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Big box broker lays off thousands, puts best producers on salary plus commission

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Rethinking the impossible

People talk about raising the bar all the time and many, including myself, have placed that responsibility mostly on real estate brokers, and associations. The truth is, brokers are challenged with technological advances, shifting consumer demands, economical constraints, and growing pressure to provide more services and lower commission splits.

This seems like the normal challenges of any business in a modern economy, but the broker’s challenge has always been greater in that there is a leak in the model. The leak stems from the fact that their salesmen aren’t employees, they’re contracted labor. Ultimately, this means that many of the demands a normal employer would place on their employees, a broker cannot require without risk of qualifying the contractor as an employee, thus requiring the broker to provide benefits to the employee. This is obviously simplified, but that’s basically how it breaks down.

Loyalty between brokers and agents

Any Realtor in any city shows up to work when they feel like it, leaves when they feel like it, and can pretty much do what they feel like, including bailing on broker A for broker B at the drop of a hat. The loyalty factor seems low for brokers in general, in that there seems to be a broker in the wings ready to accept the influx agent to their team.

What’s the incentive to train or develop any agent when the loyalty factor is so low? And with an inability to place typical employer to employee demands on the agent, the writing is on the wall that brokers continue to be doormats. One agent I know has had three brokers in the past year, yet still there was a willing broker ready to sign them up.

The broker advantage

It’s not like the broker doesn’t have certain advantages, obviously they escape the need to present the contractor with the typical benefits an employee would receive, they don’t have to provide salary for under achievers, the door swings both ways and the loyalty factor to the contractor can remain low unless they’re a top producer.

The consumer disadvantage

What’s unfortunate about all of this is the consumer isn’t really left with much choice in the market place. If you pull the curtain back on this scene and consumers see the truth that there really isn’t much difference from brand to brand, the so-called real estate industry has a credibility problem.

The credibility problem is in the endorsement of the agent or the broker in either direction, neither really have a value proposition. The broker is not known for having the best agents in the business, nor are the agents with the best broker in the business, after all, the broker is expendable, right? So if you’re both expendable to the other, then ultimately your brands and services are expendable to consumer.

Folks can talk until they’re blue in the face about raising the bar, and it probably feels great to yell into the wind, but until someone patches the expendability issues between these two parasites, creating a true need for a symbiotic relationship, we will always have credibility issues with consumers.

One possible solution

One thought is the salary plus commission model that Redfin has in play. If you remove the discount from their model, and view solely their play in customer care and client care, you see that the model can work, they’re profitable and just turned five years old. The flexibility of the salary plus commission model allows the brokerage to expand and contract based on market conditions market to market, and in up periods, commissions expand with the market keeping salaried commissioned sales teams solidly in tact, as well as retracting allows the model to downsize just as any business would in a down cycle from market to market. Dead weight is shed off for the highest producing and strongest team players.

The value proposition within this model is brand loyalty from within, with team members working the phones and doing the business of the brokerage in shifts, executing proven sales systems with set expectations by the team managers.

Redfin is certainly not the first to look at this model, but they’re certainly the first to execute it, and they did it by raising capital. Their funding is what allows them to carry the costs that consumers do not understand is the value of the traditional broker. In a salary model, consumers would very quickly learn the value of the broker as they would now pay for this risk to be carried by the broker as a part of their service. Suddenly, the value of the commission in play is as plain as day in black and white. Certain states would have problems right up front as laws have been put in play to stop disintermediation of tradition, but these laws could quickly be reversed if the value for consumers is solidified by doing so.

How boutique brokerages would fare

Another added upside to this model is you would quickly see small boutique brokerages either fly or fail. Two things are in play, the top one percent of agents would certainly need a new broker as their business models depend on their ability to be independent, however, their income will not be enough to sustain a boutique as most top producers pay very little to hang their license anywhere.

The National Association of Realtors’ role

There has been some debate that turning to this model would begin to disintermediate the National Association of Realtors (NAR) from the membership at large and return it to a broker only club, but we suspect it would actually create newer and more exciting opportunities for NAR in terms of value to members.

Ultimately, turning freelance real estate professionals known as Realtors into productive salary plus commission employees satisfies a lot of what’s wrong with the so-called industry, but also creates new challenges and a new frontier. Until the broker and the agent see a real value in the other, you really cannot ever expect consumers to experience it.

Layoffs and a new value?

If a big box broker shifted to this model in the next five minutes, the first thing that would happen would be major layoffs of dead weight, keeping the brightest and best talent in house. A value would immediately be placed on the individuals left at the big box in terms of that base salary, and Monday morning, at 8am the brightest would show up for work ready to meet sales goals and expectations.

