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Opinion Editorials

Dual real estate revolutions gaining velocity

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Revolution #1

In case you haven’t noticed, the local MLS is available to the public through literally a hundred if not a thousand websites in your market. In fact, I’d go as far as to say ya can’t swing a dead cat without hittin’ some Realtor’s IDX. (In essence, the MLS on an agent’s website.) This means that if you’re a buyer, or even if you’re merely curious, you can see pretty much anything listed in your community. I have one, though so far, it’s pretty much been for my family and friends. I don’t sell San Diego real estate to anyone with the lone exception of  those who wish to live in a 2-4 unit setup. Even if you live in East WhatsIt Ohio though, you can see whatever you want in San Diego’s MLS on my site, and hundreds like it.

Back in the day, the only way a buyer could see all that was for sale was to get an agent. Only brokers/agents had access to the MLS. See, it was their property, the listings that is, and that’s the way they treated it. They harbored the silly belief that since it was the fruit of their labor, and their entity, they’d do whatever they chose to do with it. Imagine the cheek. It worked very well, as far as buyers and sellers were concerned. ‘Course some folks always think they have a better idea. This is almost always dangerous, especially to their members when NAR begins thinking they have a better way.

See, they gave away the store. The only thing of value they had on their shelves was their listings. Now they don’t have that. What geniuses brokers/agents have at the helm of their ship, the SS NAR.

Here’s a scoop for ya — consumers don’t have a ‘right’ to my info just cuz they declare it so.

They have a right to professional service and solid expertise, ethically rendered with integrity. Wonder how it’d go over if decades ago those same consumers had declared their right to Coke’s formula? It’s the only thing Coke has of value. Once that formula can be used by anybody, they’re toast. Yet many seem to think the real estate industry was created to be their bitches. I beg to differ.

All the fuss lately about using or not using aggregators is moot from where I sit. Who cares, anyway? Any agent worth two quarters to rub together will sell their listings without using any of ’em. They’ve been doin’ it for generations. If ever an industry has been sold a bill of goods — by their own leadership — real estate is it.

It’s possibly too late now, but order needs to be restored.

I suggest a revolution. Let the biggest brokerages in each market completely withdraw from their local Board and MLS. Then they can start over from scratch. NAR would have a stroke to be sure, but they’d stop pretending everything they’ve done for the last several years has been in the brokers’/agents’ best interest. If you believe that, you should go buy some Vegas property for zero down and wait for the appreciation tsunami.

Like Bill Cosby used to say to his kids, “I brought you into this world, and I can take you out.”

The various Boards of Realtors need the brokers, not vice versa. Ditto the MLS. It’s time broker-owners stop allowing the tail to wag the dog. The only thing they need to do to accomplish that is to reach down and grab a pair.

Revolution #2

The agent-centric business model has failed miserably everywhere it’s been tried for the last 40+ years. Get over it. It wasn’t a good idea from day 1. How bright must we be to know that you don’t put worker bees in charge of the hive. They’re worker bees, not risk taking, capital spending, gladiator-in-the-arena bees. The broker/owner to agent ratio has to be somewhere around 100 to 1,000/1. Yet we’ve been (That’s the editorial ‘we’, as I’d never allow it in my firm.) allowing the 1 to rule the roost since the early-mid 1970s.

Geez, guys, how’s that been workin’ out for ya lately?

Since most don’t know the history, here’s how the broker-centric model works. The broker’s in charge. The agents are to be seen and not heard. If the agents had what it took to own their own successful business, they would. But they don’t, so they don’t. They don’t get to dictate to the business owner how to run it. The broker generally pays for the bulk of the marketing. They directly or indirectly generate and/or distribute leads. They don’t view dead wood as a good thing. They do a lot more, or the same business with a lot less agents. The agents make more money even though their splits are much less than agent-centric models.

This is why teams are literally outperforming their own brokerage owners sometimes.

With rare exceptions most successful teams today are using the pre-1970’s broker-centric models. What’s hilarious to watch is how their buyer-agents are earning more bottom line money than their counterparts in the same office. Their counterparts are often making 50-125% bigger commission splits, yet bring home less bacon. Meanwhile, the poor broker/owner is not only payin’ the overhead for the schmuck to whom he’s payin’ 50-90% splits, he’s hearing ’em complain. All this while month in and month out he gets to watch a team’s team leader make as much or more money than he is as broker/owner of the company.

