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Your Brokerage Model Sucks: 6 Months Later

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The Birth of a Brokerage

It’s been six months since the lovely wife and I launched our independent brokerage, and six months since I wrote my first post on Agent Genius, Your New Brokerage Business Model Sucks!.

It’s been a busy six months…

I thought I’d take a moment to share some of the trials and tribulations of giving birth to a real estate brokerage. I don’t write this to bask in the glory, Lord knows we’ve made or share of mistakes — with many more to come. Maybe someone can take something away from this and make their brokerage launch flawless (I know you are out there…). Maybe someone will decide, “if Jay can do it, so can I”. And maybe some sage Ag readers can say, “Yo! You might wanna try this.”

Fundamental Mistake #1

We’d originally planned to have the brokerage consist of me, my wife Francy and one friend of ours.

So much for planning. We’re currently at eight agents. Clearly that’s not a huge number, and likely someone out there is thinking, “What a pipsqueak. Eight agents hardly a brokerage makes”. But the simple fact is, our agent count is 170% higher than what we’d thought about and planned for.

Enter fundamental mistake #1 — not planning for growth. Even if you don’t think you are going to grow, you just may find out otherwise.

Hindsight being 20-20, we should have laid out contingency plans for growth rather than shooting from the hip. Shooting from the hip on the other hand, leads us to something I think we’ve done right…

Be Flexible

My old broker had rules cast in stone. Black and white, no room for adjustment or creativity. This rigidity was a prime factor in our decision to leave and forge out our own shop. If I’ve learned one thing in the short six months I’ve been a broker/owner it is to be flexible. While we have certain standards that will never be compromised (ethics and customer service to name two) you have to be able to change and adapt, often on-the-fly.

Fundamental Mistake #2

Being flexible is good. But systems are important too. Of course we did all the things required by our states rules and regulations. Documents are filed (electronically wherever possible), notices are posted in compliance with arcane rules. Agent credentials are vetted appropriately. Where we erred in the beginning was not having internal brokerage policies and forms for every foreseeable contingency. I still need a “new agent on-boarding process”. Some forms need to be uploaded to our private website. It’s all little stuff, but little stuff has a way of piling up over time. Fortunately, my failure to sweat the small stuff is offset by the single most critical thing we did right…

Hire the Best Agents

I remember my former broker telling me when he first heard we were leaving the mothership, “You’re going to lie awake at night worrying about what your agents are doing.”

Actually, I sleep like a baby.

We hired good agents. Really good agents. Agents that know their stuff. Experienced agents that have the same general customer-centric philosophy we carry through in all aspects of what we do.

I’ve turned down agents that wanted to come to our brokerage. One was quite perturbed, and loudly claimed, “You can’t do that. You have to hire me!”

No, I don’t.

I think the traditional brokerage model of hiring anyone with a license and a pulse has played a significant role in damaging the credibility of real estate agents in the court of public opinion. Sure, I could make more money hiring any John Doe out there. Collect a monthly fee and hope little Johnny sells a home to Aunt Sally or stumbles into a listing. I could go to a real estate school, which continue to crank out wanna-be agents at an alarming pace, and toss out a beautiful “Join Us!” pitch. I could talk the talk. Tell them I’m going to teach them all about the new age ways of Internet and social media marketing and prospecting. Heck, I could probably leverage our virtual office and no sales meetings — tout “work from home!” and pick up dozens of agents practically overnight.

But I enjoy sleeping well. I like not worrying about getting a call or a certified letter from some lawyer or the Department of Real Estate. I love knowing our clients are in expert hands. And I like taking one tiny step toward improving the perception of real estate professionals.

There is Still Much to Learn

Six months clearly does not make me an expert broker/owner. Far from it. I will make more mistakes. Hopefully we’ll continue to do some things right and I know we’ll improve. I am always open to suggestions from anyone — agent, broker, new, experienced, young and old.

Am I glad I did this? Let’s put it this way. I was told by someone I respect tremendously that after six months I’d be saying, “Why did I wait so long?”