Benn Rosales is the Founder and CEO of The American Genius (AG), national news network for tech and entrepreneurs, proudly celebrating 10 years in publishing, recently ranked as the #5 startup in Austin. Before founding AG, he founded one of the first digital media strategy firms in the nation and also acquired several other firms. His resume prior includes roles at Apple and Kroger Foods, specializing in marketing, communications, and technology integration. He is a recipient of the Statesman Texas Social Media Award and is an Inman Innovator Award winner. He has consulted for numerous startups (both early- and late-stage), has built partnerships and bridges between tech recruiters and the best tech talent in the industry, and is well known for organizing the digital community through popular monthly networking events. Benn does not venture into the spotlight often, rather believes his biggest accomplishments are the talent he recruits, develops, and gives all credit to those he's empowered.

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50 Comments

50 Comments

  1. Mytitleguy

    April 9, 2011 at 4:50 pm

    I liked your article, certainly interesting. I can see how allowing top producers to be employees would work. Systemizing the sales responsibilities of agents, where there currently is none could be a great thing for the agent, the broker and the consumer. I agree, there is a lot of, as you call it, “dead weight” in The industry, a by product of low barriers to entry and very little training required. I don’t see how it would restore any credibility with the consumer though. I was in the title industry for 10 years. One of the things I quickly realized that most agents and brokers choose to ignore is, most consumers – 97% could care less about brand A or Brand B. They want a product, the product is not the agent or the broker – the product is the house. It’s why a brand new agent sitting a multi million dollar listing open can sell it – most consumers will choose the 1st agent they come across when they identify a home that fits their needs (loyalty is out The window) the agent is in most cases, is a means to an end.

    The days of agents and brokers controlling access to information are over, the info the consumer wants is now on the Internet, it’s one of the reasons most consumers do not differentiate between agents. I think the employee model may be a good thing as I believe we will see more pressure and more competitors In the information space. NAR has been able to hold off a lot of the competitors that want to release all listing information and make it public, but they won’t be able to do it forever. Ultimately, Consumers want transparency and value. In this new reality, the most technology embracing agents and brokers will succeed, what’s amazing is (from my experience) most of the brokerages and agents I have seen are still fighting this new reality. Adapt or Die. Period. Great post.

    • Benn Rosales

      April 9, 2011 at 6:49 pm

      “I don’t see how it would restore any credibility with the consumer though.”

      Right, not for the industry, but for that particular brand, it would based on it’s reputation.

      • Mytitleguy

        April 9, 2011 at 9:05 pm

        I see. Do you think consumers care about the brand though?

  2. Ken Montville

    April 9, 2011 at 6:14 pm

    All very interesting and all very shouting into the wind, as you say.

    Even in other professions (industries?) that have a salary plus commission model in place, loyalty from either “employee” or “employer” is at a minimum.

    Further, this discourages the entrepreneurial (can we say “Ayn Randian”) motivation of the top producers. It would encourage Brokers to reduce services to their agents (independent contractors/entrepreneurs) and race to the lowest cost possible to increase their profit as much as they can at the expense of a supportive work environment for their “employees”.

    On another note: I have often wondered how a fee for service model would work with the consumer. After decades of working with a commission based system, what would be a good critical mass of real estate professionals be to change consumer behavior.

    You may think that Redfin is the bee’s knees and cat’s pajamas. I’m not so sure.

    • Benn Rosales

      April 9, 2011 at 6:37 pm

      Hi Ken,

      “Even in other professions (industries?) that have a salary plus commission model in place, loyalty from either “employee” or “employer” is at a minimum.”

      Do you have these statistics for the companies you’re referencing? Please be specific. I’ll rebut with Zappos as my key example to give you a head start at the bar you need to set.

      Further, this discourages the entrepreneurial (can we say “Ayn Randian”) motivation of the top producers.

      Of course it doesn’t, hang it with a broker that caters to non-profits. Become a broker, or face being valued. This brokerage model simply competes on volume.

      “You may think that Redfin is the bee’s knees and cat’s pajamas. I’m not so sure.”

      All I have is their showcase of loyal consumers, ratings and reviews of their staffs, their exact model in black and white, and their policies in the public eye.

      It’s easy to sit around and debunk things, hell, even I can poke holes in things that are actually tangible, much less a concept. I knew the resistance before ever writing this piece. Now what I need from you is not to attempt to flippantly insult me, but to actually give specifics based on a business concept, not fear and tradition.

