Real estate offices are closing all over the country. Real estate agents will be hanging up their licenses in every state. The traditional bricks-and-mortar property brokerage can be hemorrhaging, and all that retains this archaic business model alive is consolidations. As offices near, some agents quit, but the survivors move their licenses to another sinking ship, a ship that appears just like the last one and often with the very same name on the bow.
A big franchise office closes it’s doors, no longer able to keep carefully the lights on after more than a year of operating in the red. The agents are worried sick, not knowing what they will do, until their savior walks in the door.
A broker from a large bricks-and-mortar across town with exactly the same franchise offers to take all the agents in with the very same contract terms: each realtor pays $600 monthly and keeps 100% of their commissions. The brokers sigh in relief and swiftly sign the new agreements like sheep to the slaughter.
Since the broker can’t generate enough potential clients for the agents, and because the agents aren’t selling enough to make the broker enough money on commission splits, almost any split wouldn’t make sense for the broker today. land for sale accrington A sharp broker will charge each broker a monthly cost. He laughs all the way to the bank, because with 60 brokers paying $600 monthly, he’s making $36,000 a month just for living.
Three years ago I sat over the desk from a franchise broker who looked at me and explained, “Well, we’re feeding the business every month. You have to do that whenever times are tough. But we’ve been through a down economy before, and we always turn out okay.” I remember thinking to myself that was a silly thing to say coming from a man who told me he had no business plan, no cover marketing, no written vision for the future of his business. Regrettably, that same broker only issued a press release that he is permanently closing the doors of his bricks-and-mortar and you will be hanging his permit with another bricks-and-mortar. Another consolidation.
This broker is merely jumping from one sinking ship to 1 that hasn’t sunk yet. The new ship has a lot of leaks, and it might take a while for individuals on the Titanic to wake up. Bricks-and-mortar property brokerages that stubbornly refuse to bridge the gap to a completely home based business model will die a gradual and painful death. It’s a very important factor for brokers to ride their very own ship down, but it is fairly another thing altogether for those brokers to market tickets to realtors with promises they can’t keep.
The most unfortunate thing about all of this is that the brokers who think they are doing what must be done to survive are only re-arranging the deck chairs on the Titanic. Many of them truly do not know or comprehend how precarious their fate can be. Most of them do have an uncomfortable feeling, plus they know something is wrong making use of their business model. Just like so many of the passengers on the Titanic near the finish who smiled and kept stating, “Don’t worry, everything always works out alright,” traditional agents continue steadily to greet people who have a smile and await the phone to ring. But the ship is tilting, plus they are at risk. They just don’t know what to do.
This is the great dilemma of being stuck. It is the classic inability to think beyond oneself. Traditional brokers and agents who have operated within a traditional brokerage model for several years struggle to think in entirely new ways. What makes this especially problematic for so many is their irritation with technology and the Internet. Some simply refuse to learn the technologies. I know of a high producer who refuses to adjust, and he sincerely believes he is able to delegate lots of the responsibilities to his assistant. Very few assistants are going to spend night and day learning and adapting for a boss, and if they do and depart someday, where does that depart the broker? Even successfully delegating leaves serious difficulties in bridging the gap, that i will share later.
There’s been an enormous change, however, not all agents and brokers recognize what’s happening. Most do not comprehend that they are in the center of a significant earthquake. Therefore, they continue to do what they always have done. Underlying all these changes is something very huge that traditional brokers are missing. Just as it is powerful forces that move tectonic plates heavy below the earth’s surface, we have been experiencing powerful forces causing an earthquake in the real estate world. As with so much in lifestyle, what we see on the surface is merely a symptom of a deeper and much more significant trend that is actually the driving force. It is this driving force that many brokers and agents have not recognized.
Here is the first tectonic force that’s at the root of most these changes effecting the real estate industry: a big change in consumer behavior. Granted, it is a huge change in consumer habit. It’s so big with so many implications, most people don’t comprehend it.
The full description of these changes in consumer behavior would be quite long, but here is a brief overview in the context of the true estate business. Consumers are no more willing to be sold with obnoxious advertising and told what to buy and when to buy it. Consumers are sick and tired of interruption advertising, of billboards, of high pressure salesmen, of telemarketing, and of misrepresentations and boldfaced lies. Consumers have had it with specialized conflicts of interest. They’re fed up with only getting partial information where to base their most significant decisions. Customers want and demand freedom to control their own destiny. They don’t like being controlled. They don’t like being manipulated.
The second tectonic force effecting such spectacular changes in the real estate industry is powerful in its own right, but additionally works as a catalyst for the improvements in consumer behavior.
The catalyst that has empowered customers and is forcing these improvements which are the death knell of classic real estate brokerage is… advances in technologies.
The traditional brokerage business design has been totally unequipped to deal with these tectonic shifts. The effects of the true estate recession has accelerated this technique to be sure, but only in time. Had it not been for this recession, the impact of these changes in consumer behavior could have taken longer, however the impact would ultimately function as very same. The recession has acted such as a diversion, however, distracting real estate agents from the real reason behind their doom.
I’m reminded of the newspaper salesman who attempted to market me expensive print advertising lately. I talk to him, “Why would I market in the newspaper when it hasn’t sold any of my real estate listings during the past year or so? Help me out. Why must i advertise in your paper?” His reply while soft-spoken and polite, was basically of the same mindset as many real estate agents today, “Well, you don’t want to be left out when your competition is advertising, do you?” In reaction to my blank stare, he pleaded, “When business is slow, it’s not the time to avoid advertising. It’s the time and energy to advertise more than ever!” That’s when I could no longer have myself, and I broke out laughing. We used that collection in sales 30 years ago. Are they even now using that line? Yes, they’re.
Apparently, that kind of sales pitch still works with many real estate agents and agents, because like flies bouncing off the plate glass windows in a futile work to escape from bondage, many agents are still doing what they admit fails very well any longer. Whatever we were doing that has been not working before should be done twice as fast now. If the ship you are on is sinking, stop wasting time about your business and jump on another ship similar to the last one. Such behavior is definitely insanity and a ticket to failure.
More real estate agents have filed for bankruptcy defense during the past two years than at any time in U.S. History. And the earthquake have not ended as many bricks-and-mortar brokers are on the verge of closing their doors soon.
It’s the early adopters of home based business models and new technologies who will be the millionaire real estate agents in the years to come. Because time is definitely truncated with the accelerating rate of the growth of technology and the usage of the Internet, those that pause too long to think about doing something will be left so far behind, they may never catch up. Think about a space ship going into warp speed. Those that missed the flight will find themselves light a long time behind their colleagues. This is how it will be for traditional real estate agents who insist on staying behind.
There is an answer, and it means embracing technology, new marketing techniques, new tools to reach clients, and mastering the web as a powerful medium.