They were wrong. It took about two weeks.

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16 Comments

16 Comments

  1. Danilo Bogdanovic

    September 17, 2008 at 10:44 pm

    Jay – Congrats on your new brokerage and your stellar growth! Your comments about hiring the best agents echo those of my broker (not sure why he hired me though). He practices quality over quantity in his business and he sleeps like a baby too. Must be a coincendence… lol

  2. tony - vidlisting

    September 18, 2008 at 3:15 am

    Congrats on the unexpected growth. It’s a good problem to have.

    I sent this link to my General Manager who also just opened a brokerage in South America. She runs a one of the most popular spanish language real estate blogs (https://blog.casacomprar.com) and the opportunities just grew into a brokerage. Great tips for her to get started.

    Take care

    Tony

  3. Daniel Bates

    September 18, 2008 at 4:10 am

    You’ve got twice the number of agents my company has and we own our area. I’m sure you’ll continue to do well because you care about the details (which so few people do) without overlooking the big picture (which way too many do).

  4. Jim Gatos

    September 18, 2008 at 5:55 am

    Congratulations for congratulating yourself!

    Seriously, a strong point here is that YOU and your wife feel you’ve made the right decision. I totally understand your reason to think you as a broker need to have flexibility with the changing times but smart enough to also realize you need to have standards, too.

    The internet is the “great equalizer”.. in terms of exposure for real estate brokerages of all sizes. I don’t think it matters how many agents a company has; it’s now becoming a question of how many QUALITY agents does the company have. Good thing I am high on my company; with CBRB, where I am affiliated with, due to management and training, I feel I have both.

    If I move to Arizona, may I apply to your company? I have “credentials”.. I can still keep my blog name .. (mass=big, heavy, etc…)?

  5. Missy Caulk

    September 18, 2008 at 8:10 am

    Jay, how I admire you, One day I’ll do it, I’m sure. Just need to get over that branding thing, which is only in my mind. My team calls me Betty Crocker. Why?

    Well she is not alive anymore but her name lives on, so they said you can be Betty Crocker, let your name live on and someday pass the torch,

    You are right, hiring the right agents, being flexible, and having good systems makes me sleep at night too.

  6. ines

    September 18, 2008 at 8:29 am

    I’m absorbing like a sponge and I’m so glad it’s going well for you. I totally agree about volume hiring, I hate to be placed in the same category as a mediocre agent just because we are in the same office.

  7. Jay Thompson

    September 18, 2008 at 9:14 am

    Missy – I’ve met you. There’s no question you can do it! You are bright, know your stuff and you are personable.

    “The branding thing” comes up frequently. Yes, there are advantages to having a name like C21, Re/max, CB, KW etc behind your name. But I am fully convinced the vast majority of people don’t chose an agent because they are wearing a gold jacket or have a thing for balloons. Granted it’s only been six months, but we have yet to loose a client because we aren’t affiliated with a large franchise. In fact, we’ve had two sellers that said one factor in choosing us was we were a “local Mom & Pop shop”. It’s never even come up in conversation with a client or prospect, only with other agents…

    We may not have all the tools or clout that a national franchise has, but technology is a great equalizer. Providing kick ass customer service is an even better one.

  8. JeffX

    September 18, 2008 at 11:13 am

    The world of real estate professional’s needs more Jay (and Francy) Thompsons…I love your outlook, willingness to critique yourself, the industry and having the courage to go out there and do something about it.

    You are a building a brand Jay, and a damn good one!

  9. Jeremy Hart

    September 18, 2008 at 1:06 pm

    “They were wrong. It took about two weeks.”

    I think that was a message meant only for me. The fear of something new and unknown has kept me on the sidelines. Thanks for the gentle nudge, Jay.

  10. Matt Wilkins

    September 18, 2008 at 8:04 pm

    Jay can you see that?? It’s me giving you a big thumbs up.

