Category Archives: Management

What If Real Estate Brokers Worked Like Car Dealerships?

used-houses-lot

My friend Eric Stegemann, whom many of you already know as a frikkin’ brilliant dude who runs Tribus, posted something on Facebook today and in our banter, got my thinking going.

Here’s his post:

And obviously, you can see my comments too.

I thought the similarities between car dealers and how they feel about automotive third party websites (like TrueCar) and real estate brokerages and how they feel about real estate third party websites (like Zillow) were superficial at best, because of vast differences in the business model of car dealerships and real estate brokerages.

But that got me wondering… what would it look like if real estate brokerages actually functioned like a car dealership did?

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Brief Post: Why Young People Don’t Become Real Estate Agents

Over on Facebook, my friend Nick Solis is on a roll about the aging REALTOR population.

There are some good points being made over there mostly from younger REALTOR types. But I don’t think the issue is all that complicated. So before I go board this plane, I thought I’d jot a few thoughts down on why young people don’t become real estate agents.

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Reading the Union Position on Monell v. Boston Pads

One of the law firms who filed the union-side amicus brief

One of the law firms who filed the union-side amicus brief

As my readers know, the recent Massachusetts Supreme Judicial Court (“SJC”) handed down its ruling in Monell v. Boston Pads. I wrote about that case and cautioned against irrational exuberance from the results, because the results were not exactly a huge victory for the real estate industry’s position.

Thing is, Bararsani v. Coldwell Banker, the ginormous California case that everyone has been watching has yet to be decided, and one rightly wonders what the impact (if any) of Monell v. Boston Pads might be to that case. There is no controlling authority, since SJC is the state supreme court, not the Federal one, but there may be persuasive authority to the judge in Bararsani. I touched on that in my previous post.

Now one of the more interesting subplots of the Bararsani case — and all real estate independent contractor cases — is the involvement of the labor unions. One piece of scuttlebutt I heard from the folks at CAR (California Assoc. of REALTORS) is that CAR approached the legislature to make it clear that real estate agents were not to be considered as employees… and the legislature refused, because the unions didn’t want that. (What that says about REALTOR political power is a subject for another post, another day.)

So… I thought it might be interesting to try to understand what the argument of the labor unions are. Thankfully, the unions — by way of an amicus brief — made its arguments clear to the court in Monell. I understand this is probably of zero interest to those readers who aren’t law junkies or aren’t involved in strategic planning for the Bararsani litigation, but… what the hell. I think it’s interesting.

Notorious ROB — where I read law briefs so you don’t have to. :)

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Monell v. Boston Pads Ruling: Hold Off on the Jubilation

Earlier today, the Massachusetts Supreme Court handed down its decision on Monell v. Boston Pads, one of two independent contractor status lawsuits that the real estate industry has been watching with baited breath. (The other one, still being litigated, is Bararsani v. Coldwell Banker in California.)

Bottomline: the brokerages and the REALTOR Associations that backed them won. I can almost hear the champagne corks popping from my house in Houston. Here’s the press release from MAR (Massachusetts Association of REALTORS):

This decision is a win for consumers and the entire real estate industry because real estate brokers and salespersons will still be able to work as independent contractors. Affiliating as an independent contractor  has been the backbone of the profession for more than 100 years.

“We are pleased that the Massachusetts Supreme Judicial Court affirmed the pro-consumer choice by real estate professionals to affiliate as either independent contractors or employees.” said 2015 MAR President Corinne Fitzgerald, broker-owner of FITZGERALD Real Estate in Greenfield. “This relationship has worked for generations and it is what consumers have come to expect regarding agent entrepreneurship and availability. We’re glad the choice will continue.”

Inman News headline on the story looks like this:

Appeals_court_upholds_centurylong_real_estate_broker_structure_in_epic_win_for_industry_and_consumers___Inman

And on Facebook and elsewhere, the celebrations continue.

First of all, I’m glad the case came out the way it did, and I can get behind the whole “this is a win for consumers” angle on the decision.

But might I suggest tapping the brakes on this joyride a touch? I’ve read the actual opinion itself, and while this is not legal advice, it is advice to consult your attorney when looking at how you’ve structured your brokerage operations.

This ruling is not an epic win. The ruling does not confirm that real estate agents are considered independent contractors. In fact, it is not a clear-cut victory for the brokerages at all. As Mos Def says, “Relax, pump the brakes. You’re speeding, money.”

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Meditation on Meaning of Membership

tshirt-back

The talk within the industry these days is all about technology. Well, by “these days” I suppose I mean the last ten years or more. Sometimes I honestly wonder who talks about technology more: REALTORS or venture capitalists. Go look on any of the social media channels frequented by real estate folks, and all the hubbub is about AMP, RPR, Upstream, Zillow, mobile apps, etc. etc.

Well, I just got home from an important engagement — one of the most important I’ve undertaken in my (comparatively brief) career as a consultant to the industry — and I wanted to jot some thoughts down that has nothing to do with technology but everything to do with the shape of the industry going forward.

The question is, what does membership mean?

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