      • Ken Montville

        April 11, 2011 at 7:50 am

        Benn,

        I’m not a statistician. Never have been. Never will be. I know you like Redfin for all the reasons you mentioned. I’m not really sure it’s something that will be attractive to others outside the narrow demographic of young, hip, affluent and technically savvy 20 and 30 somethings. That’s fine.

        I’ll work with the moderate income, blue collar, middle aged home owners that realized equity in their home and savings in the bank were worthy values. Oh, and they don’t mid exhibiting their verbal skills.

        I wasn’t insulting you any more than you insult Realtors, real estate agents and Brokers that don’t adhere to your personal vision of a technological future where people simply buy and sell real estate through “Wowie Zowie” tech tools.

        RE: Loyalty in the workplace. Sure. Zappos is a wonderful company (I’ve read the book). But you only need to look through the Fortune 500 or virtually any other business index to tick off a list of companies where management is most concerned with bottom line profitability at whatever cost…including overseas outsourcing and zero loyalty to their employees.

        Why does the next generation have prospects of multiple careers during their working life? Boredom? ADD? Or just plan lack of loyalty?

        Loyalty is a personal value much like integrity and commitment (among others). It is instilled in children by their parents and nurtured by society. When it becomes obvious that loyalty breaks down in the work place, it breaks down everywhere (look at the divorce rate). This is more of philosophical discussion, though, and probably not relevant to the Brokerage of the Future.

    • Bruce Lemieux

      April 9, 2011 at 6:53 pm

      Ken – I also think that a fee for service model may be a piece to the puzzle. When I discuss commissions with a seller, I acknowledge that it’s a lot of money. A big part of that discussion is that 100% of my time and money is at risk. If the home doesn’t sell, I get nada. Instead, what if the seller shared in the risk? Pay a meaningful and non-refundable upfront fee, and then receive a smaller commission-based fee at settlement? The seller shares the risk, and ultimately pays less. This I could live with.

      For buyers… I just don’t see them paying a fee when they can get it for free.

  3. Bruce Lemieux

    April 9, 2011 at 6:42 pm

    I’ve been thinking a lot about compensation models lately. I agree that that the traditional commission-only/independent-contractor is the primary reason there is such a low bar of excellence in our profession.

    Getting to a salary + commission bonus would provide financial incentive to produce, give the agent the benefit of a predictable minimum salary, plus give the broker the leverage to implement real value-added standards to elevate the consumer experience — and develop a differentiating brand. Seems like a good thing.

    Still – a couple of key challenges:
    – What’s the right mix of salary vs commission? The more emphasis on commission, the stronger incentive to produce – very important to attract talent (and have a profitable business). Yet, if salary is too low, the agent loses a meaningful, predictable income.

    – The broker must be more like an employer: real training, evaluations, career development, daily management, etc. All great things for the consumer, but not things brokers are accustom to doing. Brokers currently: 1. recruit, 2. deal with issues, 3. motivate/fluff-up agents. This isn’t the right skill set to manage employees.

    I agree that Redfin is one to watch. There’s a lot they are doing that I admire. However, I’m not convinced their formula is quite right. IMO, I think they hurt themselves by giving 50% back to buyers. They aren’t selling value, but they are selling cheap. As a result, I would think they attract more do-it-yourself, don’t-expect-much-service types. I guess that’s more a critique of their business model, not their compensation model.

    I keep waiting for Rob Hahn’s thoughts on this topic.

    • Benn Rosales

      April 9, 2011 at 6:51 pm

      Love the thinking here – right, I actually think full service works under their model, and they’re underpriced, but hell, every market is different, who knows if it would even be the same pricing strategy from market to market?

    • Benn Rosales

      April 9, 2011 at 7:17 pm

      PS your #1 point is a real challenge in say Unionized states as it would be incredibly expensive to operate there, however, you could vary the model.

      Also, if I were the broker in this position, I would base salary/commission on the department, skill level, and need. Obviously, I want the best doing what the best should be doing and equalized pay just like any business model.

  4. Jonathan Benya

    April 9, 2011 at 6:50 pm

    I’m missing something here. What good reason do I have to adopt this model, from a personal standpoint? A good agent should excel in any pay structure, so why have the Broker making more money off of me? This benefits a mid-range agent (3-12 deals/yr), but a lousy agent would just end up with a pink slip (probably not a bad thng, I admit), and a top producer would be angry they were making so much less. You may as well say so long to entrepreneurship in the industry.

    • Benn Rosales

      April 9, 2011 at 7:07 pm

      Well, if you’re in the top 1% I congratulate you, the broker would in fact be making more off of you, until they took your market share and you applied for a job, or the 1% guy can out race using his entrepreneurial skill.

