Bad Marketing Candy from RSS Pieces

Mary McKnight wrote an article last Friday called Real Estate Blogs are Stores, Not Websites – So Blog Like You are Selling Houses, Not Writing For Your Local Paper and it made the short list for the Odysseus Medal Sunday. It is well written and provocative. Mary McKnight is recognized as one of the premier web site designers and SEO experts in Real Estate. I have a great deal of respect for her knowledge as it pertains to web sites and SEO. If you have not read it, please do; and then answer this question for me: How is it possible that someone so good at creating real estate web sites, can be so wrong when it comes to real estate marketing?

The Sugar Coating
Let me preface this by saying that I have a great deal of respect for Mary McKnight. Add to which a lot of people for whom I also hold a great deal of respect use her services and listen to her advice. But when she says Your real estate blog is a store, not a newspaper, I find myself asking the obvious question: If it is a store, what do you sell? If you answer “homes” I am going to assume you work at a mobile home dealership. Otherwise you clearly do not understand your product. Here’s a hint: you see your product every day in the mirror. You no more sell homes than you stock them… which is why you are not a store. You are a service and your product is your expertise.

The Creamy Middle
The point of her article is …to get you to understand that if your business is about real estate and you want to attract customers that have a real estate need you MUST write about real estate, not skateboards and restaurants. This is true on a very grand scale: most of your articles and certainly your “look and feel” must tell the reader that you can and will be the best agent they have ever had. But does that mean you should only write about real estate? When Mary says it

is inconceivable to (her) that by driving people into your blog with an article about local skate parks, you will snag a home buyer…

she misses the point. One article about anything will rarely generate a home buyer. And a lot of articles about skate parks will probably do no better. But many articles of interest to your demographic (skateboarding is a bit disingenuous here, but let’s give her one), all written with an eye toward real estate, will contribute to one very important source of business and referrals: it will raise your perceived level of expertise.

In Mary’s world the buyers and sellers come to you from a key word search and you have either 15 seconds (in the case of buyers) or 2 minutes (in the case of sellers) before they make a decision. As an agent, on the other hand, we should try to build a community of raving fans. Mary is keyword searching for eyeballs and hoping they will stick around long enough to use our services. We hope to recruit eyeballs too, but over a greater range of topics; and we do not expect to help them buy or sell their home from that initial search. Instead, we expect to move them, over time, into our community of raving fans. We will happily accept people that came to our web site because they Googled skate parks, but we know the majority of our business is coming from people who can already find us; people that know us to be experts in their area.

The Delicious Center
There is that word again: Expert. The goal of almost all real estate marketing has been, and continues to be, relating your expertise in the community. The question you want to put in their head is: who better to help them sell their home than you? You know the neighborhood inside and out. More important still is the conversation they will have with a family member, friend or co-worker. It begins with the future client saying: “I have been thinking about moving to your neighborhood. I hear the schools are great, the homes are beautiful and everyone turns out for the 4th of July parade.” The raving fan we have created responds: “That is all true. I love living here. Let me hook you up with this agent. He knows almost everything about our community. He has a booth at every festival, his Sold signs are everywhere and his web site is THE source for what is happening. If a house is being bought or sold in my neighborhood, this is the guy that knows about it. As a matter of fact, we call him the unofficial Mayor.” Ah yes, Mayoral Marketing at its best. While over 80 % of buyers start their search online, I do not know too many yet that buy online. You are still after the referral business and you are still after the repeat business. You can expect to get some key word business too, but, unlike Mary, do not base your marketing strategy on such an ephemeral crowd.

Here is the other important point when considering a blog consisting of dry market reports and local listings versus one overflowing with articles of interest to the entire community. Most marketing, in the end, tries to own one of two places: the consumer at the point of sale or a place in the consumer’s mind. I would rather not spend my career in competition with hundreds of other local agents in a fight over those people who have signaled that they are in a buying or selling heat. I would much rather get to them when they are not being bombarded. I want to own a piece of their mind. (This is but one of 22 Immutable Laws of Marketing – a book that should be on every agents’ desk.) I want them to be my client before they even know they are clients. Winning is easier if the competition does not show up until there are only two minutes left in the game.

