Waiting for the real estate fallout

Re: 'End of the independent contractor' (Feb. 6)

Dear Editor: 

You don't have to be a commercial real estate broker to understand that a retail shopping mall is not in the business of selling goods to the public; it is in the business of attracting and retaining quality retailers. They do so by signing "anchor" retailers and by marketing their mall brand. The higher-quality stores it can attract, the more shoppers it will attract. The more customers it attracts, the higher the likelihood that the mall will have a low vacancy rate and will be paid on time each month.

The mall then makes its money through the collection of rents and by retaining a percentage of sales (in a nutshell). Real estate brokerages are the same; they are not in the business of selling properties to or for the public but, rather, are in the business of hiring and retaining the most productive agents. Some try to do this through low fees, while others do this by creating an excellent brand. Aren't we agents basically "stores" in the mall?

Sears would not sign over its profits to the owners of the mall in exchange for a monthly stipend and a few additional bonuses for volume, but a mediocre teriyaki stand that is making it day-by-day might. In the same way, a broker offering a salary-plus-bonus plan would attract only those who don't have the know-how to be wildly successful. By nature they'd attract only those who aren't capable of making it on their own. If a broker opened up in my town right now and began offering a few thousand dollars per month salary, they'd have agents lined up around the block like a soup line during the Great Depression. The only agents who WOULDN'T be in the line are the successful ones!

Agents need to understand that they are solely responsible for their own success. This is not a job, it is a business. You don't work for your broker -- you partner with them. In fact, I am my broker's customer -- not an employee. The brokers make the space available and hopefully give you a solid brand on which to hang your hat. The rest is up to you.

If you want a salaried job, hop on CareerBuilder.com and start looking. If you want to own a business, go find me one where you can earn six figures with so little investment and overhead, and with such a quick startup time. Instead of worrying about salaries from brokers, focus on being the best agent in your market area. Offer the best property photos and marketing for exposure.

Practice your negotiating skills and get your clients high prices when you're listing, low prices when you're helping them buy. Follow up well, so that your past clients can't help but sing your praises and refer you. Be active in your community so others know who you are. Donate to charity because it's the right thing to do and watch the grace naturally flow over into your business. Be smart in how and where you spend money -- and save, save, save. We will come out of this dark time, but it will happen again. In other words: Take charge of yourself and your business.

I think we need to slow down all of the talk about how pay structure needs to change in dramatic ways. What really needs to happen is that we who are performers have to wait out the nonperformers. Once enough agents have been beat up long enough, they'll simply decide not to get relicensed, and those still standing will make that much more money on the upswing. Frankly, this natural cycle will create an unintended benefit to the general public: Only solid, knowledgeable agents will be standing at the end.

Walk in to any commission-based business and ask the sales staff if they'd rather be on commission or earn a salary. The top half will always say "commission," and the bottom half will always say "salary." In our industry, it would probably be more like 70 percent wanting the salary because, as we all know, a relative few make most of the money.

Of course, once the media begins touting that the industry is beginning to turn around and the sun is out once again, we'll go back to normal. Millions of uneducated people will see real estate as a quick, easy way to make a lot of money and will line back up to get a license.

Hey, I know -- let's make it more difficult and more expensive to obtain a first-year license and put more cost and training requirements on the first couple of renewals! What if we required an associate's degree before real estate classes could be taken? There's a reason everybody's not an attorney or a doctor. I run a real estate practice in much the same way those professionals might run theirs. Our requirements certainly don't need to be as sturdy as theirs, but do we really have to pass out a license to anybody with a breath?

Chad Clement
John L. Scott Real Estate
Puyallup, Wash.

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