Real estate professionals too often tell people what they want to hear. I’m not sure why. Possibly they are afraid they won’t get a piece of business, or they just don’t want to face a possible conflict with the client or the other agent. But in any case, postponing conflict, or trying to avoid it, does not resolve it. And without resolution conflict just waits and grows until it is a larger monster than it needs to be.

When an agent sits before a seller who wants to ask too much for their property, or has an unreasonable expectation about what the process will be like, they have a responsibility to tell them the truth. To share with them the information that we have, and our knowledge of the process. And if they cannot grasp the necessities of the market, then perhaps we need to walk away from that piece of business, so that we do not do a disservice to them and ourselves by taking a listing that we cannot sell.

It seems so easy to say, and yet every day real estate salespeople take listings with the thought that maybe it will sell, or perhaps they will come to reason after they have been on the market for while – but in those cases, that conversation often takes place int he agent’s mind rather than with the client – because the conversation might be too hard to have.

But by not having the conversation, the seller’s expectation is that you’re going to sell the property for the higher price, or that the process will be somehow different from what the reality of your market is. Then the lack of an offer, or your failure to call them once a week, or the fact that more co-op agents show the property than people from your office creates a lack of faith in you, and a distrust of you that eventually will sour what should have been a good relationship.

So here is your permission to tell the truth to all of your buyers and sellers.

• Let the buyer know that, though the market is burdened with inventory, they still need to be within the parameters of your local market – that they may be great negotiators, but some people negotiate so well that they never buy a house.
• Tell your sellers if their price is too high. Perhaps they are not motivated to sell. Perhaps they just want you to “test the waters”. I give you permission to explain to them that this process is like ordering a complex and expensive dish in the finest restaurant, and then when it comes to your table, saying “Just Kidding,  I really didn’t want eat, I just wanted to watch you do the work, and see the results of your work before I went home to do something else”.
• If you enter the waters of a short sale, remember that the value of the property is the value – not the debt . Be realistic in setting your seller’s expectations, and help buyer’s agents set their expectations properly as well.
• Its OK to tell buyers and sellers both that the job is not just winning the negotiation, its buying or selling the house. Too often, people are so involved in negotiation, that they lose sight of the ir goal and hurt themselves rather than helping themselves. Some people negotiate so well that they never buy a house.

Agents also have a need to face the truth throughout the transaction, and be as open as possible about what’s happening.  When things start to go bad, or a problem occurs, too often agent tries to “work it out” without bringing the problem to the attention of their manager,broker or co-op agent. Perhaps it’s because they made a mistake, or they don’t want to be seen as weak, or they just don’t want to admit to themselves that a transaction is falling apart. It really doesn’t matter – they’re all bad reasons, because they truth of these matter always comes out at some point, and hiding it or ignoring it only makes it worse.

The problem is always closer to resolution when it is recognized and brought out into the open, and all of us can use a little help. The agent may be too close to the transaction – personalities might be influencing problem analysis, pride might be getting in the way – or any of a thousand other possible reasons might come into play. The broker or manager (who is may also be more experienced)  should be able to be more detached and analytic,allowing them to offer some solutions or perhaps some insight into how to fix the problem.  Maybe, like Alexander the Great who cut the Gordian Knot, they might just see an easy solution to a difficult problem like terminating the agreement or firing the client. Or maybe they are just a sounding board for working out a solution to the problem.

Whatever the situation, whether a tough client or customer, or a problem in a transaction, approaching your problems in the most open way possible allows people to see you as a facilitator and a problem solver. One who recognizes issues and meets them head on with courage, ingenuity, and integrity. And by doing so enhances your professional efforts. I have often turned down a listing from a seller whose price position was unattainable, only to be the second or sometimes third listing agent on that property  - and most importantly, being the listing agent who got the property sold. Of course you could choose the be the listing agent that “rolls the dice” to see if the market will accept the higher price or the unreasonable terms.  Which listing agent would you rather be?

I’m not sure when we lost our respect for the plain old signature. It might have started when we first began faxing documents to other agents, rather than putting together packages of contracts, financial data, and a deposit check to be hand delivered to the listing broker. Maybe it started during the heated market of the last decade, when the urgency of delivering agreements led to scanned and emailed documents sent to the listing broker with a note that you would bring the deposit over later when the agreement had been accepted. Maybe it was the general use and acceptance of electronic forms, that degraded the urgency of getting things in writing, with original signatures, and actual deposits- (Would you believe that I once received an agreement of sale with photocopies of the “cash deposit”? Not only a Federal crime, but a real non-event- What did that mean to the seller?)

Don’t take my post so far as an argument against electronic signatures – I think they are wonderful, and useful, and as valid as the written signature, but a real signature of the principals involved in a transaction should be key to any action taken in a sale.

Too often, in talking to agents about the problems that face around them around the country, I hear tales of documents faxed to the cooperating broker, which was never returned as signed, though the agent who faxed it thought that they had some agreement. Contracts, modifications to contracts, even termination and release documents all need to be in writing, and executed by both parties for the contract or its modifications to have any legal standing.

If you have sent something to another agent, you must be remorseless in your efforts to obtain the executed form back, or you must relate to your client that you just don’t have any agreement on the change they proposed. You cannot assume that silence on the part of the other party means that they agree to the change you requested.

It is more than just being a stickler for form. You have a legal obligation to your client to assure that all agreements between them and the other party are in writing- and that means more than typing and sending a request. You have an obligation under the Code of Ethics if you are a REALTOR to assure that same thing, and on a practical basis, you will avoid potential conflicts with the coop broker, potential litigation with they other principal, and potential complaints from your client. So do a favor for me, your client, and yourself – get it in writing – and make sure its signed !

