Consumers follow agents, not brands
Roadmap to Recovery: Essay
By Inman News, Tuesday, February 3, 2009.
Editor's note: Inman News readers have embarked on a Roadmap to Recovery editorial project to find the best path forward for the real estate industry. Click here for more details. The following is a contribution by Michael Volkin, president of Area Pro Realty.
There is no doubt about it: As real estate professionals we are experiencing a perfect storm. A collision of a credit crisis, falling housing prices, financial bailouts, and a housing market with no foundational support. America is literally reinventing itself. Unfortunately, given the magnitude of these events and the policies that must be instituted to reshape them, we are reinventing ourselves reactively rather than proactively. Future generations will reference the events that have shaped the real estate community during these recent years as the worst in decades. As a result, the business model that is still adopted by today's real estate brokerage will have to be reinvented as well.
The old real estate brokerage model is still dominant in today's society:
- Open an office;
- Design a company brand (logo, slogan, etc.);
- Hire as many agents as possible;
- Have those agents close as many transactions as possible;
- Take a percentage of the commissions;
- Reinvest a portion of profits into promoting the company brand.
A 2007 NAR Technology Survey named referrals, repeat business and the Internet as the top three lead generators. Among the least important were open houses and floor time -- two pillars of the "old way." Traditional brokerages are laboring under increasing expenses that include keeping up with technological advances, maintaining an office, and brand-recognition advertising.
In spite of brokers' attempts to keep up with technology, well over half of the agents and associate brokers responding to the NAR Survey indicated they wanted their broker to expand the amount of technology offered. And for all of the dollars spent on promoting a brokerage brand, it is usually individual agents who are sought out -- not the broker's brand.
I invite all brokers across the country to break free from this common business model and reinvent yourselves. Brokers need to address the following items to update their business model:
- Recognize that clients follow agents, not brands;
- Become an Internet presence;
- Embrace technology;
- A virtual office is not a benefit, it's a requirement;
- Understand the following logic: The more benefits and training you give agents, the more professional they become, the better their image is to the general public.
The brokerage model of the future must dispose of the mentality that a broker is only there to take commissions. The real estate agent of today needs to feel value for the commission taken from a hard-earned check. Brokers should exist to harbor and foster the development of a real estate agent. The image of the real estate agent needs to improve in the eyes of the general public, and that starts with the broker.
Given these needed advancements, it is my opinion that many of the independent brokers will conglomerate to franchisers who have the capital and technology in place to foster the development of today's agents. Brokers will enjoy the same or greater profit margins and be able to provide much more support and technology at a fraction of the cost if they pursue these benefits independently.
Michael Volkin is president of Area Pro Realty, a real estate franchise company.
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Submitted by Bill Fooks on February 3, 2009 - 4:16am.
Bill Fooks
TFT realty Marketing Service
Warwick, RI http://www.fooksteam.com
You are correct. As the agent goes so do the people they have dealt with. Past customers and clients seem to be the way to grow. There is another factor, when your large or productive agent grows a past data base that is so large that they can't service it properly. We have experienced this. We formed a team to help serve these past clients and customers with top notch service, and hooked up with a larger brand to add credibilty to the consumer who is looking for this. It has served us both well. As a team a new person is monitored closely, as well as mentored to provide the same quality service.
Submitted by Marilyn Wilson on February 3, 2009 - 4:31am.
While I agree with the premise that consumers generally follow agents, not brands, I do think that brokers need to think about why that is. What is the true value being derived from your brand? Personal relationships are absolutely key in this business, but I do think the real estate brand could play a larger role. We need to think about brands more fundamentally than we do today. A brand is a lot more than a logo and a beautiful website. It needs to stand for something. It needs to help a consumer understand the type of experience they can expect when they work with the company and the agents who work for it. When you think about strong brands like Trader Joes, Mercedes, Fisher-Price and others, they evoke an image or feeling. They deliver a consistent experience and approach from the products and servicdes they offer to the employee that works for them. The "products" produced satisfy an expectation that has been set first by a clear communication of what the brand stands for. We need to start thinking about what differentiates our real estate brand from our competition. Next we need to have the guts to train each of our agents to follow the path/message outlined every time they touch the consumer whether it be when they answer a website inquiry, answer a yard sign call, touring properties or closing the sale. If we want our brands to be valuable then we need to start acting like a brand and not a collection of individuals working under a broker's license.
Submitted by John Sabia on February 3, 2009 - 4:40am.