The Craving
I end right back at the beginning. Mary compares shoppers looking for a skateboard to shoppers for homes and points out that someone looking for a skateboard and landing on your site is not likely to buy a home. To which I say “duh.” She declares (correctly I might add) it’s going to (be) one hell of a sell to get the skateboard guy to buy a house. This is a specious analogy at best. But, we can make this more applicable. What if there were skateboards that cost $50,000 because they were so “tricked out”? These boards would only be of interest to a select group of riders (let’s call them the professional trick riders) who would, in many ways, constitute a community. What if you wanted to sell your trick boards to these trick riders? You would have to capture their interest wouldn’t you? What if there was a magazine that catered to these trick riders? The articles in this magazine covered issues of particular interest to trick riders: the newest ceramic ball bearings, the hottest half-pipes, which local politicians were voting for legislation to make trick riding in public a misdemeanor and what energy drink the best of the best use before and after a grueling exhibition. Do you think, as a vendor of trick boards, you might like to advertise in that magazine? What if I could offer you more? What if you could not only advertise but establish your expertise, your “street cred,” as a contributing writer? What if you were given the position of publisher? How awesome would it be to write and publish a magazine aimed at and read by the majority of trick riders – the very group that buys your expensive boards? I think that might do wonders for your business. Now how is that different from writing and publishing a magazine aimed at and read by the majority of home buyers and sellers in your farm – the very group that buys your expensive homes? Of course, with a blog site you do not incur the tremendous expense of a magazine. But you reap the same rewards.

The Nutritional Information
It has been a while since I was a full time, active real estate agent. Most recently my time has been spent helping agents and originators find success, use Social Media Marketing and get balanced. Also, I do not know any more about skateboards than I do about creating web sites. But I am, as many of you are aware, starting a hyper-local blog site or, by my definition, a hyper local cat blog. Others have already done it with varying degrees of success, Mary’s concerns notwithstanding. Some of best are right here at BHB. Yet when my blog site dictates the need, can you guess who will be on top of a very short list I will look to in order to take my site to the next level? Buy skateboards from skateboard shops and web sites from Mary McKnight, but when it comes to success as a real estate agent, be passionately you.

Filed under: LIFE THAT POPs , Success

What’s Your Six Month Plan?

Every now and then I get to talk to someone just coming into the real estate business or contemplating the move. My initial response is often a surprise to them but I bet many of you would agree with me when I tell them, “Great! This is the best time to get into real estate. If you come in with a good plan, establish the right habits and market consistently you will become a producer while times are tough and a star when times are good.” They usually look at me a little crooked and then smile. I guess they have a lot of people telling them they should have their head examined for going in when so many are getting out. Maybe they should, but I always found the party a lot more fun after the wanna-be’s and coulda-beens were done posing and said their good-byes.

The Three Questions
Following my response the potential new agent will inevitably tell me about their past experience and how it gives them a great sphere of influence in which to market. They share with me their personal motto about discipline and the pledge they gave their cousin – the copier salesman – to never stop marketing. I applaud all of this. Mottos and pledges and enthusiasm are all important, maybe even indispensible. But the first admonition about coming in with a good plan, the one they missed, is the most important. Where is your business plan? I have yet to hear: “I agree with you Sean. I have a business plan written out and I am excited to begin.”

So here are the three questions I pose to all new agents:

Why do you want to become a real estate agent?
Do you have a written business plan?
What is your six month plan?
The first question is really just a leading question designed to get people to open up and talk about their passion. If you do not have a passion for some aspect of this business it is going to be awfully tough to work through the rejections. The second question is meat and potatoes. I call it the SBA question and I am astounded how few agents have a bona fide business plan. I think the problem lies with the misleading ease in which most people become an agent. Almost any other business requires capital to get started. If you went to an investor or the Small Business Association for seed money the first thing required of you would be a business plan. Real Estate, however, stands alone as a business that one can start without creating a road map to success (to your long term detriment I might add). Maybe the problem is that most agents do not think of themselves as business owners but rather as real estate agents. That is a sure fire way to cap income. In real estate the top producing, most successful agents all see themselves as CEOs of a company – even if it is a company of one. In my experience this has been a universal belief, so why do so few agents copy it? A business plan is fundamental. The process of creating one is an entire article (or two or five) in and of itself, so I will leave well enough alone.