Ok, rant over, go back to work now….

If you are out to describe the truth, leave elegance to the tailor- Albert Einstein

I love talking with Rob Hahn, even when we disagree. But having an online conversation with him can be frustrating. Rob is an artist with words – but in many works of art,  reality is sacrificed for the sake of beauty. His last response in our ongoing conversation about the future of NAR is an example. Rob talks about a disagreement we had online about a post he wrote, saying;

“ During that debate, I suggested that Bill was simply defending the status quo to the hilt since his first post was nothing but a robust defense of all things NAR. Since he said that he has many ideas for change at NAR, that he wasn’t happy with everything at NAR, I asked him to lay out some reforms he’d like to see.”

In fact, Rob accused me of being a defender of the status quo when I pointed out that his basic premise ignored the actual structure of NAR. My response to him was that I was not defending the status quo, I was merely explaining the nature of the organization, and that I was in fact, an advocate of change. Rob then challenged me to come up with a vision of a better NAR. I told him I would. My first postwas to layout the actual parameters within which we work, by explaining the structure of NAR and what actually happens there. I didn’t realize that making statements of fact amounted to a “robust defense of all things NAR”. However, Rob has wandered far from his initial post in making his response. According to Rob’s initial post, NAR needed to do three things:

First, rediscover your souls. Rediscover your very heritage, dating from that day in 1908: “effectively exerting a combined influence upon matters affecting real estate interests.” Second, having rediscovered your core mission, start purging. Third, this does mean that dues have to go up and that programs have to be transferred. 

The first statement is patronizing and ill-informed. I have known and worked with a number of NAR Presidents, volunteer leaders from across the country, and many members of local, state and national staff. They are, as a group, dedicated to making the real estate industry better. I can tell you that overwhelmingly, from personal experience  they are dedicated individuals, who have made a huge commitment of their time and energy  to “effectively exerting a combined influence upon matters affecting real estate interests” for many years. Without them and people like them, we would not have a real estate industry that is a magnet for real estate professionals from all over the world, who come to our annual meetings to observe our industry. The second statement sounds like it comes from the Josef Stalin School of Association Membership – really? Fire members because they don’t understand what the association does for them? Why not create an environment for them where they are motivated to educate themselves about the organization and the industry. Not to mention the fact that this contradicts his first stated goal of “rediscovering our soul”. The pre 1908 real estate industry had local Boards of real estate professionals scattered across the country that found that their passionate desire to improve the industry was limited by the small size of the organization, That is why they met to create the larger organization that we have today. The third statement is what pushed me in the direction I took when Rob asked me to dream up an alternative to his suggestions. Rob’s post suggests that higher dues are fine, pointing out that NAR’s dues are only $120 a year as opposed to the $420 a year charged by the AMA. I just went one step further. Increase the dues, but credit the members for every association event or activity they are involved in, providing them with a simple, tangible benefit to participation in making their industry better. In practical application, anyone who was involved in the slightest way at their local, state or national associations, would not experience any actual increase in expense, they would merely have an increase in their association interaction.

Thomas Gray said “”Where ignorance is bliss, ’tis folly to be wise.”

Rob’s initial post and subsequent presentation at RETSO had at is heart a vision of a smaller elitist organization that is not representative of the real estate industry, cannot claim to be the voice of real estate, would be unable to accommodate the support currently provided for practitioners of real estate specialities. It is an impossible future, because it ignores the very structure of our trade association, and the fact that change has to be initiated by the members of the organization. Everything we are today has been created of members, by members and for members, with the help of some outstanding association professionals.

Rob then misstated my position saying “Bill’s first argument amounts to, “What’s wrong with NAR is its members.”

I never said that , nor anything remotely like that. Rob’s argument talked about the members that felt that they were not part of the organization. In fact, the crux of his argument was the that members  joined because they were told they had to, and many of them do not perceive value in their membership in NAR, the State Associations of REALTORS, and the local Associations.   I believe that these people don’t care because they aren’t involved enough to understand what these Associations are all about. They see the dues, but not the  homes that State Associations built in the aftermath of Katrina. They see the RPAC solicitations, but don’t get the bullets that they dodged because of the results of those donations. They talk about making the industry better, but they don’t recognize that NAR is the only organization in the country  that is dedicated to that very goal.  Any other group that has the betterment of the industry anywhere in its agenda has it there only as a side effect of their true agenda,  whether that be selling franchises, educational seminars or real estate specific software. When I say that, I mean no disrespect to any other business, it’s just that their commercial agendas, do, and should, come before any altruistic motivation. When real estate professionals are more active in their local state and national trade association, they are generally better informed and feel a closer bond to the group, therefore it would be in the best interest of the members and the organization to increase participation by those members. Unlike Rob’s vision of a smaller, more pretentious group, I don’t want NAR to just give up on  being the” voice of real estate” and representing the largest  group of members. Rob doesn’t agree. In fact he criticizes my that idea saying;

The reform that Bill proposes comes down not to fixing what might be problematic in the organization, but fixing what’s problematic in the “membership”.

Again, not a position I took or a statement I made. But it does beg a larger question. What exactly is problematic in the organization?  Rob claims that members are divided into three classes – Consumerists, who want to get something from belonging ,  Activists - who want to do something by belonging and , Unionists,  who belong because they need to. While he and I disagree about these groups and his definition of them, we need to acknowledge them to understand Rob’s logic.   He went on to describe that problem ;

Well, NAR today is a house divided against itself, with Activists bemoaning the lack of involvement by the Consumerists who in turn chafe that they are forced to join NAR at all and then get lectured at by Unionists who believe that there is something immoral about selling real estate without being part of the House of R

So  according to Rob,  what is problematic with the Association is whats problematic with the members – a disconnect between those he calls the “consumerists”, the other member groups he defined (Activists and Unionists)  and the associations they belong to.  My suggestion is aimed at fixing what’s problematic with the relationship of the association and some of its members. You can’t do that without involving people and educating them. It seems to me that this comment is just sophistry – sort of form over substance. Rob then goes on to say:

“What I don’t quite understand here is how “people that don’t serve or attend” is a “member” of an organization at all.”

