The future of commission-based real estate
This morning, the message was sent out via Twitter that Inman News in February will be examining the future of commission-based real estate.
And to that, all I can say is that it’s about time. If ever there is a (non) topic that routinely has been twisted to suit the purposes of whatever particular axe someone wants to grind, it’s the concept of real estate commissions. Knowing the higher standard to which Inman News holds itself, I have every confidence that this won’t be the same years-old rehash that agents make too much money, etc. Not only wouldn’t that be news, it would be a gross mischaracterization of the real estate industry.
Seven Basic Truths
Any objective analysis of real estate commissions undoubtedly will uncover these basic truths:
1) There is no set compensation structure in real estate. Some agents and brokerages work on a commission basis. Others charge only a flat fee (and in some cases, no fee) for entering listings in the MLS. Sellers are free to select the brokerage that most closely aligns with their own perception of value and have the right to negotiate with any agent on any fee. The worst that will happen, as is the case in any negotiation, is one side or the other says no and the seller moves on to the next brokerage down the line.
2) Compensation for buyers’ agents is negotiable. There are many agents and brokerages that negotiate the compensation they will receive at the very beginning of their relationship with a new buyer. So if a buyer has an issue with their agent accepting the compensation offered through the MLS, this can be addressed at the very beginning. And, again, if the two sides can’t come to an agreement there are many alternatives from which the buyer can choose.
3) Commission checks are not pure profit. Let’s say an agent receives a $3,000 check on a $100,000 sale. From that $3,000 the agent then needs to pay a split to their broker, national income tax, state income tax (depending on the state), local income tax (depending on the municipality), fixed costs such as gasoline and automobile payments and maintenance and other operating expenses (office staff, etc.) Whatever is left after all that is paid is what eventually goes toward groceries.
4) Fixed costs accrue regardless of whether a transaction results. Marketing of listings in many cases is paid out of pocket by the listing agent with no up-front fee charged to the seller. When working with buyers, the fixed costs accrue and time is spent whether the buyer purchases or not. Every agent has experienced a situation (if not many situations) where hours and hours have been invested with someone who doesn’t buy a home.
Which is okay, because we knew that side of the bargain when we started working with the person and presumably our own personal business model accounts for that … just as the prices you pay in a store account for expenses such as breakage, which are passed down to the consumers who do purchase.
5) There’s no barrier to entry for alternative models, save for the public’s willingness to embrace them. As has been proven by Redfin, any company can enter the real estate game with an alternative model. To coin a poker phrase, all you need is a chip (if not millions of chips in venture capital) and a chair and you’re in the game. As also has been proven by the various iterations of Redfin’s model for working with buyers, market forces will determine whether any particular model is successful.
This is the very nature of entrepeneurship. A new idea is developed and it fails or succeeds on its own merit, unless we’re talking about the WNBA. Those that fail almost universally complain that The Man held them back or there was some sort of competitive disadvantage (damn McDonald’s and those Golden Arches), but the reality is an idea with sufficient public support – financial support – will succeed.
For instance, as a solution for those buyers who look and look and look and never buy, I could offer a fee structure where I’m compensated either hourly or by the home. Accounts would be settled at the end of the day, my fixed costs would get covered and the buyer would appreciate that there’s a cost associated with the search for a home (not even getting into the actual negotiations.)
What prevents me from doing this? Certainly not an edict from the National Association of REALTORS, whose leadership is too busy planning their next parade float to pay attention to what one member decides to do. No, the reason I don’t adopt that model is I don’t believe there’s a market for it.
We can argue whether there should be but it’s almost as pointless as arguing that there doesn’t need to be an episode of the CSI franchise on television 24 hours a day on one station or another. The public demands CSI and so it’s there. The public isn’t demanding the ability to pay up front for their real estate agent’s time so that niche doesn’t exist.
6) Commissions are more negotiable than many other fees consumers pay. Talk to many real estate agents and you’ll discover that there are many variables in what many charge for their services. Fees are negotiable.
Take this same approach with a different industry … say subscription-based online real estate journalism. I invite you to take a moment and call the folks at Inman News to negotiate what you’re willing to pay to become a premium member. For some, the amount Inman charges has sufficient value to justify the cost. For others, there’s little to be found at Inman News that can’t be found in a hundred other places on the web absolutely free.
It’s absolutely irrelevant what fixed costs Inman News may have, after all. That’s Brad’s problem, not yours. Decide what value you receive from peeking behind the subscription firewall and make your offer based on that amount. Surely they won’t take the same route as the inflexible agents that have been mocked in prior years’ news stories and tell you “this is what we charge, take it or leave it.” That would be hypocritical.
