The following is the introduction to Inman’s book titled “Leadership: How Real Estate Leaders Can Act Decisively to Change the Industry,” a compilation of articles and Q&As published throughout our first-ever Leadership Week. A limited edition of the book will be given to the nearly 200 attendees coming to Inman’s Disconnect in The Desert event on March 26-28 for the opportunity to discuss and debate the industry’s most critical issues and create a plan of action for change.
The real estate industry must rethink leadership from the ground up as deep rumblings of change begin to crack the surface, threatening to rupture tradition and leave an array of legacy companies in the dust. The top-down, exclusive pyramid model is no longer suited for a dynamic and evolving business.
In some ways, everyone is their own leader in an industry made up of two million independent contractor real estate agents who have the opportunity to drive their own destiny. This creates an innately flat structure at odds at times with old-school top-down brokerage cultures and organized real estate’s hierarchy that instead should reflect a diverse tapestry of ideas, backgrounds and strengths through a more collaborative, responsive and team-driven model.
“We are too busy being captains of our own destiny to really notice who is leading what and why,” commented Minnesota broker-owner Teresa Boardman.
In a deeper exploration of real estate leadership, Inman flipped the script by surveying 787 industry professionals over a 10-day period in February about what they’d like to see happen at the top, while inviting the industry’s movers and shakers to contribute their ideas through a series of articles, Q&As and social posts and inquiries.
What we learned through this aggregation of insights is that now more than ever we need new forms of leadership, a new generation of leaders and a new compact among them to bring the industry into a new age driven by transparency, authenticity and the courage to face competitors in fresh, creative ways. The appetite for change is strong — an informal Facebook Group poll asking Inman’s readers “what’s one thing you’d change about the industry?” incited nearly 120 comments calling for improved leadership, raising barriers to entry to an overcrowded field, and better benefit offerings from brokerages.
“There is hope for current leaders if they accept this atmosphere of high visibility and rapid change, and seek to inspire success and responsibility in an environment that will require both,” wrote Seattle managing broker Sam Debord in an article exploring how transparency will transform real estate industry leadership. ”Moves toward a philosophy of openness are being seen even in the industry’s most long-standing organizations.”
Technology that helps and hurts progress
According to Inman’s research, the biggest threat to traditional real estate is an ambush on multiple fronts from consumer-direct upstarts, on-demand apps and other data-driven tech disruptors.
Moreover, the industry’s attempt to leverage technology to its advantage has thus far been piecemeal and oftentimes off the mark. It’s true that real estate professionals are successfully integrating new technology with traditional sales strategies and are calling on leaders to more quickly embrace cutting-edge digital platforms, apps and lead generation tools to stay competitive.
But many agents reported lackluster products and long-term contracts, not to mention a flash-in-the-pan lifecycle for some tools that fall out of favor at lightning speeds.
“Adopting poor technology and then being tied into a long-term contract compounding the poor decision,” a Tahoe City, California, Realtor wrote, balking at questionable tech purchases.
Diversity in hiring and leadership
The research offered cause for hope, namely the positive sentiment expressed by real estate professionals about their leaders’ commitment to diversity. Fifty-five percent of respondents reported that leadership at their company was “very committed to diversity,” and another 31 percent said it was “somewhat committed to diversity” in the workplace. Only 3.7 percent claimed executives weren’t committed at all.
Still, 40 percent of those polled said that even the most committed leaders could do more in terms of hiring. In a female-dominated industry run by mostly men at the top, there’s no doubt that more balanced gender representation is needed.
Between 2011 and 2015, the most recent year in which comprehensive industry-wide numbers are available, executive leadership positions among women remained unchanged at 26 percent nationwide, according to Real Trends, the Colorado-based real estate consulting firm.
“We actually see real estate firms doing slightly better than, say, hedge funds in getting more women through the door and working in those companies,” said Amy Bensted, head of hedge fund products at Preqin, who co-authored a 2017 report on women in alternative assets. “We see higher levels of C-level representation. But the real picture is that females are still grossly underrepresented.”
