Notorious R.O.B.

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

We're Number One! We're Number One!

This might be the shortest blogpost in history of Notorious ROB… because I’m just genuinely curious and don’t fully understand this.

A recent Facebook update from a friend-of-a-friend said something along the lines of (and I’m paraphrasing here both to protect the innocent and because I’m too lazy right now to go take screenshots and black things out)… “Celebrating my five years as manager of Brokerage Office XYZ.  We started with 10 agents, and now we’re the largest in the area with 200!  How fantastic this has been!”

And the comments/responses are all like, “You go!” and “How wonderful!” and “You’re doing a great job!” and so on.

Here’s what I don’t quite get:  Why does the number of agents matter?

I’ve seen/heard this from time to time in the industry.  A broker at a conference might say something like, “Yes, Company X is interesting, but it’s insignificant because it only has 25 agents, while my company has over 2,000.”  And I’m left scratching my head because as far as I know, the number of independent contractors you have working for you doesn’t appear anywhere on your income statement, cashflow statement, or balance sheet.

If the aforementioned manager had said, “Five years, and we’re tops in revenues, tops in profits, and we’re making money hand over fist, y’all”, that makes perfect sense to me.  Or if the aforementioned broker had said something like, “It’s nice that Company X is doing well, but they can barely make rent, while my brokerage is doing $5m a month in free cashflow from operations” or some such.

But really, quite often you hear brokers, managers, and even agents brag about how big their company/office is by reference to the number of agents.  With some 40+% of real estate agents (according to MLS sources) doing ZERO transactions, why is the number so significant?

Would love to hear your thoughts/explanations.

-rsh

Just thought some of you might want to check out this new post over on 7DS Associates blog:

The annual Brokerage Performance Report put together by REALTrends is one of the most useful and important studies for the real estate brokerage industry.  Unfortunately, the last report was released in 2007, and nothing has been released since then.

The trouble with the 2007 Report, as valuable as it is, is that it uses 2006 data from respondents who submit the information voluntarily.  And housing market started to decline sharply really starting in 2007, and 2008 may have been the annus horribilis of the real estate industry.  It may be that the respondents of the REALTrends study simply didn’t want to tell anyone how horrible a year 2007, and then 2008 was even worse.

Either way, lacking 2007 and 2008 performance data means that it is nearly impossible to guess what constitutes “average” performance.  And lacking information means decisionmaking is at best made in a vaccuum with no baseline, and at worst is haphazard.

I’ve always been keenly interested in tracking as much performance data as possible.  And I’m into speculating on stuff I can’t measure.  So I figured I’ll take a foolish crack at some numbers.

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Fact is, we as an industry really need some better data on company performance. It’s hard to know how well or badly you’re doing if you have nothing to measure against. Here’s to appreciating REALTrends, and hoping they get back to doing the awesomely useful Brokerage Performance Study series again.

-rsh