Notorious R.O.B.

Other folks have already praised the new Real Estate Marketing Report Card, which the company was kind enough to alert me to via email.  (/wave at Brian Thibault).  And if you can get Joel Burslem to say the following, you probably don’t need my two cents:

It’s a great promotional tool -  one that’s clearly designed to encourage people towards listing their home on the site (a $299 one-time fee).

The proliferation of consumer search portals has given rise to all kinds of syndication tools like International Listings as well as Listhub, Postlets, vFlyer, Point2 and others, that do the heavy lifting for agents and brokers to get their listings out across the web.

Savvy sellers, who in this market are going to want to see that their agent is doing all they can to move their home, are likely going to be checking the various search sites to make sure that they find their house. A tool like this one, while clearly a gimmick, helps make that possible.

But I blog to please myself, and honesty is more or less the first rule of blogging, so…

I give the Real Estate Marketing Report Card (RE Report Card hereafter) a grade of C-.  That is probably an unpleasant grade, but allow me to explain why.

The Good

The design is very clean.  The tool is actually fun to play with in a way.  And the report card makes excellent use of AJAX in displaying the information in a clean, visually appealing way.

It is simple to use (although, I do have some pet peeves) and the average consumer would immediately grasp what the purpose is and what to do.

The Bad

Given the grade, you probably anticipated that this section would be larger than The Good.

First, the data input has some odd behavior.  Why do I need to put in Zip Code if I’m already typing in the city and state?  Do a lookup, willya?

Second, more substantively, all that the RE Report Card does is to check to see if the listing is syndicated.  The quality of the syndication is not examined (and it isn’t clear that it could be examined by a computer program).

An agent could do a godawful job of listing my house — one dingy, ugly photo, horrible description, outright lies like “Desperate owners!  Going cheap!” and the RE Report Card would still give the syndication a green check mark, and up the overall grade.

For something like this to be truly useful to the consumer — instead of being just a cool little curiosity — there has to be a way of grading the listing & syndicated listing on quality.

Third, even on a straight syndication basis, there is no way to enter other websites.  That the agent’s own website/blog is missing is truly odd in this day and age.  Same with the broker site, or the franchise site (if part of franchise).

The Ugly

The Ugly goes to the heart of agent value.

What RE Report Card does, in my opinion, is to value the listing agent’s efforts strictly on one dimension: as a syndicator of listings.

In an age where agents are trying very hard to brand themselves as local and subject matter experts, picking out this one aspect of their job and grading them on it (and in a flawed way at that) can and will lead to rather unpleasant conversations.  No matter how many open houses you’ve held, no matter how many buyer agents you’ve negotiated with only to have things fall through, the client will simply regard you as B- material because his listing isn’t syndicated to  Lycos.

Furthermore, the natural question that arises in my consumer mind is… “I wonder if I can just bypass Ms. Six Percent and do all this syndication myself?”

As it happens, I get a suggestion right at the bottom of the RE Report Card:

Not happy with your listing’s web presence?

Put International Listings to the 30-day test and submit a luxury property listing today. Our real estate listing syndication technology is the best in the business. When you list with us, we’ll work with our extensive list of high-traffic partners to syndicate your listing wherever it’s eligible. Competing sites will list many syndication partners, but then their listings won’t actually appear! You won’t have that problem with International Listings; list through us, and within weeks you’ll see your property all over the Web.

Give us the chance to show you our value for a full month. If you then decide, for any reason, that your listing didn’t meet your expectations, just let us know. We’ll promptly refund the listing fee.

The listing process only takes a few minutes, and your listing is live within hours: Add your listing now! Just $299 – click here.

Um, okay… except that as the disclaimer says:

International Listings LLC is not a licensed real estate broker. We do not represent or negotiate on behalf of property owners or prospective buyers, advise property buyers or prospective buyers regarding real estate transactions, or take actual part in real estate transactions.

So if a consumer actually tried to call International Listings to do precisely what International Listings suggests, presumably they would be met with… what exactly?

If RE Report Card was never intended as a consumer tool, then it needs to be hidden behind some sort of security measure to prevent not-fully-informed consumers from running their house on it and making angry phone calls to their listing agent.

Way Forward

In commercial real estate, listing agents routinely provide the client with a weekly/monthly report of activities.  These reports can be a relatively involved, time-consuming affair.  But when you’re listing a $300M office building, you or someone on your staff had better be spending the time.

