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Opinion Editorials

Ch-ch-ch-changes in Phoenix Real Estate

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Changes in the brokerage scene

News has been circulating the last couple of days about changes in the Phoenix real estate brokerage scene, though the vast majority of the changes have never seen the light of day in the local newspaper.

Sometime over the past two weeks a smallish Century 21 franchise, Century 21 Camelview, shut its doors. Several agents made their way to my old firm, Century 21 Arizona Foothills. Arizona Foothills, meanwhile, announced this past weekend that it will be closing its Arrowhead Ranch office effective March 31.

2nd most productive office

That Arrowhead office was the second-most productive office in the Century 21 chain in Maricopa County last year (with admittedly limited help from me.) But the lease rates were high and the property owner was demanding a five-year lease, which Floyd Scott, Foothills’ owner, wasn’t willing to sign.

Today news comes that Homesmart last week acquired another local brokerage, Dan Schwartz Realty, giving Homesmart more than 3,300 agents. What slice of the market the company now will have, I’m not sure. I’ll try to run the numbers sometime soon.

We often talk about the need for real estate agents to prove their value to the general public. But real estate brokerages are finding themselves needing to prove their value to their agents to an equal degree.

Ron Copus’ departure

The worst past of Foothills’ closing of the Arrowhead office is the departure of Ron Copus, the one-time broker at Tradin’ Places before it was acquired by Foothills. Ron was my mentor and the mentor for many successful agents. There were many who remained at Foothills after the buyout only because of Ron and Mary Sand, the training director.

Loyalty to the Foothills’ brand never has run deep. And with the closing of this branch, there now are several agents looking elsewhere because without a local location, there are limits to the value the company offers. There’s a vibrant corporate relocation program there but agents soon learn that the 3/4 of one percent they may earn is little reward for a great deal of work.

Expenses passed to agents

More and more expenses have been passed to the agents. And there are substantial splits taken out of every closing check, sometimes with only the flimsiest of justifications. (Like an additional 5% fee for daring to accept a referral from a sister Century 21 franchise, payable directly to the company’s relocation department for doing absolutely zero work on the file.)

Dan Schwartz agents are used to a minimum of infrastructure so the change there likely will be less dramatic, outside of the usual need to order new signs, business cards and marketing paraphernalia. And since Homesmart is a company with 100 percent splits, the value question likely will not be asked as often.

Two types of communities

As I wrote on my own blog there seem to be two types of companies – mom and pop, and the monoliths. Century 21 Metro Alliance was a monolith whose days appear numbered, what with the owners filing for bankruptcy and rumors of downsizing office space from a scarcely 1-year-old location. Homesmart appears to be a monolith that’s thriving.

Smaller shops with a handful of agents often can be more successful comparatively due to the lack of overhead. Jay and Francy Thompson, for example, started Thompsons Realty after leaving Century 21 Aware and haven’t missed a beat. Others prominent in the real estate blogging world for their alleged marketing prowess have zero active listings in the MLS and remarkably few over the past 16 months or so.

Strange times, indeed.

Jonathan Dalton is a Realtor with RE/MAX Desert Showcase in Peoria, Arizona and is the author of the All Phoenix Real Estate blog as well as a half-dozen neighborhood sites. His partner, Tobey, is a somewhat rotund beagle who sleeps 21 hours a day.

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10 Comments

10 Comments

  1. Teresa Boardman

    March 26, 2008 at 4:44 am

    We have a growing trend here in MN where more and more of us have brokers licenses and agents are going out on there own in larger numbers than ever before. One of the major companies in town seems to be shrinking but the largest company looks like it is growing. It will be interesting to see if this is just an anomaly or if agents will continue to go out on their own.

  2. Greg Cremia

    March 26, 2008 at 6:31 am

    What I don’t understand is how it is illegal for me to talk about commission structure with another agent but it is ok for 3,300 agents to follow the same commission structure in one city.

  3. Jonathan Dalton

    March 26, 2008 at 2:15 pm

    Greg – a company can set whatever commission structure it chooses. I honestly don’t know if this is the case at Homesmart. I know at my prior office I never charged what the company’s set rate was for a variety of reasons.

    Teresa – It’s something I’ve contemplated myself but I still like having the big franchise behind me, even if I don’t trade on their name all that often.

  4. ines

    March 26, 2008 at 9:46 pm

    Something similar happened to us last year – our local Coldwell Banker office closed its doors saying they were “consolidating offices” and we had to move to one further off. CB lost their local presence and I still think it was a mistake, but Rick and I work from home and it really didn’t affect us. Interesting times for sure. I still like the big name behind us……somehow that name does not seem as big anymore.