Furthermore, with the dawn of the #MeToo movement and raised awareness of sexual harassment in the workplace, Inman found that allegations of sexual harassment and misconduct by senior leadership do exist across the industry in brokerages large and small, but they are relatively rare, standing in contrast to otherwise mostly positive depictions of real estate leadership nationwide.
A new type of leader
The challenges may sometimes seem daunting: a wave of warp speed tech shifts, a vexing housing affordability problem, new dynamics in the workplace and social and political unrest around us.
Trulia co-founder Pete Flint recently warned the industry of the unstoppable “tsunami of disruption” that will kill the majority of traditional real estate companies within the next 10 years. Berkshire Hathaway HomeServices agent Jake Breen fears the day when “one big conglomerate” — whether it be Zillow and Amazon, or Zillow and Google — announce a consumer-direct model and “it’s game over: no more real estate industry” as we know it.
These are problems that leaders can confront if they act decisively and join together. Take the issue of open data — rather than forming a united front, the industry is fragmented with a gaggle of groups and companies taking a different position.
But real estate can no longer sit idly by, squabbling on the fringe and divided in factions trying to trip each other up. It must insist on diversity in leadership positions. It must stand up to challenges like affordable housing and natural disasters and climate change, and it must join hands to embrace open data and not discourage disruptors. It should charge hard for higher agent standards and a stronger code of ethics. It should work to meet new consumer expectations of speed, convenience and certainty.
“The current generation of leaders must be willing and able to ask hard questions and make tough decisions that won’t make him or her popular, but will result in saving the real estate industry as we know it,” writes industry consultant Robert Hahn in his thought piece, “Leadership in real estate: Courage is what we need.”
Examples of leadership excellence
Some leaders in the brokerage, technology and mortgage spaces are already forging a new path in the right direction.
Top NYC brokerage leader Elizabeth Ann Stribling-Kivlan knows all 330 real estate agents who work for her and requires each one of them to go through diversity training to create a company culture of inclusion. Formal rabble-rouser turned real estate industry ally Glenn Kelman said what keeps him up at night is concern over the needs of Redfin’s homebuyer and seller customers, and whether they are being met first.
As CEO of fast-growing brokerage Compass, Robert Reffkin openly shares his failures with his company so they can learn from mistakes faster. Concierge Auctions founder Laura Brady drives her team toward a higher purpose — for every home her company sells, it funds a home for a family in need.
Commissions, Inc. founder Duane LeGate sold his company and shared much of the gains with every employee, even though he was not obligated to. He rewarded the flat org.
Three members of the Austin Association of Realtors sued the trade group to overthrow the old guard who allegedly were not acting in the best interest of its members. They demanded transparency and power to the members.
Jillayne Schlicke publicly called out a mortgage executive who opened a presentation with a homophobic joke. She understands the first step towards diversity is by wiping out bigotry and prejudice.
Keller Williams’ John Davis and Gary Keller canceled their convention to make way for the attendees to do volunteer service in the Houston natural disaster zone. The power of the network was more important than the fat cats showing off their ideas and predictions.
According to our research, these leaders reflect something that the industry would like to see more of — whether it be transparency, a higher commitment to social good or a strong company culture.
‘We owe it to our agents to be relevant’
Our readers do not necessarily expect their leaders to be crusaders but want advocates for the issues they believe will most impact the real estate industry — affordable housing, health care, tax reform, government regulations and agent safety. Lean into social causes, including disaster relief — but keep your political views to yourself, they warn. Most of all they want to be invited to the conversation, for leaders to break out of their ivory towers and listen.
Because preaching support of agents is an empty promise unless you build a business around their success. Espousing innovation but unfairly blocking disrupters is hypocrisy. Defending associations but failing to hold them accountable is politics at their worst.
Indeed, the real estate industry is a powerful force made up of many brilliant minds, bold voices and a tenacious, scrappy rank-and-file. Can it face its blind spots and adapt, or will it accept a fate like Blockbuster, bricks-and-mortar retail and the music industry in the years to come?
In the words of Century 21 CEO Nick Bailey: “To be competitive, we owe it to our agents to be relevant today and tomorrow.”
The choice is yours, and the time is now.