I found myself in cool mountain air, suited up and ready to speak to a group of real estate leaders about “The state of the industry.”
They had gathered at a lodge tucked between two mountains – a mossy escape from the day-to-day.
I like doing these talks, but I was uncomfortable in my clothes. And I was uncomfortable with what I had prepared for my presentation. I believed in what I had to say. It would even be useful. But it was incomplete.
I was leaving out that which was most important about the present state of the industry.
So just before my presentation began, sitting in the lobby of this lodge, carried away by the smell of wood smoke, I added three slides at the beginning of my presentation:
Intractable truth number 1:
Most real estate professionals are bad at what they do. This is not sustainable.
Intractable truth number 2:
Most real estate brokers and brands are wholly disconnected from the markets they serve. This is not sustainable.
Intractable truth number 3:
It is VERY difficult to foster excellence in this business. But survival dictates that we stop sustaining stupidity.
I know: It would have been better to throw down a bitchin’ Twitter strategy. But these truths – which have always been so but are now morbidly problematic – just had to be reiterated.
The slides stayed in.
I spent ninety minutes exploring the forces with which those in the room would need to contend in 2011. I was constructive. I gave concrete examples. I shared my opinions on how they might account for major technology developments.
But I did not – I could not – tell them how to recruit more new agents, keep more members from falling off the rolls, or keep those with a toe-hold’s grasp on the profession of real estate in the game.
Battlefield surgery
I spoke with a Realtor association executive after my talk. “How do I focus on supporting the true pros in my organization when I need to cater to bad agents to keep my doors open?”
Yeah, that’s tough. Coming from other people, this might have been “How do I grow a real estate brand and not enforce standards? Or “How can I create a great consumer experience when I have to accept that my sales force is 50% butt-heads in order to make money?”
My answer to these questions was….well, don’t.
It hit me, as I looked at this gentleman, that I was recommending suicide. This was not so helpful. It was stupid. But so was failing to address the problem. Like the accumulated toxins of a decade’s cigarettes, the disease within his organization would get him sooner or later.
What might be in order, then, is a sort of battlefield surgery – a bloody, screaming rescue in the open air.
Big and dumb or smaller and smart?
Can the NAR protect the mortgage interest deduction with 300,000 members?
Can an MLS charging 10,000 subscribers $50 per month survive charging 2,000 members $250 per month?
Can a brokerage grown fat on the empty calories of sub-professional agents get in shape without driving itself into the ground?
Maybe. I think it comes down to stomach and money. Do you have the stomach for the bloody mess? Do you have the money to ride out the short-term hits?
Many don’t. They’re drained of spirit and cash after 5 years of pain.
But some do.
I think the NAR does. If there was $20 million to throw at creating a database that already exists, well, then, there may be a few dollars to create a public-facing national database that shines light on the question of just who does business in this business.
Some MLSs do. MRIS, for example, has embarked on a strategy to deliver value to the active professionals in their ranks [Disclosure: MRIS is a 1000watt Consulting client, though we can in no way take credit for what they are doing]. Bob Hale at HAR went for it last year with his Agent Match application. Who’s next?
Brokers are in bad shape. But there are brokers taking the steps to focus on quality. Some of them are our clients. And let me tell you: It’s absolutely possible to create a real estate company you can envision existing 20 years from now.
We’re on the same page
What’s funny about saying things like I said at the beginning of my presentation is that no one ever disagrees. You might think that stating that half of all the real estate professionals in existence are so bad at what they do that they threaten the livelihood of those that are good would provoke some argument.
It doesn’t. In fact, despite all the whining about the media’s Realtor bashing, the most virulent Realtor-bashers are inside our industry. They are the thousands who can only chuckle, rant or shake their heads at the fact that our industry is so troubled.
It’s sort of an inside joke.
I’m hoping we come up with a better punch line soon.
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Brian,
Your article summed up in one of your classic one-liners…
“It is VERY difficult to foster excellence in this business. But survival dictates that we stop sustaining stupidity.”
Spot on Brian.
At some point each brokerage must decide for itself “are you in a race to the bottom” or are you going to focus on building a sustainable model for profitibility and survival. And than have the courage of your convictions moving forward.
Welcome to my nightmare, Brian.
Whenever you guys want to do some battlefield surgery, and you’re not afraid of getting some blood and guts splattered on you (some of it your own), let me know.
Rob and Brian, I’m in on the battlefield conversation. Let’s tee-up a call to explore together
Well said. Having been in the business for over 20 years if there is one thing I can say is that there should be much fewer of us. From what I have been told, a full 1/3 of the agents in my board did NO business last year. Although there are agents out there that I think are awesome, they are the rarety.