I think that’s the way RE Report Card needs to evolve: as an agent/broker tool (sort of as Joel Burslem suggests) with a far stronger qualitative measure.

If I were the customer, I would want my listing agent (who is taking 6% of the sale in my eye, since I don’t know about agent splits and whatnot) to send me an emailed report every week with:

• Listing Views, by site
• Inquiries, by site & total, for the week and month to date or YTD
• “Serious Conversations”
• Actions (e.g., contracts, walk-thrus, showings, home inspections, etc.)
• Buyer comments/thoughts even when deals fall through so I can judge for myself what the market is saying
• Appendix with a screenshot or links to every site where my listing is syndicated, including the agent blog, the agent site, the broker site, the franchise site, etc.
• Updated comps/CMA showing competitiveness with the rest of the market.

Thing is… I’m just not sure that an agent needs some online tool to do this.  An Excel spreadsheet would work just as well.

The issue is the “doing it” part, I suppose.

In any event…

RE Report Card — a beautifully designed, neat and easy to use tool, with serious flaws: C-.

-rsh

After a recent Lucky Strike Social Media Club dinner — the very first one, as a matter of fact, in which the club was formed — I had the pleasure of riding in a car with two realestistas.  Sarah Bandy (@sarahbandy) and Perri Feldman (@perrifeldman) are two NJ-based realtors who are just a joy to be around.

As we were rolling down the NJ Turnpike, Sarah and Perri started telling tales from showings that went akimbo and other war stories.

After I got done getting off the floor from laughing too hard, I said to them, “You know, forget about blogging market data and whatever else you’re doing.  Blog those war stories instead.”

Five reasons why realtors should focus their blogging on war stories.

Entertainment

First, war stories are fun.  Sarah’s story about the homeowner whose cat was on the toilet doing what humans typically do on toilets during a showing drew howls of laughter from me.  Perri’s tale of the one showing she did where the sellers forgot about the appointment and decided to… ah… take a mutual lunch break… and were discovered in flagrante delicto — that’s a classic story.

And I’m certain every realtor has horror stories, has funny stories, touching human stories — in short, entertaining stories.  Blog those.

Information

Second, war stories are educational.  I mentioned HeyAmaretto — a realtor named Diane Guercio — in this blog earlier.  I find her stories to be filled with information and things I didn’t know, as a consumer.  For example, here’s a war story of sorts from one of her posts:

The one which I will share was about a listing I have- a bank-owned property that had suffered from neglect and freeze damage. Some of the damage was repaired, but I wasn’t certain the extent of it. An interested buyer called me and requested placing an offer, and of course I disclosed this information. I had his mortgage person run me a preap, and it came back contingent on several items that I had told the buyer may be problems, among them being the heating system.

I told the mortgage officer this, and told him that this property was being sold as is. Apparently, this buyer had an issue with reserved funds. The mortgage officer asked me to “Please advice” (sic).

Fair enough. I have issues of my own with reserved funds from time to time. But selling this buyer the home would be plain irresponsible, to my way of thinking. Possibly everything would work out, but more likely I would get the listing back as another bank-owned property a year or two down the road.

Now, this may seem completely routine to professional realtors.  But to a consumer who is in the market every seven years on average, finding out some of this back-and-forth between a broker and a mortgage officer is fascinating.

Plus, now I know enough to ask how the mortgage could be contingent on the heating system.  And what the heck is a reserve fund?

I think war stories are a fantastic way for consumers to get really useful bits of information without being bored to tears with some earnest “10 Things To Do When Selling A Home” type of article.  Don’t talk about how you should stage a house properly; instead, tell us the story of the time when you showed a house that wasn’t staged properly and the hilarity that ensued therewith when the buyers saw the dominatrix-themed basement…

Education

Third, war stories make obvious what a realtor actually does.

It’s actually amazing how few consumers know what you realtors do for a living.  I know I didn’t know until I started to meet and talk with many of you.

None of us see the behind-the-scenes phone calls, negotiations with the other side, the wrangling with the mortgage officer, the calls to appraisers, to attorneys, etc. and so forth.  We have no idea.

All we know is what we can see.  And what we see is not very much.  You show up, get the listing, then stick a sign on our lawn.  Then maybe you hold an open house or two.  Miraculously, some weeks later, the house sells, and you take $45,000.  No wonder consumers think you’re all overpaid.

