OpinionAgent

6 true confessions of an industry veteran: Part 1

What I've learned in my 36 years in real estate

Takeaways:

  • To me, standards are not optional in any business, and they are especially critical in a business that deals with the single largest investment a person will likely make in their lifetime — the sale or purchase of a home.
  • The industry reportedly pays billions of dollars each year for ineffective print ads that exist and serve to appease the seller — as we curse the media portals.
  • It has been my experience that we have enough issues running our brokerage businesses — let alone taking on building and owning everything we think we need to control our businesses.

With the mere mention of the word veteran, so many different things come to mind. So I decided to go to the source for the proper definition.

Webster defines a veteran as “a person of long experience usually in some occupation or skill.” The same dictionary further defines veteran as “an old soldier of long service.”

Interesting.

This business and everything related to it requires a “soldier mentality” to survive and thrive. It’s a business where it’s all about the survival of the fittest, the quickest, the cleverest and the most innovative.

By far the greatest challenge for the participants in this industry is in maneuvering through a complex and incredibly fragmented business.

Over these many years, I have had the great pleasure of working in nearly every aspect of this business.

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Suffice it to say that I have either worked, owned, consulted or served in the relocation, franchising, brokerage services, online media, portal, technology services, real estate sales, investment, distressed, broker networking, print media, new homes, land development and big data businesses.

I have to admit that this is a tough business for anyone to understand truly — let alone master.

I decided to sit down and write this article to provide some insight for the industry to consider.

These are true confessions I have made that caused me to pause and caused me to rethink and regroup — things that I did not fully understand at the time.

So here goes a deep dive into my confessions about some of the most controversial topics in our business:

1. Performance standards

Someone once joked that if it is difficult to find others with your high standards, just lower your standards and there will soon be lots of people around you.

So goes the plight of the consumer as it relates to identifying and understanding the standards in the real estate brokerage business.

To me, standards are not optional in any business, and they are especially critical in a business that deals with the single largest investment a person will likely make in their lifetime — the sale or purchase of a home.

Standards in real estate brokerage should be everything, yet I must confess: I just don’t see any. The National Association of Realtors (NAR) is referred to as a professional association.

Currently based on its lack of adherence to high standards of performance, it is, to me, simply an association. The notion of basically signing up anyone with a real estate license, slapping on a code of ethics and taking dues is — in my opinion — not setting a standard.

I’m speaking of standards that signal what a person has done — closed sales and listings — not what they have been certified to do. There is a difference — a big one.

If American Airlines operated like NAR, any licensed pilot could be hired to fly its jet aircraft. If that were the case, there would certainly be a lot more airline crashes.

Very quickly, the smart passengers would demand higher standards for pilots. Further, the FAA rides with the pilots to assure that they meet the standards set by the FAA.

In real estate, the impact of working with inexperienced agents in most transactions is called a lawsuit.

Standards extend into the brokerage environment as well. I must confess that the odds of NAR coming to its senses are little to none.

I have been waiting for 36 years now. So I believe that the brokers are the real keepers of any performance standards. Brokers need to rethink and monitor the quality and proven performance of their agent populations.

In my past days in real estate sales, Coldwell Banker Commercial had a policy that every new agent was required to serve two years as a “runner” before being able to face a consumer and transact an actual deal.

In residential real estate, just get a license, join the various associations and the MLS — and you’re in.

Really?

The single biggest challenge I see facing this industry is establishing proven performance standards. And specifically, getting the sometimes and the part-time agents out of the reach of the consumer.

These agents are dragging the image and reputation of this industry into the dirt.

2. Media portals

There has never been more noise in this industry than there has been surrounding the real estate media portals.

The industry reportedly pays billions of dollars each year for ineffective print ads that exist and serve to appease the seller. Then we turn around and curse the media portals for their supposed control of the consumer.

Really?

The portals agreed to advertise listings for free when they were created, and, yes, they remain free to this day.

If you think that is in any way a small contribution to marketing residential, then go down and talk to your local newspaper or real estate magazine about placing a few free listing ads.

If this industry had not been able to point to the portals for exposure to hundreds of millions of potential buyers, the only option would have been for every listing broker and agent to personally fund millions of expensive and ineffective print ads.

best pixels / Shutterstock.com

best pixels / Shutterstock.com

Ouch.

Then there was this small matter of the economic downturn. In a down market, where the shelf life of a listing was greater than the half-life of uranium, free advertising was the only credible type of media.

We need to get over the transition from offline to online advertising. It has been painful only for our industry. The consumer is OK with all of it.

Will someone please focus on listing and selling more properties — using the portals as they were intended — to advertise local listings to massive numbers of potential buyers worldwide?

The bottom line here? The portals have saved this industry billions of dollars in advertising costs over the past 10 years. It is only the brokers and agents who now need to embrace the media portals and once and for all get over using expensive, ineffective print media.

3. Own everything to control everything

So what’s with the notion that we must build and own everything to control it?

It has been my experience that we have enough issues running our brokerage businesses — let alone taking on building and owning everything we think we need to control our businesses.

It seems that when we want to revolt or change something, we organize the effort with a host of industry participants and then struggle with who is going to pay the bill to build and operate it.

In my opinion, this is a misconception that has consistently plagued our industry.

Let’s again compare our industry to that of the airlines.

I can’t think of any major airline that builds its own aircraft, despite total dependence on having them. American Airlines sees the value in capitalizing on the expertise of Boeing, not begrudging them for sharing that knowledge with Delta Airlines.

And the airlines haven’t banned together to build their own airplanes. They use their energy to create competitive advantages by defining and always refining their unique consumer experience.

There are plenty of capable service providers that would be willing to build and operate anything we could imagine with the support of the brokers. And those same providers would do so with the strictest and most defined rules any broker could imagine.

This is something that we need to think long and hard about.

As an industry, I must confess that we need to get over the historical trend of “loving to hate something” and the false perception that we need to own everything.

Stay tuned next week for “6 true confessions of an industry veteran: Part 2.”

Kenneth Jenny is an expert in the residential real estate brokerage industry and real estate marketing.

Email Kenneth Jenny.