Scott – I would say that question needs to be answered fast, too.
Wow!! The unvarnished truth! The conflict you felt/feel is palpable. And Scott is absolutely correct. It is a “race to the bottom” for alot of folks. The fact that so many associations (local, state and national), brokers (large and small) and MLS’ (of all types) continually cater to the least common denominator. We all feed the beast failing to acknowledge that volume dilutes the mix rather then increasing its potency.
Excellent post. Thank you!
Wow!!!!
Is this a state licensing problem – anyone who pays a fee gets to take the test ????
Is this an State Association Problem of admitting anyone with a license who pays without any standards
Is this a Brokerage problem who hires on the hope the numbers will make it worth while
Is this a public perception problem who believes any Realtor can do the same job for any price
The issues are many, the solutions are only painful for all who has to pay the price of change
One last thing, The laws make the assumption in California, that the broker of record is actually involved in every transaction and has transactional knowledge, when that broker of record may have over 1,000 agents in 20 offices over several counties under his license ??????
We need to get reality in here some where
My $.02 worth
Brian; I know its unpopular to point this out, but the issues you raise here go far deeper than some perceived lack of accountability or brokerages being held captive by unproductive agents, The problems with the industry are more a function of the broken business model where real estate professionals work on spec – with no assurance of payment. Solving that problem would allow for realignment of companies expectations, agents performance, and different levels of accountability. But its way too big a conversation for the comment section of your blog
Bill – I agree. The problem is structural. There are a hundred ways quality is undermined by the current business model. I see some making it work within this structure, but it’s damn tough.
You only have to look as far as the large commercial brokerages for a business model. Cbre, Newmark, staunch, C&W etc, make it work. For the most part they hire people who have talent, and make them adhere to performance standards…and it works. They laugh at the residential agents, and cringe when someone mentions them in the same breath.
Brian you said it a long time ago…this is a business run by people who learned it the wrong way, and not teach it the wrong way.
The good agents /firms just have to learn how to compete against idiots, and not be afraid to do it. Nothing wrong with slamming your competition for not being as good as you. Apple does it to Microsoft, and now tmobile is doing it against Apple…and ATT and Verizon go at it too. My creative juices are already running wild.
Brian, these are great questions, but we are not ready to answer them yet. First we need to decide and define what we mean when we say agents are not professional. Right now, what you see as “professional” is not what the next person thinks is professional. With this in mind, the PA Association of Realtors is getting ready to embark on a project to define what a professional looks like. After we do that, then we can answer your questions and make a dent in the universe.
Good point. Look forward to your answer! Just please don’t make it another designation
Brian,
Ha! No worries about another designation being created. The plan is to actually use the criteria as the basis for a rating system that hold agents publicly accountable for this performance. Hmmm…set industry benchmarks and then see how agents stack up. In most businesses, that is filed under duh! Hey, maybe that could be our new designation… the DUH.
Right on. Please let me know how it goes.
Nice work, Brian. What you are describing plays out every day in real estate offices across America. The term, tyranny of low expectations, comes to mind. It is frustrating trying to communicate to prospective clients on the internet that there is a difference between the Pros and the Joes. If they take the time to look a little deeper, I’d hope it would be obvious to even the most casual observer. Sadly, it seems very few people draw a distinction between real estate agents – they just assume most of them are part-time hair dressers looking to make a fast and easy buck. The scary question to ask next would be ‘is it true?’
Here’s to higher standards!
[...] when I read what Brian Boero of 1000Watt Consulting had to say, it definitely rang true with me. What the industry needs to do is cull out that which does not [...]
Since the the barriers to entry in this profession are so low – and will likely always be – then it seems to me that our industry will always have a large swath of mediocre agents and brokerages. I don’t see this changing. Ever.
If an enterprise can understand and apply evolving technologies and new business models that provide *superior value* at *lower cost* to the consumer, then it’s a fantastic time to be in this industry.
You have a choice: moan about the poor market, low standards, blah, blah, etc; or take advantage of the change and be better, smarter and faster. At the end of the day, the market and our consumers will reward the ones who get it right. The sign-up-as-many-agents-as-possible model doesn’t seem to be the future, nor does the no-value-add-discount model.
The future is somewhere in between. It’s an exciting time.
Bruce – You could be right that the industry may not take the steps necessary to right the ship. But I do think it will happen in time anyway, with or without the participation of those on the inside.
