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Opinion Editorials

The challenge of doing business in an archaic industry

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Don’t Judge a Realtor by the company they keep

I don’t know about you, but access to my MLS is governed by my local Realtor association. So when I wanted to become a Real Estate Agent, I had to join my local board. And joining my local board meant that I was also joining my state association and the National Association of Realtors. Board membership is mandatory to be an MLS participant. MLS participation is mandatory to have a successful real estate career. Joining my board was a business decision, not a political one.

There’s the business of real estate: the hustle for clients, the unpredictable (yet flexible) hours, the commission based income, the interesting people and fascinating homes. Then there’s the politics of real estate: the numerous MLS fiefdoms, IDX policies, data aggregation and syndication, and, national, state, and local association rules, to name a few.

Why join the board

Most agents that I know are like me, and joined the board because they had to. It was a business decision. This may explain why so many agents I know go out of their way to avoid the politics of real estate. Ask most agents for their position on IDX rules, data aggregation and syndication policies, and you’re likely to get a blank stare. Not because agents are stupid or short-sighted, but simply because agents focus on what they feel they can control, and most agents I know feel extremely disconnected from the decisions being made on their behalf at the local, state and national level.

Speaking quite frankly, I feel that many local boards have spent the last few years advocating policies that will perpetuate their existence, regardless of if the policy is good for their members or real estate consumers. For many agents there is an enormous disconnect between their day-to-day business practices and the policies adopted by our local, state, and national Realtor Associations.

As an example, let’s take the continued existence of almost 1,000 MLS systems across America. If you can look me in the eyes with a straight face and tell me that the real estate industry is better off with hundreds of local MLS systems rather than one (or a few) national systems, then I’m going to bet you’re a local MLS or association executive.

Consumers don’t think they should have to know that as soon as they cross a county line they need to start searching a different website for home listings. They want to go to one place, type in any address in America, and find out what’s for sale nearby and how the market is doing. Don’t believe me? Go visit Zillow. Or Trulia. Or even Realtor.com.

The evolution of the MLS

Our patchwork of MLS organizations developed in an era when cooperative listing information was shared on paper index cards updated weekly by a clerk at a local office. The clerk has long since retired (and perhaps died), the index cards have been relegated to the novelty drawer and yet we still have hundreds of little MLS systems across the nation. The logic for their existence is long gone, we should help them die a graceful death.

While I don’t have an issue with one (or several) national MLS systems, I think the real estate industry – at a minimum – needs to get serious and make 50 statewide MLS systems (each adapted to their own unique state laws about real estate) a reality. Because if our associations don’t make this a reality, some plucky entrepreneur will make it happen, either with or without our help.

The presence of hundreds of MLS systems when a few could accomplish the same task is indicative of the challenges that associations have created for their members. Associations, when faced with an onslaught of change, have – for the most part – each hunkered down and done everything they could to protect their little island of real estate data. In my area, for example, it has taken more than three years for seven local associations to agree to lockbox key interoperability. For comparison, Apple transformed computing with the introduction of the iPad in less time than seven associations could agree to share keys.

The conundrum

It’s a conundrum that I can’t quite wrap my head around: some of the most entrepreneurial, dynamic, and interesting people I’ve ever met are fellow real estate agents. But all of these individuals are doing business in one of the most rigid and archaic business frameworks I’ve ever encountered. I’d really love to hear what your thoughts are about how agents can help the real estate industry give itself a long overdue remodel?

Matt Fuller, GRI spends most of his waking hours obsessing over all things San Francisco real estate. He is half of the successful JacksonFuller real estate team, and also writes at the San Francisco real estate blog about all things SF. He is also a father, husband, foodie, avid runner, and slave to his Newfoundland and Basset Hound dogs.

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9 Comments

9 Comments

  1. Jeff Brown

    February 18, 2012 at 1:14 pm

    Hey Matt — Out of 1,000 home buyers, how many would you estimate are looking for their new home in an area larger than 5-20 square miles? Thanks

  2. Glenn Ashby

    February 18, 2012 at 1:54 pm

    Get rid of all referral networks. Agent to Agent is fine, but 37.5% for someone to pull a name out of a hat is not doing the consumer a service. It is nearly extortion.

  3. Ed Neuhaus

    February 18, 2012 at 2:52 pm

    I think this world be great. I know people already working on it.

  4. Karen Brewer

    February 18, 2012 at 5:07 pm

    OMG….youre talking about my life. I am now on the Board of the hyperlocal Board and it is astonishing to me howmuch people want these things to stay the same. In my case, the MLS adds NO value since we are officially dominated by a larger MLS in the state.Most of the budget (membership $ just goes to perpetuating the existence of the board.Amazing.