Members are members because they joined an organization,for whatever reason. They are not members by virtue of their actions after they join, just as citizens are citizens because they are born here, whether they are politically active, contribute to the community, or do nothing at all. Should we revoke the citizenship of every American citizen who fails to vote in every national election? Should people be asked to leave town if they don’t vote in their local election? Should they be exempt from paying taxes or obeying laws because they don’t like the local, state or national government? The core to my message, and the point that Rob missed, or chose to ignore, is that WE are NAR. The solution to a disconnect between the members and the organization is not to fire the members, it is to help them engage with the organization. Don’t like it? Change it. Don’t like the people in power? Work to replace them. Want to see the organization change? Become agent of change. This conversation started with a partial quote from JFK’s 1961 inaugural speech – but the 60s was a decade of substantial change, so let me close it with a quote from one of those forces of change – Eldridge Cleaver’s  1968 presidential campaign -, “you’re either part of the solution or you’re part of the problem. “ I know what I want to be. How about you?

I think that Rob’s idea of a smaller organization would not in any manner benefit the industry or the political efforts of the organization, because, as I have pointed out in the past, the larger the group, the more attention it gets from politicians, and that attention is important to the lobbying efforts of organization.I appreciate Rob’s analysis of response to calls to action and the number of major RPAC donors, but in addition to those efforts, politicians respond to the threat of concerted action by voter blocs, which, due to the tradition of closed ballots, cannot be measured, but like Damocles sword, hangs over anyone who needs to be elected to their job. Rob has engaged in some intricate and articulate rhetoric in his conversation but rhetoric can’t trump that logic, and for that reason, it’s just not an argument to have. However, in that conversation Rob asked what I would like to see as a future for NAR, so here goes -

I believe that the primary problem face by NAR and the State and Local associations is not the size of the organization, but the lack of education and involvement on the part of the members. More engagement between the associations and their members would be of immense benefit for a number of reasons, not the least of which would be the creation of new evangelists for the industry. Because this is a “bottom up” solution, I have struggled with how to accomplish it – What can we do to provide incentives to increase member involvement? One solution – don’t decrease membership, increase dues – substantially,but then credit the involved member back an amount equal to the increase  based upon ;

1. Attendance at Association events (educational, social or political)
2. Donations to RPAC and participation in political events
3. Memberships in committees and the local, state or national, levels
4. Their participation in Association sponsored community events

By doing this, members would increase their professional growth, learn what the association does, gain new and better relationships with volunteer leadership, association staff, and their colleagues. Experience has shown me that people who get involved in association committees regularly, and over a period of years,  become association advocates, and when they believe the association needs new directions, become the catalysts for change. The benefit of a plan like this is that the people that don’t serve or attend, will pay a financial penalty for their failure to make the industry a better place, instead of being carried on the backs of others.  Frankly, though, I would hope that the financial encouragement would just increase the knowledge and involvement of the average member,who would donate a little time to work on the industry as well as working on their business. In any case, the infusion of new members with new ideas, should provide additional ability for associations to grow and change through introduction of new ideas and points of view.

Most typically complaints about associations are made by disaffected members are a result of their lack of understanding of the nature of the REALTOR associations (local, state, and national). If members were not as under-informed and uninformed as they typically are, I believe they would better understand the challenges faced by their industry and their trade association. Participation in local, state and national events would provide them with a larger group of professional contacts, better information about the functions of all three organizations, and a better understanding of the real estate world that exists outside the walls of their office.

In my company, when you complain about something, we allow you to help us make it better by volunteering to create solution. It would be great if we could do this in the association world as well. I would like to see members who complain about specific issues or functions of the association  participate in resolving those by offering suggestions for correction and then working on the issue at the local level , and then the state level. This would allow for the creation of a knowledgable group of members to be involved in volunteer leadership. Though we couldn’t make anyone work on a committee or workgroup, think of the potential for change if every complaint was recognized and reviewed – as long as the complainant had some positive suggestions for overcoming the problem – at the very least a dialogue could be started to overcome the problem or demonstrate the necessity for the offending process.

For my second future vision? I want a future in which the organized real estate industry reclaims their position as the primary source of information about real property. Though we talk about the benefit of syndication and national real estate sites,no one has made clear what business purpose this provides for  us. We are a business whose practitioners are not licensed nationally and are restricted by licensure to operate only within state lines – where is the business benefit to the national website? I know that there is no business benefit to the intermediation of a third-party company between the REALTOR and the consumer – or at least not one that anyone can articulate to me clearly.

If MLSs were to provide public facing websites, consumers could have available to them all of the listed property in every market area. Organizations like the Houston Association of REALTORS and the Long Island MLS have already created such sites, and their members seem to perceive them as very beneficial. Such sites could become substantial competition with the third-party sites that currently dominate the real estate space, and if they were to be executed in a proficient manner, could become terrific, cost-effective resources for members. An amalgamation of all of that data into a single well executed real estate site would benefit the consumer and the industry by removing a layer of cost from the rea estate transaction. With the redundant listings already provided by IDX feeds from our MLSs, combined with this national portal, consumers would be contacting real estate professionals directly, saving time and money, as the costs for competing advertising portals that currently receive millions of dollars in advertising dollars from real estate professionals.

