Real Estate Investment
All over the country, real estate agencies are closing. Every state is seeing real estate agents lose their licenses. Traditional bricks-and mortar real estate brokerages are in decline. Consolidations are the only thing that can save this archaic model. Some agents close their offices, and others quit. But survivors move their licenses onto another sinking ship. A ship that looks exactly like the previous one, often with the exact name on its bow. After more than one year of being in financial trouble, a large franchise closes its doors. The agents are scared sick and do not know what they will do. Until their savior comes in. A broker at a brick-and mortar in the same town offers to take all the agents into his office with identical terms. Each agent pays $600 monthly and keeps 100% their commissions. The agents are relieved and sign the new contracts as if they were sheep going to slaughter. Because the broker is unable to generate enough leads for agents and agents aren’t selling enough for the broker to make him enough money on commission splits today, any type of split wouldn’t make financial sense. Each agent will be charged a monthly fee by a sharp broker. He giggles at the bank as 60 agents pay $600 per month. That’s $36,000 per month just to live. Three years ago, I sat down across the desk of a franchisor toronto mls broker. He looked at my face and said, “Well we’re feeding our business every month.” When times are difficult, you have to do it. However, we have been through many difficult times before and we always emerge unscathed. I was struck by how silly it was to say that to a man who said he didn’t have a business plan, a budget for marketing or a written vision for his future business. This broker just announced that he was closing down his bricks and mortar business permanently. He will also be transferring his license to another bricks and mortar. Another consolidation. The broker is just jumping from one sinking ship into another. It is possible that the Titanic crew will take some time to realize the new ship has many leaks. Brick-and-mortar brokers in real estate will eventually die slow and painfully if they continue to refuse to make the transition to a new model. Brokers may be able to steer their own ship, but it’s another for brokers who sell tickets to real-estate agents with empty promises. The worst part about this whole situation is that those who think they are doing everything necessary to survive are actually rearranging the Titanic’s deck chairs. Many of them don’t know or understand how dangerous their fate is. Many of them feel an uneasy feeling and are aware that there is something wrong with their business model. Traditional agents, just like the passengers on Titanic’s near-end, smiled and continued to say, “Don’t worry. Everything always works out alright.” They continue to smile at people and wait for their phone to ring. The ship is tilting and they are at great risk. They don’t know where to turn. This is the great dilemma associated with being stuck. It’s the classic inability for one to think beyond oneself. Agents and brokers who have worked in a traditional brokerage for years find it difficult to think in new ways. It is because they are not comfortable with technology and the Internet that this can be so difficult. Some refuse to learn new technologies. I know of a top producer who is unwilling to adapt and believes that he can delegate many of these responsibilities to his assistant. Few assistants can spend a night learning and adapting to a boss’s needs. What happens if the boss leaves? There are serious problems in bridging this gap even if you manage to delegate.