  5. Russell Shaw

    February 18, 2012 at 9:56 pm

    We already have several "national" methods the public can search for properties. I have never seen a national MLS as a Realtor or a public benefit. To the contrary, a national MLS or even 50 state wide MLS systems is just asking some DOJ lawyer to attempt to nationalize the entire system. All the little MLS systems are our best defense against such crap.

    To suggest that the committees at the state or national level are somehow possessed of better insight or judgement does not seem to be supported by the facts. Just look at the silly set up NAR gave Realtor.com or the latest piece of pretty much useless crap – RPR. I don't do a lot of my business out of my area. Neither does anyone else who is actually in the real estate business.

    In California it is beyond me why an agent in the Bay Area needs access to data for Los Angles. I don't believe a Los Angles broker is competent to advise a buyer or a seller about buying or selling a home in San Francisco.

    • Jeff Brown

      February 19, 2012 at 4:00 pm

      Hey Russell — I've been sayin' the same thing for a few years now. Also, notice nobody's stepped up to the plate to answer my first question here. The reason is cuz I suspect the answer proves your point.

  6. Eric Estate

    February 19, 2012 at 9:36 am

    I'm just a student, but coming into this system with a pair of fresh eyes to the situation. There is absolutely NO need for any MLS system at all. If an agent were to just post their listing on their own website, search enginges like Google or Bing could easily index them, nationwide.
    This would also separate out the best agents because they would have the most popular sites, with the best, most up to date info on their listings.

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Opinion Editorials

How to find the sweet spot between procrastination and desperation

(EDITORIAL) Many intelligent people find themselves stuck in analysis paralysis (procrastination) and missing their window of opportunity. Others make decisions without enough information. How do you find the sweet spot between the two?

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I need to confess something to you

So, a little confession’s good for the soul, right? I feel like I need to confess something to you, dear reader, before we jump right into this article. What follows is an article that I pitched to our editor some months back, and was approved then, but I’ve had the hardest time getting started. It’s not writer’s block, per se; I’ve written scores of other articles here since then, so I can’t use that as an excuse.

It’s become a bit of a punch line around the office, too; I was asked if I was delaying the article about knowing the sweet spot in decision making between procrastination and desperation as some sort of hipster meta joke.

Which would be funny, were it to be true, but it’s not. I just became wrapped up in thinking about where this article was headed, and didn’t put words to paper. Until now.

Analysis by paralysis

“Thinking about something—thinking and thinking and thinking—without having an answer is when you get analysis by paralysis,” said St. Louis Cardinals pitcher Matt Bowman, speaking to Fangraphs.

“That’s what happened… I was trying to figure out what I was doing wrong, or if I was doing anything wrong. I had no idea.” It happens to us all: the decisions we have to make in business loom so large over us, that we delay making them until it’s absolutely necessary.

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Worse still are the times that we delay them until after such a time as when making the decision no longer matters because the opportunity or market’s already moved on. So we try to find the avenues for ourselves that will give us the answers we seek, and try to use those answers in a timely fashion. Jim Kaat, the former All-Star pitcher said it well: “If you think long, you think wrong.”

Dumpster Diving in Data

In making a decision, we’re provided an opportunity to answer three basic questions: What? So what? And now what?

The data that you use to inform your decision making process should ideally help you answer the first two of those three questions. But where do you get it from, and how much is enough?

Like many of us, I’m a collector when it comes to decision making. The more data I get to inform my decision, and the sufficient time that I invest to analyze that data, I feel helps me make a better decision.

And while that sounds prudent, and no one would suggest the other alternative of making a decision without data or analysis would be better, it can lead to the pitfall of knowing how much is enough. When looking for data sources to inform your decision making, it’s not necessarily quantity, but an appropriate blend between quantity and quality that will be most useful.

You don’t get brownie points for wading through a ton of data of marginal quality or from the most arcane places you can find them when you’re trying to make an informed decision. The results of your ultimate decision will speak for themselves.

“Effective people,” said Jack Welch, former CEO of General Electric, “know when to stop assessing and make a tough call, even without total information.”

Great. How do I do that?

So, by what factors should you include (and more importantly, exclude) data in your decision making?

Your specific business sector will tell you which data sources most of your competitors use already, as well as the ones that your industry disruptors use to try to gain the edge on you.

Ideally, your data sources should be timely and meaningful to you. Using overly historical data, unless you’re needing that level of support for a trend line prediction, often falls into “That’s neat, but…” land. Also, if you’re wading into data sets that you don’t understand, find ways to either improve (and thus speed) your analysis of them, or find better data sources.

While you should be aware of outliers in the data sets, don’t become so enamored of them and the stories that they may tell that you base your decision making process around the outlier, rather than the most likely scenarios.

And don’t fall into this trap

Another trap with data analysis is the temptation to find meaning where it may not exist. Anyone who’s been through a statistics class is familiar with the axiom correlation doesn’t imply causation. But it’s oh so tempting, isn’t it? To find those patterns where no one saw them before?