Though I am not the defender of the status quo Rob makes me out to be, I know from my personal involvement that NAR works diligently to change and adapt, constantly reviewing the strategic plan, working on obtaining member feedback, and trying to be as responsive as possible. It is, once again, the uninformed and underinformed who think of NAR a monolithic organization operated by some faceless entities disconnected from the membership – and that’s just not true. So to close the loop, let’s revisit  Rob’s paraphrase of John Kennedy’s charge to the American people – but this time in its entirety   ”And so, my fellow REALTORS: ask not what your NAR can do for you — ask what you can do for your NAR.”

We’ll all be glad you did

Then my Mother-In-Law got laid off when her company closed, and I wanted to help her with a little additional income. I owned a few properties, and some clients were asking if I would manage properties for them, so I opened a property management department in my real estate firm. Now I collect rents on over 500 properties every month.

Single family Property management is pretty labor intense and is as profitable as residential re-sales, so as other brokers in my marketplace decided to divest themselves of their property management accounts, I found the opportunity to buy some practices that allowed me to accumulate a large enough group of accounts to operate profitably. Property management has the benefit of providing a constant, income stream, even if its not the immediate profit center that re-sales can be. Of course the down side is that it requires a lot of attention to detail and potential liability. But if you own a number of properties and have a real estate company already paying for the physical location, it is an opportunity that real estate professionals often consider.

As the market has faced challenges in the past few years, more agents and brokers have turned to rental collections. But because they are unfamiliar with the operation of,  or may not have considered the issues raised b, y operating a rental department , they often generate more problems than profit when they get started.

Perhaps the most dangerous problem is the problem the broker doesn’t even know about – the agent who does their a favor for a client by helping them with the rental collections on the property they just bought. In most states, they are in violations of licensing laws that don’t allow agents to perform licensed activities independently of the brokerage they work for.  In addition to that license violation, most agents have no training to prepare them for the tasks they are undertaking – and that usually ends with an unhappy landlord  or tenant or vendor or broker or all of the above.

It’s just so easy for the agent to get started. Seems like a no harm no foul type of favor for their client after all. And in most companies, there isn;t a lot of conversation about rentals because the emphasis is on making sales and taking listings.  So the agent agrees to help the client out and find them a tenant and then collect the rent. And that’s where the trouble starts.

Did the agent create a special account for the rental collections? Did they set the security deposits aside in a special account as the state (usually) mandates? did they have a special contract signed authorizing them collect rents? Are they reporting the management fees on their local state and federal taxes? Have they used the company name on any of the papers they generated? Are they perhaps using the electronic forms provided by the company to generate leases etc.? Now the original illegal action by the agent can be compounded, and the brokerage can become involved without their knowledge or consent because of the actions of their employee!

The brokerage involved? without their knowledge or consent? Sounds absurd until you realize that if they use the office address on anything, or a lease is brought to court with the company name or license numbers on it, the plaintiff’s attorney will certainly add the company as a defendant on the “deep pockets” theory. Whether the company can be removed or not, there will be legal expenses involved , even if the result is what the company desires.

While the company can try to isolate themselves from liability by addressing rentals in their training and their independent contractor agreements, even that may not be enough. I hired an agent last year who had worked at another national franchise where she had desk expense as part of her ongoing costs. When we interviewed, and when she was hired, we talked about her experience in residential re-sale and in obtaining tenants for a different former company’s property management department.

After she had been working for us for about 10 months, her office manager received a letter from a gentleman who had bought a property from her at the previous firm, and for whom she had been collecting rents since his purchase. It seems that she had advanced money for repairs which exceeded the amount he felt should have been spent. He refused to reimburse her, and she threatened to sue him. Obviously it was a worthless threat since she wouldn’t have had any legal authority to spend money for him, but the threat infuriated him and he was angry at her , and her new firm. He now wanted to sue her for doing a poor job as a property manager, and if the situation escalated to that, we could have been involved in defending the firm from a lawsuit that we had no real position in.

As soon as we became aware, we brought the agent in, explained what she had done wrong, and that there was to be no real estate activity in her life outside the parameters of our independent contractor’s agreement. We contacted the landlord, calmed him down, explained that she would be absorbing the costs of the repairs, and avoided a bullet that came from a situation we had no way of knowing about.

The best course an agent can take in this madness is to make a decision about what they do for a living. If they want to be in the rental business or learn property management, then go in that direction. If they want to be in residential re-sale, then concentrate on that , and leave the property management to the appropriate department in their company. And if the brokerage hasn’t had a rental; department? Then maybe its time to think about creating one. And if you do, then here’s a few tips for starting:

• Make it simple on yourself and collect all of the rentals on the first of the month. Then whatever you need to do, in terms of late notices, notices to quit, rental increases, etc, will all fall through the month in an even flow.
• Make sure that you’re listed as an additional insured on the liability policy of your client. Rental agents are often sued along with the owners of the property for anything regarding the property. Just having your “For Rent” sign on a property is often enough to get you sued by someone who slips in the snow or trips on a crack walking by the property.
• Check your E&O insurance to see what coverage you have for your property management activities. Don’t assume that every new activity you choose to expand your business  is automatically covered by your actions.
• Be familiar with all of the forms used to rent properties, not just the lease, but additional rules for tenants, addenda for the lease agreement, credit applications, rental collection forms, late notices, eviction notices, and the myriad of other form letters and agreements you may need.
• Establish systems for the intake of property repair issues, how you will handle responses to tenants. You need to respond in a uniform manner, and whether you keep a log of calls it has to be the same for every tenant and landlord you serve.
• Remember your obligation to the landlord – adding cost to the vendors you employ as an additional profit center is not only bad business, and a conflict of interest,  but a potential violation of NAR’s Code of Ethics.

