Tag Archives: Social Media & Web

Why Bother? Brokerage Numbers From the New NAR Study

So NAR has published a new study of brokerage firms ($149 if you’re not a NAR member) which shows “optimism and challenges”. Various media folks have opined and reported on it already, and I read the RISMedia story on the survey. Go check it out in full if you haven’t already.

But one passage in the story caught my eye:

The typical residential real estate firm handled a median of 25 transaction sides in 2012, representing a dollar volume of $4.4 million. Ten percent of a firm’s median sales volume was generated by a website, but less than 1 percent came from social media; however, firms with three or more offices obtained 5 percent of their business through social media. The vast majority of sales were from prior relationships with clients and from referrals.

Hmm. Median real estate brokerage did 25 transaction sides, for volume of $4.4 million? Some quick math follows:

  • $4.4 million in volume X 3% commission per side = $132,000 in GCI
  • Assuming 70/30 split with the agent (keeping in mind that many producers are at far higher splits), the brokerage has $39,600 in company dollar, after paying out $92,400 to the agents.
  • 10% of the volume (and therefore, 10% of the GCI, 10% of the Company Dollar) was generated by a website = $440K in volume, $13,200 in GCI, and $3,960 in company dollar.
  • Less than 1% came from social media, but we’ll be generous and say that 1% did. So $396 in company dollar is attributable to social media.

Um, my question is, why bother? $39,600 in company dollar means all expenses have to be paid out of that — office rent, equipment, the fancy brokerage website, the marketing expenses, E&O insurance, etc. etc. Let’s be generous and say that the brokerage operates with 50% profit margin. So after it’s all said and done, the broker takes home a whopping $19,800 for his troubles.

You can make $40,000 a year driving trucks in the Houston area. Hell, you could probably make $19,800 at Starbucks serving up skinny vanilla latte’s. Why does anybody want to be a broker again?

What’s shocking is that that $4.4 million, 25 transactions figure is the median. That means HALF of the brokerages surveyed did less than that.

I ask again, why bother?

Furthermore, 10% of the business came from the website. Again, assuming the very generous 50% profit margin, that means if you as a brokerage spends more than $1,980 per year on your website, you’re losing money. Given that IDX plugins alone can be $100 per month, and even inexpensive templated WordPress sites could easily cost a couple grand to have a developer build for you… I’m just not seeing how that makes any kind of sense for the median brokerage. And it definitely doesn’t make sense for the below-median brokerage.

Finally, do we really need to point out the absurdity of obsessing over Facebook and Twitter and Pinterest and Instagram and whatever else in light of these numbers?

Honestly, I’m curious. If you’re one of these median brokers (or below median), with $4.4 million in volume in 2012 and 25 transactions, I’d like to know why you remain a broker. Is it really worth it financially? Is it the freedom? Ego boost? What is it?

-rsh

Notorious P.O.D., Episode 4: Carol Seal & Mark Blazek from Greater Chattanooga Association of REALTORS

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In this episode, I have a great conversation with Carol Seal, CEO and EVP, and Mark Blazek, the President of the Greater Chattanooga Association of REALTORS. Topics range from their new website (at GCAR.net), their reasons for relaunching the public-facing portal, commercial real estate and the Association, off-market listings, third party websites, business models in real estate, and a variety of other topics.

This was the first time I spoke with either Carol or Mark, and I have to say, they’re two awesome, amazing leaders in real estate. I really enjoyed chatting with them, and I hope y’all will enjoy listening to our chit-chat.

Many thanks to the Greater Chattanooga Association of REALTORS, to Carol Seal, to Mark Blazek, and to Taylor Hartley for making this happen despite numerous snafus in the schedule due to multiple commission-generating activities I’ve been involved in recently.

Enjoy!

-rsh

In Which I Propose a New Role for the REALTOR Association

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I’ve been in the real estate market the last few months. It has been an interesting experience all around to be a straight up consumer, both selling and buying. And I’ll tell you what: it has been absolutely amazing to see the good, the bad, and the ugly of the industry personally from a consumer’s point of view.

If you read my previous post about the visionary memo from Cendant almost ten years ago, you’ll see that despite nearly a decade of experience with online marketing, the real estate industry still has a long way to go. The gap between the expectations and needs of both sellers and buyers, and the actual services delivered by far too many REALTORS is still far too wide. It’s hard to know how bad things are until you spend time as an actual buyer looking at listings online. I’ve done that the past couple of months, and… there’s work to be done.

This is an actual photo I saw from an actual listing of a home for sale here in the Houston area not two weeks ago:

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At first, I laughed. Then I thought, my lord… some poor seller is expecting to get buyers to want to visit his home and ultimately sell it with this? True, the property wasn’t all that expensive, as it was around $100K. But that’s still $3,000 or so that the listing broker would take from the sale.

The seller certainly got screwed, and maybe I, as the potential buyer, also got screwed since I didn’t put that property on the list of homes I’d want to go see in person. Perhaps it was the perfect home for my needs, but I’ll never know.

In what world is this level of performance acceptable for $3,000? It’s especially intolerable given that the Houston Association of REALTORS has struck deals with local photography studios where a basic 10-image package is only $85.

The only possible explanation is that the listing agent/broker in question here either (a) didn’t know about the HAR photography deal, or (b) didn’t care.

Can anything be done about this? And if so, who can do something about it?

My answer: The Association of REALTORS can and should do something about it. Here’s why and how.

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The Need for More Effective Online Marketing by Real Estate Professionals… Nine Years Later

 

Actual MLS photo, circa 2010…. (courtesy: PhoenixRealEstateGuy.com)

In the course of research for something I’m working on, I ran across an absolute gem: the white paper published by Cendant (the former parent company of what is today Realogy) in 2004 entitled, The Need for More Effective Online Marketing by Real Estate Professionals. The unnamed author(s) wrote the white paper for the real estate brands then owned by Cendant: Century 21, Coldwell Banker, ERA, and Sotheby’s.

Keep in mind that 2004 was before Trulia and Zillow saw the light of day. (Trulia launched in beta in September 2005, and Zillow opened its doors in early 2006.) Those were the days before the DOJ-NAR lawsuit. In March, when the white paper was published, Google had not yet gone public. Facebook was just a college student website limited to Ivy League students.

In other words, in Internet terms, this paper is ancient history. It’s like the Peloponnesian Wars.

Reading through the white paper, I realized that the author was prescient in some respects, and amazingly, his comments and questions remain as relevant in 2013 as they were in 2004. Let’s check out some of those thoughts.

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NAR Mid-Year: Cry Havoc, and Let Slip the Dogs of War

I have been asked for a recap of the events at NAR Midyear, but as I did not attend the Board of Directors meeting, and as I was busy doing other things, I felt it wasn’t really my place to give a recap.

It is, however, my place to offer some thoughts — high-level, unusual, and either prophetic or batshit crazy depending on your point of view — on what I heard, saw, felt, and read this past week. And my overall impression right now is that war within the real estate industry is inevitable. It is a question of when, not if, and how, not why.

The “why” has already been answered by the Greek historian Thucydides, who wrote:

The growth of the power of Athens, and the alarm which this inspired in Lacedaemon, made war inevitable.

Similarly, the growth of the power of the Internet, and the alarm which this inspires in various circles in real estate, makes war inevitable. While I hope to see the minimum of conflict, and will work to make peace wherever I can, at this moment, I remain darkly fearful that we will need to fight in order to resolve the only question that matters: who shall rule?

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