Not only to brokers need to embrace technology and internet marketing, so do our local board of Realtors. Hopefully, my local board (Fort Lauderdale) reads this article and realizes that limiting saved searches to 125 is ridiculous and restrictive to agents who utilize technology for internet marketing.
Fort Lauderdale Real Estate website
Submitted by Robert A. Hulme on February 3, 2009 - 5:04am.
I have always been of the opinion that clients follow agents not the brand, but having a good brand certainly helps. With today's technology driven environment a good brand helps the first impression that a online client sees. When I started my a massive SEO campaign this past year my first move was to Prudential, mainly for the national recognition I would receive. Today I am experiencing a boat load of website generated leads that I can partially contribute to the name of the Brokerage that I am working with.
Robert A. Hulme
Realtor, GRI, e-PRO
Prudential Utah Real Estate
Loan Officer
Mortgage Xpress
www.UtahCountyRealEstate.us
www.UtahRealtor.ws
801-885-2586
Submitted by Gregory Bain on February 3, 2009 - 5:21am.
Show where this data comes from about consumers follow the agent. I really want to see how you come to this conclusion. It is my opinion that this whole sales approach is just a way to get agents to spend their money advertising inventory that belongs to the broker. Save your money and work for a company that spends their money on advertising not yours.
Gregory Bain, ABR, SRES
Realtor Associate
NJHomes@Ask4Greg.com
Submitted by Derek Eisenberg on February 3, 2009 - 6:26am.
Consumers follow BOTH agents and brands. Some buyers and sellers will hunt down the agent and others will just call the office the agent used to work at and not care who helps them. Be leery of absolute statements. There are no absolutes in the marketplace. There is a little bit of everything.
Derek Eisenberg
http://www.mls2u.com
Submitted by Kathi Frank on February 3, 2009 - 6:40am.
I agree with Derek and others who say that consumers follow both agents and brands. Until December 2008, I was with a well recognized brand who spends the most money creating an image in the minds of consumers. I do not regret being part of that company for 4 1/2 years.
However, I switched to Prudential Gary Greene because they seem to have a better idea of how to support agents that embrace the future of real estate through technology.
When a broker's focus is on creating a brand in the minds of consumers and monetizing vendor offerings by offering them to the agents - it is a valid business model.
When a broker's focus is on finding ways to enable their agents to stay on the cutting edge of future business - it is the business model that works for me.
Kathi Frank - www.KathiFrank.com
Prudential Gary Greene Realtors
9000 Forest Crossing, The Woodlands, Tx
(936) 441-1314 home office & cell
email: Kathi@KathiFrank.com
Join us online for the Radio Show
www.TheWoodlandsTalk.com
Submitted by Catherine Read on February 3, 2009 - 6:44am.
I agree with Derek that making absolute statements like this is not wise. For agents who do a good job in maintaining relationships with past clients and marketing to their sphere of influence, this might be true. But what percentage are those agents out of the million plus that have a license? Consumers are brand driven in nearly every other choice they make, and brokers spend a great deal of money and resources in making certain they are giving their brand visibility on their agents behalf.
Catherine S. Read
Creative Read, Inc.
Submitted by Kevin Schmidtchen on February 3, 2009 - 6:48am.
Good article but like many things in life...this is not an absolute. Consumers will predominantly follow the agent but also want/hope/respect that their agent is connected to a good firm or brand. Many local agents go with the biggest local company because it feels right. For many people this is fine and this is what I did when I got into the business 8 years ago. As times changed and I realized that Santa Barbara and Montecito CA were a brand amongst themselves, out of town buyers felt more comfortable with a well recognized brand.
Correct, the best way to get leads are referrals...but there are still many people searching on their own and that are new to town. This is where a recognizable brand comes in.
Kevin Schmidtchen
Sotheby's Int'l Realty
Santa Barbara, Montecito CA
www.SantaBarbaraRealEstateVoice.com
Submitted by Bob Connors on February 3, 2009 - 7:23am.
Interesting article. I used to work for one of the big brokerages but am much happier since leaving to form my own brokerage almost 3 years ago.
It's likely that the truth of the brand vs. agent argument lays somewhere in the middle.
Bob Connors
Broker
www.realasave.com
Submitted by Anna Schau on February 3, 2009 - 9:57am.
Having a powerful brand behind you is helpful but how many agents can say that more than 25% of their business comes from leads generated by their company's brand. To build a profitable business, I would argue that you should be focusing on the source of the other 75%.