And if you do decide to be in the rental business, remember that you need to have a large enough portfolio of properties to pay for the clerical staff you’ll need to get the job done right! Good luck with whatever you decide

Fired red stamp (Photo credit: Wikipedia)

I had to explain to an agent last week why she was being terminated.

She was an articulate and experienced mature woman, with an MBA and strong business backgrounds. But she couldn’t take direction. Every time the managing broker in her office tried to mentor her and make suggestions to further her career, she responded that she was an independent contractor.  I suggested to my managing broker that we allow her to be independent somewhere else, and the woman was shocked that we wanted to terminate her.

As we spoke , she told me that she was first licensed 8 years ago and went to work at a competitor’s firm. She said that she had been hired and that, unlike our company, she was just set in an office at a desk without direction. “How did that work out for you? “, I asked. “Not too well”, she responded. I pointed out to her that if she couldn’t make money , even by accident,  in 2004 when the market was red hot, it would seem that she might need some direction to help her become successful.

When I asked why she refused to participate in activities in the office designed to make her more successful, she really didn’t have an answer, and kept saying, but I’m an Independent Contractor, I shouldn’t have to do anything I’m told to do, I should only have to do what Iwant to do. I explained to her that she had obligations under our independent contractor agreement (which she had read and signed) and that , more importantly, we operate as a team. Agents and management working together for our mutual success, and that it seemed that she was not a good fit for that type of arrangement.

After shaking hands with her and sending her on her way, I saw a post if a Facebook group I belong to that said ”

Are Brokers abdicating their responsibility to manage sales persons, ethics, and integrity? There are rogue agents who threaten to leave because their broker pushes them to raise the bar. There are rogue agents who don’t advertise their brokerage, which in Texas is legally required with all marketing including FB. There are rogue agents who aren’t honest in their marketing efforts in MLS or or on flyers. Brokers talk about these issues in team meetings, they may even send out letters, but they don’t reprimand or dismiss agents in most cases. Should they?

As Managing Brokers or Broker/Owners we are able to determine what our company culture will look like, and how our company will operate by choosing who we allow to affiliate with us.Our agents want to be part of a culture of excellence, and if we allow ourselves to be held hostage to the demands of an unreasonable agent, we fail our company, that agent, and our other agents. Companies, no matter what the size, should have a symbiotic relationship with their agent population. In other words,(specifically the definition of the word at dictionary.com) we and our agents should by living in symbiosis, or having an interdependent relationship Agents likewise need to recognize that they can be most productive and most effective by leveraging their team.

All the conversations about who and what the consumer chooses fail to recognize that any combination of reasons is better than any singular reason. So it benefits everyone to put their egos aside and promote the entire organization. In other words, if the consumer has a brand reference, and they are well disposed towards the company, the preference for the agent has even more power than it does alone. In a market like today’s, more than ever before, agents should be able to rely upon their companies to support and enhance their efforts, and companies should be able to rely upon their agents to be team oriented, and pleased to support company initiatives to be profitable and grow.

While agents are indeed independent contractors, they need to remember (as does their company) that they are part of a larger organization, and that no business does well without structure and direction. Though individual agents are often the catalysts of change within their firms, they still need to value the team, and be part of the team – so everyone can achieve more. If they can’t value the team, then they should find a team they can value, or open a company and create their own team.

Wouldn’t our workspace be better if all of us worked towards the success of all of us? Shouldn’t an agent have reasonable expectations of their broker? And shouldn’t the broker have reasonable expectations of their agents?

These are the new leads. These are the Glengarry leads. And to you they’re gold, and you don’t get them. Why? Because to give them to you would be throwing them away. They’re for closers. – GlenGarry Glen Ross

Glengarry Glen Ross (Image via RottenTomatoes.com)

People all over the country are talking about syndication and IDX, and who does what for the data , when the core issue that doesn’t get talked about as much is who gets to contact the consumer first – something that is often referred to as lead generation.

Using the term lead, by the way, does not mean that I (or anyone) does not care about the consumer, or is not prepared to do what is needed to establish meaningful business relationships. Using the term doesn’t mean that I do not value consumers as human beings. I use the term because we need a term to describe the process of obtaining contact information that a consumer trades for online information every day – on every website from Facebook to Google and back again.

When markets contract, customers become crucial. In the real estate business we are always seeking new customers and clients because our repeat sales cycle (the time between purchases) is measured in years. But that causes us to wonder – whose job is it to generate those opportunities?

Traditionally, real estate companies were the source of potential business for their agents, and agents affiliated with companies that they perceived as having strong sources of business.

Core business was generated by the organization and individual agents worked their own network of family and friends to develop additional sources of business. As new business models developed the company was not concerned financially with the success of the agent, and therefore did not spend time or money in generating business opportunities. In these models,  agent compensation was increased by decreasing company services and support. As a result, their  agents began to bear the effort and expense of developing new business sources. This has led to a wide variety of business models being developed arround agent compensation with varying levels of support, and therefore varying levels of responsiblity for finding sales opportunities.

With the advent of IDX and the syndication of property data, third-party companies sprang up to place themselves between the consumer and the supplier of service adding cost without service to the real estate transaction.Yes, I know that they have slick interfaces that consumers like, but that adds facility, not value in the financial sense for the consumer.

From banner ads, to enhanced listings, to the direct sales of customer contact information, a new industry was created by people who usurped the role of the real estate agent and company, seeking to be the first point of contact for the consumer, which they would enable them to sell either advertising of consumer information to the real estate professional necessary to the transaction itself. Some of these models failed when the market receded, but the third-party aggregator – a company that acquires listing information from real estate professionals and organizations, is alive and well and aggressively pursuing the same consumer the real estate professional is pursuing.