7) What my buyers and/or sellers elect to pay their real estate agent isn’t anyone else’s business. One of the most beautiful things about real estate is the ancillary jobs that have been created that have next to nothing to do with real estate.
For instance, take Inman’s vice president of content and community manager positions (both of which are filled more than capably by friends of mine.) As a member of the general public who may or may not use the Inman product, do you believe that you should have a say in the salaries they receive?
Of course not. Which is why I find it curious that so many people believe that the general public, who may or may not use the services of a real estate professional – any real estate professional – should have a say in the compensation said professional receives from a buyer or seller. If a buyer and seller agrees to compensate an agent in a certain manner, if they’re comfortable in doing so, why is this anyone else’s concern?
Real estate agents aren’t receiving tax dollars … most of us aren’t even receiving the vast quantities of venture capital that have kept some of our competition afloat. So why is it our 1099s are the subject of debate when the W-2’s of others vaguely connected to this industry are not?
Go back to point number 5 (it’s in Chapter 3 of this admittedly lengthy post.) If you don’t believe in any particular compensation model, come up with something different and see if it floats. It’s that simple.
Is there an agenda here?
This has been a rather lengthy post but I believe it’s a mere pittance compared to the length of an objective month-long investigation of the many myths that surround real estate commissions. No doubt, all of the above points not only will be made but will be supported by a number of published articles, or at least enough to offset those that would perpetuate the myths to support their own business model.
Because the basic reality surrounding this entire topic is everyone has an agenda that they’re trying to push, even if it’s simply to push a business model that the free market hasn’t chosen to embrace…
… or if they’re attempting to co-opt a conversation rarely if ever heard outside the online world of real estate journalism and blogging in the name of increased subscription and convention sales. (Though you’d have to think, if at any point the real estate populace gets the feeling that the host of a conference is trying to make a buck by slamming the entity know as “real estate professionals,” maybe they’d finally stop shelling out the dough.)
Simple ways to improve your organic reach on Facebook
(BUSINESS MARKETING) Facebook continues to make businesses and pages pay to play, but businesses still have a shot of improving their organic reach, according to experts in the field.
Facebook organic reach is not dead, but you will need to work harder to get eyes on your pages. Here’s a rundown of what experts are saying will help you reach your audience. Facebook is still the top social media platform that marketers use and where consumers tend to look for and follow brand pages. So don’t despair!
Those running Facebook business pages have been seeing ever diminishing returns on their effort at getting their content in front of their audiences and fans, especially since around 2016. Yet Facebook remains the #1 platform for building an audience. Once upon a time, Facebook was incredibly fertile soil to grow our entrepreneurial and creative gardens in, at little to no cost to us. Many businesses are seeing a drastic reduction in reach, meaning that a tiny percentage of people are seeing our posts, even among those who follow our pages.
Have you ever heard something like, “The first one’s always free; that’s how they get you”? This has long been a business philosophy to hook prospective customers, used by savvy marketers and drug dealers alike. Facebook went and took that to the next level, introducing an easy-to-use platform where almost anyone could find and engage with their target audiences of customers, fans, members, and more.
Of course, there had to be a reckoning, and now that Facebook has more than 2.6 billion active monthly users worldwide, they continue to change the rules. Consider the amount of users and the amount of posts being made, and it makes more sense that Facebook tries to narrow the audience for any single post to a reasonable chunk. Otherwise, our brains would explode (okay, my words, not an actual medical opinion). Really, you don’t need to reach everybody, because not everybody is interested in what you’re offering. You need to reach the right people who are going to engage and build a smaller, engaged loyal group of diehard customers.
Community is key
Here are some of the latest tips and best practices to increase organic reach in 2021, provided by Facebook pros. Mark Zuckerburg keeps bringing up the concept of community, and the algorithm favors engagement, not only on Facebook, but across platforms. Nobody wants products and services constantly jammed in their faces.
This is a conversation, not a one-way portal into your customers’ brains and wallets. A constant barrage of salesy content, urging people to buy buy buy, grows real tedious real fast. “If you build it, they will come.” Only instead of a baseball field in the middle of nowhere, work to build a community.
Ask yourself these questions:
- Are you creating conversations?
- Are you using your platform to act as a resource and provide helpful or inside information in your niche or area of expertise?
- Are you asking your audience what they want and would like to see more of from you?