Imagine an entire company based on today’s team concept. You don’t have to, cuz I lived it. It closed more sides than anyone in my local market, San Diego, for five consecutive years, than anyone. They did it with never more than 30 full time agents, and about a dozen part-timers. Over 1,000 sides a year. Their competitors? Some had as many as 16 offices. They had triple, sometimes quadruple the number of agents and still couldn’t keep up. In my experience there were two basic reasons for this.

1. Broker/owners acted like broker owners. They were in charge of their own businesses. What a concept. They were brave enough not to kowtow to a buncha wannabes who, frankly, couldn’t find their asses with a map, two guides, and a GPS.

2. If an agent wasn’t cuttin’ it, they were shown the door. Non-producers were not treated as mascots, as they are today in agent-centric models. In other words, you were a professional producing agent, or you were gone. What a concept.

Oh, and by the way? That brokerage wasn’t part of either the local Board or the local MLS, both of whom came hat in hand, begging him to please join and share with them his bounty. Go figure.

The tiresome “raising the bar” discussion

The cry for ‘Raising the Bar’ is well meaning, but mostly misguided.

There are those with very good intent who want the industry to make it more difficult to become an agent or a broker, and/or want continuing education to be more rigorous. I understand their thinking. I’m 60. Been hearing the ‘raise the bar’ mantra since I was a teenager. How’s that been workin’ out for us? Don’t answer, it was rhetorical. But if we all take a few steps back so as to view the big picture, maybe we can begin to come together on a different approach. The big picture? It comes down to two realities merged into one prototypical person — and they represent, easily, around 70-85% of currently active licensees to one degree or another.

They work for a brokerage without producing much if any business. Also, regardless of the many classes they may’ve been coerced into attending, they don’t know much about the law, procedures, and general practice of real estate agency. Combine those two — lack of production and general industry ignorance — and you get the periodic outcry for ‘raising the bar’. Hey, I have a idear, why don’t we insist as broker/owners that our agents be producers or be gone? Producers generally know what they’re doing on all fronts.

What a concept! The vast majority of all listings/sales of 1-4 units is done by far less than 20% of the licensees out there. Said another way, if tomorrow all brokerages were suddenly operating the broker-centric model, the merit based culture would be the natural result. The huge majority of agents out there who take up space more than anything else would, like steam, heat the air then disappear. They’d never return either, cuz bottom-line production requirements would be the barrier they’d never be able to navigate.

Would love to hear your thoughts.  Back to the future may just be what’s beginning to happen now.

Jeff Brown specializes in real estate investment for retirement, has practiced real estate for over 40 years and is a veteran of over 200 tax deferred exchanges, many multi-state. Brown is a second generation broker and works daily with the third generation. With CCIM training and decades of hands on experience, Brown's expertise is highly sought after, some of which he shares on his real estate investing blog.

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30 Comments

30 Comments

  1. Lesley Lambert

    January 30, 2012 at 9:59 pm

    My mom was my first broker (she started real estate in the 80's) and this was how she trained me. I credit my training in the above methods as being what has allowed me to survive and even thrive in a bad market. Some good points that I am certain a lot of people don't want to acknowledge.

    • Jeff Brown

      February 1, 2012 at 8:32 pm

      As the industry is slowly forced into the broker-centric model, Lesley, something tells me they'll acknowledge it. 🙂

  2. herman chan

    January 30, 2012 at 10:05 pm

    hi jeff! i think in theory a merit based brokerage would work, but the fact of the matter is many brokerages don't' chop off non-producers b/c brokerages make money off the non-producing agents by selling classes, certs, desk/franchise fees, tech fees, blah blah blah.

    • Jeff Brown

      February 1, 2012 at 8:18 pm

      Hey Herman — They do that cuz their model simply is a big FAIL.

  3. Nick Molnar

    January 30, 2012 at 11:07 pm

    Sorry Jeff, that day is dead (or dying). If all an agent has to offer is listing data and a well-trained team, they should make plans to exit the business. Launching a brokerage is now well within the capability of a smart high-schooler with a four or five figure budget (depending on the market). And the listing data ultimately belongs to the sellers. It sounds like you offer a real value to your investor clients and help them in ways they are unable to help themselves. Why do you think residential brokerage should offer anything less?