      This is pure capitalism, so just reverse everything you said. (playing devils advocate) Why do I care, I’m a broker who wants to be a value to consumers and employees, I’ll provide them a marketing department to send their listings, and a sales team to generate leads, and internet marketing team to handle digital sc and deals to handle and close, and I’ll pay them competitive salaries and varied splits to reward them, and probably a bonus too.

    • Bruce Lemieux

      April 9, 2011 at 7:31 pm

      The thing I love about this business is that it’s perfectly suited for an entrepreneur — be smart, work hard, do the right things and you can built a fantastic business.

      Looking at the industry, however, how can the profession be elevated? Neither NAR nor our local boards will lead the way. If it happens, it will come from new business models and the brands that represent them. The current commission/split model doesn’t lend itself to creation of new, valu- added brands. The broker must control more of the process (IMO) to create an experience that truly resonates with consumers.

      Going back to Redfin. I just looked at their stats for buyer sides in MRIS (Metro DC). 15 agents have 154 contracts in 2011 with over $80M in volume. Even with 2 new agents (I assume), this is an avg of 10 contracts/$5.4M each and we’re only 1/4 into 2011 (its actually higher since I can’t see contingent contracts). That’s phenomenal production. And if 1/2 of the commission volume went back to buyers, this is a clear value-add to the consumer.

      Now I don’t think that a brokerage needs to sell ‘cheap’ to differentiate themselves like Redfin. But, this their model – which depends on a mix of salary + commission (I assume it’s not all salary) – clearly has traction. Like Redfin, I think a salary/commission model will truly allow a brand to differentiate itself from everyone else. And in doing so, raise the perception of professionalism in our industry.

  5. Kevin "Troll" Tomlinson

    April 9, 2011 at 7:39 pm

    I read it all. Kind of made my hair hurt. Nothing is gonna change.

    All this theorizing hurts my brain.

    Is @ardelld the president of Redfin?

    • Bruce Lemieux

      April 9, 2011 at 7:48 pm

      Yeah, you’re right. Enough procrastinating. Back to work.

    • Ken Montville

      April 11, 2011 at 8:04 am

      Kevin,

      I love the “troll” part!

      You’re right. Nothing is going to change that much. Not necessarily because of the way Brokers behave or change. More likely it would be a difficult and long path to get consumer behavior and expectations to change.

      The first time I told a Seller their CMA was $50 (or more) would be the last time I heard from them. If I asked the Seller for $3000 up front to cover marketing, a lot of them would say “bye-bye”.

      Then there are the “intangibles” – my time to negotiate terms of the Seller’s behalf, time to negotiate inspection items, time to meet the appraiser, time to interact with the mortgage and title companies. I have to pay my own mortgage, insurance, taxes, food, etc. Do I get to charge a little more to take my wife to the movies? A play? On vacation?

      If my “fee for service” was roughly equivalent to the percentage I charge now, would the consumer care or notice?

      You are soooo right. This whole discussion is %^#&

  6. Fred Romano

    April 9, 2011 at 9:41 pm

    So why would any serious “top producer” want to go on salary plus commission? I would think they’d be happy making lots of money as an independent contractor and would most likely make a lot less money in this hypothetical scenario.

    Also, if Redfin was that great they would be in more markets, but they are not. I think their model is seriously flawed and the only reason they are open is because of their discounts. I can not see a “full service” Redfin style model with no discounts working! – Fred

    • Benn Rosales

      April 10, 2011 at 8:47 am

      In a capitalist and competitive world (devils advocate here) as a broker, why in the hell would I care what happens to the top producer? I want what they got, right?

      As for Redfin, it doesn’t matter if their model is exact, because most companies operate under the model I’m describing. It’s hard to imagine a paradigm shift away from needing 1,500 ‘agents’ in a single market when truly you really only need 5 and an office staff to handle the paper. Spread that from say 10 markets in central texas and you’re only salaried plus commission for 50 executives, and the rest are locally centralized hourly phone banks, a media department, marketing department, training and hr.

      You would no longer have a talent leak, you’re desired because you own market share, and the best rises and the least crumbles.

      That’s one answer, I got like 50 different ways I can go with this.