We don’t know about the eighteen hours you may have spent with the buyer’s agent, only to discover that the buyer’s husband absconded to another country at the last minute with the family funds.  We don’t know about the dozens of phone calls you may have made to other realtors in the area.  We don’t know about the arguments you had over the CMA report you thought was inaccurate because it didn’t reflect the unique value of the house having great sightlines out the back porch.  We just don’t see the work you do.  (Assuming, of course, that you’re a pro and you do in fact do some work.)

Again, if you do a self-righteous, whiny blogpost about how customers just don’t appreciate all the work you’ve put in… well, that’s a big turnoff.  But if you do war stories that happen to show all the work you do… why now that’s fun!  The message still gets across.

Unique

Fourth, war stories are unique.  Market reports are a baseline — you have to do them, I suppose, if you’re a realtor.  But know that every other blogging realtor — and pretty soon, that will mean every other realtor — will do them.  There are companies that will supply you with canned reports, and many MLS’s also supply them.

But war stories are uniquely yours.  It isn’t likely that anyone else had to walk a client through the second-floor cat… bathroom.  Is isn’t likely that another realtor had the exact same client with the exact same counterparty with the exact same set of circumstances.  All stories can be unique.

Personal

Fifth, war stories reveal the personality of the storyteller.

Different people have different ways of telling stories.  Some are animated and fun; others have a dry sense of humor; still others are earnest, but honest and authentic.

What makes so many realtor blogs unreadable to me is that the real voice of the person behind the keyboard is often stifled.  It’s as if many of you are looking at the blog as just another giant listings ad, or a professional resume, and are determined to use the most “professional” voice you’ve got.  Most of the time, that makes for dry reading.

War stories are inherently personal, inherently unique, and inherently reflect your storytelling voice.

The Value of Storytelling

It is said that literature began as a bunch of cavemen sitting around a fire telling each other stories of hunting trips, birth of their babies, and the like.  Storytelling is baked into our collective consciousness in a way few things are.  Some people, like Seth Godin, believe that all marketing is just telling a story.

So start telling stories.  It’s the most human of activities.

-rsh

Last week, I had an opportunity to attend an extraordinary meeting with some of the most senior people at NAR, on the topic of social media.  I have to thank Jim Duncan for putting the meeting together, and of course, I am grateful to the leadership at NAR for being willing to listen to a bunch of blogger types.  I finally got the chance to meet Jim in person, and it was absolutely fantastic to meet and converse about social media, web, real estate, and marketing with some of the best and brightest in our industry.

Quick shout-outs then to: Dale Stinton, Frank Sibley, Mark Lesswing, Pamela Kabati, Hilary Marsh, and Keith Garner from NAR.  And to my fellow realestistas Jim Duncan, Ben Martin, Jay Thompson, Joe Ferrara, Eric Bryn, and via telephone, the redoubtable Benn Rosales, a tip of the ole hat.

However, this is not a post about that meeting.  It is, rather, about a concept that was brought up that has really intrigued me: multi-layer brand, and how that interacts with social media.

Multi-Layer Branding

The notion is that all working realtors (or REALTORS, more precisely) have what one might call a “multi-layer brand” and that this will have enormous impact on social media (indeed, on all marketing efforts) for real estate services.

Let me illustrate:

So the idea here is that every single REALTOR has multiple brands.

First, they are a REALTOR, a member of the National Association of REALTORS.  Presumably, this distinguishes them from the non-REALTORS, who I understand are referred to as “licensees”.  Those non-REALTORS are nonetheless real estate brokers and agents, fully licensed to help people transact business.

Then they are often members of large franchises or networks, such as Coldwell Banker.  Again, this distinguishes them from people who are not CB agents and do not carry the CB brand.

Then you have brokerages — in our industry, many/most operate under their own brand name as an extension of the franchise brand.  (Those that are not franchised operate under their own brand.)  So presumably, being with Coldwell Banker United is different from being with Coldwell Banker Joe-Blow Realty.

Next tier down may be either Teams or Offices.  Now this brand is trying to distinguish the realtor from others who are not part of the “Jill Smith Team”.  It’s trying to say, “Sure, those people are also CB United REALTORS, but we’re better/different because we are the Jill Smith Team.”

And finally, you have the agent’s personal brand:  “That Joan Cartwright is a real expert, and so friendly too!”

As the graphic attempts to illustrate, brand awareness (or breadth of brand) is higher towards the top and drops as you go down the layers.  More consumers have heard of REALTOR than have heard of Jill Smith Team.  Conversely, and interestingly, brand value (or power) is lower towards the top and higher towards the bottom.  For example, you may be referred business because you’re Joan Cartwright, super-agent, but only rarely (if ever) will you have a consumer say, “I’m giving you this listing, because you’re with Coldwell Banker, instead of those Keller Williams people.”