    I went on my own in April and have not looked back (yet). I spent years at a big franchise brokerage with a broker’s attitude of “I know there’s problems but I can’t do anything about it). After getting my broker’s license I was recruited by a long-time contact to develop and run a successful brokerage. However, my adoption of contemporary real estate ideas clashed with his status quo atitude towards the indsutry and brokerage management. I finally walked away from it.

    We may have slightly different ways of operating but we share many of hte core values of the “new” real estate indsutry. Hopefully we wil connect and share ideas over time.

    To everyone else on the sidelines talking about going on their own, you have a great pool of people more than happy to be a sounding board for ideas and questions.

  11. Cooper

    September 18, 2008 at 10:09 pm

    I have to hand it to someone willing to put their mistakes in front of thousands of eyes.

    I dont get the connection with the picture though. Too esoteric for me.

  12. Jamie Geiger

    September 19, 2008 at 8:14 am

    As an agent, leaving a large national brand to go to Thompson’s realty, I could not be happier and glad I made the move. Like JeffX said- the industry needs more like Jay and Francy!!

  13. Jay Thompson

    September 19, 2008 at 8:34 am

    @Cooper – not esoteric, just the way my brain works. I tried to find a pic of a “long and winding road” and settled for “light at the end of the tunnel” — let’s just hope the light isn’t an oncoming train…

    @jeffx – thanks for the kind words.

    @jeremy – do it. Just do it.

    @matt – would love to connect some time. Speaking of connect, go to Connect NYC in January!

    @jamie – we are more glad than you are!

  14. Kris Berg

    September 19, 2008 at 8:39 am

    You know how I admire your hutspa, and I don’t even know how to spell “hutspa.” Continued success to you! You deserve it.

  15. Paula Henry

    September 20, 2008 at 9:36 pm

    Jay – Fanatastic growth – there’s never growth without some growing pains; I know you and Francy will make it happen – i’s who you are.

    Someday, I’m going to put my foot in the water 🙂

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Point & Purpose

What makes a top producer in real estate?

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What makes a top producer?

Stop and think for a few minutes about who the top producers are in your market?

Ok, now think about what they doing that has allowed them to continue to consistently produce in a down market, when everyday REALTORS are throwing in the towel.

Every day I scan the MLS to see, what has sold, what is active, and what went under contract (I assume that is something most agents do every day.)

Over and over again the same names pop up as the listing agent with the home that sold or the actual buying agent that sold the home.

Teams

Except for one agent in my area, all the top producers have teams. Now it may be a two person, husband and wife team or a well oiled team with a team leader, several assistants, a listing coordinator or a closing coordinator. But, they all have HELP.

In my area, the names that keep popping up are on Teams. I believe it is virtually impossible to be a top producer without help. Well, you could do it alone but if you do how is that effecting time with your family? Realistically how many transactions can you juggle and give good service?

Running a Business

The second thing I notice about those top producers is the fact that they treat their business like a business. Real Estate to them is not just selling a house, but something they brand, allocate resources for, grow and manage. Not only are they thinking of ways to grow their business but they also thinking of the future and how to sell it down the road.

I remember being told by a entrepreneur friend of mine years ago, “all businesses are built to be sold.”

Far to many REALTORS, think of Real Estate as a job they do and someday when they retire then all the hard work of creating and nurturing relationships they have built is gone. (I’m outta here)

Focused and Positive

One other observation I have observed with top producers is they are focused and positive. I never see them “hanging out at the office”, or attending broker opens, or really for that matter, serving much at all on their local boards. Oh there are a few, but really very few.

Finally, I don’t see many top producers in my market on Twitter, Facebook, Empire Avenue or other social media sites during the day. I don’t see them at every conference known to man around the country.

What I do see is they work everyday, on their business and in their business.

How ‘bout you?

Think of the top REALTORS in your market, what characteristics do you see?

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Point & Purpose

Is requiring Realtors to obtain a college degree smart?

The idea is constantly thrown around of raising the bar in real estate, but let’s take a look at why requiring a college degree may not be the answer.

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Last week we brought up the topic of requiring Realtors to hold a college degree as a means of minimum standards for licensing. Any time we discuss with agents what the best thing to do for improving the industry and the image of the industry is to raise minimum standards with most people agreeing that a monkey wearing an eye patch can get a license.

