Connect with us

Business Marketing

Predicting the Future of Residential Real Estate Brokerage

Published

on

100%

Okay, so they’re not really all “100%”.  Re/Max is now a maximum of a 95% split.  Further, most of the 100% companies have various other more traditional splits (IE: 70 – 30) for those who can’t pay the standard monthly bill.  But the overall trend for the industry is that most “mega agents” wind up at a 100% company and many of the major marque agents wind up eventually even leaving Re/Max to start their own company.  Re/Max was, at one time, the most agent-centric company in the business.  That has changed a bit.  Now at their national conventions the only “approved” business coach is Brian Buffini.  The others, who used to be quite visible ( Mike Ferry, Howard Brinton, to name a few) at those conventions are no longer welcome.  Only Buffini.  I am just guessing that someone named Brian Buffini pays a specific amount of what he can collect from Re/Max agents to Re/Max International.  That one is just a guess, but there was no guess work involved when Re/Max sued First American last April.  First American backed out of the deal and stopped payments.  The lawsuit from Re/Max prompted a probe from the Colorado Real Estate Department looking into the possibility of a HUD kickback violation

Actually, I don’t think they did actually violate the law.  But I have to say I loved their defense:  we were basically just selling a mailing list.  We have a lot of agents, let’s pimp them out.  This is from the company that revolutionized the residential brokerage business.  Not very revolutionary, is it?

___

The 100% concept was started by a very remarkable man named Dale Rector.  He was a true visionary and he was the founder of Realty Executives.  He made Realty Executives into a very successful company that for many years was the top selling company in all of Arizona.  Prior to Re/Max, Dave Liniger worked for Dale Rector here in Phoenix and had been sent by Dale up to Denver to start a Realty Executives office there.  Instead, Dave started Re/Max.  A few years later he took it national.  He successfully accomplished what Realty Executives never did: massive expansion on a global level.  The real estate world would never be the same.  Agents who could produce did not have to “give the broker half”.  They would pay the broker to be there (a desk fee) and pay their own expenses and keep all of what they earned.  Dale Rector’s original dream had become a reality for agents all across the nation and eventually, most of the world.  But it was Dave Liniger who made that dream a reality.

__

Anytime anyone discovers or develops anything that could be a meaningful advantage in business it does not take long until someone else comes along with a knock off version, usually for less money.  Real estate brokerage offices are no exception.  By the mid 70’s, when Re/Max was just getting going and Realty Executives was going strong a different kind of company started sprouting up all around the Phoenix area.  Realty Executives / Re/Max knock offs.  There were dozens and dozens of them.  Some were very well run, others were very poorly managed and went out of business.  The company I have been with for 31 years, John Hall & Associates was one of those “original knock offs”.  Less offered and less service to the agent but at a much lower price.  In the early 80’s came the knock off – knock offs.  West USA, was started by Clay Fouts.  Clay started at John Hall about the same time I did, in 1978.  He liked the idea of what John had done and saw that he could provide similar services for less.  Clay’s original value proposition was simply having a lower price per month for agents than John Hall.  When he started West USA he got several hundred of his original agents from John Hall.  He took some from Realty Executives too.  Eventually came the knock off of the knock off of the knock offs.  Companies that would charge the agents $25 – $50 a month to hang their license and take a few hundred dollars out of each closing.  These companies went on to pass West USA (West USA was the largest company in Arizona with about 2,000 agents) and there is now a company with well over 3,000 agents: HomeSmart.  This business model is scalable and can be started just about anywhere.

If HomeSmart doesn’t eventually open an office in your city don’t worry.  Someone like them or someone lifting their business model will eventually do just that.  How can a brokerage firm make any money at $25 – $50 a month?  Use your calculator to multiply that times, say 3,000.  Add in the fact that they are not providing office space, a desk, phones, etc. and you can start to get the picture.  Maybe they only have 200 – 300 agents they are collecting $200 a closing from and they are still quite profitable.

The competitive pressure these companies have put on “traditional brokers” with regard to commission splits has changed the landscape for all real estate companies here.  For example – a little known fact – the two largest national 100% companies, Re/Max and Keller Williams charge agents considerably less in the Phoenix area than they charge elsewhere.  For example a Re/Max agent here could pay around $600 a month without office space.  That same set up in the San Francisco area would be about $1,600 a month.  Watch that price drop once the knock off knock off knock offs are well known to the agents there.

