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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

7 ways to carve out me time while working from home

(OPINION / EDITORIAL) It can be easy to forget about self-care when you’re working from home, but it’s critical for your mental health, and your work quality.

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Woman in hijab sitting on couch, working from home on a laptop

We are all familiar with the syndrome, getting caught up in work, chores, and taking care of others, and neglecting to take care of ourselves in the meantime. This has always been the case, but now, with more people working from home and a seemingly endless lineup of chores, thanks to the pandemic. There is simply so much to do.

The line is thinly drawn between personal and professional time already, with emails, cell phones, and devices relentlessly reaching out around the clock, pulling at us like zombie arms reaching up from the grave. Working from home makes this tendency to always be “on” worse, as living and working take place in such close proximity. We have to turn it off, though.

Our brains and bodies need down time, me-time, self-care. Carving out this time is one of the kindest and most important things you can do for yourself. If we can begin to honor ourselves like this, the outcome with not only our mental and physical health, but also our productivity at work, will be beneficial. When we make the time to do things we love, our body untenses, our mind’s gears slow down that constant grinding. Burnout behooves nobody.

Our work will also benefit. Healthier, happier, more well rested, and well treated minds and bodies can work wonders! Our immune systems also need this, and we need our immune systems to be at their peak performance this intense season.

I wanted to write this article, because I have such a struggle with this in my own life. I need to print it out and put it in my workspace. Last week, I posted something on my social media pages that so many people shared. It is clear we all need these reminders, so I am paying it forward here. The graphic was a quote from Devyn W.

“If you are reading this, release your shoulders away from your ears, unclench your jaw, and drop your tongue from the roof of your mouth.”

There now, isn’t that remarkable? It is a great first step. Let go of the tension in your body, and check out these ways to make yourself some healing me-time.

  1. Set aside strict no-work times. This could be any time of day, but set the times and adhere to them strictly. This may look like taking a full hour for lunch, not checking email after a certain hour, or committing to spending that time outdoors, reading, exercising, or enjoying the company of your loved ones. Make this a daily routine, because we need these boundaries. Every. Single. Day.
  2. Remember not to apologize to anyone for taking this me-time. Mentally and physically you need this, and everyone will be better off if you do. It is nothing to apologize for! Building these work-free hours into your daily schedule will feel more normal as time goes on. This giving of time and space to your joy, health, and even basic human needs is what should be the norm, not the other way around.
  3. Give yourself a device-free hour or two every day, especially before bedtime. The pinging, dinging, and blinging keeps us on edge. Restful sleep is one of the wonderful ways our bodies and brains heal, and putting devices away before bedtime is one of the quick tips for getting better sleep.
  4. Of course, make time for the things you absolutely love. If this is a hot bath, getting a massage, reading books, working out, cooking or eating an extravagant meal, or talking and laughing with a loved one, you have to find a way to get this serotonin boost!
  5. Use the sunshine shortcut. It isn’t a cure-all, but sunlight and Vitamin D are mood boosters. At least when it’s not 107 degrees, like in a Texas summer. But as a general rule, taking in at least a good 10-15 minutes of that sweet, sweet Vitamin D provided by the sun is good for us.
  6. Spend time with animals! Walk your dog, shake that feathery thing at your cat, or snuggle either one. Whatever animals make you smile, spend time with them. If you don’t have pets of your own, you could volunteer to walk them at a local shelter or even watch a cute animal video online. They are shown to reduce stress. Best case scenario is in person if you are able, but thankfully the internet is bursting with adorable animal videos, as a backup.
  7. Give in to a bit of planning or daydreaming about a big future trip. Spending time looking at all the places you will go in the future and even plotting out an itinerary are usually excellent mood-boosters. It’s a bit different in 2020, as most of us aren’t sure when we will be able to go, but even deciding where you want to go when we are free to travel again can put a positive spin on things.

I hope we can all improve our lives while working from home by making time for regenerating, healing, and having fun! Gotta run—the sun is out, and my dog is begging for a walk.

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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

4 simple tips to ease friction with your boss while working remotely

(OPINION / EDITORIAL) Find it challenging to get along with your boss while working from home? Here are a few things you can try to ease the tension.

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Woman stressed over laptop in remote work.

Most people probably feel like their relationship with their boss is fine. If you’re encountering friction with your boss for any reason, though, remote work will often exacerbate it—this is one instance where distance doesn’t necessarily make the heart grow fonder. Here are a few ways to remove some of that friction without adding to your boss’ overflowing plate.

According to CNN, determining the problem that exists between you and your boss should be your first step. There’s one caveat to consider, however: Your boss’ boundaries. Problem-solving on your own time is fine, but demanding more of your boss’ time—especially when you’re supposed to be working—may compound the issue.

An easy way around this is a low-impact communique—e.g., an email—sent at the beginning or end of the workday. Since that’s a more passive communication style that takes only a minute or two out of your day, it’s less likely to frustrate your boss further.

If ironing out the issue isn’t your prerogative for now, examining your boss’ parameters for success is another place to start. Does your boss prefer to receive multiple updates throughout the day, or do they want one summative report each morning? Do you respect your boss’ preferred communication styles? These are important questions to ask during remote work. If you find yourself reaching out more than necessary, for example, it may be time to cut back.

It can also be difficult to satiate your boss if you don’t know their expectations. If you’re able to speak to them about the expectations regarding a project or task, do it; clarifying the parameters around your work will always help both of you. It is worth noting that some supervisors may expect that you know your way around some types of responsibilities, though, so err on the side of complementing that knowledge rather than asking for comprehensive instructions.

Finally, keep in mind that some bosses simply don’t communicate the same way you do. I’ve personally been blessed with a bevy of nurturing, enthusiastic supervisors, but we’ve all had superiors who refuse to acknowledge our successes and instead focus on our failures. That can be a really tough mentality to work with during remote periods, but knowing that they have a specific communication style that hampers their sociability can help dampen the effects.

As always, communication is key—even if that means doing it a little bit less than you’d like.

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