  7. Jordan Gilbreath

    April 10, 2011 at 8:23 am

    Thought provoking!! I’m all for it. I’m a team player in the office, I meet my desk cost, I’m ethical, & I work hard for my clients–put me on salary! I deserve it. 🙂

  8. Benn Rosales

    April 10, 2011 at 9:14 am

    Marlow Harris doesn’t agree with me and opines her usual anti-redfin spin, but I’ve never said redfin was priced correctly, only that smaller can produce volume transactions in a corporate environment. She sites no evidence or proof that it takes 1,500 agents in a single market to produce volume, nor does she address the eternal leak the traditional broker has in terms of talent. She never addresses that only 20 percent of a given market of agents produce, the other 80% are dead weight, a training expense, and a waste of focus. Hire them and put them on the phone to execute systems at 10 bucks an hour and they’d be doing better than they are now. Floundering conference going wannabe’s. It’s exactly the 20% that you’re competing for and you can’t do that wasting your time with mediocrity.

    Love you Marlow.

    • Fred Romano

      April 10, 2011 at 10:27 am

      So Benn, what defines “talent”? I mean it’s not rocket science to work with sellers and buyers. Anyone can do it, and do it great. It’s all about customer service and having a great personality. IMO Houses sell themselves when shown in their best light and priced right.

      • Benn Rosales

        April 10, 2011 at 1:14 pm

        It costs money to train and develop people, it’s better to provide a ladder than an escape hatch. From the moment you hire, the broker in this scenario now has control of who/what he/she hires, where in the past, the agent believes they’re the value, and they are, but now it’s the things they’re actually talented at. Not all closers are amazing marketers or photographers, so why not just hire them to do what they do best.

        Again, your model handles volume with small company. You’re not spinning your wheels being all things to all people.

      • Bruce Lemieux

        April 10, 2011 at 4:21 pm

        Fred – saying “it’s not rocket science” and “anyone can do it” says you don’t understand the business. If houses really sold themselves, this industry would not exist. The Zillows, FSBOs and flat-fee listing models would have taken over long ago.

  9. BawldGuy

    April 10, 2011 at 11:47 am

    Not being Devil’s Advocate, as some opine that on this subject I am the Devil. 🙂

    So tell me, how much salary are you gonna pay Russell Shaw? Or me? Or anyone else who produces superior results? This model simply cannot afford the top producer as it’s defined. They can only pay those they think might become one. Even then, they’ll look at Russ or many others and wonder if, when they made their decision to become an employee, they were drunk.

    How much will they pay an agent used to making six figures monthly? The answer is (drum roll please) not a dime — they can’t afford to pay the salary of a truly top producer. The only way this works is if somehow top producers are forced into it.

    Of course, that doesn’t begin to address the second tier of agent, the one who consistently makes $20-50,000 a month. Hell, that’s barely what real top producers pay in expenses. What are brokers gonna pay them? Again, if you’re a Dallas or Austin agent, making that kinda money, you’re gonna laugh any broker proposing employee status out of your office. It’d become a favorite story for happy hours.

    Tell me where I’m wrong, I can take it. 🙂

    • Benn Rosales

      April 10, 2011 at 12:43 pm

      Show me yours or Russells business plan, and I’ll tell you. 🙂

    • Benn Rosales

      April 10, 2011 at 12:55 pm

      PS are you selling houses now? If not, then you wouldn’t fit into this scenario at all.

      Russell however is perfect proof it doesn’t take 1500 agents to dominate a market. However, if TP A is spending 1/2 million a year just in advertising, and another quarter million in general expenses to make a million in personal income, then technically, his annual salary with commission would be worth $200k or so, however, what I’m suggesting here is a big box is now competing on his same overhead if not better because as you and I both know, you and Russell technically couldn’t exist in the same market as there is only so much 20% to go around.

    • Bruce Lemieux

      April 10, 2011 at 4:11 pm

      Russell or others with very high production wouldn’t take a salary. They are really CEO’s/owners in their own business, aren’t they? It would be interesting to know how he compensates his sales team members (not marketing or admin). Are listing specialists and/or buyer agents purely commission-based, salaried, or a hybrid. How does he keep *his* ‘top producers’? If he pays salaries, does he enforce standards, min. hours worked, training, etc.?

      • Benn Rosales

        April 10, 2011 at 5:34 pm

        Bruce, he would probably answer a direct question from you by email, he gladly gives away his playbook. if you click ag index on the side, find his name in the contributors list- his info is there, or Google him haha

  10. Fred Glick

    April 10, 2011 at 3:28 pm

    Dude, what are you smoking.

    I have been fighting, suing and negotiating with the Federal Reserve of the United States because this is wha they forced on mortgage brokers.

    And, we have already seen mortgage people forced to give higher rates, ripping off their clients and wholesalers going out of business.

    The flip side should be for every business, everyone on commission. If you don’t perform, you don’t earn.

    • Benn Rosales

      April 10, 2011 at 5:21 pm

      Um, I’m smoking capitalism, and the concept of the Broker actually operating a business, not a stable.

