The Predictable Model

Evolution is inevitable when it follows a distinct model; that of; Dependence, Independence, and Interdependence. For example:

Start in the 12th Century. King John, (1199 – 1216 ad) sovereign ruler of the realm, claimed all within his boundaries from the center of the earth to the zenith of the sky. Everyone, and everything within was Dependent on him, including their existence. Not everyone liked this, however. So to enforce his laws, collect taxes, and protect his chattel, he called upon his mightiest warriors.

It didn’t take long, after a taste of power, for their egos to get in the way and they began to distrust his lead. Seeing this, King John played to their egos and knighted them. He also expanded his boundaries allowing his Knights to build castles on his parameter giving them the rule of domain and privileges in his name.

Understandably, they relished this power. And, as a result, they pushed for more Independence. In a further attempt to appease his Knights, he bestowed a higher title, that of Baron. This backfired. They began to squabble among themselves as to which Baron was the most powerful and, you guessed it, a fight broke out!

King John was not only at war with his own Barons but with France and the Pope as well. His lands became battlefields stripped of game, crops, livestock, and, hence, value. His people were killed in battle or famine, and his economy collapsed.

The Barons, in the same shape, finally had a light bulb go off! Hey, wouldn’t we be stronger as one? Sound familiar? So they banded together and called King John, “We’re meeting at Runny Mead for a beer and to create a united front. Would you join us?” He, of course, said no, and they said, “Okay, we’ll kill you. After all, we have you surrounded.” He then agreed, and the rest is history. On June 15, 1215, they created the “Great Charter”; i.e., the Magna Carta - a document of Interdependence and the Evolution of Democracy.

Okay, But How About Today’s World?

Let’s take it closer to home: Children. As babies, they are totally dependent on their parents for everything - food, shelter, clothing, love, care, attention, knowledge, and diaper changes. But as they mature, they constantly test the boundaries of the parental hold.

Then one day they become TEENAGERS, and they lay claim to the world, as they know it. And the fight for independence is on! Their words are, “Why?” “You don’t know.” “You don’t care.” “My friend Jessica said, "Then they get their ‘perceived ticket’ of independence, a driver’s license - and off they go!"

After what seems like forever, they return home (some permanently) as Adult Children. Their words are, “Dad; I love you.” “You’re so smart.” “You were so right back then.” “You taught me so much.” “Wow, a home cooked meal!” And, with an education, jobs, and a solid love interest, they sit at the family dinner table to express their Interdependence of love and mutual respect. Again, the Evolution model of Dependence, Independence, and Interdependence shows the trend.

How Does Real Estate Fit Into This?

Let’s apply this evolutionary trend to real estate brokerage. When I started in real estate in 1971, I was an agent for Doyle Pargin Realty in Albuquerque, NM. The agent commission split was 50/50 and, regardless of when a property closed, we were paid once a month. Even though, as licensed real estate agents, we were categorized ‘independent contractors’, we were dependent on Doyle. Dependent on him for everything; training, encouragement, advertising, marketing, leads, income, and, often, sellers and buyers - that was the broker/agent norm.

A new concept. About the same time, in the early 70’s, a company with a new idea appeared on the horizon. Realty Executives of Phoenix, AZ, whose owner, Dale Rector, watched the restless fervor of high income producing agents as they left the fee split offices seeking Independence to open offices of their own. Dale Rector knew that running a successful real estate office for a profit was a difficult task, to say the least. His new concept would take away the burden of office ownership and management and charge the agents a monthly fee for a desk and office support allowing them to keep 100% of their commission! Very win/win. It not only satisfied the need of high producing agents for Independence but let them do what they did best, sell real estate and close transactions!

One highly productive agent seeking Independence was Dave Liniger - a salesman, and later manager, for one of the largest most respected fee split companies in Denver, CO, Van Schaack & Associates. He, too, was dissatisfied with the fee split company and its control, restrictions, and market direction. And, when the company’s owner told him that he was not allowed to wear loafers, he knew he had to change. It seems that in those days, Van Schaach fancied themselves as the button-down collar, white shirt, and tie, wing-tipped shoe, real estate version of IBM.

Dave had heard of Realty Executives’ and their new business model and moved to Arizona to experience it first hand. Later, he returned to Denver to duplicate the 100% concept and opened a new company by the name of RE/MAX and the rest is history.