I shared with you what I learned and didn’t learn in college and reasoned that requiring a degree wouldn’t likely improve the industry as many basic business skills are not taught in universities today, barring the business schools.

I got a touching email of a reader that agreed with me. Sig Buster started his career in 1972, before I was even born. According to Sig, he was “broke, busted and disgusted but this [real estate] business gave me something the college didn’t give me. Hope and a chance and that’s all I wanted. I’ve seen many recessions come and go and many college boys and girls bust out of the business, but I am still here.”

Sig’s story is one of a successful agent who does not have a college degree, he is a well respected leader. I would defy anyone to argue that he is not qualified to practice because he does not have an $80k piece of paper like some of you (and I) do.

Sig’s story in his own words:

Try to read this tale and make the argument that degrees should be required. Bachelor’s degrees are nice, they’re fancy, and requiring them is a great default argument but one that I think is lazy.

“I didn’t graduate from HS anywhere near the top 10% of my class. We didn’t have a speech class, thus I was very shy and couldn’t think very quickly on my feet. The Viet Nam War was ramping up in 1965 and no one wanted to gamble any money on a college loan with a young man like me who was 1A for the draft. I did get some college, mostly English and history by working and paying my way to night classes while I worked as a draftsman with the highway department. As a draftsman, I learned how to read maps and survey plats which helped me later with selling land.

When the money ran out, I was talked into trying real estate. I knew this was the only way I would ever have a fighting “chance” to “make good” as they say. We didn’t have any real estate classes or schools, so I studied for the test on my own while working on a framing crew building houses. This taught me how to read house plans and a lot about construction which later helped me spot trouble in houses I listed or sold.

I firmly believe this hard earned knowledge has helped me better serve my clients and kept me from being sued. You know the catch all phrase lawyers like to use. “He/She knew or should have known”. Well, my experience in the field helped me to “know.”

Eventually, I took and passed the real estate exam and received my first year salesman license. The Monday morning I began work as a salesman, I knew for a fact that no one should depend on me to buy a house. I was too poorly trained to sell houses. Fortunately, I had a good sales manager who helped me, and I sold and closed my first VA loan home in 30 days- just in time to pay my rent and buy me another 30 days in the business.

I received a flyer advertising the Realtors GRI classes and I took the first class. This opened my eyes to the education provided by the Realtor association. I took advantage of every class and seminar I could find. Gaining knowledge in my chosen field every day. This specialized knowledge provided by other real estate professionals who knew the business, gave me the knowledge to better serve my clients and the money followed. I learned a very valuable lesson that is hard to teach young realtors. Provide the service and the money will follow. In other words, don’t chase the money.

To make a long, long story short, I eventually received my GRI, and my CCIM designation. I have been chairman of a planning commission and chairman of a zoning board of adjusters. Thus, I have a working knowledge of the government side of development- something they do not teach in college. I will be a guest speaker at a college in April of this year. I will be speaking to a college real estate class of fresh young faces who will graduate thinking they know it all.

As I said in the beginning, our high school didn’t have a speech class so I took two Dale Carnegie courses as well as Toastmasters and now I have the knowledge to speak in public and think on my feet.

I still don’t have a college degree so in this society, I couldn’t be hired to be a dog catcher’s helper, but I do consider myself educated. I’ve read and studied more books than all of my college educated children put together.

I have a degree from the school of hard knocks. I don’t recommend getting this type of education because it takes so long and it is a very hard road. But, this is what I would recommend if we demanded a college education for a real estate career.

1. Continue to develop the Realtor University that is provided by NAR. If possible, get Realtor University accredited as a University. Instead of building buildings and concentrating on research, continue to teach people to function in their chosen field.

2. Have a specialized tract, residential, land, or commercial. Don’t try to do it all, but know a little about all of it.

