, some guidance when (IF) we needed it, and the right to use the C21 logo and gold sign posts.
Oh, and he ran a three line add in a minor newspaper for our listings, which never made the phone ring.
Big deal. There was no point in forking over all that money for nothing.
So I got my broker’s license and we opened our own shop 2 years ago. No brick and mortar office (hence no overhead). The original plan was for it to be me, my wife and one friend who we put on a 90/10 split and charged $25 a month for E&O.
Two years later we’ve got 18 agents and a branch “office” in Tucson.
You know what the brick and mortarless office in Tucson cost me to set up?
$600. $250 of that was one-time set up fees for Tucson MLS access and state licensing. The annual recurring cost is $350.
We only hire experienced agents, don’t practice single-agent dual agency and have never recruited an agent — they come to us. We’ve turned down many “top producers” who don’t fit what we are looking for.
We’ve also had no — zero — agents leave our brokerage to work for another brokerage.
Know what has since happened to that traditional broker?
He had to close his office — the office he’d had since 1983 — and merge with an existing C21 office. He’s now an associate broker there with little to no control or direction over the operations. He’s an agent.
You want to see something interesting about work space, check out RETT — Real Estate Tech Tank. It’s a co-working space some RE types here are developing. No boundaries — any agent from any brokerage is welcome. As are lender, title people, home inspectors, etc. It’s a fascinating development and helps close the gap between a “virtual” brokerage like we’re running and a traditional office space where people can gather and work together.
@David
“It’s also about the juice. You haven’t lived until you have that $1.2 million dollars on the line hoping the deal works out. You haven’t lived until you’ve lost the $1.2 million dollars, or only thought you had.”
Just because we talk tech and not necessarily just real-estate doesn’t mean where any less, or more, of a Realtor.
My biggest deal to date was over $20M. Talking about sweating. You don’t know sweating until you have spent 3 years putting the deal together. Paying a New Homes Team a base salary during that time to help put the deal together. The commission was $1.8M. The developer stiffed me, and then proceeded to screw up the whole deal, screw up the builder team, and put the project out of business. Yeah I hired an attorney, paid out another load of cash. But you can’t get blood from a turnip.
One of my most rewarding deals was an empty Nascar Team building here in my little town I listed and sold in less than 30 days for $2.4M. Then proceeded to lease the building full in 9 months and got stiffed on the leasing commission.
I also know a lot about zoning and the whole land development process. So just because we don’t talk about it here, don’t think we can’t walk the walk.
Barrett Powell
The topic was brokerage, desk fee, or over sight brokerage.
What bothers me is when people who sell technology start referring to Real Estate agents as knuckle heads. The Glen guy at redfin claimed the world was against him and went to Congress. His business model is dangerous. It was illegal until the new law change. It’s called rebate brokerage, first introduced in the 1980s by Sears. Back then, if you used Sears, Coldwell Banker, to buy a house you could also get a free patio set.
If you read this thread Marc is driving a BMW and drinking Grand Marnier. His back ground is in music, but his mother and brother are Real Estate agents so he can help you.
The guy insulted me repeatedly, but hey, I’m a knuckle head and he’s driving a BMW.
Millions of people have lost billions of dollars in Real Estate transactions and the tech community wants to continue business as usual. Sorry, but I’m offended.
We need real life solutions to today’s Real Estate problems. Real Life does translate into experience.
@Jay,
You hit the nail on the head.
Tell me something – the 18 agents you brought on, was there a certain inherent trait you looked for in each? Something common that tied them all together perhaps that fills you with confidence knowing that this baby you and your wife birthed – Thompson Realty – is being handled as you both did when you started?
It would be great of you to share.
And I also want to say that what you have done is really what the next generation broker is and where these next gen brokerages are coming from. Disenfranchised agents who no longer need or want to be a part of that old brokerage model.
Well done man!
@Danielle
Representing Houston. You truly define transparent. Bill is a lucky man to have you. It appears my travels may bring me to Houston soon. When there, I want to shake his hand. And if it’s ok, give you a hug.
@ David
You’re a wonderfully frustrating, passionate, spirited, confusingly articulate individual.