The Six Month Plan
The third question is the most interesting. What if a brand new agent came to you? They are filled with passion and they have gone to a course or bought a book or done what was necessary to create a good business plan. Now there is one thing left: they want to hit the ground running. So they ask “What should I do for the first six months of my career that will contribute most to my long term success?” Before answering, let’s assume we are designing the perfect agent and they have saved at least six month’s living expenses so they do not have to worry about eating and keeping a roof over their head. They knew they were starting a business and would begin with virtually no net income – so they came prepared. What are the initial steps to a fulfilling and financially rewarding career as a real estate agent?

Assuming their business plan already accounts for budgets and, based on desired income, worked backwards to minimum contacts per day, I ignore those items as more than just a six month interest. Here are some of my suggestions then, in no particular order:

decide what will be the three legs of your marketing stool
select a “farm” based on one of those legs
based on your farm, plan on operating a long-tail blog within your website
pick a URL accordingly and get a basic site up and running
name yourself and begin to create your marketing image
lay out your week in time blocks that include marketing, client meetings and study time (become an expert on something)
select three different agents that are similar to you in market and approach
spend two days shadowing each of them (with their permission of course)
track your contacts and conversions for at least the next six months (if not forever!)
attend your weekly caravans and know your inventory
(I believe this may be stolen from Russell Shaw) work with a minimum of 10 buyers before you ever go on a listing appointment
create, buy, beg, borrow or steal a listing presentation that you can make your own… then make it your own
I am sure this is only the tip of the iceberg. How would you answer the question? What do you wish had been given to you at the beginning of those first six months? Care to share?

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Filed under: LIFE THAT POPs , Success

Eyeball Marketing – Are You a Pioneer?

What do running shoes, firefighters’ air tanks and cordless drills have in common? They are all direct spin-offs from the Apollo Space Missions (and before anyone comments, neither Teflon nor Tang was a spin-off from the Apollo missions or NASA in general). Why is this important to practitioners of the 2.0 arts? Because Social Media Marketing is, at this time, a lot like the Apollo Space Mission. It is young and unexplored. It is obviously a new way of doing something and most would agree that it is quite powerful, but many more question its real use. Apollo was questioned. Many accused the entire program of being a boondoggle: powerful, but of little practical use. “What is the point, even if you do succeed?” Sound familiar?

The Eyeball Marketing theory is simple: if you can put enough eyeballs on you, someone will pay to access the brains (and wallets) behind those eyeballs – might even be you. There is no shortage of people with products or services to sell that will gladly pay you to get in front of your group. This is the basis of most large, multi-day seminars. (You didn’t think they were paying those big names full boat to come and hock their books did you?) Lots of people have something to sell, but few have the ability, the reach and the vision to put butts in seats and eyeballs facing forward. Quick self quiz: how many of you have paid for leads in the past? If you have then you are someone with a service to sell willing to pay someone else for the eyeballs they generate.

I suggest that there are two basic forms of marketing. When we talk about past clients, sphere of influence and a community of raving fans we are talking about marketing to a target. When we talk about hyper-locals, mass mailings and Google juice we are talking about marketing for eyeballs. They are not mutually exclusive; in fact, the goal of eyeball marketing is to gather enough people into a specific group that you can market to a target. Blanket an area with your bumper stickers, kiss their babies, give your stump speeches and create a community of raving fans… then be elected mayor (Mayoral Marketing).

So what does this have to do with NASA, BHB and the price of tea in China? I have been thinking a lot about this ever since Brian Brady launched one of his rockets two weeks ago. You may remember a couple of posts about Ashley Dupree that took BloodhoundBlog to #1. It caused quite a stir in clicks and comments here at BHB as well as other sites. Some accused the author of gaming Google. Not so. Was he writing with an eye toward Google? He wouldn’t be the Great and Powerful Oz if he didn’t. But that was not the point and never is. Brian saw an SMM event happening and it got him to thinking. He then played with it and voila: a rocket launch that circled the earth and returned safely. What was the purpose? What was the direct benefit? Does there have to be one? Just a whole lot of eyeballs. Social Media Marketing is still in its infancy. The pioneers playing with it right now are building rockets, the limits of which are unknown. Often times we explore for the sake of exploring. We take things apart because we want to know how they work. We do not put rockets into space to make better running shoes. But we do have better running shoes because we put rockets into space.

What will be the benefit of the most recent experiment to come from BHB’s mad scientist lab? I will leave that to better minds than my own. I expect many answers to be given at Unchained. But I rest comfortable in the knowledge that there will be benefits. If you can generate eyeballs, the sky is the limit.