Born of Marketing, Growing Up on Social Media?

What I find interesting about this is that the multi-layer brand is the inevitable result of past marketing strategies focused around mass communications media.

It is much easier — and more effective — for national organizations to leverage TV, radio, and national print campaigns to create a national brand than it is for a local agent team to do so.  In fact, it probably makes no sense for Jill Smith Team to buy a Superbowl ad, but it may very well make a lot of sense for NAR to do so.

Since traditional marketing had a more-or-less direct correlation to the amount of spend, awareness is inevitably tied to size.  At the same time, over the past decade or so, the erosion of brand value not just for real estate brands but for almost all brands has been accelerating as consumers become more and more networked, and more and more skeptical of advertising.  As the Wired article says:

A study by retail-industry tracking firm NPD Group found that nearly half of those who described themselves as highly loyal to a brand were no longer loyal a year later. Even seemingly strong names rarely translate into much power at the cash register. Another remarkable study found that just 4 percent of consumers would be willing to stick with a brand if its competitors offered better value for the same price.

And,

The single biggest explanation for fragile brands is the swelling strength of the consumer. We’ve seen a pronounced jump in the amount of information available about goods and services. It’s not just bellwethers like Consumers Union and J.D. Power, established authorities that unquestionably shape people’s buying decisions, but also the crush of magazines, Web sites, and message boards scrutinizing products.

Hinted at in the Wired article is the growing power of “social media”.  New-school web-heads might look at “message boards” and laugh at it as being so Web 1.0.  But Facebook is really just a message board, which are in turn just a prettier face to the old Usenet newsgroups.  Plus ςa change…

One of the observations I made about social media at the meeting is that no matter what else social media might do, it definitely does one thing: bypass traditional media.  Brands that were born from traditional media, and sustained by traditional media plays (like mass advertising and PR) need to look at social media with some care and even trepidation.  Because social media allows other players to bypass traditional media, one of the implications is that the higher-awareness brands (whose value is already weak) start losing awareness to boot.  If you’re a consumer getting most of your information from Twitter, blogs, and Facebook, you may never have even heard of Keller Williams as a brand.  You’re certainly not going to have any impression or emotional connection to the KW brand.

The Challenge

The conundrum of the higher-awareness brand owners then, such as NAR, is what to do about social media.  There are three available strategies:

• Alienate
• Ignore
• Embrace

Alienate

An organization (such as NAR) can try to alienate social media.  It can prohibit its members from blogging, from using Twitter to talk about the organization, and the like.  It can leverage its power in traditional media to denigrate these “upstart know-nothing bloggers”.  Traditional news organizations have tried taking this tack in the past, with disastrous results.

For real estate, at this stage of the game, I believe that trying to alienate and denigrate social media would just make an organization look out of touch and stuck in the past.

Suffice to say, alienating social media is not recommended as a strategy.

Ignore

You can try to pretend that social media doesn’t really exist, or if it does, it’s not something to be taken all that seriously.  While not prohibiting involvement, you can choose not to promote involvement either.  Have a website, even a blog, but don’t expend a lot of effort beyond that.

A variation on the theme is to do social media as a ghettoized niche of marketing.  Far too many companies that have “social media” also have “corporate communications” and “public relations” and so on.  Only those people who work in “social media” are allowed to be the voice of the organization, and blog posts have to be approved by the Director of Social Media or some such.

The trouble with this is that “social media” is just a channel; that isn’t really important.  What is important is the attitude that makes “social media” work — the natural, authentic, human voice.  When you have segregated social media into a small corner of the overall marketing effort, then what you are really trying to do is ignore it, hoping it’s a fad that will go away.

Depending on the organization, this very well may be the ideal strategy.  If you’re Apple, for instance, I don’t know that it pays for you to let your people blog freely or twitter away.  So much of Apple’s brand image, and therefore its power, is a creature of traditional media that is tightly controlled by some very talented marketing people.  Why mess with it?  Sure, have a blog; but make sure it’s controlled.  Have an Apple Facebook page, but make sure that it’s tightly controlled.  If traditional methods are working, then why mess with it?