3. Know how to read plans, plats and have a knowledge of how to read a compass, GPS.

4. Learn something about the governmental side of real estate and how it works.

5. Continue using Webinars and Archived Webinars provided by NAR and CCIM.

6. Encourage Dale Carnage and Toastmasters and courses like that to develop the social skills that are necessary for this business.

I don’t have a problem with people getting a college degree but I don’t think a college degree is the end all of education. It can be a deterrent because of the cost and it will shut out people who can’t afford to pay the price. Real estate has been good to me and I have given back by serving my association as President and in many other ways. This has all been a learning experience and always will be. If we must have a degree, let it be in Real Estate.”

Sig’s accomplishments:

These aren’t your standard Realtors’ back patting, these are some serious accomplishments:

  • Licensed in South Carolina and North Carolina
  • 1972 Entered The Real Estate Business with Associated Realty, Inc in Columbia, SC.
  • 1973 Earned the GRI Designation
  • 1989 Earned the CCIM Designation
  • 1998 Co-Chair CCAR Legislative Committee
  • 1999 President SC CCIM Chapter
  • 2000 CCAR Leadership Program
  • 2000 CCAR-Certified Professional Standards Mediation
  • 2001 Co-Chair CCAR Legislative Committee
  • 2001 CCAR REALTORS Image Award-April
  • 2002 Chairman CCAR Legislative Committee
  • 2002 National Chairman of the CCIM Legislative Committee
  • 2002 Member CCAR Grievance Committee
  • 2004 Leadership SCAR
  • 2004 Chairman CCAR Legislative Committee
  • 2004 CCAR Board of Directors
  • 2004 Realtor of the Year-CCAR
  • 2005 Vice Chair SCAR State and Local Issues Working Group
  • 2005 CCAR MLS Committee-Member
  • 2005 SC CCIM Chapter-Member Board of Directors
  • 2005 CCAR Legislative Committee-Member
  • 2005 CCAR Leadership Program-Dean
  • 2005 CCAR Board of Directors-Member
  • 2006 CCAR MLS Committee-Member
  • 2006 CCAR-Secretary-Officer
  • 2006 CCAR MLS Sub Committee- Commercial
  • 2006 CCAR MLS Sub Committee-Grievance
  • 2006 CCAR Legislative Committee-Member
  • 2006 NAR- Land Use and Environmental Committee
  • 2006 SCAR Director
  • 2006 Chairman SCAR State and Local Issues Working Group
  • 2007 Vice Chairman of SCR Legislative Group
  • 2007 President Elect Coastal Carolina Association of Realtors
  • 2008 President Coastal Carolina Association of Realtors
  • 2008 Chairman of SCR Legislative Group2008 South Carolina REALTOR Advocate
  • Award (used to be the Grass Roots REALTOR of the year award.
  • 2009 Treasure SCR/member Legislative Group SCR/Legislative Committee, CCAR
  • 2011 Legislative Group Chair SC CCIM Chapter
  • 2011 SC CCIM chapter Board of Directors

Can anyone really look to Sig Buster and say that he is not doing good things for our industry simply because he doesn’t have a college degree? No. The argument is lazy and the real requirements should be (as Sig indicated) education that is focused on real estate and encouraging active leadership involvement. What say you?

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Point & Purpose

Should Realtors be required to have a college degree?

In Texas alone, barbers are required to have seven times more education hours than Realtors, and most licensed professions require more continuing education. This got me to thinking about what I did and didn’t learn in college, and what “raising the bar” really means.

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We’ve been discussing for years how to personally improve the practice of being an individual agent as well as how to improve the profession overall so that consumers have a better experience from industry insiders. Everyone has a different idea of how to raise Realtors above used car salesmen in the eyes of consumers and while social media has helped America see the personal side of real estate professionals, it hasn’t quite elevated the profession.

You’ve been to Starbucks this month, right? Everyone can spot the Realtor in the room- the hair is a little too big, the cell phone conversation is too loud and self important and the knock off Louis Vuitton bag is so far from the wrong brown it’s not even funny. As a Realtor, you roll your eyes and think “if only there was SOME way that it was a little harder to get licensed.”