The customers of the big brokers are not buyers and sellers.  Buyers and sellers are the customers of the agents.  The customer of the big broker is the agent.  The brokers are in the agent acquisition and retention business.  If successful, their expertise typically is limited and is solely in getting and keeping agents and avoiding lawsuits.  They seldom even know much about the little detail of getting and keeping buyers and sellers – as they never did it very much.  The skills required to be a successful agent and the skills required to be a successful broker are not the same skill set.  There are a select few who have both skill sets but that is quite rare from what I’ve seen.

There are specific communities and areas where a company is so good at getting business that they can hire all the agents they want and dictate the commission splits.  However, this is not the pattern in most areas.  The pattern is typically that the company doing the most business has the most top producing agents.  If those top producing agents left to go somewhere else their business would go right with them.  So what is a brokerage company not making enough money to do?  There are just a few choices: 1. cut back expenses, 2. close, 3. find a way to drive in business or 4. find a way to get more agents.

As almost all of the companies are completely inept at driving in business they are forced to choose options 1, 2 or 4.  Option 4 is achieved by having a company agents would really like to affiliate with – so to survive they have to be really really great or really really inexpensive.  The later is typically much easier to achieve.

Russell has been an Associate Broker with John Hall & Associates since 1978 and ranks in the top 1% of all agents in the U.S. Most recently The Wall Street Journal recognized the Top 200 Agents in America, awarding Russell # 25 for number of units sold. Russell has been featured in many books such as, "The Billion Dollar Agent" by Steve Kantor and "The Millionaire Real Estate Agent" by Gary Keller and has often been a featured speaker for national conventions and routinely speaks at various state and local association conventions. Visit him also at nohasslelisting.com and number1homeagent.com.

Continue Reading
Advertisement
8 Comments

8 Comments

  1. Cindy Knight

    December 16, 2008 at 12:42 pm

    Awesome post Russell and how true we started at Re/Max, opened our own office, in Feb opened a Realty Execs – plan to run like a HomeSmart and we’re working on option 4.

  2. Jim Whatley

    December 16, 2008 at 1:00 pm

    I all ways enjoy your articles. Real Estate co. are changing will change. I think for the better, the innovative hard working agent will all ways do well.

  3. Ken Brand

    December 16, 2008 at 2:59 pm

    I enjoy reading and thinking about your perspectives. For me, your next to the last few sentence is pure Platinum:

    “so to survive they have to be really really great or really really inexpensive”

    If you want to thrive you can’t limp around in the middle. For me, I’m going to work my ass of to be OMG fantastic and charge appropriately. The idea of beating feet down the dirt cheap path is not for me.

    Which ever trail taken, blessing to all hardworking agents who deliver on whatever promises are made.

    Keep the flash light shinning Russell! Thanks.

  4. Missy Caulk

    December 16, 2008 at 9:32 pm

    Good historical perspective. Having read Dave’s book it is point on.

    I was with RE/MAX for 12 years, went to KW last December along with 18 other agents, it had nothing to do with desk fees, just the wrong Brokers bought it from the original broker.

    KW had a reputation of young, inexperienced agents in Ann Arbor, no more. We have had amazing growth in 2008, and currently have the most market share now.

    A lot can happen in a year. IMO Gary tweaked the Remax concept and made it more affordable for new agents.

  5. Jonathan Dalton

    December 17, 2008 at 10:40 am

    When I moved, I opted for a split plan. The idea of writing the larger check wasn’t all that palatable. In fact, even the $225 I pay on the split didn’t feel good after years of $10 office fees (and less than favorable broker splits.)

    At the level I’m at now, there’s almost no financial difference between the 100% and the current split. When I hit the next level in the next year or two, then it will come time to make a decision.

  6. Sharon Simms, St Petersburg, Florida

    December 22, 2008 at 6:17 pm

    Russell – I think the reason many top agents leave RE/MAX is that RE/MAX hasn’t adapted well to teams, so the expenses are huge to stay with RE/MAX when you have a team.

  7. Linda Davis

    December 28, 2008 at 10:46 am

    Brian Buffini may be the only approved business coach at RE/MAX and your guess could be right about what he pays for that privilege but Brinton and others are certainly welcome at the annual convention. In fact, Brinton, Knox and a host of others will be speaking at the convention in March 2009, just as they have at most of the past conventions I’ve attended.

  8. Ramon

    July 10, 2016 at 9:54 pm

    Interesting stuff, I changed template on my website and after that the search rankings plummeted
    Added this on my wall, very interesting!

Leave a Reply

Your email address will not be published. Required fields are marked *

Business Marketing

5 ways voice is changing the SEO game

(TECH NEWS) As voice assistants take over our lives, you may worry how your SEO fares in this new, uncharted territory. Let’s discuss.