- Are you taking current events and trends into account, reacting to local/national/world news at all, and creating timely posts?
- Are you using a variety of post types (photos, videos, links) and taking advantage of Facebook’s built in post tools?
- Are you taking data into account for what content people are responding to favorably and when?
- Do you ever invest in Facebook ads or boosted posts for important content or events?
Find the answer to these questions to reevaluate your strategy, work on promoting a dialogue with your audience, and ideally you will see more engagement on your pages, fruitful interactions that ultimately lead to loyal customers and bigger sales.
Zuckerburg himself comes back to this point repeatedly in his regular updates on the state of all things Facebook and how the algorithm works, saying Facebook will “prioritize posts that spark conversations and meaningful interactions between people.” Not every industry lends itself to deep thoughts, but it can be simple enough to engage your audience with community questions. People love giving their opinions or talking about a shared interest.
Community questions can be fun, lively, and create fun interaction between your audience and the business. A simple This or That question posted on one of the background color templates can get the conversation started. If people don’t have to invest a lot of time to answer, then great! Depending on the industry, these can be easy one-offs: Red wine or white? Beach vacation or mountains? TikTok or Reels? Mac or PC? Harley Davidson hogs or Kawasaki crotch rockets? Early bird or night owl?
Hot takes, unpopular opinions, are another way to get people chatting. I’m not espousing trying to stir up controversy here, unless that is appropriate for your business, but people get emotional as all get out for something as simple as pineapple on pizza or beans in chili. What’s a popular or common opinion in your field? How can you introduce a hot take to get people chatting? For an entrepreneurial page, you could put out a hot take on a cluttered desk, or making lists, or standing desks.
Sure, these conversations may start out superficial, but who knows? When people begin interacting on your page more, they begin seeing more that you post, and that’s when you can introduce something a little weightier, asking them to share their expertise or advice on a relevant topic.
Become a resource
Whether your business is a science journal, digital marketing, interior designing, or a Texas Hill Country resort, your business and your audience is unique. Real estate agencies have become good at this, so we’ll use them as an example. If you are selling or leasing properties in Austin or San Francisco, sell the area. Don’t only post the properties you’re selling or agent profiles. Post those, yes, but also post industry news and local attractions.
When people are interested in moving to a new city or a new neighborhood or investing in opening a business there, they need to know why the area is attractive. What is the business climate? What are the financial perks associated with living there? What is the area known for (local restaurants, live music hiking trails, swimming holes, no traffic)? Has the area made a list for quality of life, affordability, great job prospects in X industry? Sharing blogs, articles, infographics, videos, and photos highlighting any of these can help your page serve the interests of your target audience. This is a good thing.
Ask your audience
This is a simple tip for keeping things closer to your audience’s interests, helping you identify areas where your page may be lacking–and opportunities for growth, and keeping the conversation going. Be careful not to overuse this one, but it’s an important tool.
- Try a simple question, such as “What would you like to see more of on this page?”
- Create a poll, which is much faster to answer, and helps you narrow answers down to what you really want to know.
- Similar to the community questions, ask them to share something that has helped them. A classic example would be “What is the best entrepreneurial advice anyone has even given you?” Or “Please share some tips to fight procrastination.” Or “What is the top time-saving tool you use in your business (or for scheduling)?” Having your page followers (and hopefully others) chat with each other this way is helpful for them and for your organic reach.
Take current events and trends into account
This one’s simple: Read the room. This goes both ways. If there is renewed interest in, say, downtown lofts or sea shanty dances on TikTok, can you use this momentary heat to bring interest to your page? On the other hand, if there is a natural disaster, tragedy, or financial crash that has caused great suffering in an area? That’s a good moment to review your scheduled posts and delete or postpone anything that could be unintentionally triggering or offensive.
Some types of businesses are better suited to jumping on the latest trend. Do you have a bar or restaurant with a fairly young, social media savvy crowd? Go ahead, Photoshop that Bernie-Sanders-in-mittens image sitting on your patio (only if you can do it as the trend is hitting). Are you targeting an area that has recently been hit by extended power outages? I’m sorry to tell you, but this is not the time to promote that popup restaurant where diners experience eating in the dark.
Mix it up and use native Facebook tools
Of course you want to stay on brand, but please don’t get caught in a rut where all of your posts are one type. Consistency is one thing, but beware that this doesn’t turn into monotony. Assess where you can change things up. Add photos, videos, links to relevant blogs and articles, or community questions. Different people respond differently to different types of input. Use all the tools at your disposal to generate interest, draw people in, and get them reacting to and engaging with your page.
