Preparing For Your Managed Real Estate Team

It was a coincidence, actually. I had an opportunity to attend a very popular lunch program dedicated to the purpose and practice of the agent team. It was a classy event with an upscale lunch and a cast of high performance agents all associated with the team movement. Two moments from this event contributed to this article.

The first occurred when one of the women being featured on the program panel arranged to be introduced as the "CEO of the XYZ team." It was just one of those moments in life when reality loses focus and confusion sets in. She was looking in every way like one would expect the CEO of a real company to appear. It's not that I hadn't done my homework for the event by researching a number of sources on the current status of the agent team, for I had. I just wasn't prepared for either the concept of pretending that this is a real "entrepreneurial" activity or for the program that followed. It was 60 minutes of finite detail and collective wisdom on how to "negotiate" various benefits, concessions, and allowances from brokers whose "brokerage" was being blessed by the presence of a team within their business sphere.

The second moment of substance occurred at the curb as we waited for an overworked parking valet to retrieve our vehicles. Standing next to me was a local broker of considerable progressive substance. Like two alumni meeting on a strange campus, I asked what he thought about the program and if it felt familiar. In response he rolled his eyes and in a firm and focused voice said, "This has gone too far."

This article is about agent teams, but not about the agent team movement that is now sweeping the industry. It is about a whole new kind of agent team that will soon mark its arrival and the industry's return to a more common sense approach to profitability. An agent team that will be playing for the brokerage.

The past few months have provided readers with more than adequate notice that what is currently a very powerful trend is about to move into the classification of an industry reality.

Of course, the first event was the Zillow-Trulia transaction. The traditional industry sharply greeted this new reality with amazement on the first day and then dutifully agreed that it had no relevance to their lives on the second.

The second event was NRT's announcement regarding its "Operation Flanker" was of equal importance.

The third event was NAR's organizational realignment and the release and distribution of its 'manifesto.'

The fourth event was Berkshire's Hathaway's continued low profile relative to how its massive holdings and powerful culture would really impact the American real estate marketplace.

These events individually and collectively provide an opportunity for the reader to inquire what gives them a common feel and collective influence on the industry. Consider the following:

• The industry's consciousness regarding profitability and return on investment is aggressively refocusing itself. The centerpiece of this focus will be "the bottom line." With a record level of public ownership of brokerages and support entities currently in effect, profitability has quietly moved to the head of the priority line. With record numbers of traditional brokers reaching or passing retirement age, the opportunity to sell a "profitable" brokerage is increasingly becoming the issue.
• While some "amateur" visionaries are promoting new and inventive ways to generate profits, the fact is that lower commission splits and universal core services remain 'odds-on favorites' in the "feasible" classification.
• Few brokerages of substance have hit upon a formula or management format that can deliver any appreciable level of agent sensitivity or responsiveness regarding what is best for the overall brokerage moving forward.
• Agent teams and "off-MLS marketing" are but two examples of the fact that agents in general, and certainly high performance agents, are not focused on either long-term industry financial health or the need to work together.
• A strong argument can be made to support the proposition that, in light of these factors, the more knowledgeable industry players will be expending their energies and efforts in a manner that will drive business practices that generate and sustain profitability rather than consumer centricity or agent "happiness."

Zillow has spent the past several years following this path and currently has over 60,000 agents (paying at least $360 per month) designated as premier agents. There are now shadow Zillow teams within most brokerages.

NRT's recently announced Operation "Flanker" will be focused in the same direction. One would anticipate that within the next eighteen months significant numbers of "select" REALOGY agents would be working in this new format.

NAR's recent organizational reorientation and the August manifesto, carefully read, demonstrates a realization that these and other recent events strongly suggest that the industry is nearing a new phase that will see a substantial shift in the nature of its basic relationships, including those of organized real estate.

Finally, while there is nothing new about Keller Williams and its continuing triumph, the fact is that no small part of its success can be traced to the levels of organizational loyalty and systems compliance demonstrated by its agents, management and support personal. For KW agents, the profitability of their market centers is a critical part of their responsibility to the organization they have elected to support in the marketplace.

There is nothing new here, but the events of the past month have probably moved an optional attitude and/or behavior to a new industry expectation. As this new force and attitude takes effect, look for the following:

• Industry incentives will be about profitability, not data.
• Moving forward broker profitability and ROI will become the primary factors in making operational and marketing decisions.
• A key element of this new environment will be a whole new kind of agent team. It will not have its own CEO. It will have a high level of loyalty and compliance.
• The leading industry entities will begin to design, develop and implement standards sold as consumer centricity, but managed and implemented as profitability waymarks.
• This overall process will be known as "managed real estate."
• Agent accountability, aka "responsibility," will become a key factor throughout this scenario. A responsible agent is not by definition an "employed" agent.
• Transparency will be used to demonstrate the results to both Wall Street and the consumer.
• This process will require universal transaction management, consumer reporting, a whole new manager profile and a supportive consumer experience.

Dispute the observations, argue about the details, but move quickly to incorporate the principles of managed real estate. Learn how to design and implement a "managed real estate" brokerage.

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