  11. Susan Milner

    April 10, 2011 at 4:13 pm

    I see a lot of ‘top producers’ are upset or curious how they’d make money. I see two options for them. 1) open their own brokerage and work for themselves – hire or not hire additional agents as they like or 2) I don’t know – go work doing something else? As a broker I don’t make as much money off of a top producer as I do a mid-level agent anyway. The top producers go to a high split office and demand the world. Most of them end up costing the company when they look at their actual #s but they keep them for maybe 1) whole office figures (EGO) or 2) recruitment tool for other agents (they think if one agent can produce that then it is the company) 3) they are dumb. I don’t know if I would adapt the salary based model but it would clean out the industry I think…..interesting dialog here….

  12. BawldGuy

    April 11, 2011 at 1:31 pm

    Benn — I’ve listed/sold nothing BUT houses/2-4 units for the last several decades.

    As for Russell, if he, as I suspect, closed about 700 sides in 2010, that’s roughly 2.5-3.1 Mil in GSI.

    Let’s assume there’s a company opting for your approach. They’ll not have either the Shaws or those just below him in production, working for them. That means, as somebody wisely said earlier here, that they’d be hiring pretty much the lower-middle to ‘almost really good’ agents. Almost elite agents, even in Texas/Arizona, make $10-15,000 monthly. In markets like San Diego they make much, much more. To be able to hire that level of quality, how much salary are they gonna pay ’em?

    Meanwhile, many of the brokers trying to implement this approach will also be endeavoring to attract listings based on price. They’ll be paying salaries plus commission to relatively less than elite agents, who’re more security oriented than their gladiator brethren, who’ll be slaughtering them in the free market arena — where only results matter. This is no different than most of the crappy results produced by discount brokerages. They only succeed in markets where a C- eighth grader could sell a house. (2000-2005) During normal to buyers’ markets they suck like Dysons. In fact, I’ll go further. Have the so-called ‘list for $250-500′ brokerages show their batting averages, listings/closed sales. They’re jokes. If they produced results more than 10-20% of the time, full service top producers would already be extinct. The only folks succeeding with that approach is the brokerage owner — not their clients. More power to ’em, it’s a free market, but their results are embarrassing.

    Then there’s the capitalization of such a venture. It would be massive. And in the end it would fail. Nothing trumps results, which is why they won’t succeed.

  13. Kevin Lisota

    April 12, 2011 at 1:40 am

    We employ the exact compensation model that you describe. Our agents are employees paid a salary plus a bonus. Our pay is consistently above market average, and we are able to reduce the volatility and intra-office competition so prevalent in our business, while providing upside when things are good.

    Why do we want our agents as employees? It aligns the incentives of the brokerage and the agents, plus it ensures quality standards and teamwork. If a brokerage and its agents sell lots of homes, everyone benefits, and when things slow down, cuts need to be made.

    Virtually the entire real estate industry is built on a model where brokerages make easy money off desk fees and commission splits from “dead weight agents” who close a handful of deals a year. What did brokerages do in this massive downturn where transaction volumes (and associated revenue) declined 30%, 40%, 50% or more? They went out and recruited like mad! They do this because there is no downside risk to them adding more agents. It is a system that encourages the accumulation of dead weight. I sat in a seminar last summer with the CEO of a major east coast brokerage franchisor. He tried to get his brokerages to shed their non-producing agents, but they resisted because they “liked having them around and might close a deal or two this year.” That is just bad business, and other industries simply don’t operate this way.

    As a brokerage, we have picked the hardest business model possible, taking on much of the risk of market volatility. When things are slow, there is a payroll to be made. When things are booming, we have to weigh whether our sales pipeline can support more employees. Our brokerage could make more money by simply stacking independent contractors one on top of the other and charging them fees, and there are days when our bank account wishes we were structured that way. However, we have chosen this path to ensure that we provide a consistent, quality experience from every single agent on the team, which is something that the vast majority of brokerages cannot provide in their current structure.

    • Bruce Lemieux

      April 12, 2011 at 11:15 am

      Kevin – great site. If having employees ultimately allows you to provide superior service, why cut your revenue by half for buying and listing? Like Redfin, your primary value-add to a consumer is lower cost — not results/service. If you convinced consumers you offered a better product, couldn’t you do just as well by offering only offer 25% reductions?

      I’m curious if you believe that your compensation model is simply a better way to run a brokerage — discount or not.

      • Kevin Lisota

        April 12, 2011 at 2:49 pm

        The compensation model in my mind is unrelated to what we charge for our services. Rebate or not, I like the idea of having a cohesive team of agents who all work from the same play book. I also have no desire to carry more agents than are absolutely necessary to serve our current transaction volumes.