Published

on

voice and SEO

SEO is a moving target. The standards change constantly so, despite years of experience, many web designers struggle to meet all the optimization guidelines. How, then, can any business confidently approach the web design process? It starts with recognizing those evolving norms, the newest of which is voice search.

Why Voice Search Matters

For years, the dominant SEO rule has been mobile first. The introduction of voice recognition systems, like Siri and Alexa, to smartphones has dramatically changed how we interact with devices. In fact, 20% of Google searches are voice searches with that number expected to grow rapidly over the next few months. Businesses and web designers, then, need to make sure their sites are voice ready if they want to stay relevant. Though the sites may stay the same visually, they need to gain a new edge functionally.

From The Ground Up

Modifying your website to support voice search isn’t as simple as many other SEO transitions, but if you take a ground up approach to the process, you’ll be able to reshape your website around those changes. Still, you’ll need help to do this correctly. When adapting your website for voice, SEO consultant Aaron Rains recommends hiring an expert for a full site audit and analysis to maintain your page ranking. You don’t want your page to take a rankings hit because you’re trying to keep up with the trends.

Expanding Your Device Options

In addition to its advantages from a mobile perspective, making the move to voice search also means expanding your site’s horizons by making it more accessible to new devices, particularly the smart home speakers that are gaining in popularity. Users are particularly comfortable with these devices because they rely on natural speech patterns rather than half-formed search terms. Children growing up with these smart speakers in their homes seem to view them as part of the family and will be native voice search users as they grow.

Snippets For Search

Part of updating your website for speech is optimizing the content to match changing search patterns. One of the key ways to do this is through the use of featured snippets.

Featured snippets are designed to help put your website in the #0 spot – the top ranking. To do that, you’ll want to put the answers to your most popular queries in the first few sentences on your page. This is especially for purchasing and local search since people frequently use voice search to find local businesses. If you can optimize for the most important snippets early on, you’ll be way ahead on the competition and have a greater ROI.

Rebuild and Reassess

After modifying your website for voice, you may find your rankings initially drop. That’s because you need to request your site be re-indexed. Otherwise, search engines won’t be able to match queries with your new site content. Re-indexing will put all of your new information into effect and make it possible for users to search using the featured snippets. Re-indexing your site will also help you ensure that you haven’t interfered with the crawl-ability of your site.

Experts expect half of all searches to be voice-driven by 2020, but since 50% of users with voice search access already use it at least occasionally, now is the time to act. Even if many users are still wary of voice search, you can’t afford to fall behind. Those users will still be able to rely on traditional text search mechanisms, but that won’t help voice enthusiasts. If you lose those early adopters now, they might not come back when you’ve caught up with the voice search revolution.

This editorial was first published here in March of 2018.

Continue Reading

Business Marketing

10 podcasts that every business owner should hear

(MARKETING) If you’re a business and want to learn something, give one of (or all of) these ten podcasts a listen.

Published

on

headphones listen podcasts

So many choices, so little time

As podcasts grow more and more popular, it has become increasingly difficult to sort through the sea of excellent options out there.

bar
From interviews with business leaders to industry specific advice from experts, podcasts are an incredible free and convenient way to get a small dose of inspiration and knowledge.

Business podcasts for your listening enojoyment

This short list offers just a taste of the myriad of business podcasts available. Whether you’re an aspiring entrepreneur looking for some tips on breaking into a new industry or a seasoned vet hoping to get some new inspiration, we hope you’ll find something here worth listening to.

How I Built This, hosted by Guy Raz.

Podcast fans will recognize Guy Raz’s name (and voice) from TED Radio Hour. While that show can be a great source of inspiration for businesses, one of the most consistently inspiring shows is his new project that shares stories and insight from some of the biggest business leaders in the world. In just four months, Guy has talked to everyone from Richard Branson and Mark Cuban to L.A. Reid and Suroosh Alvi. While there are plenty of excellent interview-driven shows with entrepreneurs, if you want to hear about the world’s best known companies, this is your best bet.

The Art of Charm, hosted by Jordan and AJ Harbinger.

The Art of Charm is a business podcast by definition, but the advice it provides will definitely help you in other parts of your day-to-day life as well. With over three million listens a month, the incredibly populat show provides advice, strategies and insight into how to network effectively and advance your career and personal life.

StartUp, hosted by Alex Blumberg and Lisa Chow.