Great observation Bruce! Indeed this is an exciting time and with people like you to help all of us draw the distinctions, we will get there. Thanks!
Kudos!
Delivering that message takes courage that few exhibit.
We live in exciting times.
Nancy – thanks, but it took zero courage to say what I said. The hard part is acting upon these widely agreed but vexing facts. As I noted, practically no one disagrees with me. But I do think it’s important to acknowledge reality in any serious discussion about this business.
Thanks for posting the brutal facts. Saying it out loud will help practitioners muster the courage to spawn their own conversations.
Brian – great post. I think ultimately many, many issues in this industry – and certainly the ones you outlined in your post – can be traced back to the often time contentious relationship between agent and brokerage.
As Scott mentioned – it indeed at times feels like a “race to the bottom,” and perhaps this is because agents do not lean on their brokerage for support, guidance and assistance, and conversely, perhaps there isn’t enough guidance, support and assistance given to agents by brokerage.
A long-term solution to this MUST start at the brokerage level – and at the brokerage level there are a lot of hard, gut-wrenching decisions that need to be made. Brokerage MUST take ownership of training, processes, marketing, coaching and advice given to agents as a first step – agents SHOULD be utilizing brokerage for that anyway (in my opinion) instead of paying thousands of dollars annually to outside coaches and “gurus,” who at the end of the day, are really disinterested third-parties as they have absolutely nothing to do with the Consumer-Agent-Brokerage relationship, or the real estate transaction itself.
In a nutshell, Focused Brokerages = Better Agents = Better Industry.
Amit. Big call from you for the brokers to weigh in. I like it. And while I appreciate the battleground metaphors from well intentioned folks on the sidelines, I am sure they would all agree that the major players (starting with brokers) first need to engage. Competition being what it is, brokers will look to advantage themselves at another’s expense. To extend your line of thought, this could be a very good thing to occur. The services you describe are at the core of a successful brokerage.
Brian,
The business model is not just broken, it never made sense in the first place!
Many brokerages, in an effort to maximize revenue, hire newby or unproductive agents who they can saddle with a 50/50 split. Knowing that the odds of these agents generating fees on a consistent basis is unlikely, this led to packing more agents in an office until the odds are improved. Then, realizing that they have an office full of inexperienced, unproductive agents who need to generate revenue for the company, they shout from the rooftops their alleged superiority in hopes of conning the public.
I worked for a brokerage here in Atlanta where the two “managing brokers” would call every agent in sometime in December to discuss their business plan for the coming year. The conversation usually went like this, “So, Mandy, what are your business plans for the new year?” Mandy would respond, “I’m going to sell $5 million”. The brokers would respond, “That’s great, Mandy. Let us know if we can help.” “Next please!”
There was never a hint at “Gee Mandy, you did $1 million this year and you’re talking about a 500% increase.” No questions about lead to appointment conversion ratios, nothing about what percent of her listings closed – nothing. Unfortunately, I see a lot of our industry being led by empty suits who would rather charm the public into doing business with them than in having a smaller office with highly competent agents and hands-on management.
Whew! I’m glad to get that off my chest! I’m feeling better already!
Beautifully said.
Has the time come for alternative to the NAR and the designation Realtor? Perhaps change from within is structurally and culturally impossible or at least extremely difficult.
There are many of us out there striving for excellence in the profession, but sometimes it feels like swimming up stream in a flash flood.
1000 Watt. Thank you for leading and encouraging!
The NAR and the Realtor designation is worthless. Consumers could care less about it. And every time i write a check for my dues I don’t wake up the next morning feeling like I suddenly have ethics. It’s onlybworth something tonthosenwho have nothing else to “brag” about. They may do some good foe various issues, but I think they do more harm than good. Saying you have a 4 year degree from a good business school has more meaning, and we should only hire people who have that as a minimum
From my experience…80% of the agents out there are shitty!
Just had to cancel escrow on a deal where the Agent didn’t know he had to get a HUD-1 from escrow to start a short sale. BTW, this Agent was actually a licensed broker. Ridiculous!!!
It amazes me when I talk to agents and the first thing I ask them is “Do you use Docusign?”. They usually answer with “No, what is that” or “Ya, our office has that”. If your office has it, then why don’t you use it? This is 2011 people.
And I’ll tell you what’s not helping, the Associations and the MLS’s!
Brian….great article!!! There is no question that companies are built around a few top producers and droves of underachievers. We (as company owners) can whine, make excuses, and blame the agents or we can build something different. Delivering tools that no one uses or providing training 13 times a week that no one (other than the top 3%) attend isnt the answer. Being available to agents and being engaged with the agents are two different things. We cant sit quietly on the sidelines and complain about the outcome of the game.
