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How Will High Performance Agents Fit Into the New Industry Models?

December 14 2011

This article is about an interaction that is becoming increasingly more common throughout the industry – a call for consultation from high performance ($12M +) agents, in the most immediate case, three “30 something” high producers. A pre-dinner interaction at a posh bar and a vegetarian dinner with a giant mushroom is today’s equivalent of yesteryear’s rib-eye dinner. These are the blessed moments, wherein participants speak of their hopes and fears.

The conversation starts out slowly, because it would not be cool to suggest that there are any problems in the historic paradise of those agents who are at the very top echelons of marketplace production. We talk about who is living where, the last fabulous vacation, how really good everyone is doing this year, the best place to buy great shirts.

Then, slowly, the conversation begins to find traction in the realities of today’s conflicted marketplace. Shared observations about current practices, recent experiences and new market variables. Casual questions about what is happening in other markets. Thoughts are shared about how things are ‘changing’, and apparent solutions. By the time the second glass of Silver Oak hits home, the real issues begin to hit the table.

For years the upper 10% group has been told, and willingly accepted, that their status, incomes and practices would be immune from any changes sweeping across the market. Now, for the first time, they are becoming aware of the fact that the new convergence-impacted marketplace, with its emphasis on profitability, will render them as irrelevant as are their less productive brothers and sisters. They are coming to grips with the fact that they have more to lose. They have begun to think about what they should be doing to protect their current market position, while at the same time integrating into the new practice model.

The first step that agents must take to protect their future positions is to gain a conversational expertise on exactly what is happening in today’s American real estate industry. After being told, from your early days in the industry, that you are invulnerable, it is a major wakeup call to suddenly realize that your survival isn’t a matter of self-determination. Positioning one’s self to be knowledgeable puts one face-to-face with the industry’s silence regarding current directions. Things are so bad that it is actually possible to attend some of the most important industry meetings without hearing a single thing about current challenges or future directions.

Consider the following (A checklist format has been incorporated to enhance the ability of this material to support a discussion format):

• The current brokerage environment is a very complicated one.

___ Few have made a market level profit over the past five years

___ Many are near the end of their financial resources and most have been unable to make necessary capital improvements

___ Few if any sales or acquisitions are occurring other than “shotgun marriages”

___ Most have been operating on minimal staff and a very liquid bricks and mortar formula

___ The average age of brokers is over 60

___ There is little or no capital in the sector except that coming from parent company donations and broker asset liquidation

___ Few brokerages have created transition plans and fewer yet are discussing future options with their agents for fear of breakage.

• Brokerage relationships are, and will continue to be, critical to agent careers.

___ Moving forward, much of the business will be controlled by larger entities who either have powerful Internet and consumer positions or relationships with those who do

___ Productivity, accountability, profitability, specialization, standardization and transaction management will be hallmarks of the these entities

___ These entities are not likely to enter into agent relationships that are not capable of generating market level profitability

___ Without a clear and compelling plan, which includes appropriate synergistic agent relationships, a brokerage is not likely to succeed in this new environment

• Agents must understand what they can’t control.

___ The economics of free enterprise

• It’s primary function is to drive profitability

• Function will inure to an entity that can integrate it into a profitable package

• A 2 trillion dollar plus industry will not be allowed to drift within the economy

___ The realities of the consumer control

• You will not be allowed to operate out of your car

• Consumers will want the strength and stability of an organizational structure of some kind

• Perhaps your team will morph into a brokerage, but how will that help you?

• Focus on what you can control.

___ In all likelihood you will spend the remainder of your real estate career with some manner of vision/plan/structure

___ You will want to be situated when the economy settles into its new configuration and consumer centricity reaches its zenith

___ Over the next eighteen months you have an opportunity to make decisions about what kind of structure you can accept and support

___ The Agent must know what kind of vision plan structure of which to be a part

___ The Agent must be willing to work to create and contribute to that kind of vision/structure

___ The agent can determine the characteristics of a structure that would be acceptable and compatible, so long as it meets the ROI requirements.

• Here are some recommendations

___ The broker must be a leader who is willing to be in control

___ That leader must have a documented vision that can be articulated. “Trust me” is no longer acceptable.

___ That leader must be willing to share the vision plan, and the execution.

___ Your leader must be willing to help you navigate an agreed upon career path

___ The Agent must be willing to merge their career with the vision plan.

• The vision/plan must have the following traits:

___ A Detailed succession plan

___ Generate a market level profit and return on investment

___ Be able to grow and prosper within the chaos of extreme competition

___ Be consumer centric

___ Be Internet fused

___ Document acceptable standards of practice

___ Provide the Agent with a comprehensive data package

___ Demand and enforce universal accountability

___ Utilize acceptable financial management procedures

___ Have an enlightened corporate management team

This is an amazing time to be in our industry. However, the practices of the past several years that have contributed to the industry’s current distressed condition will not long prevail. Agent/Brokerage relationships will be critical moving forward, but many Agents will not willingly bare responsibility for their role in that relationship.

There are a great number of practice options for agents who are willing to become part of a profitable, productive and structured brokerage team, but very few options for lone rangers.

Talk to your broker today about the road ahead. Be knowledgeable and demonstrate your understanding of how the new environment will impact your practice. It may be one of the most important conversations of your career.

To view the original article, visit the RECON Intelligence Services blogRECON Intelligence Services blog.