    • Jeff Brown

      February 1, 2012 at 8:24 pm

      Somehow I think we're not communicating, Nick. That's exactly what I'm suggesting. You're right about anyone being able to START a brokerage, but they'd fail just like the brainiacs who've been bringing in extra income streams just to stay afloat. The listing data belongs to me, period.

      I own the listing, period.

      The old model fired incompetents. They slowly but surely ended up with quasi all-star teams after a relatively short time. Nothing's changed since then, Nick. Sellers want their homes sold, at the highest possible price and in the shortest period of time. It was true when I first started in '69, and it's true today.

      That day may be dead, but the teams are showing their broker/owners the way. Agent-centric models simply do not work. They're doomed from the start.

  4. Drew Meyers - ESM Exec Designs

    January 31, 2012 at 10:38 am

    Exactly why I think (know) brokers like m realty in portland and m squared in wash dc are on their way to killing their respective markets…

  5. Bruce Lemieux

    January 31, 2012 at 4:08 pm

    The 70s offered many delights like awesome clothes and spectacular shag carpet. People who ran 26 miles were labeled as freaks. Now, you're a freak if you don't. It was a golden age.

    Still, I wouldn't like to see the return of cars that rust and don't run, double digit mortgage rates, or restricted access to home listing data. Consumers should have easy access accurate and non-spammy home listing data. Good for consumers, good for our industry. I'm less concerned about how they get it (syndicated, IDX, etc).

    Revolution #2 really resonates. The methodology for the big brokers in my market is simple: grab as many agents and market share as possible. Remove all risk to operate a profitable business, give cubes, free business cards and office managers (often to babysit) — and take a high split. As agents get better and want a bigger share, they are lured by the do-it-yourself, agent-centric models. Now, agents need to invest heavily in processes, technology and coaching to acquire and convert leads – which is time not selling. Now imagine a world where the broker manages the business, generates the leads, and coaches – and holds accountable – the agents who spend 100% of their time selling. Sounds like a pretty good trip back to the 70s to me.

  6. Jeff Brown

    February 1, 2012 at 8:30 pm

    Love the comparisons, Bruce. As far as #1 goes, the public has unfettered access through hundreds, sometimes thousands of IDXs in each local market. My gripe is MLS/Board treating its members like street walkers. There's simply no need, and the professionally listed home sells quickly and for more without the aggregator circus clown acts. 🙂

    Does my model interest you for your brokerage?

    • Bruce Lemieux

      February 1, 2012 at 9:07 pm

      As it turns out, I'm in the last stages of launching my own brokerage. The organizational model will look a lot like a team where the broker (my wife and me) will concentrate on lead generation and listing conversion, with a couple buyer agents focused 100% on sales. At this point, I don't see how new 'listing agents' would come on board since I'll have a very structured listing process, but I don't need to figure that out right now. I'm excited about our listing model – we'll see if my market likes it once it launches. When it's completely out of my brain and fully realized in a marketing plan, I would like to send it over to you so you can shoot holes in it. An unvarnished critique would be appreciated — I know that you’re very good at being ‘unvarnished’ 🙂

  7. Stephanie Crawford

    February 4, 2012 at 6:52 pm

    Bruce, send that model over to me while you are at it. Would love to check it out 🙂

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Opinion Editorials

5 ways to grow your entrepreneur business without shaming others

(OPINION / EDITORIAL) We all need support as business owners. Let’s talk ideas for revenue growth as an entrepreneur that do not include shaming your competition.

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Entrepreneur women all talking around a meeting table.

The year 2020 has forced everyone to re-assess their priorities and given us the most uncertain set of circumstances we have lived through. For businesses and entrepreneurs, they were faced with having to confront new business scenarios quickly. Maybe your entrepreneur business was set to thrive as behaviors changed (maybe you already offered contactless products and services). Or, you were forced to add virtual components or find new revenue streams – immediately. This has been tough.

Every single person is having a hard time with the adjustments and most likely at different stages than others. We’re at the 6-month mark, and each of our timelines are going to look different. Our emotions have greeted us differently too, whether we have felt relief, grief, excitement, fear, hope, determination, or just plain exhaustion.