There’s nothing wrong with doing your homework and finding real connections, but relying on two data points and then creating the story of their interconnectedness in the vacuum will lead you astray.

Such artificial causations are humorous to see; Tyler Vigen’s work highlights many of them.

My personal favorite is the “correlation” between the U.S. per capita consumption of cheese and people who died after becoming entangled in their bed sheets. Funny, but unrelated.

So, as you gather information, be certain that you can support your action or non-action with recent, accurate, and relevant data, and gather enough to be thorough, but not so enamored of the details that you start to drown in the collection phase.

Trust issues

For many of us, delegation is an opportunity for growth. General Robert E. Lee had many generals under his command during the American Civil War, but none was so beloved to him as Stonewall Jackson.

Upon Jackson’s death in 1863, Lee commented that Jackson had lost his left arm, but that he, Lee, had lost his right. Part of this affection for Jackson was the ability to trust that Jackson would faithfully carry out Lee’s orders. In preparing for the Battle of Chancellorsville, Jackson approached Lee with a plan for battle:

Lee, Jackson’s boss, opened the conversation: “What do you propose to do?”

Jackson, who was well prepared for the conversation based on his scout’s reports, replied. “I propose to go right around there,” tracing the line on the map between them.

“How many troops will you take?,” Lee queried.

“My whole command,” said Jackson.

“What will you leave me here with?,” asked Lee.

Jackson responded with the names of the divisions he was leaving behind. Lee paused for a moment, but just a moment, before replying, “Well, go ahead.”

And after three questions in the span of less than five minutes, over 30,000 men were moved towards battle.

The takeaway is that Lee trusted Jackson implicitly. It wasn’t a blind trust that Lee had; Jackson had earned it by his preparation and execution, time after time. Lee didn’t see Jackson as perfect, either. He knew the shortcomings that he had, and worked to hone his talents towards making sure those shortcomings were minimized.

Making trust pay off for you

We all deserve to have people around us in the workplace that we can develop into such a trust. When making decisions, large or small, having colleagues that you can rely on to let you know the reality of the situation, provide a valuable alternative perspective, or ask questions that let you know the idea needs more deliberation are invaluable assets.

Finding and cultivating those relationships is a deliberate choice and one that needs considerable and constant investments in your human capital to keep.Click To Tweet

Chris Oberbeck at Entrepreneur identifies five keys to making that investment in trust pay off for you: make authentic connections with those in your employ and on your team, make promises to your staff sparingly, and keep every one of them that you make, set clear expectations about behaviors, communication and output, be vulnerable enough to say “I don’t know” and professional enough to then find the right answers, and invest your trust in your employees first, so that they feel comfortable reciprocating.

Beyond developing a relationship of trust between those who work alongside you, let’s talk about trusting yourself.

For many, the paralysis of analysis comes not from their perceived lack of data, but their lack of confidence in themselves to make the right decision. “If I choose incorrectly,” they think, “it’s possible that I might ________.” Everyone’s blank is different.

For some, it’s a fear of criticism, either due or undue. For others, it’s a fear of failure and what that may mean. Even in the face of compelling research about the power of a growth mindset, in which mistakes and shortcomings can be seen as opportunities for improvement rather than labels of failure, it’s not uncommon for many of us to have those “tapes” in our head, set to auto play upon a miscue, that remind us that we’ve failed and how that labels us.

“Risk” isn’t just a board game

An uncomfortable fact of life is that, in business, you can do everything right, and yet still fail. All of the research can come back, the trend lines of data suggest the appropriate course of action, your team can bless the decision, and you feel comfortable with it, so action is taken! And it doesn’t work at all. A perfect example of this is the abject failure of New Coke to be accepted by the consumer in 1985.

Not only was it a failure to revive lagging sales, but public outrage was so vehement that the company was forced to backtrack and recall the product from the market. Sometimes things just don’t work out the way they’re supposed to.

You have to be comfortable with your corporate and individual levels of risk when making a decision and taking action. How much risk and how much failure costs you, both in fiscal and emotional terms, is a uniquely personal decision, suited to your circumstances and your predilections. It’s also likely a varying level, too; some decisions are more critical to success and the perceptions of success than others, and will likely cause you more pause than the small decisions we make day-to-day.

In the end, success and failure hinge on the smallest of factors at times, and the temptation is to slow down the decision making process to ensure that nothing’s left to chance.

Go too slowly, however, and you’ve become the captain of a rudderless ship, left aimlessly to float, with decisions never coming, or coming far too late to meet the needs of the market, much less be innovative. Collect the information, work with your team to figure out what it means, and answer the third question of the series (the “what”) by taking action.