If you’re an entrepreneur, there is no excuse not to be listening to StartUp, the award-winning business podcast from Gimlet Media. The show’s talented hosts come from incredible radio shows like Planet Money and This American Life and bring a top-notch level of storytelling to the show, which provides behind the scenes looks at what it is actually like to start a company. Now on the fourth season, StartUp is one of those business podcasts that even people not interested in business will get a kick out of.

The Whole Whale Podcast, hosted by George Weiner.

One of the best things about podcasts is the wide variety of niche shows available that go in-depth into fascinating topics. One of those shows is the Whole Whale Podcast, which shares stories about data and technology in the non-profit sector. You’ll get detailed analysis, expert knowledge and can hear from a long list of social impact leaders from Greenpeace, Change.org, Kiva, Teach For America and more.

Social Pros Podcast, hosted by Jay Baer and Adam Brown.

Navigating the surplus of social media guides online can be a nightmare, so look no further thna Social Pros. Recent episodes talk about reaching college students on social media, the rise of messaging apps, and making better video content for Facebook. Plus, there are great case-studies with companies doing social right, like Kellogg’s, Coca Cola and Lenscrafters.

Entrepreneur on Fire, hosted by John Lee Dumas.

One of the original entrepreneurship shows, Entrepreneur on Fire has logged over 1,500 episodes with successful business leaders sharing tips, lessons and advice learned from their worst entrepreneurial moments. Sometimes humorous, sometimes heartbreaking, always inspiring, this show is sure to have at least one interview with someone you can learn from.

The $100 MBA, hosted by Omar Zenhom.

Think of The $100 MBA as a full-fledged business program in snack-sized portions. The daily ten minute business lessons are based on real world applications and cover everything from marketing to techology and more. Cue this show up on your commute to or from work and watch your knowledge grow.

This Week in Startups, hosted by Jason Calacanis.

This is your audio version of TechCrunch, Gizmodo or dare we say The American Genius. Each week, a guest entrepreneur joins the show to talk about what is happening in tech right now. You’ll get news about companies with buzz, updates on big tech news and even some insider gossip.

The Side Hustle Show, hosted by Nick Loper.

This is the show if you want answers for the big question so many entrepreneurs face. How do I turn my part-time hustle into a real job? Featuring topics such as passive income ideas, niche sites, and self-publishing, host Nick Loper is upfront and honest about the tough world of side hustles. The show features actionable tips and an engaging energy, and may just be that final push you need to grow your gig.

Back To Work, hosted by Merlin Mann and Dan Benjamin.
Focused on the basics that you don’t think about, Back To Work looks deep into our working lives by analyzing things like workflow, email habits and personal motivation. Somewhere between self-help and business advice, Back To Work takes on a new topic relating to productivity each week.

#LearnSomething

Continue Reading

Business Marketing

A personalized daily digital marketing checklist

(MARKETING NEWS) For all businesses, it is not only essential to develop an digital marketing strategy, but also necessary to utilize it in order to gain customers, and ultimately make a larger profit. This app can help.

Published

on

clearpath digital marketing

There is no doubt that starting your own business can be overwhelming. Along with promoting your business at events, meetings and in person, digital marketing strategies play a key role in the success of a company. For all businesses, it is not only essential to develop an online presence, but also necessary to utilize it in order to gain customers, and ultimately make a larger profit.

Simply creating a website and Facebook page for your business is not enough. However, software tools can help simplify digital marketing. ClearPath is a tool that organizes and creates tasks to optimize your online marketing. By creating to-do lists for you based on your online marketing strategy, you can focus on the areas of marketing that improve your business, all the while receiving useful tips and advice.

Using ClearPath is pretty straightforward and only requires one prerequisite. Before beginning, you must have a website.

If you are already lost, don’t panic. ClearPath can help you develop an online presence. Once your website is linked up, you get to choose the marketing channels that you would like to focus on. These include Search Engine Optimization (SEO), email, social, content, analytics, local, pay-per-click (PPC) and Conversion Rate Optimization (CRO). Again, if you are lost, ClearPath is there to help you strategize.

After ClearPath analyzes your site, they start sending you customized tasks based they believe can improve your online marketing.

As you finish each task, you can simply check it off and it will disappear. New tasks will appear each day, and some may even repeat as they need to be updated.

Whether you are well-versed in digital marketing or not, staying updated with the newest ways to optimize your business online is a constant struggle. Tools like ClearPath give people a place to start. Although I don’t think it can supplement an active and experienced digital marketer, it is a tool that can help small businesses that cannot afford to add to their team yet. At the end of the day, it aims to save you time. And since time is money, your business will hopefully be more profitable.

Continue Reading
Advertisement

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!