Now that we are participating in life a bit more virtually than in 2019, this is a good time to re-visit the pros and cons of the influence of technology and marketing outreach online. It’s also a great time to throw old entrepreneur rules out the window and create a better sense of community where you can.

Here’s an alluring article, “Now Is Not the Time for ‘Mom Shaming’”, that gives an example from about a decade ago of how the popularity of mommy bloggers grew by women sharing their parenting “hacks”, tips, or even recipes and crafting ideas via online posts and blogs. As the blog entries grew, so did other moms comparing themselves and/or feeling inadequate. Some of the responses were natural and some may have been coming from a place of defensiveness. Moms are not alone in looking for resources, articles, materials, and friends to tell us we’re doing ok. We just need to be told “You are doing fine.”

Luckily, some moms in Connecticut decided to declare an end to “Mom Wars” and created a photo shoot that shared examples of how each mom had a right to their choices in parenting. It seemed to reinforce the message of, “You are doing fine.” I don’t know about you, but my recent google searches of “Is it ok to have my 3-year old go to bed with the iPad” are pretty much destined to get me in trouble with her pediatrician. I’m hoping that during a global pandemic, “I am doing fine.”

Comparing this scenario to the entrepreneur world, often times your business is your baby. You have worn many hats to keep it alive. You have built the concept and ideas, nurtured the products and services with sweat, tears, and maybe some laughs. You have spent countless hours researching, experimenting, and trying processes and marketing tactics that work for you. You have been asked to “pivot” this year like so many others (sick of that word? Me too).

Here are some ideas for revenue growth as an entrepreneur (or at least, ideas worth considering if you haven’t already):

  1. It’s about the questions you ask yourself. How does your product or service help or serve others (vs. solely asking how do I get more customers?) This may lead to new ideas or income streams.
  2. Consider a collaboration or a partnership – even if they seem like the competition. “If you want to go fast, go alone. If you want to go far, go together.” – African proverb
  3. Stop inadvertently shaming the competition by critiquing what they do. It’s really obvious on your Instagram. Try changing the narrative to how you help others.
  4. Revisit the poem All I Really Need to Know I Learned in Kindergarten and re-visit it often. “And it is still true, no matter how old you are – when you go out into the world, it is best to hold hands and stick together.”
  5. Join a community, celebrate others’ success, and try to share some positivity without being asked to do so. Ideas include: Likes/endorsements, recommendations on LinkedIn for your vendor contacts, positive Google or Yelp reviews for fellow small business owners.

It seems like we really could use more kindness and empathy right now. So what if we look for the help and support of others in our entrepreneurial universe versus comparing and defending our different way of doing things?

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Opinion Editorials

Can we combat grind culture and injustice with a nap?

(OPINION EDITORIALS) A global pandemic and a climate of racial injustice may require fresh thinking and a new approach from what grind culture has taught us.

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Sleeping cat with plant, fighting grind culture.

Information is delivered to us at warp speed with access to television, radio, and the internet (and more specifically, social media). We are inundated with messages. Oftentimes they’re personalized by something that a friend or family shared. Other times we manage them for work, school, or just keeping up with news. Many entrepreneurs already wear many hats and burn the midnight oil.

During this global pandemic, COVID-19, we have also seen a rise in awareness and attention to social injustice and systemic racism. This is not a new concept, as we all know. But it did feel like the attention was advanced exponentially by the murder of George Floyd on Memorial Day 2020. Many people and entrepreneurs felt called to action (or at least experienced self-reflection). And yet they were working at all hours to evolve their businesses to survive. All of this happening simultaneously may have felt like a struggle while they tried to figure out exactly they can do.

There are some incredible thought leaders – and with limited time, it can be as simple as checking them out on Instagram. These public figures give ideas around what to be aware of and how to make sure you are leveling up your awareness.

Dr. Ibram X. Kendi, Director of the Center for Antiracist Research – he has been studying anti-racism and has several books and interviews that help give language to what has been happening in our country for centuries. His content also delves into why and how white people have believed they are more than people of color. Here is a great interview he did with Brené Brown on her Unlocking Us podcast.

