Real estate offices are closing all over the country. Real estate agents happen to be hanging up their licenses in every state. The traditional bricks-and-mortar real estate brokerage will be hemorrhaging, and all that maintains this archaic business design alive is consolidations. As offices close, some agents quit, but the survivors move their licenses to some other sinking ship, a ship that looks similar to the last one and frequently with the exact same name on the bow.
A large franchise office closes it’s doorways, no longer able to keep the lights on after more than a year of operating in the red. The agents come to mind sick, not knowing what they will carry out, until their savior walks in the door.
A broker from the large bricks-and-mortar across town with the same franchise offers to take all the agents in with the very same contract terms: each real estate agent pays $600 monthly and keeps 100% of their commissions. The agents sigh in relief and swiftly sign the new agreements like sheep to the slaughter.
Since the broker can’t generate enough leads for the agents, and because the agents aren’t selling enough to make the broker enough cash on commission splits, any kind of split wouldn’t make sense for the broker right now. keenans estate agents rawtenstall A sharp broker will charge each realtor 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.
3 years ago I sat over the desk from the franchise broker who looked at me and mentioned, “Well, we’re feeding the business enterprise every month. You need to do that when times are tough. But we have been through a down economy before, and we always turn out okay.” I recall thinking to myself that has been a silly thing to state coming from a man who told me he had no business plan, no budget for marketing, and no written vision for future years of his business. Regrettably, that same broker just issued a press release 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 plenty of leaks, and it may 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 an entirely new business model will die a slow and painful death. It’s a very important factor for brokers to ride their own ship down, but it is quite another thing altogether for those brokers to sell tickets to realtors with promises they can not keep.
Probably the most unfortunate thing about all of this is that the agents who think they’re doing what it takes to survive are just re-arranging the deck chairs on the Titanic. Most of them truly have no idea or comprehend how precarious their fate is definitely. Many of them do have a distressing feeling, plus they know something is wrong with their business model. Just like so many of the passengers on the Titanic close to the conclusion who smiled and kept expressing, “Don’t worry, everything always works out alright,” traditional agents continue steadily to greet people with a smile and wait for the phone to ring. However the ship is tilting, and they are at risk. They just have no idea what to do.
This is the great dilemma of being stuck. It’s the classic inability to think outside of oneself. Traditional brokers and brokers who have operated inside a traditional brokerage model for quite some time struggle to think in entirely new methods. What makes this especially problematic for so many is their distress with technology and the Internet. Some simply won’t learn the technologies. I understand of a top 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 mastering and adapting for a boss, and when they do and depart someday, where does that keep the broker? Even successfully delegating leaves considerable issues in bridging the gap, that i will share later.
There’s been an enormous change, however, not all agents and agents recognize what is happening. Most do not comprehend that they are in the middle of a significant earthquake. Therefore, they continue steadily to do what they will have done. Underlying each one of these changes is something very large that traditional agents are missing. Just as it is powerful forces that move tectonic plates deep below the earth’s surface, we have been experiencing powerful forces producing an earthquake in the real estate world. As with so much in existence, what we see on the surface is merely a symptom of a deeper plus much more significant trend that is actually the driving force. It really is this driving force that lots of brokers and agents have not recognized.
This is actually the first tectonic force that is at the root of all these changes effecting the real estate industry: a change in consumer behavior. Granted, it is a huge change in consumer behavior. It’s so big with so many implications, a lot of people don’t comprehend it.
The full description of the changes in consumer behavior would be quite long, but this is a brief overview in the context of the true estate business. Consumers are no longer ready to be sold with obnoxious advertising and marketing and told what to buy and when to get it. Consumers are fed up with interruption advertising, of billboards, of high pressure salesmen, of telemarketing, and of misrepresentations and boldfaced lies. Consumers have had it with experienced conflicts of interest. They’re fed up with only getting partial information where to base their most important decisions. Consumers want and demand freedom to control their own destiny. They don’t really like being controlled. They don’t like being manipulated.
The second tectonic force effecting such dramatic changes in the real estate industry is effective in its own right, but also functions as a catalyst for the alterations in consumer behavior.
The catalyst that has empowered consumers and is forcing these adjustments that are the death knell of classic property brokerage is… advances in engineering.
The traditional brokerage business model has been totally unequipped to handle these tectonic shifts. The effects of the true estate recession has accelerated this technique to be sure, but only with 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 function as exact same. The recession has acted just like a diversion, however, distracting realtors from the real reason behind their doom.
I’m reminded of the newspaper salesman who tried out to sell me expensive print advertising recently. I request him, “Why would I advertise in the newspaper when it hasn’t sold any of my real estate listings in past times year or so? Help me out. Why should I advertise in your document?” His reaction 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 stop advertising. It’s the time to advertise as part of your!” That’s when I could no longer incorporate myself, and I broke out laughing. We used that series in sales 30 years ago. Are they even now using that line? Yes, they are.
Apparently, that kind of sales pitch still works with many real estate agents and agents, because like flies bouncing off the plate cup windows in a futile work to flee from bondage, many agents remain doing what they admit fails very well any more. Whatever we were doing that has been not working before should be done twice as fast today. If the ship you’re on is sinking, stop wasting time about your business and join another ship just like the last one. Such behavior is insanity and a ticket to failing.
More real estate brokers have filed for bankruptcy security in the past two years than at any time in U.S. History. And the earthquake has not ended as many bricks-and-mortar brokers happen to be on the verge of closing their doors soon.
It is the early adopters of home based business models and new technologies who will be the millionaire realtors in the a long time. Because time is definitely truncated with the accelerating pace of the growth of technologies and the use of the Internet, those who 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 who missed the flight will find themselves light a long time behind their colleagues. This is one way it will be for traditional realtors who insist on staying behind.
There is an answer, also it means embracing technology, new marketing methods, new tools to attain clients, and mastering the Internet as a powerful medium.