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December 2013

Brokerage Design

Why Can't Everyone Just Do His or Her Job?

By Jeremy Conaway

December 2013

Jeremy Conaway

The Setting: A high tech conference facility in the Silicon Valley
The Event: A strategic leadership conference sponsored by one of the country's leading MLS operations.
The Scene: The conference participants include some of the most engaged and enlightened industry leaders in the country. They are nearing the end of the first day of a two-day high intensity interactive program designed to prepare them to make a series of decisions that will reconfigure their organization and allow it to move to the next level. Within the past several hours, conference participants have heard from...

  • Jeremy Conaway on current industry strategies and tactics
  • Stefan Swanepoel on industry positioning
  • Curt Beardsley on current interactive industry relationships
  • Robert Bailey on the Art of Visioning
  • Chris Crocker on the expanding role of portals
  • Marilyn Wilson on the growing influence of consumers

From these presentations they have learned that some combination of the following constituted the industry issues and challenges of the day.

  • The Realty Alliance (representing the 70 largest brokerages in the country) is preparing to take their current and potentially destabilizing MLS/public facing website initiative to the next level
  • The Consumer Financial Protection Bureau (CFPB) has prepared a portfolio of 972 new regulations, many of which will take effect in January of 2014. In their present configuration these regulations will significantly change the eligibility and procedures for many mortgage transactions.
  • There is increasing evidence that the Consumer Financial Protection Bureau (CFPB) may extend its regulatory program to the real estate transaction. The CFPB is currently blanketing the mortgage industry.
  • The "off MLS" marketing epidemic continues to grow in markets across the country. There is increasing evidence that this situation will damage the effectiveness of the MLS, the agent value proposition and public confidence in the real estate market.
  • Portals appear to be winning the race for the consumer's eyeballs and are accordingly becoming more and more powerful in the real estate marketplace.
  • Boomers seeking to save money for retirement and "X" and "Y" generations trying to stretch their purchase cash are raising the probability that a "do it yourself" assisted transaction program will be introduced.
  • Increasingly the 80 million strong "Y" Generation is finding itself locked out of the American Dream of home ownership. Rising mortgage rates, student loan debt and lower employee compensation is driving this trend.
  • More and more agents are promoting themselves as "Portal Agents" thus weakening the power and influence of the brokerage industry. The portal agent is the fastest growing sector in the industry. Associations and brokerage will have to come up with ways to manage and coordinate this element.
  • The agent value proposition, long held secret from the real estate consumer, has come under significant pressure from portals, empowered consumers and supporting technologies are increasingly given consumers the impression that agents are not required for much of the transaction.
  • By and large traditional brokerages are choosing not to respond to the circumstances outlined in trends 1 - 9 above and are choosing to pursue traditional systems and practices.

The Defining Moment
Given the natural course of events it was time for the participants to hear from and about the brokerage community around which many of these issues revolve. Selected to provide this crucial perspective was John Thompson, Founder and Executive Vice President of Intero Realty Services, one of the largest brokerages in California.

This was a tense moment in the program. No one in the room was taking or making any bets with respect to what direction John would take. Would he be critical of the growing role of associations and MLSs? Would he take this opportunity to call out the portal sector for their contributions to the current confusion? Would he offer a menu of change for the brokerage community, assert the correctness of their current stance or make excuses for their apparent position?

Those who know John or of his leadership style know that he is a very dynamic individual. I recently had the privilege of spending time in his office discussing issues and observing his management style. His immediate peers and sphere of responsibility includes some of the most successful real estate service and management personalities in the country. Watching him work is like watching an admiral on the bridge of his flagship during a major operation. His knowledge of the current business situation is total and his command instincts are instant, flexible and most impressive. Moreover, what becomes quickly obvious is that his troops possess and demonstrate a level of respect that is most uncharacteristic of our industry.

So given this situation and these facts John takes the floor and delivers an absolutely compelling, relevant and to the point presentation.

With respect to the portals one must keep in mind that while their "5 point" analysis is entertaining it is really just another way to describing how to pick the "low hanging" fruit. The portals have wisely elected not to get their hands dirty with the real day-to-day business of parenting and protecting real estate transactions. There isn't a brokerage in the country that wouldn't love to take this position. However, it is the nature of things that sooner or later one must address the fruit at the top of the tree and that which has fallen to the ground. This is where the real and long term challenge lies and this is where brokerage firms are making their stand.

Sure, many brokers are envious of the position taken by the portals but each, at some level, understands what is necessary to succeed in the long run.

Since when, he asks, is this industry uncomfortable with people who are knowledgeable and informed? He points out that among his team are some of the most knowledgeable and informed people he has ever met. Being knowledgeable and informed is a way of life for his team member in everything they do both professionally and personally. The challenge is to learn how to recognize this new consumer and how to work with them at the level in which they want to interact.

With respect to the amazing range of new technologies and tools that are being made available to real estate professionals, John suggests that adaptation goes to the very spirit of the American experience. It shouldn't be seen as a threat, but, rather as an opportunity. He sees on a daily basis the benefits of adaptation to the firm and agent bottom line.

He then carefully reviews and articulates the points, arguments and challenges that have been repeated in one way or another by virtually every expert and every speaker during the day. He pauses for a moment and then makes his winning point. "It appears to me that if every agent and broker just did their jobs that these problems and these complications would disappear overnight." Why can't we just do our jobs and get on with it?

A standing ovation follows.

Thanks John. What more can one say?