  5. Joshua Ferris

    March 26, 2008 at 11:38 pm

    I think the value of a broker has been challenged dramatically over the past year or two. I worked at a certain black and yellow company when I first started and it was an absolutely awful experience all the way around. I then switched to a work-from-home-we’ll-give-you-the-leads operation for about 4 years. It wasn’t a bad model really but I had to pay for all office expenses, meet potential clients at Starbucks because we had no office and work with buyers exclusively. To top it off, I was on a 60/40 split.

    Over the summer I started my own brokerage to shoot for the 100% commission and I still hated working from home and not having an office. Plus when the calls came in for listings I was the only one to answer them so I had no time to myself.

    Now I’m with Keller Williams and I couldn’t be happier. Not only do we have beautiful offices and a great front desk staff that everything but I also have a fantastic broker who helped me seal the deal on a 200+ home community marketing contract. Oh, and the split is higher than the 60/40 place!

    Overall I couldn’t be happier. I share all this because brokers will always have a place in real estate but the ones who bring nothing new to the table and don’t help agents flourish are soon to be dead in the water.

  6. Bill Lublin

    March 27, 2008 at 2:30 am

    Teresa;
    There is a cycle that the business follows – as markets are good new people come into the business and over time some portion of them decide that they are the source of all good things and they go to open – some are business people and grow their companies, some struggle and don’t grow because they are better salespeople then they are businesspeople, and some (like Joshua find that they are better suited to be agents then owner operators- After a period of time some of the new independent companies find a place where they need to grow further and the next stage happens – a wave of franchisees or an expansion (I openend my second office 5 years after the first and didn;t buy a franchise for another 6 years when it seemed to be the next groweth step) after a period, there is a consolidation of many of the smaller offices as the market contracts – and then when the market expands again the cycle starts all over again – its really fascinating to watch – So many people open brokerage firms that never grow to be businesses, but are just opportunities to create a job (like Joshua relates) – A great book about that is call the E-Myth – it helps put into perspective the whole process (from purely a business overview – not real estate specific)
    The nice thing is that its almost a sort of economic darwinsim – new things arise, old things grow and change – some things prosper and others don’t – but the agents and companies that make it through seem to be stronger when the next expansion cycle starts –

  7. Bill Lublin

    March 27, 2008 at 2:33 am

    @Greg; When people from more then one company talk about their commissions it is considered price fixing (since a number of companies may be agreeing to “fix” a price to charge the consumer) – when agents within one company follow a single policy it is a business practice (since all of their competitors set their own commission schedules) It goes back to business practices in the late 19th century when railroad companies and energy suppliers would conspire to create pricing through artificial methods outside of the marketplace demands – (leading to things like the Sherman Anti-Trust Act) Hope that helps explain it

  8. Bill Lublin

    March 27, 2008 at 2:35 am

    Ines – I undertsand how you feel – we’re hyper-sensitive to changes in our business becuase we’re so involved in it (like you get sensitized when you buy a new car and start seeing it everywhere you go) but the consumer still sees the branding they’re used too, so the names still seems the same to them – (but we know better 🙂 )

  9. Bill Lublin

    March 27, 2008 at 2:39 am

    Joshua – I agree that the brokerage needs to bring something to th table – no matter what the business model – and I would even challenge the common assumption that its a split or a percentage – When the brokerage is a place that fosters the growth and business of its affiliates then it does well- and its not about your split- but about what you make and keep – in our market there are many business models where the agent is paid a higher split and then charged back for services etc – bottom line is that the brokerage needs to be a profitable strong company and the agent needs ot make a good living and be able to experience growth – In our company almost all of my partners were agents in the company at one time – when they were ready to grow – we helped them open offices and they became principals in the company- its worked for us well so far – and even in this market we’ve been moving forward because this is a growth opportunity-

  10. Greg Cremia

    March 27, 2008 at 5:12 am

    Bill,

    I understand that part completely and agree with it. What I don’t understand is why it is ok for those 3,300 agents under one umbrella in one city to talk about commissions or even follow the same office policy on commission. If those 3,300 agents are not forced to follow the same pricing schedule they are at the very least encouraged to follow the same commission schedule.

    It is a double standard when 2 little companies can’t talk about commission until they are bought out by a big company.

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Opinion Editorials

Why robots freak us out, and what it means for the future of AI

(OPINION / EDITORIAL) Robots and humans have a long way to go before the social divide disappears, but research is giving us insight on how to cross the uncanny valley.

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Close of R2D2 toy, an example of robots that we root for, but why?

We hate robots. Ok, wait, back up. We at least think they are more evil than good. Try it yourself – “are robots” in Google nets you evil before good. Megatron has higher SEO than Optimus Prime, and it’s not just because he’s so much cooler. It cuz he evil, cuz. It do be like that.