So in today’s market, where property information is ubiquitous and 1,000s of copies of every listed property  competes with each other on all three of these levels for a finite number of consumer eyeballs, we need to answer three question; Who should be generating leads? Why should they be involved in that process? Who benefits from their lead generating efforts?

Let’s look at some possible answers;

Agents , to succeed,  need new business. Therefore, on some level they should always be involved in creating new business opportunities. Call it prospecting or lead generation, it boils down to the same thing – contacting people to determine if they need your services. In today’s electronic world, much of that needs to come from your personal sphere of influence. The people that view you as a trusted advisor. For agents, I believe it is more effective to build relationships than to compete with companies, franchises and aggregators for consumer eyeballs.  This is not to say that individual agents cannot compete with well written blog sites, Web sites that exploit long tail SEO strategies, and focused niche marketing, it is only  to point out that they are outnumbered by the competition, and are generally at a disadvantage if they do not do those things.

Companies, to attract agents, benefit from having the ability to provide a “leads rich environment” – companies with RELO departments for example, typically use that source of business to attract new and experienced agents. Ziprealty and Redfin were, in their original iterations, based on the concept that really successful lead generation (or consumer attraction) would, by itself generate business. They both found that having well-trained and motivated agents are important to execute against the opportunities provided by their excellent technology. In addition, providing opportunities to agents generally allows companies to retain more of the gross commission dollar, providing a stable infrastructure, as ell as the resources needed to execute a strong lead generation program.

Third party sources of these opportunities come in several flavors – websites that attract consumers and then sell us placement as an indirect way to obtain leads, or direct lead sales.  But all of them are in it for the same reason – to interpose themselves between the consumer looking for services or products, and the individuals and companies that provide those services or sell those products.  Oddly enough, they have become our most  vicious competitors online because we have given them the currency to do so in the form of listing property information.  The question of how good a strategy that is won’t be discussed here – that’s another story for another day.

The Future? A fourth contact point for the consumer was brought to my attention by Matt Case, a Michigan REALTOR who, in a thread in a Facebook group discussed plans by a local association to create a public facing web site. Some MLSs (most notably HAR – the Houston Association of REALTORS) have created terrific public facing web sites that create consumer contact opportunities for their members. While some might argue that the job of the MLS or the Association is not to “level the playing field” between its competing members, I see them as a much more benign third-party than the For Profit aggregators.

Given the importance of effective lead generation to the survival of companies and the individual careers of their agents, more and more effort is being focused on that task by those that have weathered the economic storm of the past several years. Probably the most effective solution for the real estate industry and its members is when there is a combination of company and agent generated business opportunities. Companies and agents need to be symbiotic once more as they were in the past. Companies and agents should not abdicate the job of generating business to third parties. It increases costs, makes them work harder to woo the consumer and retain consumer loyalty when they have no previous relationship with us. And direct contact with the consumer makes their success safe from the vagaries of third parties , allowing agents and firms to succeed or fail as a result of their own efforts.

Look, in the final analysis, generating all the contacts in the world won’t help if you don’t have the skill and knowledge to help the consumer. But any sales organization needs new contacts regularly – Who do you think should be responsible for generating them?

Get out there – you got the prospects coming in. You think they came in to get out of the rain? A guy don’t walk on the lot lest he wants to buy.  - GlenGarry Glen Ross

Its just a week until I will be on stage at RETSO as the Emcee for one of my favorite conference experiences.

Originally titled ReTechSouth, the conference was, unlike others, created by a couple of people in the real estate space who wanted to create a regional real estate technology event. What they actually created was an awful lot more. RETSO has become a national event with speakers flying in from all over the world to participate in what is possibly the most community based and collaborative tech event  in the country.

Part of the reasons the speakers come are the relationships that they have formed with each other. These are doers- people that actually use the tools that they talk about – formulate and execute strategies for their businesses , and want to share them with others in the industry. Let me give you an example. In 2009 I had an online conversation with Rob Hahn and Joe Ferraro that generated into RETSO’s first Cage Match – it was fun, insightful, and filled with energy. Sadly Joe is no longer with us, but this year Rob and I will be on stage with Jay Thompson in a new Cage Match centered around the Syndication controversy which has been raging across the industry and the RE.Net.

RETSO was the site of a lot of firsts for me. The first time I hung out in person with some of the people I was so involved with online. It was the site of Hal’s Triumphant Recreation of the Star Wars Saga . It was where I had my first taste of chocolate bourbon bacon ice cream and sang karaoke until my throat was sore. It was the site of many conversations, business opportunities, and social events that have impacted my life in many ways. It is a place that people want to return to

RETSO is a place where information, conversation and participation collide to create an amazing experience.
RETSO is for doers.
Hope I see you there next week.

Photo portrait of John F. Kennedy, President of the United States. (Photo credit: Wikipedia)

In a recent post Rob Hahn took a historic quote from President John Kennedy and cut it in half.

His post  ”Ask Not What You NAR Can Do For You” , talked about NAR as if it was the entire real estate industry and that’s probably appropriate in one sense, since it is truly the face of organized real estate – but as the face of organized real estate it represents about half of the real estate practitioners in the country – what I believe is the top half of the industry, but half nonetheless, leaving a large group of people outside the conversation. Non-REALTORS contribute nothing to the industry as a group because they do nothing as a group , leaving NAR as the only organized “voice of real estate”.

Rob’s post was about what NAR should do to improve itself and the industry  - based on Rob’s understanding of NAR as a single entity.  However that’s not what NAR is.

