Editor’s note: Inman News on Nov. 19 announced the launch of Roadmap to Recovery, an editorial project that is focused on the future direction of the industry (see Inman News story). This future-focused guest perspective suggests there is a need to rethink the real estate brokerage model and abandon old habits.
Quit what doesn’t work and start reinventing things that do.
Seth Godin covers this practice extensively in his book, "The Dip," and nowhere can it be more appropriately applied than to today’s brokerage model, which is running full steam on yesterday’s expense engine. Brokers are struggling to stay on top of their business, as the cost of maintaining failing operations add insult to the injury of the declining economy and stagnant housing market. Many brokers are in need of a new direction to help them through the remainder of this housing recession.
To do this, they need to let go of old habits, processes and the apron strings of traditional models that continue to cut into revenue and that no longer make sense. Here are the six things brokers need to let go of today:
People. Reducing headcount is the most difficult thing for us all to do but is also the most logical place to start. It’s heart-wrenching and personal and it never gets easy. Unfortunately, however, it needs to be done and the sooner the better. Begin with the folks and/or departments that are not performing. Trust that their lack of production is not only affecting the firm, it’s affecting others inside the firm that are producing. When you take this sort of action, the signals you send across all channels will, in fact, energize the entire organization. Next, remove those parts of the organization that are not necessary to your core business. If it isn’t core, you might very well be able to reduce its cost by outsourcing. This is particularly true of administration, internal support, information technology, accounting and other such groups. Become better organized and leverage technology and you won’t miss the "luxuries" of support staff to which you have grown accustomed. Start now.
Expensive Applications. Another by-product of the boom are clunky brokerage applications that can be easily swapped for freeware that works as well if not better than what your vendor custom-built for you years ago. From mail servers to comparative market analysis (CMA) tools and lead management, alternatives are now available that did not exist a year ago that are sleek, easily programmed and simple-to-use and can replace a host of aging functionality. Brokers, think of replacing your e-mail system with Google or Yahoo mail. Think of replacing your contact management system and calendaring with ones available for FREE. When you have a system that you get only 3 percent use out of, is this worth the cost?
Web sites. Is your Web site designed to be consumer friendly? Does it offer the tools and information that a CONSUMER requires? If not, throw away that old Web site and replace it with a new one that does. Your site should attract and engage customers while allowing you to capture business. Remember that your office on Main Street has been replaced with the one on the Web.
Advertising. I know some sellers still expect print ads to advertise their homes, as do agents. But how much longer can brokers continue to feed these fantasies? And so what if you’ve advertised on search engines for the last five years. Are these efforts returning value that pencils out at the end of the day? Too much of brokers’ money is being wasted on the wrong ad buys and destinations that no longer provide the best visibility and return on investment. And even more money is wasted on the ads themselves, replete with bad copy and missing the key triggers that will incite a quality call-to-action. Brokers, start tracking your Web ads. Measure every penny spent. Scrutinize the ad copy. And quit everything that no longer works.
Desk fees. Granted, this is how some brokers make money and yet even the term seems so antiquated as the need for a desk — let alone many of the things that come with it — are of no use to agents today. Analyze the tools you are supplying your agents and how often they are used (if at all), then compare that to what you could be offering them that applies to today’s business. You may find that many of your agents are already paying outside vendors for things you could be providing, such as Web sites, blogs and listing syndication, among tools and services. Study your own agents, find out what they need to operate efficiently, and match these needs to the most basic functionality they crave. You will find that in many cases you are overpaying for technology that is not even being used.
Physical space. Today, it is possible to run an entire company virtually. Agents don’t need office space. Accounting departments don’t need office space. IT people don’t need office space. In fact, brokers don’t necessarily even need in-house accounting or IT staff since all of these services and more can be outsourced. Between task-flow software, cloud computing, digital paper and e-signature, and working from home, most medium-sized companies can go completely virtual and most very large firms can scale down immensely. Seek out a $500 lease on office space for meetings, and relegate your agents to work from Starbucks and the host of public destinations where free Wi-Fi exists. Let’s face it: As walk-in traffic has waned, agents need to be as public and available as they can.
We are in an incredible time of transition in the real estate industry. Brokers are continuously rethinking costs, investments and processes, and considering options to cut costs and improve efficiency.
Ashfaq Munshi is the co-founder and CEO of Terabitz, a real estate technology company.
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