        I would disagree with our primary value add, and all of our customers would disagree with you as well. It is all about the results and service. Lower cost is not our primary differentiator, simply a benefit of using us.

        We do charge less than a typical brokerage, but that comes from a belief that a full 6% in our market is not reflective of the effort needed to buy or sell. In lower-priced markets, it doesn’t make sense, but when average home prices climb over $500k, the commissions become eye-popping.

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Coworkers are not your ‘family’ [unpopular opinion]

(MARKETING) “I just want you to think of us as family,” they say. If this were true, I could fire my uncle for always bringing up “that” topic on Thanksgiving…

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family coworkers

The well-known season 10 opener of “Undercover Boss” featured Walk-On’s Bistreaux & Bar. Brandon Landry, owner, went to the Lafayette location where he worked undercover with Jessica Comeaux, an assistant manager. Comeaux came across as a dedicated employee of the company, and she was given a well-deserved reward for her work. But I rolled my eyes as the show described the team as a “family.” I take offense at combining business and family, unless you’re really family. Why shouldn’t this work dynamic be used?

Employers don’t have loyalty to employees.

One of the biggest reasons work isn’t family is that loyalty doesn’t go both ways. Employers who act as though employees are family wouldn’t hesitate to fire someone if it came down to it. In most families, you support each other during tough times, but that wouldn’t be the case in a business. If you’ve ever thought that you can’t ask for a raise or vacation, you’ve probably bought into the theory that “work is a family.” No, work is a contract.

Would the roles be okay if the genders were reversed?

At Walks-Ons, Comeaux is referred to as “Mama Jess,” by “some of the girls.” I have to wonder how that would come across if Comeaux were a man being called “Daddy Jess” by younger team members? See any problem with that? What happens when the boss is a 30-year-old and the employee is senior? Using family terminology to describe work relationships is just wrong.

Families’ roles are complex.

You’ll spend over 2,000 hours with your co-workers every year. It’s human nature to want to belong. But when you think of your job like a family, you may bring dysfunction into the workplace.

What if you never had a mom, or if your dad was abusive? Professional relationships don’t need the added complexity of “family” norms. Seeing your boss as “mom” or “dad” completely skews the roles of boss/employee. When your mom asks you to do more, it’s hard to say no. If your “work mom or dad” wants you to stay late, it’s going to be hard to set boundaries when you buy into the bogus theory that work is family. Stop thinking of work this way.

Check your business culture to make sure that your team has healthy boundaries and teamwork. Having a great work culture doesn’t have to mean you think of your team as family. It means that you appreciate your team, let them have good work-life balance and understand professionalism.

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Business Marketing

These tools customize your Zoom calls with your company’s branding

(BUSINESS MARKETING) Zoom appears to be here to stay. Here are the tools you need to add or update your Zoom background to a more professional – or even branded – background.

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Zoom call on computer, but there's more options to customize.

If you haven’t had to deal with Zoom in 2021, you may be an essential worker or retired altogether. For the rest of us, Zoom became the go-to online chat platform around mid-March. For several reasons, and despite several security concerns, Zoom quickly pushed past all online video chat competitors in the early COVID-19 lockdown days.

Whether for boozy virtual happy hours, online classes for school or enrichment, business meetings, trivia nights, book clubs, or professional conferences, odds are if you are working or in school, you have been on a Zoom call recently. Many of us have been on weekly, if not daily, Zoom calls.

If you are the techy type, you’ve likely set up a cool Zoom background of a local landmark or a popular spot, a library, or a tropical beach. Comic-con types and movie buffs created appropriate backgrounds to flex their awesome nerdiness and technical smarts.

Many people have held off creating such an individualized background for our virtual meetings for one of any number of reasons. Perhaps it never occurred to them, or maybe they aren’t super comfortable with all things techy. Many people have been holding out hope of returning to their offices, thus seeing no need to rock the boat. I’m here to tell you, though, it’s time. While I, too, hope that we get the pandemic under control, I am realistic enough to see that working or studying from home will continue to be a reality for many people for some time.

Two cool, free tools we’ve found that can help you make your personal Zoom screen look super professional and even branded for business or personal affairs are Canva and HiHello. While each platform has a paid component, creating a Zoom background screen for either application is fairly simple and free.

Here’s how:

Canva is the online design website that made would-be graphic designers out of so many people, especially social media types. It’s fairly user-friendly with lots of tutorials and templates, and the extremely useful capabilities of uploading your own logo and saving your brand colors.