NAR is an organization made up of an alliance of 1400 local associations and 54 State Associations. It represents roughly 50% of the real estate professionals in the United States, NAR is the only entity which acts as a political advocate for real estate professionals, and works to provide and safe space for all of us to work in the industry. NAR members created the Code of Ethics (which provided the basis for most state regulations  regarding licensure) , and have for almost 100 years worked diligently to enforce the protections the COE provides for consumers and the benefits of the arbitration the COE provides for members. NAR is the single largest provider of real estate specialty education in the country. and has done more to increase professionalism and raise the bar in the real estate industry than any other organization, public or private. NAR has provided funding and legal support for numerous litigations which could have damaged property rights, or severely curtailed the ability of its members to be profitable in the pursuit of their business. The list of accomplishments by NAR, its states and local associations and its members could go on and on.  And yet, with all of these positives, NAR attracts criticism from people who work in the space NAR and its member associations created and protects.

Rob suggested that I was protecting the status quo because of my response to his post. Nothing could be farther from the truth. I am a proponent of change,  have always embraced change in my daily life and my business, and have worked to bring change to the real estate industry. But change needs to be rooted in reality, and executed in the real world. For any change in the body of real estate professionals, we need to look to the organized real estate industry. So let’s look at that world.

NAR is attacked not because it or its member associations have done anything to damage the industry, but because it is an easy target. What makes it such an easy target?

1. Because there is no organization dedicated to the improvement of the real estate industry as a whole that is of comparable size or efficiency.
2.  NAR is a big name, and as such, it is easy to blame it for any problem the speaker perceives is endemic to the industry.
3. People who attack NAR don’t clearly understand the organization, what it does, or how it is organized.
4. People involved in such attacks don’t thoroughly understand the professional real estate industry, and often base their attacks on inaccurate or insufficient information

As an example think about these two examples

Some of online rhetoric suggests that the average practitioner is poorly trained because NAR wants a larger membership and has no interest in making its members better. However NAR does not solicit members directly. Members join local associations and , by virtue of a three-way agreement, become members of the appropriate state association and NAR. The responsibility for the practitioner’s education lies with the practitioner and the company or individual they work for – not with NAR, their state association or their local association. Even though they are not responsible for the education of the practitioner member, NAR, the state and local associations provide the largest amount of free educational opportunities for any member available from any source, including a huge library of free educational materials. From the speakers at NAR’s national events, to the educational events run by State and Local Associations, each of the associations provide members with opportunities to increase their professional expertise and product knowledge – at little or no cost. In addition there are a large number of fee programs developed by NAR ,its Affiliates, and State REALTOR Associations. But the member needs to avail themselves of the opportunity to improve. 

A second argument that finds itself repeated again and again is that NAR (and again its member associations are ignored)  would somehow benefit from a smaller membership with higher dues. This argument fails on a couple of levels. First of all, the truly committed and passionate members are already there and donating substantial amounts of time and money to help move the group forward. Secondly, in the political arena, groups with smaller numbers of members have less influence with politicians, who are interested in special interest groups that have the ability to sway larger numbers of votes – not fewer numbers for passionate votes! For NAR and the state and local associations to be effective with their political advocacy, the number of members we represent is crucial to maximize the impact of RPAC and the RPICs that work so hard to help provide a space private property rights are protected, home ownership is promoted, and we can practice all the forms of real estate that our membership represents. But the members need to participate in the political advocacy on their local or state level, and to contribute to the overall effort being made by our associations. 

Kennedy’s original quote “Ask not what your country can do for you, ask what you can do for your country” was a rallying cry for a generation – a call to activism rather than complacency. A demand that we recognize that we are the solution to our problems, not a question about the value of our country or our government.  I think we should complete  Rob’s paraphrase – “Ask not what NAR Can Do for You,  Ask What you can do for your NAR” and in asking that question, take the responsibility for improving our industry into our own hands by contributing to the improvement of the whole rather than criticizing the work of others. A contemporary of Kennedy’s Football coach Vince Lombardi said “Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work.”  It is what makes NAR work as well.

Oh, BTW, regarding Rob’s question about  whether JFK would be a democrat today? Absolutely! Though he was a Commander-In-Chief  in the cold war, he was as liberal as they come in his domestic policies – at a time we needed them.

As far as Rob’s question about what I would like to see change in the real estate industry - that will be next up

Related articles

• Ask Not What Your NAR Can Do For You… (notorious-rob.com)

Chicken Little in Black by dbgg1979

I really like Rob Hahn and think that he’s a really smart guy- then he goes off and shows me that even being smart doesn’t help if you push off on the wrong foot.  Rob wrote a post called “Extinction Event Horizon: Real Estate” in which he takes a flying leap into space, and with his feet planted firmly in a vacuum begins to leap frog from one preposterous premise to another. I really felt that I needed to chime back with some facts and some opinions of my own. Let’s start by looking at his premises;