We all know that gal or guy- they make the industry look horribly and in a single second undermine the entire industry. What should be done?

Any time we have this discussion, since the beginning of time, most people simply say that a college degree should be required. Really? That’s the answer? If you’ve been to college, you know that a lot of really, really, really painfully stupid people have graduated. It happens.

So this got me to thinking…

How would requiring a bachelor’s degree help the industry? I began thinking about my own college experience. I studied English at the University of Texas (then Spanish, then back to English, then Spanish and eventually left on year five with both).

College is supposed to prepare you for the “real world” and make you a better citizen, right? I’m not so sure. Regarding my own college experience, here is what college did do for me:

  1. I learned to hustle for myself. In a college so big, there was no accountability from anywhere but within myself.
  2. I learned how to research and how to tell junk from gems.
  3. I learned how to prioritize at my own risk.
  4. I learned how to work efficiently on very little sleep.
  5. Believe it or not, I learned the value of the professional network. If you didn’t go to office hours, your professors didn’t know who you were and if you didn’t keep up with them over the years, they couldn’t write letters of recommendation.
  6. The value of a personal network became apparent very early on as well- not just for getting into the best parties, but finding a roommate, a sofa when I needed one, a ride when my car broke down, a job when I needed cash, etc. If I’d stayed in my apartment alone, none of that would have panned out.
  7. Ultimately, I learned how to compete for my spot. UT is so big that it’s near impossible to get into if you’re not in the top 10% of your HS class. I also learned how to compete for a professor’s attention that hated teaching and was only there to research. Going to college also taught me how to compete for my spot in popular classes.

That all sounds good and wouldn’t those things all help elevate the real estate profession? Sure, why not? But it also got me to thinking about what I did NOT learn in college:

  1. Because I was an English major, I did NOT learn how to get to the point. We were required to write ten to twenty page papers several times each week and with that minimum, being concise was never necessary.
  2. I didn’t learn how to present well because the emphasis was on the information and not how it was presented. The most I had to do was read portions of my works out loud, but I could have read in a monotone voice and it wouldn’t have mattered.
  3. I did NOT learn how to work on a team. In the business school, this was a priority, but not in the liberal arts program. I learned how to push myself to be better than everyone, not how to function properly on a team… which is what most jobs require, especially real estate.
  4. I didn’t learn how to write a resume or sell myself. I now work frequently with interns and they are experiencing a similar lesson but now that social media is a part of their life, they think they know how to sell themselves because they can tweet. College does NOT prepare effectively how to sale, barring a few business courses.
  5. I did not learn money management. Again, the business school teaches this, but I left college having spoken to several financial advisors about my own loans but with conflicting information, my limited money experience was completely insane.
  6. I did not learn how to dress for success. I wore pajamas to most of my classes and the professor was lucky if I brushed my teeth or slept the night before. It didn’t impact my grade one iota.
  7. I didn’t learn how to negotiate. I knew how to manipulate and could get extra credit with some instructors, but overall, I learned nothing about negotiation, possibly one of the most critical tools in the real estate industry.
  8. I didn’t learn how to quit. In college, you keep pushing and pushing and pushing until you’re almost dead. In the real world, you have to know when to fold ’em. You have to know the signs of when a project isn’t working or when a tactic is failing, but college only prepares you to beat your head against a wall.

Most of these lessons I learned in my first jobs, not because the University helped me in any way.

So require or don’t require?

So, overall, when I think about whether or not a college degree is relevant in the real estate industry, I would argue that some of the most critical business survival skills are not taught in a traditional University unless students attend the business school (which is a minority of college students). Most colleges barely address the topic of real estate and graduate programs on the topic are forming, but going to school to be a Realtor is nearly unheard of (which would be the ultimate answer to the “what do we do?” question).

I believe that requiring a college degree would make for a beautiful Utopia and that in a dream world and on paper it looks good. Everyone with a framed BA or two would rule the world and help consumer trust levels, but I don’t believe it would actually make for better Realtors, it would just be more letters to add to the alphabet soup. What do you think?

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