Facebook and all social media platforms have built in tools. They want you to use them. Often, this is a Facebook effort to capitalize on a similar, competing app. Trust me when I say, you will get brownie points (higher reach) when you take the time to use these native tools. Facebook Watch, Facebook Live, Facebook Stories, even using a background color template from the Facebook options, are all ways to show Facebook you’re paying attention and want to optimize the tools they are giving you.
Use provided data
You need to be able to look for patterns, evaluate the factors that made a particular post popular, and know when your customers and followers are likely to see your page and interact with it. Facebook provides a number of insights in the platform, but there are numerous external marketing tools you can purchase or sometimes use for free (depending on how many pages and platforms you are running, and how in-depth you want your data to be).
Posting willy nilly is not the most effective way to be. Decide what data is useful to you and make time to study it, and be willing to make changes to your content strategy based on the data. Like many other aspects of marketing, expanding your organic reach is a mixture of art and science, a balancing act of intuition and cold, hard numbers. Use them.
Consider paying to play
I know, I know, this story is about organic and not paid reach, but the fact is strategically paying for a Facebook ad or boosting a post to highlight a launch, event, special deal, or other important news will bring more people to your page. If the other tips, tools, and best practices referred to here are in place, once they find your page, you have the ability to keep their attention through organic means.
Keep on truckin’
These tips should help you expand your page’s organic reach. More importantly, they should help you build and support a community, earn loyal followers and customers, and generate positive buzz about your business. Keep working on becoming a resource and sharing helpful information. Have fun with it and experiment with new media and types of posts. Know yourself. Know your audience.
Buffer’s four-day workweek experiment: Boost or bust?
(BUSINESS MARKETING) After trying out a four-day workweek last year, Buffer is moving forward with the format going into 2021, citing increase in productivity and work-life balance.
The typical five-day workweek is a thing of the past for Buffer, at least for now. The company has decided to implement a four-day workweek for the “foreseeable future.”
Last year, the company surveyed its employees to see how they are dealing with the ever-changing landscape of the pandemic and the anxiety and stress that came along with it. They soon learned employees didn’t always feel comfortable or like they could take time off.
Employees felt guilty for taking PTO while trying to meet deadlines. Juggling work and suddenly becoming a daycare worker and teacher for their children at the same time was stressful. So, Buffer looked for a solution to help give employees more time and flexibility to get adjusted to their new routines.
Four-Day Workweek Trials
In May, Buffer started the four-day workweek one-month trial to focus on teammates’ well-being. “This four-day workweek period is about well-being, mental health, and placing us as humans and our families first,” said Buffer CEO and co-founder Joel Gascoigne in a company blog post.
“It’s about being able to pick a good time to go and do the groceries, now that it’s a significantly larger task. It’s about parents having more time with kids now that they’re having to take on their education. This isn’t about us trying to get the same productivity in fewer days,” Gascoigne said.
Buffer’s one-month trial proved to be successful. Survey data from before and after the trial showed higher autonomy and lower stress levels. In addition, employee anecdotal stories showed an increase in worker happiness.
With positive results, Buffer turned the trial into a long-term pilot through the end of 2020. This time, the trial would focus on Buffer’s long-term success.
“In order to truly evaluate whether a four-day workweek can be a success long-term, we need to measure productivity as well as individual well-being,” wrote Director of People Courtney Seiter. “Teammate well-being was our end goal for May. Whether that continues, and equally importantly, whether it translates into customer and company results, will be an exciting hypothesis to test.”
Buffer’s shorter workweek trials showed employees felt they had a better work-life balance without compromising work productivity. According to the company’s survey data, almost 34% of employees felt more productive, about 60% felt equally as productive, and only less than 7% of employees felt less productive.
However, just saying productivity is higher isn’t proof. To make sure the numbers added up, managers were asked about their team’s productivity. Engineering managers reported that a decrease in total coding days didn’t show a decrease in output. Instead, there was a significant output increase for product teams, and Infrastructure and Mobile saw their output double.
The Customer Advocacy team, however, did see a decline in output. Customer service is dependent on customer unpredictability so this makes sense. Still, the survey showed about 85% to 90% of employees felt as productive as they would have been in a five-day workweek. Customers just had to wait slightly longer to receive replies to their inquiries.
With more time and control of their schedules, Buffer’s survey shows an increase in individual autonomy and decreased stress levels reported by employees. And, the general work happiness for the entire company has been consistent throughout 2020.
What’s in store for 2021?