• Premise 1. There is an organized group of brokers that are large enough to create a meaningful national MLS. Rob quotes an article at Agent Genius revolving around the members of the Realty Alliance and their discussions at their meeting last spring. The conversation as Agent Genius reported it was less about leaving the MLS than it was about withdrawing their listings from third party aggregators like Zillow, Trulia and REALTOR.com. Edina Realty actually took the step to remove their listings from XXX just this week. Whatever you think about the third party aggregator issue, it does not signal the end of the MLS.  When even the largest and  most dominant companies in a given market  area don’t control more than 24-26% of their market (a huge share), they will not leave a vehicle to access the remaining 74%.
• Premise 2. That the lack of contention between the Realty Alliance, other Large independent Brokers and  National Franchisors is significant. The fight is over, its a non-issue for now, and the parties will move on to other strategies to achieve their business goals.
• Premise 3. “a “rebel alliance” will not simply pull out of the MLS or the Association; they will pull out of both, because they must pull out of both in order to achieve their aims of independence from existing policies and governing bodies.” Its just not needed, nor does one follow the other. Most of the large brokerages in the country are run by people who are members of NAR’s volunteer leadership. They value the organization highly and would not detach themselves from the largest PAC in the country (or debilitate it) just because they want to start their own MLS (which they don’t). Additionally they value the Code of Ethics, and the pride that active REALTORS feel in their organization. Though many of the MLS systems in the country are owned or operated (or both) by REALTOR Associations, another important reason for MLS systems to follow the model bylaws created by NAR is for the E&O insurance, and for the protection of the Legal Affairs committee when they have huge industry wide litigation, as well as having access to the world class legal minds at NAR (did you see how Laurie Janick negotiated an incredible settlement on the Civix law suit at the Mid-Year meetings?)
• Premise 4. “The existing paradigm of the MLS today is that its core mission includes helping its members market properties” That is truly not the primary purpose of the MLS. The purpose of the MLS, is, was, and will continue to be to facilitate cooperation between real estate brokers and agents. In most companies, more than 70% of their business required the cooperation of another firm. The creation of the MLS is born of our need to foster cooperation, not from our need to market properties. The MLS is a B2B system, not the most important marketing system for the real estate industry. The MLS does not bring us clients, it helps us service our clients, both buyers and sellers. In fact, it works so well that we take that function for granted and ignore it. The fact that we use versions of the MLS data to feed our marketing channels doesn’t make marketing the primary function of the MLS
• Premise 5. “The most important change, then, has to be that within the Rebel MLS, there can be no such thing as Internet Data eXchange, or IDX. The whole purpose of IDX is to allow participants to use MLS data to earn a customer.” In fact, the conversation reported by AG that started this whole flight of fantasy was more about a rebellion against syndication than it was about sharing inventory with other brokers. When 90% of consumers buy their home from agents, getting your inventory out to other agents is imperative-

So while Rob’s post is timely, articulate and interesting as always (I love reading Rob’s posts) it just doesn’t have any roots in reality. That being said, he then lists some consequences that are, by themselves sort of interesting to me.

• Zillow Takes Over – I hate to say this, but we already lost this fight-property information has become so ubiquitous that it is no longer the key to contact with consumers. According to NAR’s 2008 Profile of Home Buyers & Sellers , when asked what actions they took as a result of internet home search only 27% of consumers found and chose an agent. That means that 3 out of 4 consumers chose their agents for reasons not connected to the home search. Frankly, if it were possible to remove the syndicators from the equation, it might benefit the real estate professional, but it would take a massive paradigm shift in our industry to make that happen (though I am watching the Edina situation cwith interest) and I just don’t see that happening.
• The end of Buyer Brokerage – Buyer brokerage originated because consumers were confused about who represented whom in a real estate transaction. Issues like vicarious liability, litigation resulting from dual agency (which was generally undisclosed in those days), and growing consumer demand (in many instances from consumer advocacy groups) created buyer brokerage which became codified with the advent of the ABR designation. Today most states have legislation regarding buyer and seller agency, so this part of the business is just not going away regardless of MLS issues. On a practical level, more young agents count potential buyers in their spheres of influence than any other type of real estate consumer, and buyers seek agents to help them in their complicated transaction, so working with buyers that aren’t the listing agent is again a part of the bedrock of the real estate business.
• Mass Extinction of Vendors – Real Estate is a business that generates a lot of money and has tons of practitioners. There have always been, and will continue to be people who sell stuff to that large market. We wouldn’t have fewer vendors, we would have different vendors. I would expound on that, but it seems to obvious to me to need explanation.
• The End of Associations as We Know Them – This is so wrong, and indicates so little understanding of the history and function of our trade associations on all levels, that its difficult to know where to begin. Do we start with the Code of Ethics, and the benefits it provides to members? The REALTOR movement, by its creation and adoption of the COE has established the standard of practice and professional care for real estate professionals for the past 98 years. Arbitration proceedings alone have saved members millions upon millions of dollars of legal fees, and resolved business issues more rapidly than any courts. Our local state and national political advocates have helped create a usable space for real estate professionals to practice their trade. The National Association has provided legal and financial support to local and state associations when landmark litigation has been fought. All levels of Associations provide good low or no cost education for their members, where no one is selling them anything. And NAR, through its designations and certifications programs, offer specialized training of the highest quality with no product to sell or ax to grind, aiming solely to improve member’s businesses through specialization and professional development (Disclosure- if you didn’t know- I was the lead author in the 2010 re-write of NAR’s e-PRO certification,teach that course internationally, have been approved to teach GRI in the past,  and am currently a Certified CRB instructor as well) . And perhaps, most importantly , the REALTOR Associations are a place where professionals can gather and learn from each other in a non-threatening less competitive environment.  People that don’t get any benefit from their Association membership typically haven’t put anything into it. I can only speak from experience. The courses that I have taken, the seminars that I attended, the people that I have met, the volunteer positions I have held, and the events that I have participated in have profoundly and positively impacted my real estate career and are in part responsible for the successes I have achieved as a real estate professional. It is not an accident that people from all over the world come to NAR meetings to learn and network and bring knowledge back to their countries. NAR, the state and local associations may have their flaws, but they are an amazing resource to the industry and a major force for positive change and improvement in our industry.

Rob ended his post saying “Is all this mere Chicken Little’ing? God, I hope so.” – I think, without question , that this time Rob was running a little too quickly without all the information needed to make his predictions – which, as I remember the story is almost exactly what Chicken Little did – Luckily Rob’s a lot brighter than Chicken Little, not to mention more creative – making him an interesting guy to listen to – just don’t run for cover just yet.