Embrace

The final strategy is to really embrace social media as an organization.  The challenge here is that social media at its heart is not a tactic, but a culture.  It means adopting Cluetrain principles of lowering barriers to communication between the people within your walls to consumers, interest groups, and stakeholders outside of those walls.

Social media isn’t just a corner of marketing; it becomes marketing.  Corporate communications & PR are subsumed into the social media culture of openness and authenticity.  There ain’t nothing to spin, if your culture is about openness and honesty, is there?  Everyone from the CEO down to the janitor become voices of the organization, for good and bad.  There is no “funnel” of engagement into the organization, anymore than there is a “megaphone” of the Corporate Voice out to the public.

Understandably, this state of affairs would make most marketers and most corporate executives extremely nervous.

Enter Chaos

As if wholesale organizational cultural change were not nerve-wracking enough, now we add multi-layer brand effects to the mix.

If a higher-order (in terms of awareness) organization starts to engage in social media — meaning, relaxing the barriers between its people and the public — what impact does that have on downstream brands?

So for example, say Coldwell Banker really embraces social media.  All of a sudden, you have corporate executives from CB national blogging openly and freely about real estate, about brokerage, about what’s going on inside 1 Campus, and so on.  They’re providing a lot of direct interaction with consumers, agents, and whatnot.  They start going on Twitter and engaging with individual agents of CB, even individual consumers.

While this may be wonderful, there will be a sort of a “flattening effect” that takes place.  The national Coldwell Banker brand starts to be defined by the open conversation that takes place directly with consumers and with agents.

So if you are the director of marketing for CB United, what does that do to you and your plans for the CB United brand which you are trying to differentiate from other CB-branded companies?

What if you’re Jill Smith, and you’re trying really hard to enforce a certain way of doing business in an effort to differentiate yourself from the rest of the CB agents out there?  What if your strategy was to use social media to convey to your clients that you “get it”, that you’re “authentic”, not like those other CB agents?  And here comes CB corporate essentially granting that brand image of authenticity to all CB agents by virtue of their social media efforts.

While this impact of top-level brand on lower-level brand has always been in place for any multi-layer brand, social media exacerbates the problem because of its global reach, combined with direct interaction.  Jill Smith Team can overpower traditional media in its local market by focusing the ad spend in local channels, and public relations strategies focusing on local publications.  But with social media, it takes the same (low) effort for the local consumer/agent to follow @jillsmithteam on Twitter as it does to follow @coldwellbanker.

And Coldwell Banker’s blog is likely to have far higher SERPS on various search engines, and have huge multiples of readers/subscribers than Jill Smith Team’s blog.

Now what?

Many Questions, No Answers

One of the reasons why I wrote this is that I have no answers.  It’s a new area, a new conundrum.  The amount of spend — higher but broader at the top, lower but more concentrated at the lower end — has little impact on social media.  Conversely, those lower-down on the pyramid can get completely swamped and silenced by those higher up.

I’m sure there’s a way out of this maze, and that we’ll all figure it out together.  But right now, there are far more questions than there are answers.

I have a feeling that the solution will involve something like a cascade of value via cascade of content, with a coordinated — rather than a commanded — social media effort from the top-down, bottom-up, and in-between.  The solution might involve one or more of the layers simply atrophying away to meaninglessness as openness becomes the norm, rather than the exception.

We’ll be returning to this topic in the future.  In the meantime, what are your thoughts?

-rsh

has been announced.

-rsh

In a time lost in memory, in a world far far away, I openly hypothesized that the future of real estate brokerage might look more like a law firm than brokers of today:

Everyone else is an employee. They get a salary, they get benefits, and if business is good, and they’re good, then they get a bonus. If they’re not, then they get fired. The firm is legally responsible for their actions in the course of work (respondeat superior) but in return, the firm clearly directs the how, when, what, and where of the employee’s activities. And the firm takes 100% of the revenues, with no splits, no commissions, and so on.

Junior agents in particular are valuable to the firm only insofar as revenues generated > money spent on that agent. What could a junior agent do to prove such value?

1. They can do the actual work, freeing up the partners to go out and bring in business.
2. They can bring in business.

It is a waste of the firm’s time to have a senior partner spend time showing houses; that’s for his associate, who may in fact be better at doing that. He might spend that time either calling on more potential sellers, or speaking at local Chamber of Commerce events, or writing blogs proving how much of an expert he is in investment real estate in the Modesto, CA market.

I went on to theorize further on a bunch of things, and have had some really interesting conversations with realestistas about whether this model was possible.