Filed under: LIFE THAT POPs , Success

Commission

There were a number of interesting articles last week regarding the value of a real estate agent. Essentially asking the agent to justify their commission. I know it got heated up over on Active Rain and there was some discussion on AgentGenius as well. Here at BHB we enjoyed two very good posts. You can read Brian Brady’s post here and Barry Cunningham’s post here. I disagree with both of them, which is all the more reason to recommend you read them. That and the fact that they are both very good reads.

Let’s Clarify the Question
First things first: the timing of the whole “justify your commission” question is counter-intuitive. It is coming up a lot lately, yet one would expect clients to question commissions when home sales are rapid and appreciation high. During those periods it appears simple to sell a home but, probably because of the prices being greater than the seller assumed, we rarely hear this conversation. Yet times like the current, when homes are not selling and people are most in need of a professional agent, you get the most questions about commissions. This has a lot to do with the fact that they are making less money than they expected. So let’s start by clarifying the true nature of the question. It has little to do with the agents’ value and everything to do with the clients’ profit.

Also, the question of value is directed primarily to the listing agent. There are some who will question the selling agent about their commission and they will do so regardless of the market. But for the vast majority of clients the selling agent has very little to do with this conversation. Why? Because the selling agent’s commission is already loosely tied to the market and so a function of supply and demand more than intrinsic value. When homes are moving quickly and inventory is small, the seller and the listing agent discuss what to pay the selling agent and often arrive at 2.5% or even 2% because there is no demand to pay them more (supply of buyers is high). When the market is slow like it is now, we begin to see the seller and listing agent raise the selling agent’s commission to 3%, 3.5% and even 4% because demand is high (supply of buyers is low). It is the movement of homes that dictates the selling agent’s commission. The discussion of an agent’s value (as far as the consumer is concerned) is a discussion of the listing agent’s value.

The discussion of an agent’s value (as far as the consumer is concerned) is a discussion of the listing agent’s value and it has less to do with the agents’ value and more to do with the clients’ profit. Finally, this discussion engages two distinct groups: experienced agents and new agents.

DOLLARS VS EXPERIENCE
Brian’s article suggests a method of valuing your services based on dollarization. In the comments you can read Allen Butler give one example of this principle and in the comment string of Brian’s post on Active Rain you can read a literal demonstration by Brian himself. Barry’s article, on the other hand, suggests that your experience is the driving force behind your value. He lists a set of soul-searching questions that are nothing short of brilliant. I highly suggest the exercises in both articles as a tool to assess yourself and your concept of your own value, but I doubt if they will help you with the question of value to your clients.

A list of your experiences, past transactions, back office support and so on, no matter how detailed, reflects more on your longevity than your value. A trully free market would force longevity and value to be closely aligned – in which case I would agree strongly with Barry’s points – but I think we can all draw up a long list of agents that provide little value and yet have managed to continue doing real estate transactions for years. Chalk that up to uninformed clientele and an industry suffering from low self-esteem made happy by growing membership rather than inspiring excellence. Further hindering us is the question of what our new agents are to do. They certainly can and do provide value, yet how does a new agent relate their value without a history of experience?

Using this second group (new agents) will also make plain the problem with dollarization. Using this method you explain your value in real dollar amounts to justify your commission. These dollar amounts are not so much the cost of doing business as the value of benefits the client receives from doing business with you. Yet how to assign those values? It is all quite subjective. No one of us can actually show that by using my service your house sold for more or in shorter time. This is an estimate at best and self-serving at worse. If we base our value on historical numbers, as Allen did, it looks better but still suffers from the same illness: we do not actually know what would have happened in any reality other than the one that we know. A lesser agent may have taken the listing and sold it in half the time because they had a sister looking for a home just like that. We just don’t know. So the dollarization method is a fancier method of expressing value, but no more valid than just saying: “I am worth this much because that is how good I am.” How can it be measured? The problem becomes even clearer when we bring in that pesky group of new agents again. Their response to the question would, of necessity, be framed with words like: “in my estimation I will sell for more” and “in my opinion I will sell faster” and so on. Without the false validity stamp of: past predicts future they are forced to admit the subjective nature of dollarization.

SO WHAT’S YOUR BIG IDEA?
In the end we need only remember that the question of value is a question asked by sellers and asked when times are tough. They are saying “I am not going to make what I expected. Why should I pay you this much? What are you going to do that makes you worth more than the agent that just left, pitching his discounted rate?” In other words: what is your unique selling proposition? Or, to put it in a question format more familiar still: What is your marketing plan?