Based on positive employee feedback and promising company results, Buffer decided it will continue the company-wide four-day workweek this year.
“The four-day work week resulted in sustained productivity levels and a better sense of work-life balance. These were the exact results we’d hoped to see, and they helped us challenge the notion that we need to work the typical ‘nine-to-five,’ five days a week,” wrote Team Engagement Manager Nicole Miller.
The four-day workweek will continue in 2021, but the company will also be implementing adjustments based on the pilot results.
For most teams, Fridays will be the default day off. For teams that aren’t project-based, their workweek will look slightly different. As an example, the Customer Advocacy team will follow a different schedule to avoid customer reply delays and ticket overflow. Each team member will still have a four-day workweek and need to meet their specific targets. They will just have a more flexible schedule.
Companies who follow this format understand that output expectations will be further defined by area and department level. Employees who aren’t meeting their performance objectives will have the option to choose a five-day workweek or might be asked to do so.
If needed, Fridays will also serve as an overflow workday to finish up a project. Of course, schedules will be evaluated quarterly to make sure productivity is continuing to thrive and employees are still satisfied.
But, Miller says Buffer is “establishing ambitious goals” that might “push the limits” of a four-day work week in 2021. With the world slowly starting to normalize, who knows when a four-day workweek might reach its conclusion.
“We aren’t sure that we’ll continue with the four-day workweeks forever, but for now, we’re going to stick with it as long as we are still able to hit our ambitious goals,” wrote Miller.
Should your content management system go headless?
(BUSINESS MARKETING) You may be familiar with your typical content management system, but had you heard of a ‘headless’ model? Let’s dig into it together.
At some point, you have probably worked with a content management system (CMS) like WordPress or Drupal. If you haven’t already, you at least know that this computer software is used to manage website content.
But, have you ever heard of a headless content management system before? We didn’t. So, we set out to find out what it’s all about and how beneficial, or not, it can be for your company.
What is headless CMS?
Unlike your classic CMS, headless CMS is a back-end only content management system. It decouples where your content is stored and authored (body) from the front-end where your content is displayed (head).
This CMS isn’t tied to a particular output like a web page. Content is transmitted as data over an application programming interface (API). It’s a content repository that delivers content seamlessly to any device.
Benefits of Headless CMS
Headless CMS isn’t your classic “monolithic” CMS so you aren’t constrained to an all-in-one system that might work for websites but not mobile devices.
Content is consumed by customers in more than one place now. Headless CMS provides a more versatile way to deliver multi-channel content to websites, Android and iOS apps, and even IoT (internet of things), like a smartwatch or in-store kiosk.
Businesses will benefit from this because only one back-end is needed to manage and publish content for different services and products.
No need for specialized developers
If you already have a talented developer, you don’t have to scramble to find someone else who specializes in a specific system or language you are moving to. Your current developer can do the job for you in the best way they know-how.
Security is important. Not being married to the front-end, headless CMS has a security advantage a regular CMS doesn’t. Usually, content provided to a headless CMS is read-only, and the admin portion lives on a different server and domain.
With the back-end detached from the presentation layer, there is a smaller target area to attack. Also, layers of code can be used to hide the content-delivering API making it safer than a traditional CMS.
With two separate systems, content editors and web developers can work concurrently. This shortens a project’s timeline and helps get your product and services to market quicker. Also, content editors don’t have to spend more time creating the same content for each system. Designers and developers can take care of that.
Downsides of Headless CMS
As with anything, headless CMS isn’t perfect and isn’t for everyone. It has its disadvantages.
Little technical involvement is called for in a traditional CMS. As a result, the tool can be picked up quickly by almost anyone.
A deeper understanding of CMS, coding languages, and front-end technologies is needed when using headless CMS. You must have a developer that can build the web or app just for you.
With the body separated from the head, there are two systems to maintain. Implementation and maintenance could potentially become complex.
Bigger price tag
Building a system from scratch costs time and money. With a traditional CMS, there is one account, and, most likely, one payment. With headless CMS, you’ll have multiple payments for the CMS, a developer, and the infrastructure running your website or app.
Your custom CMS also isn’t coming from a pre-built content management system. All that hard work takes time (and patience) to get it done right.
Headless CMS lets you create a unique user experience and allow for cross-platform publishing, but it isn’t a one-size-fits-all content management system.
Before you jump ships, take inventory of all your content needs. Does your content need to be published on different platforms? Will a simple stand-alone website work for you? Only you can decide what works best with your business, but we hope this information helps.
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