My management team and I recently conducted a whirlwind series of unusual - and exhilarating - meetings in which we sat down face-to-face, eyeball-to-eyeball with our brokers and their managers across the country. That's right. Every broker and manager from our 1,300 office system was invited. In fact, our schedule included 11 cities in 8 weeks, meeting with more than 600 brokers and managers.

We wanted a frank, peer-to-peer discussion in which we could openly express our views on the state of the industry, and how we could best work together to increase the brokers' profitability. Enlightening and brutally honest, participants confirmed two of our team's deepest-held beliefs:

1. Our industry is broken and "misaligned." Nothing short of a major overhaul in the way franchisors work with its franchisees, brokers work with agents, and agents work with their customers, will fix it. The numbers tell the depressing story of this major misalignment in relationships: Brokers today average a measly $137.50 net profit per transaction, despite several of the best years in the history of residential real estate. And. . .
2. The unique service-based business model we've developed and are rolling out nationally is resonating with brokers, agents and their customers.

Somewhere along the line, our industry veered off track - way off track. Our industry was founded upon one-on-one, person-to-person connections. It was known for partnerships forged by trust and a genuine desire to listen to and provide customers with quality services that added tangible value to the exciting journey of buying or selling a home.

Sadly, our industry today is awash in what I call an intellectual dishonesty by some franchisors. Rather than committing themselves to the growth, long-term partnership and prosperity of their franchisees - and ultimately, the satisfaction of the home-buying and selling public - franchisors are obsessed by signing ever greater numbers of franchisees and then selling them "stuff." Stuff that, while boosting franchisors' profit margins, perhaps, does nothing to encourage profitable, personally rewarding partnerships between franchisors and brokers, brokers and agents, and finally, agents and home buyers and sellers. In a nutshell, partnership and collaboration are in short supply in our industry.

Agents and brokers are at odds over their share of shrinking commissions. Sales associates often feel the broker's success diminishes them in some way. And there's tension between franchisor and franchisee: brokers don't use the franchisor's resources, and in many cases, are not even aware of the resources available to them. But then they claim that the franchise fees are too high...or that programs are not relevant in their markets. From a financial perspective, our industry - despite the strong resale market - has been sort of sliding slowly downhill for some time now. And given the current economic climate and the near-term outlook, things are only going to get worse - UNLESS, of course, we make them better.

This problem can be summed up in one simple phrase: lack of alignment. Ours is an industry where very few effective relationships exist among the broker, the sales associate, and the franchiser. Until very recently, when we came on the scene, no one had tried to forge a relationship where service to the "real" customer - buyers and sellers - stems from the success of others...and results from the partnership of all.

By applying what we've learned through consumer research, we're showing that, for brokers to thrive, they must evolve from a pure brokerage company to a "home services" company.

This belief grew from the voices of home buyers and sellers themselves: Over and over again, they've told us they want more, not less, from their real estate professionals. For example, they want recommendations on services they view as core to the transaction, such as mortgage, title and closing services and insurance and warranty recommendations.

Our goal - the one that keeps us energized, excited and hopeful for our industry's future - is simple: Develop a highly interactive relationship with our primary customer, our brokers. And with this comes alignment with agents, who now can provide consumers with the additional services and recommendations they're asking for. We believe that's what a partnership - and ultimately alignment -- is all about.

John Bearden is the president and CEO of GMAC Home Services and oversees GMAC Real Estate, whose 1,300 franchised and company-owned offices located throughout the United States generated more than $40 billion in sales volume and nearly 100,000 transaction sides; GMAC Global Relocation Services, the world's third-largest relocation company; and GHS Mortgage, a division of GMAC Mortgage.

Published: January 30, 2003

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