The AG Flash Poll prompts this response. Will the future have more “independent brokerages”? Yes! But that isn’t the whole story. I believe what has happened in the Greater Phoenix Area over the past 30 years is exactly what will eventually happen in every major real estate market in the next 15 – 20 years. Every last one of them – just like it happened here. I’ll tell you why, why it happened here first – and you can forecast for yourself how long it will take to happen in your area. Will independent “one man shops” or little boutique shops continue to sprout up? Absolutely. Will they ever make much difference or have much of an impact overall? No, no really. Impact comes from having LOTS of agents. Not the number of “top producers” – simply the number of agents who are there, active in the real estate business. The main obvious stat to measure the health of a real estate brokerage is: number of active agents. There are many who believe differently. Internal studies by large brokerages (franchises and independent) show that those beliefs are wrong. Just like the “health” of an agent can be accurately forecasted by the number of active listings – the future “health” of a brokerage can be seen by the number of active agents.
So what happened in Phoenix in 1965 that started “the change” I’m predicting across the land?
Realty Executives happened. The visionary, Dale Rector had an idea: the 100% commission concept. This was a real game changer of an idea for the industry. Although Realty Executives dominated the Phoenix market for several decades it was an associate of Dale’s – the now very famous, Dave Liniger was sent to Denver by Dale to start a Realty Executives office there. This was in 1973. Dave decided he didn’t need to start an operation there for Dale – but decided to start one for himself, RE/Max. Not only did RE/Max take the 100% commission concept across North America, they went on to take it across the world. They even went on to pass Realty Executives in sales right here in their own backyard.
Although the big name, franchise companies are the only major players on a national scale when it comes to number of agents – here in the Phoenix area – all the big name companies are utterly dwarfed by the 100% knock-off brands. Once it was obvious to those individuals who wanted to start real estate companies that the easiest way to attract agents was offer a higher commission split – the game was on. By the late 70’s Phoenix had so many new low cost (less than $100 a month desk fee, with $150 coming out of your first closing each month) 100% companies that it was hard to keep track of them. Like any industry, there were some companies that would thrive and prosper and others that would meet an early (broke) demise.
For the past 15 years the vast majority of Realtors in the Phoenix area have been with 100% companies. Low cost 100% companies. Over the years, almost all residential brokerage companies here have had to raise their commission splits or change to some version of the 100% concept, just to compete at all. The company I have been with for 32 years, John Hall & Associates, was started in the late 70’s based on minimum broker expense, maximum commission to the agents. Fees are higher today and much more in the area of broker support. Currently with around 600 agents it is not a “large” 100% company – the “large” 100% companies here each have THOUSANDS of agents and the really big one has over 3,000 agents. The Phoenix real estate brokerage market is now heavily populated by companies that charge as low as $25 a month (total monthly agent expense!) and they will take $200 – $300 out of each closing.
Even big national companies like RE/Max and Keller Williams charge agents much lower fees in the Phoenix market than they do in all of the other markets.
Knowing what I have written above, it is not much of a stretch to predict that this will start (slowly, at first) to happen across the country. The Los Angles area already has a few of the knock-offs – currently these offices can charge $400 – $500 a month to the agents. My prediction? Not for long. In the future, any broker will have to either provide real, meaningful help and support to their agents or they will be in a commission price war (which they will lose) with a small army of one of the many low cost, low service (really really low service) new era brokerage firms.
Here is to what I believe will be a GREAT 2011. Hope I haven’t upset anybody!
Is the real estate industry endorsing Carson’s nomination to HUD?
(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?
NAR strongly backs Dr. Carson’s nomination
When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”
At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?
The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.
In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…
Job openings hit 14-year high, signaling economic improvement
The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.
Job openings hit a high point
To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.
The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.
Good news, bad news, depending on your profession
That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.
Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.
If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.
If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.
Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.
Gas prices are down, so are gas taxes about to go up?
Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.
Gas taxes and your bottom line
Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.
Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.
Supporters and opponents are polar opposites
Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.
Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.
While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.
The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.
Is a gas tax politically plausible?
Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”
Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”
Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.
Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.
“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”
Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.
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