Now, I see this come across my RSS reader — Independent Contractor Model Outdated; Mimic Teams Instead:

If you could re-invent your company in any way possible, what would it look like?

We would begin with employee agents only, not the out-dated “independent contractor” model currently in place. The premise would be that these brokers can make more money per hour than under the current model, have more time off than current agents do, have more regular hours they could count on, have a team of specialists to assist them, in the form of transaction managers, marketing specialists, etc., leaving the agents free to do what they do the best, i.e., interface with willing buyers and sellers. In this model, employee agents could handle many more transactions than any current agent can, because others on the team handle the ancillary details.

The profile for the employee agent does not exist typically in the current “independent contractor” brokerages; the pool is external, perhaps younger, needing income, prospects in place, and perhaps benefits. The business in this model is created by the brokerage and retained by the brokerage, affording the broker/owner the control of business created and closed by the employee agents. The model for this is not new; we need only to look within our brokerages at the “teams” that exist there and mimic that model right in our own offices! This new model requires a shift from the “agent-centric” past to the “consumer-centric” present and future, which is where our consumer really lives! We need to show up. [emphasis added]

O.O

The writer here is not some random blogger like yours truly spouting off theories.  Nancy Rusinak is the broker-owner of a successful brokerage company in Colorado.  She has the actual ability to make this happen.

The blog she posted this on to share with the world is not some random blogger’s personal playpen either; that’s the official blog of the Leading Real Estate Companies of the World, the largest network of independent brokerages in America.

Dare I think that we may see the whole “Firm as Model” actually happen?

-rsh

So two events conspired to make my evening interesting.

First, there was a brief Twitter exchange between Marc Davison, he of the Kilo-class wattage, and Joe Ferrara of Sellsius:

Joe: @1000wattmarc Riddle me this: When looking at a specific home zstimate, what value is knowing the median error rate for a city?

Marc: @jfsellsius Totally. After receiving my CMA last night and going through it, I realize how much value the agent offers in this area.

Joe: @1000WattMarc Certainly no.The error rate is a red herring to lend air of authenticity. It has no real value,even 2 those who understand it.

Marc: @jfsellsius The question I have is — why did it take getting a CMA to realize the value? I know the value of BMW without owning one.

Marc: @jfsellsius What needs to be illustrated here is how much agent value is buried beneath the surface. Points to areas they can improve upon

Second, I read this post by Eric Bryn over at Real Estate Relativity on Antonin Artaud, a long-dead French playwright, and real estate (no, really, I swear):

Similarly, it seems to me, the real estate industry is due for an Artaud-like challenge to existing norms with respect to representation, compensation, and professionalism. The run-up to 2009 was indeed a real spectacle, but the tent has fallen, the elephants have flattened the performance space, and the audience seems to have run away. Indeed, many have written about the current state of affairs.

Now, I know what you’re thinking: “Boy, Rob’s life must really be sad if those things made his evening interesting.”  But let me assure you that my life is not quite as sad as it may seem.  Because those things made me wonder — as I often do as I wait for my entourage of rock stars and Ford models to arrive at my house, so we can go over to George Clooney’s place for a nightcap — about agent value.

How Much Is that Doggie in the Window?

The whole conversation began, I think, when Joe Ferrara asked over Twitter what the difference was between a normal CMA and an “advanced” CMA.  (CMA = Comparative Market Analysis).  A CMA purports to give the consumer a professional opinion on the fair-price of a particular property.

As this Realty Times article says:

This is one of the areas in which the real estate industry really earns its keep – by showing you in black and white what your competition is.

…

It takes a skilled person to be able to use it. For this reason , the CMA will always need to be interpreted by a professional or with complete objectivity by the seller or buyer.

I have no particular opinion on CMA, nor am I qualified to judge whether it takes a skilled person to be able to use it or not.  I do think, however, that much of what is perceived to be an agent’s value is tied up in this ability to look at comps, look at intangibles, interpret the mystic omens, and price property.

The thing about pricing, however, is that it’s nothing more than a guess.  Even the most sophisticated pricing models — that make advanced CMA’s look like blindly throwing darts — utterly failed to predict the financial collapse of 2008.  Turns out, these sophisticated models, built by math geniuses and bona-fide rocket scientists, were really nothing more than guesswork cloaked in arcane language.

When it comes right down to it, what something is worth is precisely equal to what someone will pay for it.  Not in theory, but in legal tender.  You can use historicals, comparables, trend analysis, macroeconomics, risk-adjusted capital asset pricing models, whatever to argue that the price should be X or Y, but the price will be what the buyer and seller end up agreeing on.