Using Canva, first create your free account with your email. It functions better if you create an account, although you can play around with some of the tools without signing up. The fastest way from Point A to Point B here is to use the search box and search for “Zoom backgrounds.” You now can choose any one of their Zoom background templates, from galaxy to rainbows and unicorn to library books or conference rooms. Choose an inspirational quote if you’d like (but really, please don’t). Download the .jpg or .png, save it, and you can upload it to Zoom.

To create a branded Zoom background in Canva, it will take slightly more work. It was a pain in the butt for me, because I had this vision of a backdrop with my logo repeated, like you see as a backdrop at, you know, SXSW or the Grammys or something. Reach for the stars, right?

OK, the issue with this was that I had to individually add, resize, and place each of the 9 logos I ended up with. I figured out the best way to size them uniformly (I resized one and copied/pasted, instead of adding the original size each time (maybe you’re thinking “Duh,” but it took me a few failed experiments to figure out that was the fastest way to do it).

Once you have your 9 loaded in the middle of the page, start moving them around to place them. I chose 9, because the guiding lines in Canva allow me to ensure I have placed them correctly, in the top left corner, middle left against the margin that pops up, and bottom left. Same scenario for the center row.

Magical guide lines pop up when you have the logo centered perfectly, so I did top, middle, and bottom like that, and repeated for the right hand margin. Then I flipped them, because they were showing up in my view on Zoom as backward. That may mean they are now backward to people on my call; I will need to test that out! Basically, Canva is easy to use, but perhaps my design aspirations made it tricky to figure out.

Good luck and God bless if you choose more than 9 logos to organize. Oh, and if you are REALLY smart, you will add one logo to a solid color or an austere, professionally appropriate photo background and call it a day, for the love of Mary. That would look cool and be easy.

HiHello is an app you can download to scan and keep business cards and create your own, free, handy dandy digital business card. It comes in the form of a scannable QR code you can share with anyone. Plus, you can make a Zoom background with it, which is super cool! It takes about five minutes to set up, truly! It works great!

The Zoom background has your name, the company name, and your position on one side and the QR code on the other. The QR code pulls up a photo, your name, title, phone number, and email address. It’s so nifty! And the process was super easy and intuitive. Now, If I took my logo page from Canva and made that the background for my HiHello virtual Zoom screen, I would be branded out the wazoo.

Remember there are technical requirements if you want to use HiHello on a Mac. For example, if you have a mac with a dual core processor, it requires a QUAD. However, on a PC, it was really simple.

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Business Marketing

Finally: A smart card that manages employee spending with ease

(BUSINESS MARKETING) Clever credit cards make it easier for companies to set spending policies and help alleviate expense problems for both them and their employees.

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Spendesk showing off its company credit cards.

Company credit cards are a wonderful solution to managing business expenses. They work almost exactly like debit cards, which we all know how to use, am I right? It is the twenty-first century after all. Simply swipe, dip, or tap, and a transaction is complete.

However, keeping up with invoices and receipts is a nightmare. I know I’ve had my fair share of hunting down wrinkled pieces of paper after organizing work events. Filling out endless expense reports is tedious. Plus, the back and forth communication with the finance team to justify purchases can cause a headache on both ends.

Company credit cards make it easier for companies to keep track of who’s spending money and how much. However, they aren’t able to see final numbers until expense reports are submitted. This makes monitoring spending a challenge. Also, reviewing all the paperwork to reimburse employees is time-consuming.

But Spendesk is here to combat those downsides! This all-in-one corporate expense and spend management service provides a promising alternative to internal management. The French startup “combines spend approvals, company cards, and automated accounting into one refreshingly easy spend management solution.”

Their clever company cards are what companies and employees have all been waiting for! With increasing remote workforces, this new form of payment comes at just the right moment to help companies simplify their expenditures.

These smart cards remove limitations regular company cards have today. Spendesk’s employee debit cards offer companies options to monitor budgets, customize settings, and set specific authorizations. For instance, companies can set predefined budgets and spending category limitations on flights, hotels, restaurants, etc. Then they don’t have to worry about an employee taking advantage of their card by booking a first-class flight or eating at a high-end steakhouse.

All transactions are tracked in real time so finance and accounting can see purchases right as they happen. Increasing visibility is important, especially when your employee is working remotely.

And for employees, this new form of payment is more convenient and easier on the pocket. “These are smart employee company cards with built-in spending policies. Employees can pay for business expenses when they need to without ever having to spend their own money,” the company demonstrated in a company video.

Not having to dip into your checking account is a plus in my book! And for remote employees who just need to make a single purchase, Spendesk has single-use virtual debit cards, too.

Now, that’s a smart card!

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