Submitted by Gregory Bain on February 3, 2009 - 11:40am.
It is really a scam. The Board requires you to identify yourself with the agency. The agency name is to be bigger than your name. So, agents spent a great deal of their income on advertising listings that belong to the agency. Or, they "farm" an area with the brokers name and logo bigger than that of their own name. Those agents who think the public will follow them, just need to leave the current office were they provided superior service and see how many customers follow them. Not many. The brokers provide agents with nothing - if you ask about leads, they will be quick to tell you to "work" your sphere. Those so called "top producers" are paying out not only advertising dollars but, most pay for an assistant. The broker's secretary is the broker's secretary. It's a scam. Every agent needs to start itemizing their expenses to see just how much they really make on a sale. Broker split is only a small part of the equation. Go work for a broker that provides the leads and save your money.
Gregory Bain, ABR, SRES
Realtor Associate
NJHomes@Ask4Greg.com
Submitted by Michael Brown on February 3, 2009 - 11:58am.
Brands are highly overrated. The agent with the website that ranks highest on the internet and who answers his e-mail and phone calls in a timely manner could work for a company named "Dirt Realty" and outperform the majority of agents working for the national brands. Branding has nothing to do with search engine placement and according to Realtor dot org more than 80% of home buyers start their search on the internet.
Submitted by Ally May on February 3, 2009 - 12:14pm.
Consumers of any product look for name recogition, so real estate consumers certainly look for that recognition in both the agents and brokers.
Broker's that will focus on helping their agents stay on the cutting edge of future business through training in technolgy and business development, and that help the indiviual agent keep more of their own commission, will be the business model that works for me.
Submitted by Michael Volkin on February 3, 2009 - 1:11pm.
Thanks for commenting on my article everyone, if you like that article you will love this short video:
http://www.areaprorealty.com/franchise
Submitted by Mark Brian on February 3, 2009 - 1:35pm.
It is the property & the price not the sign in the yard that sells homes.
Mark Brian
VIEW SOUTH CAROLINA REAL ESTATE
Submitted by Jon Querolo on February 3, 2009 - 1:54pm.
Mark Brian gets it! The consumer does not work with an Inc. or a Company or an LLC - those are legal entities that float somewhere in the sky above. Every company large and small is a reflection of the agents who work hard (or don't)day after day providing great service to their customers and clients. In my twenty-five years I never cared whose sign was in the yard...if the house is the right house you sell it and satisfy your client. I have yet to have a buyer or seller tell me after settlement, 'Your corporation did a great job'. YOU, the agent, did the job so take the credit.
Submitted by Jerzy (George) Szkup on February 3, 2009 - 3:50pm.
George Szkup
www.DestinationTucson.biz
Interesting discussion - we know that personal contacts, named referrals and repeat business result in transactions (sometime). Brands have their place, particularly in initiating contact with out-of-town buyers.
This broker has not seen any credible research on the subject of brands. Same goes for internet - current believe is that if you are not on the web - you are only "half agent".
This broker does not know of any verifiable research (not the one from media advertising) - verifiable! that compares cost of internet advertising, time spent on bloging and actual "return on investment".
George Szkup Designated Broker
Tucson Home Advisor LLC
Submitted by Debra Sinick on February 3, 2009 - 5:23pm.
Debra Sinick, GRI,CRS
Windermere Real Estate/East,Inc.
Kirkland, WA
425-260-3219
www.eastsiderealestatebuzz.com
www.debrasinick.com
Great article and discussion. I live and work in the Pacific Northwest in the eastern suburbs of Seattle. Ironically, in this area, the two largest brokerages happen to be locally owned, JL Scott and Windermere. I work for Windermere. In this area I believe the brand makes a huge difference. Marilyn Wilson mentioned Mercedes and Trader Joes as having strong brand recognition. Windermere has a strong, solid image as a caring company that gives back to the community. For me, it's an asset to work for the company. I also believe in a commitment to the community so the company image fits with my values. The company has given me a great foundation to work from.
That being said, it's still up to me to be the best at working for my clients. My business stands on my reputation and expertise, not just on the name on a sign. The buck stops with me. I ultimately have to deliver a stellar experience to my clients, no company can do that, it's the individual agent. I have to be the one to pursue the latest in technology and marketing and bring more to the table.