Yes, yes, I hear the groans. This is nothing new and not nearly so exciting as a new method of valuation or a long list of accomplishments. But the bottom line is simple: you are being hired to sell a home. Your value is directly tied to that event and your ability to accomplish that event, which is to say your value is your marketing plan. And that marketing plan – that answer to the question of value – is conveyed in your listing presentation. I would estimate that over 90% of agents do not use a formal listing presentation. I would also bet dollars to donuts the small number who do use one get very few “what are you worth” questions.

I have read Russel Shaw discuss this and, while I have not asked him directly, I am going to go out on a limb and say he does not have any difficulty with the question of his commission. I have not asked Greg Swann this question either. But when he shows up on a listing appointment with examples of single site home blogs and custom designed yard signs I doubt he has a problem either. Given the anecdotal success I see by those who use a scripted, well designed and topical listing presentation, it boggles the mind that so few do. The answer, I think, lies with scripting and the common fear of a script sounding stale. Brian Brady said it best when he said “people don’t use scripts because they suck at scripts.”

CONCLUSION
I work with an agent here in San Diego that has possibly the finest listing presentation I have ever seen. When he sits down on an appointment his script goes roughly like this:

My professional fee is 3% and it is non-negotiable. When we are done with my presentation you will know why I am worth every penny and you will want to hire me. The question you have to work on is this: How much do you want to compensate the buyer’s agent?

The value of your service, and the justification of your commission, lies in how well you will do the job for which you are hired. Your marketing plan is the best indication of what to expect and an honest, well designed listing presentation is how you convey that plan. If you wish to earn top dollar then your plan of action for your client must be top dollar. If your listing presentation exhibits that top dollar plan, you will rarely have to justify your commission to your clients.

PS

I just finished listening to Brian on www.realestateradiousa.com discussing these issues again with Barry. (If you missed the broadcast I HIGHLY suggest going on line and listening to it. They discuss how to handle this question very well.) Interestingly enough, however, Brian validated his value by giving his “listing presentation” as a mortgage originator. Barry also gave a 5 Point treatise on improving the very image of being an agent. A long resume was not included, but a top-notch listing presentation was. The only time dollarization came up was when Brian mentioned that, following the dollarization of your services to yourself you will come to know an hourly rate for your sevices. You must then look in the mirror and decide if you actually feel justified at that rate. Use Brian and Barry’s posts to assess yourself. Then make sure you have a listing presentation that reflects your value to the client.

Filed under: LIFE THAT POPs , Success

Every Day a Birthday

Wrapping up the end to another interesting week. Kind of a slow Friday what with Easter, spring break and so on. I am not sure what your experience has been, but I find that not many agents want to talk training (or mortgages for that matter) while licking salt off of a margarita glass on a sunny Friday afternoon. As I mentioned though, I do find most weeks interesting and this one did not disappoint. I celebrated my birthday yesterday. I am not much on birthday celebrations per se, I figure you celebrate on the fives and leave the rest alone. I doubt if anyone out here even knew about it. But this year I found myself doing a lot more contemplating and a lot less writing as the odometer turned over. One area of interest was rebirth. This year my birthday (the first day of spring) falls particularly close to Easter. Both the first day of spring and Easter are hardcore proponents of rebirth.

Staying fresh is a difficult concept in real estate. Essentially, a good agent is someone who endlessly repeats the same tasks around an ever changing core – yet does so as if it were the first time each and every time. In this way good agents are quite similar to good stage actors. It may be the 100th time they have given their listing presentation, but the best know that their current audience is hearing it for the first time. Embracing change and supporting a willingness to recreate yourself is a formidable weapon if you earn your living in the arena competitive – which real estate most certainly is.

Over the past few days we have been privy to posts on super real estate companies, being entertaining, virtual remodeling and, believe it or not, talking signs! Lots of good ideas, but only really useful to those among us that are willing to rearrange ourselves; root around inside and make changes. Sometimes a new idea will require letting go of a long held belief. In the 2.0 world these ideas fly by us at breakneck speed and the blessing is this: when you miss one it is OK because another one is coming. We do not have to assimilate every innovation that lights us up. But the ability to assimilate anything is made difficult if we are not ready to be new.

