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Now Is The Time For All Good People

November 19 2013

I spent last weekend working with one of my favorite clients creating the perfect strategic brokerage business plan. She has been a franchised broker for over twenty years and, with her franchise agreement coming up for renewal in a few months, she was especially concerned that she might not have a sufficient understanding regarding the unusual forces and trends currently impacting the marketplace.

So we started our process by exploring the various scenarios that are currently playing out in our industry and marketplace. It turned out to be an amazingly wonderful experience.

reconis all good people

Our first stop was in Washington at the old gray concrete box that currently serves as command central for the Consumer Finance Protection Bureau (CFPB). This is a new breed of regulatory agency started in mid 2011. It is about using excited and engaged people along with technology and modern marketing techniques to create a new, more personal and highly efficient kind of government regulation and oversight. This agency is actually going to use social media tools and techniques in a regulatory context. Believe it or not, two of its role models are Google and Apple. "What" my client asked, "does this have to do with my real estate brokerage?"

reconis all good people 2Good question. Among the things that the Bureau has learned over the last two years is that many of the families who lost their home to the anguish of foreclosure had a mortgage broker and a real estate agent who was acting in the role of a "trusted advisor." Some experts suggest that these trusted advisors not only gave advice regarding affordability (thus possibly making them financial advisors), but perhaps also at a time when they were operating with little no training, supervision or oversight. Some believe that our industry is very close to getting a CFPB kiss.

Oh, one other thing, the CFPB is also just 60 days away from unleashing a whole new regulatory scheme onto the residential mortgage industry. This action will be felt by almost every individual involved in a real estate transaction, starting January 14th.

On our way from the airport to our next stop, we passed through an interesting neighborhood causing my client to ask, "How is the market doing?" It is a difficult market. We are seeing too few sellers, prices climbing all too quickly, mortgage eligibility rules that are more stringent, agents that seemed to be fixated on making up for lost time, and consumers that are convinced they have all the answers.

reconis all good people 3Our next stop was at a mall where hundreds of consumers could be seen doing their thing. "Are these the same people who come to my agents and brokerage?" my client asked. Yes, they are. Interestingly enough, whether they are purchasing clothing, food or professional services they have become quite sophisticated with respect to both their relative status in every transaction and what they want out of their real estate experience.

"Do you think they are satisfied with the experience my agents and my firm are providing them?" asked my client. Some would suggest not so much. Each month more and more of them are approaching portals as the beginning of their real estate experience. In fact nearly forty percent of them are making a portal their first stop on the transaction journey.

"What are portals?" she asks.

Well, the answer to that question may depend upon one's political stance and financial philosophy. Portals represent a whole new energy in the industry. First of all, they are consumer centric rather than agent centric. Their primary product is the experience they provide the consumer, not the "work style" they provide the agent. They seem to have built a business foundation on doing the things that make consumers happy and that others in the industry refuse to do. During the past year, their appeal has gone beyond the consumer into the agent population. There are currently tens of thousands of agents who publically swear their allegiance to a portal, even while they are wearing their broker's insignia. It would appear that they have discovered a unique market niche for which there is no current predator.

What is this thing called "off MLS marketing?" Well, that is a bit more complicated. Suffice it to say that some agents feel that they know what is better for the consumer than most other real estate professionals, including those that they have worked with, closely, for years. They demonstrate this expertise by denying their client's listed property the full exposure afforded by the MLS marketing experience.

"This would seem to be a harmful and hurtful practice for everyone else in the marketplace. Doesn't it damage the listing agent's value proposition, the MLS and these longtime working relationships. What are its legal and regulatory impacts?" We are just now beginning to understand the full ramifications of this quite selfish act. Suffice it to say that it will not result in positive change for the marketplace and all involved.

At one point, we happened upon a group of clearly unhappy men and women at a street corner. "What are they so angry about?" asked my client. Well, that is a tough one. It appears as though their longtime business model isn't working very well anymore and they are searching for someone to blame. They have hit on the idea that their misfortune has been caused by one of their industry's service vendors and they are looking for a way to get even. "Does that make sense?" ask my client. That is a tough question. What is certain is that even if they destroy the object of their scorn, they are still not likely to win in the long run. The real sources of their troubles are actually internal, not external.

The client indicated that she couldn't help but notice that there seemed to be a lot of investor money going into the industry these days. Yes, that is true, especially into large brokerage operations and portals. "What do they want?" Undoubtedly what everyone else wants, a healthy return on investment and a stable business platform. "Are they going to get it?" Well that depends on whether they are willing to learn from those who failed before them. Many of them are incredibly smart and it defies imagination that they will not quickly see the negatives and the positives and do what has to be done.

reconis all good people 4"What ever happened to organized real estate?" asked my client. "I believe I still have a REALTOR® card in my wallet." This is one of the big questions for which no one seems to have an answer. There are still tens of thousands of honest hard working volunteers who have sworn to the cause. But it isn't clear that the cause has chosen a direction yet. I am sure they will play an important role when they get the situation straight in their minds. Keep your card, it is a good thing.

"Well," she said, "it sounds quite confusing to me. What should I do?"

I thought you would never ask. These are the great times! We are on the cusp of an industry moving to unparalleled opportunities and rewards. We have a new economy, a new consumer, new communities, a new generation of REALTORS®, and a new world of technology powered tools and solutions. Decades of non-productive work habits and cursed cultures are about to disappear at the hands of a whole new cadre of business class managers and executives. Productivity and profitability are about to re-enter our lives and our fortunes.

Stick around, renew that franchise and exchange complaining for participating; it's your franchise. You have been awarded a new chapter in your life and your story. Make it a best seller.

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