As it happens, there is a mechanism that pretty much always works for finding market price: the competitive auction.

The Ebay Effect

For the purposes of theoretical discussion, let’s imagine a world in which all sellers of real estate just put their homes on Ebay.  Oh wait, we don’t need to imagine that much: Real Estate On Ebay.

Here’s one listing in Dayton, OH:

At time of writing, the highest bid on this house was $8,600.

Now, as it happens, the real estate market in the United States is not yet ready to embrace full open, competitive auctions over the Internet.  The number of people willing to spend hundreds of thousands on a website is, well, pretty small.  And I don’t believe Ebay will take over the real estate market.

But let’s imagine that it does.  That every seller and every buyer goes on to Ebay to find, and buy & sell properties.

In that world, what is the value of the agent?

Pricing is pretty much automatic — it’s what some buyer and some seller agree on.  Comparables, historicals, and so forth have very little bearing — except that they might influence a seller to set reserve prices at a point where there are no buyers or get a buyer to bid far over what the seller would have been happy to accept. Point is that pricing is no more a matter of expertise, but of simple agreement.

Value in Transparent Markets

There is no doubt that realtors will have some value in a perfectly transparent market.  As the comments in this old thread shows, realtors actually do quite a bit more than just provide pricing guidance.  They do consulting work, they provide psychological counseling, they handle the paperwork of the transaction, and project manage the whole thing.

However… the emphasis on consulting, on “local expertise”, and the like is interesting.  Because so much of that consulting, local expertise, and the like today is tied up with pricing.  A realtor is a local expert who really knows the local market, and can help you price your house to sell or give you guidance on what you should pay as a buyer.

Much of the “consulting” is tied up with how to present, market, and stage a property so that it fetches the maximum price.  Or conversely, how to look behind the marketing to determine the “true fair price”.

Negotiation is a skill brought up often by working realtors.  Well, that’s a particularly useless skill in an Ebay world.

In an Ebay world, the realtor’s value appears to consist of doing paperwork, providing psychological counseling, and project managing a transaction — and right now, I’m thinking that justifying taking a 6% commission is going to be difficult based on those services.

Implications, Simplifications

What the experiment shows me is that so much of a realtor’s “value” today is tied up with pricing.  Despite all of the data and information in the hands of consumers today, they would still rather have someone else tell them what to charge or what to pay.

And if this ability to price properties lies at the heart of agent value, what implications does that raise for agents and brokers and real estate company marketers around the country?  For one thing, should smiling photos really be on every realtor business card?  For another, what sort of investment should brokerages be making into mo betta pricing models and training to use them accurately?

There are dozens of questions that arise from the thought experiment.  Which was sort of the point.  Which is why the two events — Marc and Joe’s debate, and Eric’s post — made my evening so interesting.

Now I have to run — Brett Michaels and boys are here with the Ford models, and George is waiting.

-rsh

Lawyers — probably the most risk-averse group of human beings on the planet by training, vocation, and personality — are starting to embrace social media and web marketing principles.  There are some rather interesting lessons from that world for realestistas.

For example, this article from Lawyers USA (h/t What About Clients?) titled, “Are you overlooking your best marketing tool?”:

Many law firms are missing a marketing tool that is right in front of them: their own staff.

While all law firms believe the mantra that every staff member is an ambassador for the firm, few make it an explicit element of firm culture.

In fact, your staff is already marketing all day long – they just need to be reminded of it.

“If you really believe, as I do, that everybody is marketing from the moment they wake up to the moment they sleep – meaning that you are persuading someone as to the validity and worthiness of your idea, whether the idea is ‘Hire me,’ or the idea is selling your story to a judge or jury –then everything that involves your people and you is marketing,” said Edward Poll, founder of LawBiz Management Co. in Venice, Calif.

But lawyers and law firm management have not successfully transmitted this message, said Tom Kane, principal of Kane Consulting Inc. in Sarasota, Fla. and author of www.legalmarketingblog.com.

“Everyone needs to understand and buy into the idea that they have a significant impact on the firm’s brand,” he said.

For small firms, whose clients more often visit the office in person, it’s even more critical that everyone from the receptionist to the paralegals to the people in the copy room know that they represent the firm. [Emphasis added.]