Yesterday was the first day of spring, a day traditionally celebrated as a day of rebirth. The secret… is to celebrate today in exactly the same way.

Filed under: LIFE THAT POPs , Success

Success is a Choice

I was working with a local real estate agent yesterday on a strategy to achieve one of his goals.  When we were done he declared the strategy good and decided that, barring any bad luck, success might just find him this year.

—- 

A few weeks back I was driving my two boys to school.  They are without doubt the most beautiful boys in the world and I speak with the absolute neutrality of an objective father.  At five and seven they are also completely present.  By that I mean they live in the here and now the way most children do.  The recent past has no more meaning than the near future.  Their focus and their conscience are in the moment.  It fills them with a constant sense of wonder and never ceases to amaze me.

So we are in the car and singing along to the radio when my seven year old sits up in the back and asks: “Daddy, do you believe in good luck?”  As an adult long separated from the freedom of childhood, I was twelve different place in my head when he asked the question and none of them were the present.  I absent-mindedly tossed off one of my favorite sayings to placate him.  “No,” I said, “I believe that the harder I work, the luckier I get.”My son, however, pressed on.  “I believe in good luck Daddy, but I do not believe in bad luck.”  At this point I was blissfully reminded, once again, how very present children are and I snap out of my own thoughts.  I too get present and I pay attention.  I say to him “I do not think you can have one without the other.”  (At this point I must share a little background. I have taught my boys about the subconscious mind, calling it the “magic” part of their brain.  How it is always listening and recording everything we say.  How our thoughts have power and our words create our realities.)  I went on, “if you believe in the idea of good luck, I think you must accept the idea of bad luck as well.”  My son looked at me and said, “No Daddy.  I believe in good luck, but if I believe in bad luck the magic part of my brain will be listening and bad things can happen.  So I CHOOSE not to believe in it.”Brilliant.  He chooses whether or not to believe in something.  Everything we do is by choice; our life, our business and most definitely our results.  Success does not find us… it is a choice.

Filed under: LIFE THAT POPs , choice, Success

Bloodhound by Choice

I was working with a local real estate agent yesterday on a strategy to achieve one of his goals. When we were done he declared the strategy good and decided that, barring any bad luck, success might just find him this year.

—–

A few weeks back I was driving my two boys to school. They are without doubt the most beautiful boys in the world and I speak with the absolute neutrality of an objective father. At five and seven they are also completely present. By that I mean they live in the here and now the way most children do. The recent past has no more meaning than the near future. Their focus and their conscience are in the moment. It fills them with a constant sense of wonder and never ceases to amaze me.

So we are in the car and singing along to the radio when my seven year old sits up in the back and asks: “Daddy, do you believe in good luck?” As an adult long separated from the freedom of childhood, I was twelve different place in my head when he asked the question and none of them were the present. I absent-mindedly tossed off one of my favorite sayings to placate him. “No,” I said, “I believe that the harder I work, the luckier I get.”

My son, however, pressed on. “I believe in good luck Daddy, but I do not believe in bad luck.” At this point I was blissfully reminded, once again, how very present children are and I snap out of my own thoughts. I too get present and I pay attention. I say to him “I do not think you can have one without the other.” (At this point I must share a little background. I have taught my boys about the subconscious mind, calling it the “magic” part of their brain. How it is always listening and recording everything we say. How our thoughts have power and our words create our realities.) I went on, “if you believe in the idea of good luck, I think you must accept the idea of bad luck as well.” My son looked at me and said, “No Daddy. I believe in good luck, but if I believe in bad luck the magic part of my brain will be listening and bad things can happen. So I CHOOSE not to believe in it.”

Brilliant. He chooses whether or not to believe in something. Everything we do is by choice; our life, our business and most definitely our results. Success does not find us… it is a choice.

Filed under: LIFE THAT POPs , Success

How Do You Find Real Estate Success in Disbrokeration?

The real estate industry is a never ending source of change and excitement.  I can remember only two years ago coaching agents on what disintermediation meant, how it was affecting the mortgage industry and how it (and the internet) would affect their success.  I was never too worried that the mortgage broker would be eliminated, but some agents were more than a little concerned about their future.  As it turns out, agents are embracing the internet; they are alive and well and thriving.  So, is there a problem?