So the irony is this…there a minority of agents that do most of the business. We know that. The funny part is that I know of some VERY successful agents that come from humble backgrounds. For example, Nate Buie from Fort Collins Colorado was a pizza driver before going into real estate. Nicole Charles in Madison Wisconsin sold Mary Kay products prior to selling homes. Both are hugely successful agents. They don’t have Harvard MBA’s, rather they are regular folks that busted their ass to do a great job. The top agents of the future are just like the top agents of the past, those who put in the time and effort will reap the rewards. Knowledge and skill are table stakes in a tough market like today.
Josh, coming from a humble background and doing well is a great thing. However, when buyers are looking to risk a huge chunk of money to buy a home, or sellers are looking to sell their prized asset which they may very well be under water on, don’t they want someone who has the education and otlr a real business background to guide them…rather than someone who’s in the business, but doesn’t have the real qualifications to be in it? This isn’t fun and games anymore. People now see the devastation that’s comes from making tje wrong decision. The right decision can’t be made with someone who isn’t a “true” expert in all facet of the business. A tour guide can ruin your life. It’s really tough out there, but would you trust the value of your home, or buying one to just any agent. Anyone who does that is stupid.
It’s time for the industry to clean house. As someone else suggested here, maybe it’s time for the NAR to have some competition…consumers would love it!
Steve, some of the most educated people with top schooling were involved, and/or created, this housing “mess”. Not sure that a business degree (or any other degree) should be a standard to judge by. I do, however, believe that requiring more continuing education could elevate the industry.
Sometimes the person selling their most valuable asset simply wants the agent who will either (a) do it for the least commission or (b) tell them the inflated price they want to hear. Unfortunately, many sellers base their choice of agent on these things, not on how “good” the agent is.
Steve,
I appreciate your comment that people want a “true” expert in the business. However, there’s a lot of “expert” home builders, brokers, and agents that are getting out of the business right now because they were overextended. Hindsight is easy when markets correct, but even the best business leaders of any type can make mistakes. If another business were to lose 25% of it’s sales (gross revenue) in a year, how well do think it would do?
Hindsight is an excuse for not paying attention and not paying attention to all te dynamics that affect your company. Builders, take risk because some of their homes or projects come online years from now, whereas realtors sell something that’s priced for the moment. Tell me you didn’t see the market starting to slow down a few years before the crash. And tell me the wiz kids at the NAR didnt see it happening, and refused to sound the alarm. Its time to stop making excuses for everyone, and it’s time to start owning to the failures an start accepting responsibility. You’re either great at what you do or your not, and we have far too many nots.
[...] [2] Hard-truths-and-no-argument [...]
Intractable truth number 1:
Most real estate professionals are bad at what they do. This is not sustainable.
Intractable truth number 2:
Most real estate brokers and brands are wholly disconnected from the markets they serve. This is not sustainable.
Intractable truth number 3:
It is VERY difficult to foster excellence in this business. But survival dictates that we stop sustaining stupidity.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Truth A. Facebook, Twitter, Blogs, all are a means to the end> they are meant to direct prospects to you to set up a face to face meeting to discuss real estate needs. You have not accomplished anything until you get that meeting.
Truth B. Agents do not sell homes over the Internet. They sell homes by setting up appointments, meeting, getting the customer/client into the back seat of their car and viewing homes. Agents can not generate a connection with buyers via email. Face to face, multiple contacts/appointments, TRUST in the agent are components to generating a sale.
Truth C. Agent failures are based on not being able to find the true desires/needs of buyers. Email, Tweets, etc will not give you this. You need to view the buyer viewing the homes. Real estate purchasing is a comparison purchase. If you are not showing homes, you are not selling homes. SALESMANSHIP helps to direct the search for the list of homes that meet the needs of the buyers. Discussion of the pros and cons of each viewed property helps the buyer in the selection process.
Truth D. When the buyer closes on their new home, they will state how “They” bought the home, never giving proper credit to agent that took the buyers needs and desires to find the correct mix of price, size, condition, location, etc. The job well done is almost never fully acknowledged.
Truth E. If the Agent does not believe we are in a great market to buy, the purchaser will not buy. Agent attitude is everything. This is a great buyers market, and if an Agent can not convey all the reasons this is the best time to buy over the last 30 years, they should hang up their license.
Leul
full time Realtor since 1975