It’s not even a compliment to call someone robotic; society connotes this to emotionless preprogrammed shells of hideous nothing, empty clankbags that walk and talk and not much else. So, me at a party. Or if you’re a nerd, you’re a robot. (Me at a party once again.)

Let’s start by assuming robots as human-like bipedal machines that are designed with some amount of artificial intelligence, generally designed to fulfill a job to free up humanity from drudgery. All sounds good so far. So why do they creep us out?

There’s a litany of reasons why, best summed up with the concept of the uncanny valley, first coined by roboticist Masahiro Mori (Wow he’s still alive! The robots have not yet won) in 1970. Essentially, we know what a human is and how it looks and behaves against the greater backdrop of life and physics. When this is translated to a synthetic being, we are ok with making a robot look and act like us to a point, where we then notice all the irregularities and differences.

Most of these are minor – unnaturally smooth or rigid movements, light not scattering properly on a surface, eyes that don’t sync up quite right when they blink, and several other tiny details. Lots of theories take over at this point about why this creeps us out. But a blanket way to think about it is that our expectation doesn’t match what we are seeing; the reality we’re presented with is off just enough and this makes us uncomfortable .

Ever stream a show and the audio is a half second off? Makes you really annoyed. Magnify that feeling by a thousand and you’re smack in the middle of the uncanny valley. It’s that unnerving. One possible term for this is abjection, which is what happens the moment before we begin to fear something. Our minds – sensing incompatibility with robots – know this is something else, something other , and faced with no way to categorize this, we crash.

This is why they make good villains in movies – something we don’t understand and given free will and autonomy, potentially imbued with the bias of a creator or capable of forming terrifying conclusions all on its own (humans are a virus). But they also make good heroes, especially if they are cute or funny. Who doesn’t love C3PO? That surprise that they are good delights us. Build in enough appeal to a robot, and we root for them and feel empathy when they are faced with hardships. Do robots dream of electric sheep? Do robots have binary souls? Bits and zeros and ones?

Professor Jaime Banks (Texas Tech University’s College of Media & Communication) spends a lot of time thinking about how we perceive robots. It’s a complex and multifaceted topic that covers anthropomorphism, artificial intelligence, robot roles within society, trust, inherently measuring virtue versus evil, preconceived notions from entertainment, and numerous topics that cover human-robot interactions.

The world is approaching a future where robots may become commonplace; there are already robot bears in Japan working in the healthcare field. Dressing them up with cute faces and smiles may help, but one jerky movement later and we’ve dropped all suspension.

At some point, we have to make peace with the idea that they will be all over the place. Skynet, GLaDOS in Portal, the trope of your evil twin being a robot that your significant will have to shoot in the middle of your fight, that episode of Futurama where everything was a robot and they rose up against their human masters with wargod washing machines and killer greeting cards, the other Futurama episode where they go to a planet full of human hating murderous robots… We’ve all got some good reasons to fear robots and their coded minds.

But as technology advances, it makes sense to have robots take over menial tasks, perform duties for the needy and sick, and otherwise benefit humanity at large. And so the question we face is how to build that relationship now to help us in the future.

There’s a fine line between making them too humanlike versus too mechanical. Pixar solved the issue of unnerving humanoids in their movies by designing them stylistically – we know they are human and accept that the figure would look odd in real life. We can do the same with robots – enough familiarity to develop an appeal, but not enough to erase the divide between humanity and robot. It may just be a question of time and new generations growing up with robots becoming fixtures of everyday life. I’m down for cyborgs too.

Fearing them might not even be bad, as Banks points out: “…a certain amount of fear can be a useful thing. Fear can make us think critically and carefully and be thoughtful about our interactions, and that would likely help us productively engage a world where robots are key players.”

Also, check out Robot Carnival if you get the chance – specifically the Presence episode of the anthology.

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Opinion Editorials

BIPOC Gen Zers are using TikTok to create cultural awareness

(OPINION / EDITORIAL) TikTok has become a platform for younger generations to share their cultures, paving the way for a more inclusive society. And they’re doing it one 15 second video at a time.

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Black person's hands holding a phone loading TikTok above a wooden table.

When scrolling on TikTok, you might come across this question posed by a BIPOC creator (Black, Indigenous, or Person of Color): “How old were you when you realized you weren’t ugly, you just lived in a predominantly White space?”

Growing up in predominantly White spaces myself with immigrant parents from the Middle East, I had a warped perspective of beauty. Straight light hair, fair skin, Western features, a stick-thin figure – I internalized my physical otherness as lack.