#TakeAction

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Opinion Editorials

Starting a business when you’re broke (and how to make it work)

(EDITORIAL) If money isn’t always a prerequisite to entrepreneurship, how can you start something from nothing?

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Breaking into the business world can be an intimidating venture, especially if you don’t have the money or experience to back up your ambitions. Experience, however, can be earned – or at least approached through a “fake it until you make it” style approach. But what can you do if you dream of launching a business but you don’t have the cash? Is money a prerequisite to entrepreneurship?

Money helps but isn’t a requirement for those hoping to start their own business – you simply need to get creative. If you’re not sure where to start, here are a few things to consider.

One of the best ways to build your confidence around the topic of entrepreneurship is to refocus your attention towards those who also started from nothing, but have since made it big.

Steve Jobs started out tinkering in his garage as a teenager and went on to found the tech giant Apple, while multimillionaire consultant Sam Ovens publically discusses his finances – he was broke just a few years ago but had made over $10 million dollars by the time he turned 26.

Such stories attest to the fact that anyone can ascend to great heights.

Even though many people think money is the most important part of any business endeavor, successful people will tell you that true self-understanding far outranks cash on the list of necessities. Take some time to reflect on your goals and on how you view yourself as you pursue them.

If you think you can’t achieve your goals, then you won’t be able to. The mind is a very powerful thing.

If introspection reveals that you’re low on self-esteem, work on improving your view of yourself and begin developing a more positive perspective. You may find it helpful to write down what you think and then revise this description, working all the time to internalize this improved view of yourself. Though it may seem like a pointless process at first, you’re actually participating in your own transformation.

Another key determinant of success that far surpasses money is passion.

People succeed when they pursue goals that matter to them on a deeper level.

Typically this is the case because passion leads you to accumulate expertise on your chosen topic, and this will draw people to you.

One incredible example of the transformation of passion into profit is 17-year-old Jonah, who makes thousands of dollars a month selling watches online. Jonah comes from a family of jewelers, so he had ready access to the necessary knowledge and cultivated an outstanding selection of timepieces on his site, but it was his ability to combine his material knowledge with real understanding of his customers that made his business successful.

At the end of the day, he wanted his customers to have the perfect watch, and he brought his own passion for the field to bear on creating that experience.

Finally, if you hope to start a business but don’t have any cash resources, the best thing you can do is learn your field and network with those in it – without bringing them on board as professional partners.

It helps to have contacts, but you can’t grow a fledgling business by paying others to do the hard work.

Hunker down and work from home, working at night if you have to keep your current job, and start from the position of humble aspirant. If you show you’re committed to the real work of starting a business, you’ll find that others support you.

If you hope to start a business, but don’t have the money, don’t despair – but also don’t put your dream on hold. The only way to build the foundation you need to live that dream is by doing the hard work in the here and now.

Lots of people started just where you are, but the true successes are the ones who had the courage to push past the barriers without worrying about the financial details. You already have what you need, and that’s the passion for innovation.

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Opinion Editorials

How to deal with an abusive boss and keep your job, too

(OPINION EDITORIAL) Sometimes bosses can be the absolute worst, but also, you depend on them. Here’s how to deal with an abusive boss and, hopefully, not get fired.

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Nothing can ruin your work life like an abusive boss or supervisor. But when you’re dependent on your boss for assignments, promotions – heck, your paycheck – how can you respond to supervisor abuse in a way that doesn’t jeopardize your job or invite retaliation?

A new published in the Academy of Management Journal suggests an intriguing approach to responding to an abusive boss. As you might expect, their study shows that avoiding the abuser does little to change the dynamic.

But the study also found that confronting the abuser was equally ineffective.

Instead, the study suggests that workers in an abusive situation “flip the script” on their bosses, “shifting the balance of power.” But how?

The researchers tracked the relationship between “leader-follower dyads” at a real estate agency and a commercial bank. They found that, without any intervention, abuse tended to persist over time.

However, they also discovered two worker-initiated strategies that “can strategically influence supervisors to stop abuse and even motivate them to mend strained relationships.”

The first strategy is to make your boss more dependent on you. For example, one worker in the study found out that his boss wanted to develop a new analytic procedure.

The worker became an expert on the subject and also educated his fellow co-workers. When the boss realized how important the worker was to the new project, the abuse subsided.

In other words, find out what your boss’s goals are, and then make yourself indispensable.

In the second strategy, workers who were being abused formed coalitions with one another, or with other workers that had better relationships with the boss. The study found that “abusive behavior against isolated targets tends to stop once the supervisor realizes it can trigger opposition from an entire coalition.”

Workplace abuse is not cool, and it shouldn’t really be up to the worker to correct it. At times, the company will need to intervene to curb bad supervisor behavior. However, this study does suggest a few strategies that abused workers can use to try to the tip the balance in their favor.

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