Notorious R.O.B.

Over at 1000watt, there is a rather interesting debate going on with some heavy hitters contributing, on whether big brokers should or should not support innovations and tools by the MLS or Association. Go check it out if you haven’t already.

The general thrust is that Brian Boero and Marc Davison both believe that innovations are an unqualified good, and that big brokerages have no reason to oppose innovation wherever it occurs — even if that is at the MLS, at the local Association, or at NAR. As Marc writes:

If you share this belief, then I submit it would be impossible for you to ever stand in the way of any innovation or impede anyone from offering that innovation. Even an MLS.

If you share this belief, never fear a tool. And always proceed by having supreme confidence in what you could do with any tool versus others.

The basic idea is that the big brokerage, with its superior execution ability will benefit more from any tool or feature offered by the MLS/Association.

The counterpoint, articulated well by a few folks who are in a position to know, is that brokerages invest heavily in technology, in tools, and in innovation. And that the MLS or Association offering those same capabilities out results in an unfair leveling of the playing field. For example, here’s Pam O’Connor, CEO of Leading Real Estate Companies of the World:

Many brokers (and not just the largest ones) invest heavily in tools for their agents for the purpose of differentiation with consumers and attracting the best and brightest. It’s called competition. To have their local association or MLS then offer the same thing dilutes that investment and competitive edge.

It’s an interesting discussion.

Well, I have a concrete suggestion to every MLS that I think would go a long way towards solving this particular conundrum. I happen to think it’ll help some other conundrums as well.

The MLS should cease collecting payment from the agent/member; it should, instead, collect payment directly from the broker, and only from the broker. Change the customer of the MLS to be the brokerages, and some of these problems become easier to think through.

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pecunia loquitur

One of my favorite writers/bloggers, Brian Boero of 1000watt, has another gem up on his blog, in which he excoriates an unnamed “large regional company” for recruiting “dual-career agents”. It’s worth a read, and it’s short.

In it, he makes this claim:

Companies with strong organizations, a discriminating approach to recruiting, and standards around service delivery are beginning to pointedly position themselves against the companies in their markets without these things.

It’s resonating.

That’s fantastic news. Now, show me the money.

Todd Waller, in the comments, writes, “Thank you for continuing to be a beacon of sanity in an industry that is easily sidetracked by the siren’s call of the almighty dollar.”

Pam O’Connor, a brilliant executive and longtime veteran of the industry, also comments, “Until our industry becomes about talent selection instead of recruiting, and about standards and accountability instead of churning bodies and hoping some will “take,” consumers will continue to lack confidence, making it an uphill climb for the true professionals who are tainted by the rest.”

Agree wholeheartedly with both Todd and Pam. Now, show me the money.

It’s quite simple. Brokers are not in business to screw consumers. Nor are they in business to bring shame upon the industry. They’re in business to make money, and turn a profit.

The reason why these business models are embraced is because they make money. If the “higher plane” model of real estate that you, me, Brian, Todd, and Pam all espouse made more money than the scrape-the-bottom models, and killed the unprofessional models in the marketplace, then everyone would swiftly abandon those and join the Raise The Bar Brokerage model.

To that extent, I disagree with my friend Todd. The siren’s call of the Almighty Dollar is the reason to be in business. Otherwise, convert the brokerage right now, today, into a non-profit and Do Good.

So here’s the challenge for the critics of the broken brokerage model of our industry: start posting numbers. Don’t just tell me and the world that companies are “positioning themselves” against the crap competition; tell me that those companies are kicking the ass of the crap competition, and by how much: Good Professionals Realty has 62% market share, made $4 billion in sales, at 32% profit margins last year, vs. Generic Crap Brokerage who has 12% market share and lost a million bucks last year, despite having 500 more agents than Good Professionals Realty. That would be welcome news.

Let’s stop banging that same old drum, complaining about how crappy some agents are; we all know. Do let’s start banging the drum of how talent selection, standards and accountability yield superior financial performance. A respected firm like 1000watt can undertake a benchmark study of broker performance, broken down by talent selection & standards ratings, and show us all that indeed, the high road pays better than the low road. A major company like Leading Real Estate Companies of the World can commission such a study.

In fact, here’s a call to action. Send me your recruiting, training, standards, accountability and operating processes along with 3 years of financials. I’ll gladly, and for no charge, do whatever number crunching and happily start compiling data on financial performance of the high road brokerage models. I’ll never release your individual info, but happily benchmark your performance against everyone else who sends me data. I’m probably not going to get the low road guys to send me anything, but at a minimum, if we can show that the high road results in 15% revenue growth year over year, 20% market share growth year over year, and healthy, above-average profit margins… maybe some of those low-road guys might see reason to change.

Because pecunia loquitur, my friends. Money talks.

-rsh

On November 6th, at roughly 3:15PM Eastern Standard Time, the National Association of REALTORS declared war on the rest of the real estate industry.  To be fair, NAR probably did not realize that it did so.  Judging by the initial responses, it doesn’t appear to me that most people see what I saw.  But, probably because of my twisted nature and my penchant for focusing on the dark side of human nature, I am predicting nothing short of civil war in the real estate industry going forward unless REALTORS Property Resource (or RPR) in its current form is immediately scrapped.

What brings forth such hyperbole?

RPR, or REALTORS Property Resource, was a project shrouded in secrecy.  Brian Larson’s post of October 19th, 2009 is a pretty good pre-unveiling summary of the questions and concerns around RPR.  Brian Boero’s initial take is a very decent summary of the post-unveiling.  But since Brian is a much nicer, much sunnier, much more positive guy than I am, I believe what you’ll get from Brian is the “Glass Half Full” vision.

Strap in for the darker vision.

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