It wasn’t until I moved to a diverse city for college that I realized this. I saw others speaking different languages, eating ethnic foods and dressing however they wanted without fear of losing their proximity to Whiteness. Exposure to others who didn’t fit “the mold” was transformative for me.

As someone in their mid-twenties, I came of age with social media like Tumblr, Facebook and, ultimately, Instagram. But I’d be lying to you if I said that I didn’t wish TikTok was around when I was a kid.

For reference, most TikTok users are between 16-24, meaning that many are still in high school. While content on TikTok is really all over the place and specifically catered to your preferences (you can feel the algorithums at work as your scroll), one facet that I find integral to the app’s essence is Gen Z proudly showcasing their cultures – aka #culturecheck.

Besides the countless ethnic food tutorials (some of my favorite content on the app!), fashion has become a main way for BIPOC or immigrant TikTokers to fully express their identities and share their culture with other users on the app, regardless of physical location.

Take the #FashionEdit challenge, where creators lip sync to a mash-up of Amine’s “Caroline” and “I Just Did a Bad Thing” by Bill Wurtz as they transform from their everyday Western clothes into that of their respective culture.

In her famous video, Milan Mathew – the creator attributed to popularizing this trend – sits down in a chair. She edits the clip in such a way that as she sits, her original outfit switches to a baby-pink lehenga and she becomes adorned with traditional Indian jewelry. Denise Osei does the same, switching into tradition Ghanaian dress. If you can think of a culture or ethnicity, chances are they are represented in this TikTok trend.

This past Indigenous People’s Day, James Jones’ videos went viral across various social media platforms, as he transformed into his traditional garments and performed tribal dances.

Though the cultures and respective attire they showcase are unique in each video, the energy is all the same: proud and beautiful. Showing off what your culture wears has become a way to gain clout on the app and inspire others to do the same.

The beautiful thing about cultural/ethnic TikTok is that it isn’t just Mexicans cheering for other Mexicans, or Arabs cheering for other Arabs – the app sustains a general solidarity across racial and ethnic lines while cultivating an appreciation of world cultures.

But just how deep does that appreciation go? Some users think (and I agree) that “liking” a video of an attractive creator in traditional dress is hardly a radical move in dismantling notions of Western beauty.

While TikTok trends might not solve these issues entirely, it’s important to note that they are moving things in the right directions – I certainly never saw anything like this when I was growing up.

For whatever reason, Millennials, Gen X and Boomers seem to have a lot of shade to throw at Gen Z. But one thing is for certain – this young generation is paving the way for a more inclusive, more respectful society, which is something we should all get behind. And they’re doing it one 15 second video at a time.

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Opinion Editorials

This website is like Pinterest for WFH desk setups

(OPINION / EDITORIAL) If you’ve been working from home at the same, unchanged desk setup, it may be time for an upgrade. My Desk Tour has the inspiration you need.

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Man browsing desk setups on My Desk Tour

Whether you’re sitting, standing, or reclining your way through the pandemic, you’re most likely doing it from home these days. You’re also probably contending with an uninspired desk configuration hastily cobbled together in March, which—while understandable—might be bringing you down. Fortunately, there’s an easy, personable solution to spark your creativity: My Desk Tour.

My Desk Tour is a small website started by Jonathan Cai. On this site, you will find pictures of unique and highly customized desk setups; these desk configurations range from being optimized for gamers to coders to audiophiles, so there’s arguably something for everyone—even if you’re just swinging by to drool for a bit.

Cai also implements a feature in which site users can tag products seen in desk photos with direct links to Amazon so you don’t have to poke around the Internet for an hour in search of an obscure mouse pad. This is something Cai initially encountered on Reddit and, after receiving guidance from various subreddits on the issue of which mouse to purchase, he found the inspiration to create My Desk Tour.

The service itself is pretty light—the landing page consists of a few desk setup photos and a rotating carousel of featured configurations—but it has great potential to grow into a desk-focused social experience of sorts.

It’s also a great place to drop in on if you’re missing the extra level of adoration for your desk space that a truly great setup invokes. Since most people who have been working from home since the spring didn’t receive a ton of advance notice, it’s reasonable to assume that the majority of folks have resigned themselves to a boring or inefficient desk configuration. With a bit of inspiration from My Desk Tour, that can change overnight.

Of course, some of the desk options featured on the site are a bit over the top. One configuration boasts dual ultra-wide monitors stacked atop each other, and another shows off a monitor flanked by additional vertical monitors—presumably for the sake of coding. If you’re scrambling to stay employed, such a setup might be egregious.

If you’re just looking for a new way to orient your workspace for the next few months, though, My Desk Tour is worth a visit.

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