What drew my eye in the piece above was what Michael Volkin said about the industry and brokerage changes that needed to happen. Regardless of the image of a company in the community, these changes need to happen throughout the industry. Here's what he said:
"Brokers need to address the following items to update their business model:
* Recognize that clients follow agents, not brands;
* Become an Internet presence;
* Embrace technology;
* A virtual office is not a benefit, it's a requirement;
* Understand the following logic: The more benefits and training you give agents, the more professional they become, the better their image is to the general public."
Amen!
Submitted by Katherine Nickerson on February 3, 2009 - 7:06pm.
Hey there, I work with Michael Volkin and I can tell you that he practices what he preaches. Michael paid his dues in the field as a realtor and he knows what he was looking for----great support and more money in his pocket. The structure for Area Pro does just that. Works for me! No wonder top agents are attracted to such a practical model. He provides the technological and marketing tools I need so I can sell, sell, sell. I don't have to try to be a graphic artist or a website guru. Never liked that part anyway. Love this market. Love this job! and happy with Area Pro.
Submitted by Kevin Lisota on February 6, 2009 - 3:37pm.
Consumers follow agents not brands in today's market because brokers have done a terrible job at building brands. A brokerage brand adds little value if it is simply a logo and a large quantity of licensed agents. A brand needs to be built on consistent service and quality levels, which seem to be virtually non-existent in the real estate industry. Consumers ARE drawn to brands in countless industries, and real estate would be no different if brokers would give meaning to their brand.
Real estate brokers need to figure out how to ensure constant quality and consistent service from their legions of agents. I believe that the brokerages who are successful at establishing a meaningful brand will eventually overtake the brokerages who are simply groups of un-related indepdent contractors.
Submitted by Marcia Canady on February 8, 2009 - 3:08pm.
I agree with Michael. Do brokers really help an Agent secure more listings and sell more homes by spending millions on their "brand". I don't think so.
Brokers should concentrate on developing the skills of their Agents, especially in technology. The Internet has changed the way buyers search/buy properties...so why wouldn't Brokers focus on helping their Agents expose properties to potential buyers Online?
I think while Brokers are figuring this out, Agents need to take charge of their own "brand" and learn how to use the new Internet marketing tools to sell more properties.
We at 2media are real estate and online marketing experts...so we created a comprehensive online marketing program to educate Agents and help them sell properties.
We recently launched www.LuxuryRealEstate4Charity.com in Southern California to give Agents with listings over $1million all of the Internet and Social Media skills needed to reach the Affluent Buyer.
When a buyer purchases directly from the Listing Agent, the Agent will donate 1% of the property sales price to Habitat for Humanity. This provides a "story" about properties...which allows 2media to use PR & Marketing to attract the Affluent Buyer.
Agent creates a profile and posts VIDEOS of their properties on the site.
This gives the Agent a chance to not only explain the unique features of every home, but demonstrate their expertise in a particular area. When has an Agent ever been able to market themselves, online, via video? Never.
73% of buyers say that they would be more willing to list with an agent who offered to shoot a video. What are agents waiting for...they need to embrace the new technologies available to win more listings.
When an Agent signs up for our site, they pay a low monthly fee that includes their Agent Profile, Unlimited Property Video Uploads, all of Social Media Sharing Tools, and starting in March, the option to participate in weekly Coaching Calls with Internet Marketing Experts and Rich German (recognized as one of the most accomplished and popular Real Estate coaches in North America
Agents will learn how to use social media to secure more listings and sell more properties. That's the goal right?
To top it off, the Agent/Agent's properties are included in the 2media's marketing.
An example of our Orange County Business Journal Ad is below (3rd page). Agents have reported many calls from prospective buyers because the program attracts the Affluent Buyer due to the fact that these Agents are giving back to the community.
http://www.cbjonline.com/Issues/RE_Gallery_90209.pdf
This ad is designed to drive buyers DIRECTLY to the Agent so that they can donate 1% of the property sales price to Habitat for Humanity.
This marketing program 1. helps Agents build their OWN Brand 2. secure listings by offering the seller a video Online, exposing the property to the largest group of Affluent Buyers and 3. sell more properties by attracting the Affluent Buyer.
Plus, Habitat for Humanity is able to provide affordable housing to hard working families...Everybody Wins!
Brokers should be encouraging their Agents to sign up for programs such as ours to develop their marketing/selling skills.
It's a new world of real estate...and Brokers/Agents need to be proactive.
We hope we can help. :)
Marcia Canady
President & COO
2media.us
www.LuxuryRealEstat4Charity.com
marcia@2media.us
Tel: 949.544.1740