This brings together two separate, but related, strands of something I’ve been talking about on this blog for a while.  One is the notion of a integrated real estate brokerage modeled after law firms.  The other is the idea that a broker’s brand is in the hands of the weakest, least competent agent.  Every broker, indeed every company, talks a whole lot about customer service.  You can’t read a corporate mission statement these days without hearing about how they’ll be focused on providing excellent customer service.

And yet… how many companies actually go beyond pretty words on the corporate website, or lofty phrases of the mission statement, and do something about service?  The reason, as the author of What About Clients blog points out, is that customer service is hard to do:

Client service is very hard, and most businesses don’t even know it. So they don’t build it, they don’t work hard at keeping and improving it, and they don’t enforce it.

The author is Dan Hull, a partner at a law firm in Pittsburgh, who is quoted in and written about in the article above.  I think his suggestions are something brokers might consider.  I think they can be summarized as Train, Evaluate, and Enforce.

Train

The first suggestion is to make client service an official policy of the firm, and to let your people know what is expected of them.  And if you’re training everyone to be client-centric, then you may as well let it influence your hiring decisions as well:

“Teach your staff that they are marketing the firm. Give them instructions on how to answer the phone and interact with people and the standards of care you would like to see,” said Poll.

This message should come across as early as the hiring process.

When Dan Hull, a partner with Hull McGuire PC in Pittsburgh, interviews potential employees, he introduces “The 12 Rules of Client Service,” a 30-page book of required reading created by his firm that includes such items as Rule #6: “When you work, you are marketing” and Rule #9: “Be there for clients – 24/7.”

Evaluate

Training, of course, merely sets the table; to implement it, you have to evaluate the impact and create a system of incentives and disincentives.

Employees at his firm know they will be evaluated based on their customer service skills and are encouraged to evaluate the partners on the same.

Presumably, at Hull’s firm, annual bonuses, perhaps even raises and promotions, are based at least in part on how the employee has carried out client services.

A lot of policies fail in implementation because there is no evaluation, no metrics.  No matter how great the idea, no matter how thorough the buy-in from people, if you can’t measure how someone is executing on the idea, then success is highly unlikely.

Furthermore, talking about evaluation and metrics forces you to get real.  “We’re client focused!” is easy to chant.  But it’s meaningless.  “We have 95% client satisfaction rating” is harder as a slogan, but it’s meaningful.  “I return all client emails/phone calls within 5 minutes” is pretty uninspiring, but it’s something that really can be measured for an individual.  And talking about metrics and evaluation forces the idea-guys to boil down the ideas to specific actions.

Enforce

Perhaps the most illuminating suggestion, Hull is absolutely clear and absolutely unforgiving when it comes to enforcing client service:

He bluntly tells everyone in the firm the rules are not a gimmick and anyone who doesn’t buy into them will be fired.

“The only way you can get fired in my firm is to make a joke about client services. We are dead serious about it,” said Hull, author of the blog www.whatboutclients.com.

And he has followed through on that promise, such as when he fired an employee on the spot for refusing to take a phone call from a client over a weekend when both partners were out of town.

For what it’s worth, without enforcement, it isn’t client service; it’s lip service.

It’s all just pretty words, and useless metrics, unless there’s actual enforcement.  Now, “enforcement” has a strong punitive connotation, but it really needs to be both positive incentive and negative punishment.

If an employee is doing great, performing awesome client service, then he needs to be rewarded — and the rest of the firm told how, why, and how much that reward is being given.

Of course, in contrast, if someone isn’t following the firm policy on client service, then that person needs to be punished, even terminated.  Lack of enforcement simply means that the organization understands that all the “client service” hoopla is just hype.

Medium, Meet Message

Due to some recent conversations on the topic of social media, the idea of client service really strikes me with some force.  Social media, after all, is still a channel for communication.  It does not, by itself, bring a message forward at all.

And amidst the buzzwords, the strategeries and tactics for using social media, doesn’t it sometimes feel like we’re all learning how to speak in all directions without thinking of what to say?

So here’s a thought: client service is the message.

Whether you use social media, Web 2.0, Web 1.0, telephone, U.S. Postal Service, or stone tablets, the message remains the same: client service.  Whatever that might mean, however you might measure it, and however you go about the business, at the end of the day, doesn’t the practice of real estate services come down to providing some sort of client service?  And beyond the whole small-is-beautiful or bigger-the-better, isn’t the determining factor for victory superior client service?

So ask yourself this: Is your company, your business, about client service?  Or lip service?

-rsh