I’m working on Part 3 of the Does Size Matter series, but a conversation on Twitter turned fairly interesting and fairly intricate, so a quick little post. This post is heavy on inside-baseball stuff about the real estate industry and the RE.net.
First, the setup of the debate:
@ProfessionalOne (Michael McClure) whose company has adopted strict standards for its agents says on Twitter that top producers are not necessarily the best agents who give the kind of client service that he expects from his people.
I ask what the average earning of a “RTB Agent” (however one defines that) is. Michael says it’s between $80K – $100K a year.
I then ask: “don’t you think one issue is that if pursuing a non-RTB path leads to greater earnings for the agent, the incentive is…”
@benjaminbach (Ben Bach, I assume, heh) suggests that #RTB (a real estate industry thing where various people are calling for greater professionalism, higher standards, and the like) is a good thing. I agree, but then we get into a whole discussion. On Twitter, which isn’t great for that.
So here’s the point:
Take someone who is the #1 overall producer in a market. A super-agent who brings in millions in GCI, and personally earns well over the $80-$100K a year that Michael McClure talks about. Say that agent makes $500K a year selling real estate.
Either that superagent is a supreme practitioner of #RTB or he is not. This is a binary logical thing.
If that superagent is a true professional, highly qualified, who provides awesome client service, resulting in many referrals and so on, then #RTB should focus on copying the business practices of such superagents.
If, on the other hand, that superagent is not those things (as Michael seems to suggest) then #RTB is in trouble.
Because the argument for #RTB to the individual agent goes something like this: You’ll make less money than you could, but you’ll be happier because you’re a moral person. Some people might agree and go that route; others, however, will not. People have different priorities, and different ideas about what “happiness” means.
Generally speaking, however, human beings are motivated more by greed than by altruism. If joining Michael’s firm means that I’m sacrificing personal income potential… that’s a tough sell.
Ultimately, Ben agrees that it doesn’t much matter what we insiders think about a topic; the real test is in the marketplace. Do buyers and sellers of real estate see value in what is being offered or not? The ultimate test, then, is in financial metrics: revenues and profits.
Ergo, my argument is that #RTB has to show that it leads to higher revenues and higher profits for everyone involved, from the agent to the broker. We can’t simply assume it; we can’t idealize it; we can’t just pay lip service to how wonderful it would be if realtors were professionals who went the extra mile for every client. We have to see how it does in the marketplace.
But if the incentive structure is setup from the start as “less money, more self-esteem”… that strikes me as a loser in the marketplace.
For one thing, what is the incentive for brokers to “RTB” if that leads to less money? Maybe the RTB agents all go flock to that shop, but if all of the top-producers are at my shop, and my profits are higher than the RTB shop… why change?
Incentives = everything.
I hope that clarifies what I’m talking about. Your thoughts? What am I missing here? What other proof statements could be used?