No, disintermediation is not a problem: but disbrokeration is.  Teri Lussier, blogger extraordinaire, recently posted a thoughtful article on BloodhoundBlog.  I certainly found it thoughtful.  I have been gnawing on the state of the current real estate brokerage system like a hungry dog with his last bone.  I have speculated that the current Broker based system is outdated and weathered beyond its useful life.  I am quite sure I am not the only one to have said this.  But how do we play this out?  What happens, or what is happening, as this model fades away?

I believe the new model is in place, we are just not calling it that yet.  Going back at least twenty years to when I was first licensed, the existing Broker model seems to be based on a simple premise: work hard as an agent and eventually, if you have the desire and the money and the wherewithal, you will create or purchase your own real estate shop.  You are then the Broker and you hire agents to represent you in dealing with clients who wish to buy or sell a home.  In many ways it was a grand retirement plan.  New agents counted on the Broker for everything from an office to phones; from training to accounting and from organization to guidance.  In return the broker kept a hefty portion of the commission.  It was rare for an agent to even reach 50% as it was the Broker who had taken all the risk, fronted all the bills and established him or herself as successful enough to own a brokerage in the first place.

But times change and the intermediary that is now serving less and less of a function: the Broker.  The internet has given the agent unfettered access to the buyers, sellers and available inventory.  The fluid nature of the business dictates that agents brand themselves now, making the need for a big name obsolete.  Pricing structures and commission splits have driven training out of the picture at most of the brokerages.  As a matter of fact, very few agents receive anything for free and those that do are likely “loss leaders”: top producing agents that are there not to make the brokerage money (quite the contrary); they stand as a beacon for recruitment and a large marketing tool for the rest of the agents.  Brokers are now engaged in the lowest common denominator: “putting butts in seats” and profiting on the first few deals before the revolving door swings another agent through.  I am not judging this.  As long as everyone knows up front what they are getting it is a legitimate model of business… just not a very good one.

So what is the future model of the real estate industry?  I believe there is nothing future about it.  We already see it in just about every large brokerage now.  It is commonly called The Super Team.  It looks like this: one or two agents are the named agents.  Beyond the named agent(s) there may be nothing more than a part time administrator; or there may be multiple buyers’ agents, listing agents, lead coordinators, customer service managers, marketing directors and so on.  What makes them unique is the fact that they all work for the named agent(s).  They may bring in some business of their own (and the splits on that business may be higher) but the primary responsibilities of those that work on the Super Team are to benefit the team and the named agents(s).  For instance, the buyer’s agents are charged with handling the prospects that come to them on behalf of the team. They need not worry about marketing or creating business.  In return their splits are usually less than 50%.  A listing specialist may also be on a lowered commission due to the direct feed of clientele, or they may be on a straight salary.  Most of the other parts to the team are salaried (and possibly incentivized with bonuses).  The entire team operates to enrich the named agents; to help them in their mayoral marketing – to help them become mayor for life.

Sound familiar?  It sounds a lot like the brokerage model of old.  Only there is no longer need for a gatekeeper.  If someone on the team decides they are ready for their own team, away they go.  For those who excel at real estate but have no interest in the commission lifestyle, they have found a cozy home.  It is the brokerage business of yore, but made streamlined, agile and appropriate to the long tail markets in which agents must now thrive.

Here is the best part: the Super Team has no interest in the “putting butts in seats” model because they are already rainmakers.  The only butts they want in seats are people who can get the job done and build the team name.  This model is based on the purity of profits rather than the bloat of over-rides and middlemen.  This model embraces training because turnover costs the named agent(s) money in lost transactions.  This model embraces new forms of marketing and can move quickly to opportunities.  This model is an evolution that must always happen.  As information becomes more readily available there is a natural progression: middlemen go from providers to gatekeepers to restrictors (chokepoints as Greg Swann calls them) and eventually they just become unnecessary.

While this post has gone well beyond the recommended daily allowance of verbiage, I will add two more quick benefits of this model.  One, it provides for greater specification of work, which in a free economy usually leads to greater efficiency and better pricing.  Two, it requires a lot less agents to take care of the same number of clients.  Without the constant requirement to feed the revolving door, the education level, experience level and quality level of the real estate industry as a whole improves.  Are you ready for the Super Teams?  They’re coming to a neighborhood near you soon…

Filed under: DISBROKERATION or "The New Model", LIFE THAT POPs, MARKETING, REALTORS , Brokerage, Disbrokeration, Real Estate Future