Tamika Mallory – American activist and one of the leading organizers of the 2017 Women’s March. She has been fighting for justice to be brought upon the officers that killed Breonna Taylor on March 13. These are among other efforts around the country to push back on gun control, feminist issues, and the Black Lives Matter movement.

Brené Brown – research professor at the University of Houston and has spent the last two decades studying courage, vulnerability, shame, and empathy. She has been listening and engaging on how racism and our shame intersect. She also speaks about how people can reflect on themselves and where they can take action to better our society. She has some antiracism resources on her website.

With all of this information and the change in our daily routines and work habits (or business adjustments), what is a fresh approach or possibly a new angle that you haven’t been able to consider?

There is one social channel against grind culture that may not be as well-known. At an initial glance, you may even perceive this place as a spoof Twitter and Instagram that is just telling you to take a nap. But hold on, it’s actually much smarter than that. The description says “We examine the liberating power of naps. We believe rest is a form of resistance and reparations. We install Nap Experiences. Founding in 2016.”

It might be a great time for you to check out The Nap Ministry, inspired by Tricia Hersey. White people are called to action, and people of color are expressly told to give time to taking care of themselves. Ultimately, it goes both ways – everyone needs the time to recharge and recuperate. But people of color especially are being told to value their rest more than the grind culture. Yes, you’re being told you need to manage your mental health and include self-care in your schedule.

Through The Nap Ministry, Tricia “examines rest as a form of resistance by curating safe spaces for the community to rest via Collective Napping Experiences, immersive workshops, and performance art installations.”

“In this incredibly rich offering, we speak with Tricia on the myths of grind culture, rest as resistance, and reclaiming our imaginative power through sleep. Capitalism and white supremacy have tricked us into believing that our self-worth is tied to our productivity. Tricia shares with us the revolutionary power of rest.” They have even explored embracing sleep as a political act.

Let this allow you to take a deep breath and sigh – it is a must that you take care of yourself to take care of your business as well as your customers and your community. And yes, keep your drive and desire to “get to work”. But not at your expense for the old grind culture narrative.

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Opinion Editorials

The actual reasons people choose to work at startups

(EDITORIAL) Startups have a lot going for them, environment, communication, visible growth. But why else would you work for one?

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Startups meeting led by Black woman.

Startups are perpetually viewed as the quintessential millennial paradise with all of the accompanying perks: Flexible hours, in-house table tennis, and long holidays. With this reputation so massively ingrained in the popular perception of startups, is it foolish to think that their employees actually care about the work that startup companies accomplish?

Well, yes and no.

The average startup has a few benefits that traditional business models can’t touch. These benefits often include things like open communication, a relaxed social hierarchy, and proximity to the startup’s mission. That last one is especially important: While larger businesses keep several degrees of separation between their employees and their end goals, startups put the stakes out in the open, allowing employees to find personal motivation to succeed.

When employees find themselves personally fulfilled by their work, that work reaps many of the benefits in the employee’s dedication, which in turn helps the startup propagate. Many aspiring startup employees know this and are eager to “find themselves” through their work.

Nevertheless, the allure of your average startup doesn’t always come from the opportunity to work on “something that matters.”

Tiffany Philippou touches on this concept by pointing out that “People come to work for you because they need money to live… [s]tartups actually offer pretty decent salaries these days.”

It’s true that many employees in their early to late twenties will likely take any available job, so assuming that your startup’s 25-and-under employee base is as committed to finding new uses for plastic as you are may be a bit naïve—indeed, this is a notion that holds true for any business, regardless of size or persuasion.

However, startup experience can color a young employee’s perception of their own self-worth. This allows them to pursue more personally tailored employment opportunities down the road—and that’s not a bad legacy to have.

Additionally, startups often offer—and even encourage—a level of personal connection and interactivity that employees simply won’t find in larger, more established workplaces. That isn’t symptomatic of startups being too laid-back or operating under loosely defined parameters. Instead, it’s a clue that work environments that facilitate personalities rather than rote productivity may stand to get more out of their employees.

Finally, your average startup has a limited number of spots, each of which has a clearly defined role and a possibility for massive growth. An employee of a startup doesn’t typically have to question their purpose in the company—it’s laid out for them; who are we to question their dedication to fulfilling it?

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