Real estate office buildings are closing all over the country. Real estate agents will be hanging up their licenses in every state. The traditional bricks-and-mortar real estate brokerage is usually hemorrhaging, and all that continues this archaic business design alive is consolidations. As offices close, some agents quit, but the survivors move their licenses to another sinking ship, a ship that looks just like the last one and often with the exact same name on the bow.
A large franchise office closes it’s doorways, no longer able to keep carefully the lights on after greater than a year of operating in debt. The agents come to mind sick, not knowing what they’ll do, until their savior walks in the door.
A broker from a large bricks-and-mortar across town with the same franchise offers to take all the agents in with the very same contract terms: each agent pays $600 per month and keeps 100% of their commissions. The agents sigh in relief and rapidly sign the new contracts like sheep to the slaughter.
Since the broker can’t generate enough prospects for the agents, and because the agents aren’t selling enough to help make the broker enough funds on commission splits, any sort of split wouldn’t seem sensible for the broker nowadays. balcarres road preston A sharp agent will charge each real estate agent a monthly cost. He laughs completely to the bank, because with 60 agents paying $600 monthly, he’s making $36,000 a month just for living.
Three years ago I sat across the desk from a franchise broker who looked at me and said, “Well, we’re feeding the business enterprise 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 has been a silly thing to state coming from a man who told me he previously no business plan, no budget for marketing, and no written vision for future years of his business. Unfortunately, that same broker just simply issued a press release that he is permanently closing the doorways of his bricks-and-mortar and you will be hanging his permit with another bricks-and-mortar. Another consolidation.
This broker is merely jumping in 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 real estate brokerages that stubbornly refuse to bridge the gap to a completely new business model will die a sluggish and painful death. It’s a very important factor for brokers to ride their own ship down, but it is fairly another thing altogether for all those brokers to sell tickets to real estate agents with promises they can not keep.
Probably the most unfortunate thing about all of this is that the agents who think they are doing what it takes to survive are only re-arranging the deck chairs on the Titanic. Most of them truly do not know or comprehend how precarious their fate is certainly. Most of them do have an uncomfortable feeling, and they know something is wrong with their business model. Just like so many of the passengers on the Titanic close to the stop who smiled and kept stating, “Don’t worry, everything always computes alright,” traditional agents continue steadily to greet people with a smile and await the phone to ring. But the ship is tilting, and they are at risk. They just don’t know what to do.
This is the great issue 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 methods. What makes this especially problematic for so many is their pain with technology and the Internet. Some simply refuse to learn the technologies. I understand of a top producer who refuses to adapt, and he sincerely believes he is able to delegate lots of the responsibilities to his assistant. Several assistants are likely to spend night and day mastering and adapting for a boss, and when they do and depart someday, where does that keep the agent? Even successfully delegating leaves serious problems in bridging the gap, that i will share later.
There’s been an enormous change, but not all agents and brokers recognize what’s happening. Most do not comprehend that they are in the middle of a major earthquake. Therefore, they continue steadily to do what they will have done. Underlying each one of these changes is something very big that traditional agents are missing. Just as it really is powerful forces that maneuver tectonic plates deep below the earth’s surface, we are experiencing powerful forces causing an earthquake in the real estate world. As with so much in lifestyle, what we see at first glance is merely an indicator of a deeper and much more significant trend that is actually the driving force. It is this driving force that lots of brokers and agents have not recognized.
Here is the first tectonic force that is at the root of all these changes effecting the true estate industry: a change in consumer behavior. Granted, it’s a huge change in consumer habits. It’s so big with hence many implications, a lot of people don’t comprehend it.
The full description of the changes in consumer behavior will be quite long, but here is a brief overview in the context of the real estate business. Consumers are no longer willing to be sold with obnoxious advertising and marketing and told what to buy and when to buy it. Consumers are fed up with interruption marketing, of billboards, of ruthless salesmen, of telemarketing, and of misrepresentations and boldfaced lies. Consumers have had it with specialized conflicts of interest. They’re sick and tired of only getting partial information upon which to base their most significant decisions. Buyers want and demand freedom to regulate their own destiny. They don’t like being controlled. They don’t like being manipulated.
The second tectonic force effecting such dramatic changes in the true estate industry is powerful in its own right, but also acts as a catalyst for the improvements in consumer behavior.
The catalyst that has empowered customers and is forcing these changes which are the death knell of classic real estate brokerage is… advances in technology.
The traditional brokerage business model has been totally unequipped to manage these tectonic shifts. The impression of the real estate recession has accelerated this technique to be sure, but only in time. Had it not been because of this recession, the impact of these changes in consumer behavior would have taken longer, however the impact would ultimately be the 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 sell me expensive print advertising recently. I inquire him, “Why would I promote in the newspaper when it hasn’t sold any of my real estate listings before calendar year? Help me out. Why must i advertise in your document?” His response while soft-spoken and polite, was initially of exactly the same mindset as many real estate brokers today, “Well, you don’t desire to be left out when your competition is advertising, can you?” In response 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 as part of your!” That’s when I possibly could no longer include myself, and I broke out laughing. We used that series in sales 30 years back. Are they nonetheless using that line? Yes, they are.
Apparently, that kind of sales pitch still works with many realtors and agents, because like flies bouncing off the plate cup windows in a futile work to flee from bondage, many agents are still doing what they admit doesn’t work very well any longer. Whatever we were doing that was not working before must be done twice as fast nowadays. If the ship you’re on is sinking, be quick about your business and jump on another ship similar to the last one. Such behavior will be insanity and a ticket to inability.
More real estate agents have filed for bankruptcy defense in the past two years than at any time in U.S. Background. And the earthquake have not ended as many bricks-and-mortar agents are usually on the verge of closing their doorways soon.
It’s the early adopters of new business models and new technologies who’ll be the millionaire realtors in the years to come. Because time is definitely truncated with the accelerating rate of the growth of engineering and the use of the Internet, those who pause too long to take into account doing something will undoubtedly be left so far behind, they may never catch up. Think of a space ship going into warp speed. Those who missed the flight will find themselves light decades behind their colleagues. This is one way it’ll be for traditional real estate agents who insist upon staying behind.
There is an answer, and it means embracing technology, new marketing techniques, new tools to reach clients, and mastering the Internet as a powerful medium.