In our last exchange you asked me for help. I willingly agreed. You never responded. Maybe you didn’t have too. Perhaps you needed a place to air your frustrations. Any regrets I might have had about not being able to fulfill my offer is now assuaged by your comments above. You just needed a place to vent and a person to lash out at. Glad to be of service.
But you have me confused with someone else. Not my style to insult.
Also, it’s my son who is a Realtor. I am very proud of him. He’s 21. Hold a license in 2 states. Go Ryan.
Also, I don’t sell technology. I do write about it. I’m rather fond of it.
Also, I like Redfin. They are just as much a part of this great, big, beautiful industry as any other company. Dangerous? How? Threatening? Sure. When threatened, one can bitch, run or fight. We have choices. I’m all about the fight.
I agree we need real life solutions. But I disagree that solutions must come from experience only. The saying “Out of the mouths of babes” comes to mind. We should be open to all thoughts, solutions and ideas especially from those with little real estate experience or those who venture in from the outside. That point of view has merit. It’s what I have tried to bring to real estate’s table since 1998.
Finally, I’ll ask you kindly to please consider sitting at the table with me, us, breaking bread and enjoying the meal here. Granted, it can get a bit spicy. I’ll bring the beer to help quench the burn.
I’m an independent brokerage as of about 6 months ago, referring most clients so I can continue developing my niche, because I have yet to find a brokerage [here] that cares about more than either the down line or the agent count. Heaven forbid they protect their CLIENTS from a new agent who moved from Hawaii to NC and knows nothing (at that point) about the area because for the 3 months she had lived in NC she was in RE school. “You are a great Buyer’s agent.” Ha ha. Shift this.
A brokerage like Jay Thompson’s would be my dream affiliation.
Susie,
Barrett Powell here. I was a presenter and worked on the ReBarCamp RDU a few months ago you attended. Jay would be lucky to have you.
Susie has leveraged Social Media as good or better than any other agent and has carved a very nice niche for herself.
If you were just a little closer to Raleigh…would love to work with you.
@Marc asks: “Tell me something – the 18 agents you brought on, was there a certain inherent trait you looked for in each? Something common that tied them all together perhaps that fills you with confidence knowing that this baby you and your wife birthed – Thompson Realty – is being handled as you both did when you started?”
There definitely are inherent traits we look for in an agent. But it’s hard to vocalize exactly what those traits are. It’s much like Supreme Court Justice Stewart Potter said in 1964 about pornography – “I can’t define it, but I know it when I see it” (paraphrased).
Ultimately, it’s passion. Primarily passion for customer service, for “doing the right thing”. I want agents who endeavor to deliver the ultimate in service to their clients. I want agents who aren’t afraid to tell a client, “Now is NOT the time to sell your home (or to buy a home)”.
I want agents with a passion for client service and a passion for real estate and a passion for life.
Sounds corny, but that’s really about it.
No Jay this isn’t corny at all. This, in my mind, is a brand element that you can absolutely work with on 3 levels. They are:
- In future hiring. If you can boil passion down to something concrete and induce it into your interview process for recruiting, you will increase you ability to locate it and be even more selective with what agents you bring on.
- In marketing. Passion is marketable. An interior decorator can design a room to evoke passion. A clothing designer can create a look that screams passion. A brokerage can a local business that evokes passion as well. There are so many things you and 18 super passionate people can do to light up your marketplace. And none of those thing are corny. My mind is already spinning with passionate ideas.
- In your core brand ethos. From today on, let passion rule every decision. In other words, when faced with a dilema of any kind, whether it regards open a new location and where or whether you should invest in a new application, ask this question – “how will that app or that new storefront convey the passion we have for our community, customer services, life and real estate?” If an answer presents itself, then do it. Without wavering.
One last thing – I would go back and look at all my assets and ask myself if they, in their current form, distill to my agents and the marketplace the passion you have. If not, make the list and throughout the year attend to each so that by 2011, Thompson Realty, from every touchpoint, looks, feels, smells, sounds, like one big wet kiss on the world.
And Jay, I can say, as an observer, mostly by reading your blog, that this passion thing you have is real. This is your brand thing and there is a lot that can be done with it so don’t think for a second this is corny or that you need any more than this.
Having one common core ideal and nailing is far better than having 10 disjointed words that sound good, but are never lived out or realized.
Thanks for providing this to us!