Why must we fight it? For years, the Dependent Brokers and Independent Brokers fought it out on the recruiting battlefield. When the dust settled, they realized that there was room for many variations of fee structures and a third model evolved; that of choice with a menu of splits and fees to fit the individual - the Evolution of Interdependence triumphed.

“What About Me?” Cried The Consumer.

For the last one hundred years, real estate buyers and sellers have been dependent on real estate agents and brokers for property information. Where did the one hundred years come from? Well, it’s a WAG (Wild A_ _ Guess), but I do own a copy of the seventh revised edition of a book published in 1910 entitled, How To Sell Real Estate At A Profit. Part 1, How To Get And Handle Clients, as you can imagine, is about being the source of all the information on properties, causing the suspect purchasers, aka prospects, to come to you, the agent. The result; the consumer was trained to be dependent on real estate sales agents.

Manipulation. By the time I got into the business, agents and brokers had perfected the methods of withholding information. They were even trained to manipulate buyers and sellers to work solely with them. It could have been a Parker Bros. game named "Let’s Call a REALTOR®." You start by rolling the dice to see which part you would play – Consumer or Listing Agent. The Consumer moved. First, they were to call the Listing Agent and get as much information about a specific property as s/he could without giving any information on themselves. If you were the Listing Agent, your job was to get the consumer’s name, address, telephone numbers, checking account numbers, and the first male born child before divulging any info on the property. It’s hard to believe that some agents still play this game!

Technology Ticked Slowly

The real estate industry has been slow to accept technology. At first, it was just an easier way to obtain Multiple Listing Service (MLS) information than leafing through the books (MLS catalogs). But later, it became a threat.

The threat was in the form of public access to MLS information. The idea that the public would have access to the same information real estate agents and brokers had struck fear into their hearts. They cried out in pain, “The buying and selling public won’t need us!” And REALTOR® Associations, real estate companies, MLS’s everywhere began to clamp down on what they now call “Proprietary Information,” aka exclusive property listings. After all, it was ‘their’ information, ‘they’ owned it, and, if they didn’t want to share, it was ‘their’ right.

Forced Independence. The tighter they hold on to the property information, the louder the cry of INDEPENDENCE from the buying and selling public! The fight was on. And, quickly, the Internet became the consumer’s vehicle of choice for property searches for two reasons; speed and autonomy. Not newspapers, not flyers, not yard signs - all were too confining, too time-consuming, and dependent on the agent. Consumers went to the Internet because they didn’t want to give their name, they wanted property information on their time schedule, and they wanted it NOW.

Agents were in the way. Besides, they had spent years on ‘Personal Promotion.’ You know, the me, me, me, me, me, me, and look at me Ego Marketing Mania! Well, no one cares! It’s not that they don’t like your photos, your billboards, your “I sold Millions” marketing. Actually, the Independent Consumer appreciates the entrepreneurial spirit. They just want to know, FIRST, What’s In It For Me! (WIIFM).

I’ve been teaching WIIFM for years - not many have listened. It’s actually hard to hear over your inner voice of WIIFM. But, just like your teen children and King John’s Barons, they want attention, they want to be noticed, that’s a sign of Independence - the need to be recognized as Independent. I’m OK; You’re OK.

Technology Feeds Independence

How great this age of technology where, as promised, everything occurs at the speed of life. Okay, many things. However, evolution appears to be happening exponentially because of world interconnectivity. Read The World is Flat, by Thomas L. Friedman. Real estate has been brought to the pinnacle of awareness by negative media and recognized at the forefront of the consumer’s mind, and it is well fed.

House Mania TV. To accept this, simply turn on cable TV and you’ll literally see hundreds of hours of programming: Flip This House, Bought & Sold, Buy Me, Designed to Sell, Desperate Spaces, DIY to the Rescue, Curb Appeal, Double Take, Don't Sweat It, Dream House, Find Your Style, Get It Sold, Fun Shui, Get It Together, Ground Breakers, Hidden Potential, Homes Across America, House Detective, My First Place, House Hunters, My House is Worth What?, House Hunters International, I Want That!, National Open House, If Walls Could Talk…, Offbeat America, Over Your Head, Property Virgins, Takeover My Makeover, reZONED, That's Clever!, Rip + Renew, What's With That House?, World's Most Extreme Homes, Secrets That Sell, Sensible Chic, Sleep On It.

The Independent Consumer is being recognized. They have been schooled in front of the tube, coached on how to avoid the agent, buy from the owner, get the best price, fix it for cheap, decorate it to sell, and flip it for cash. Watching to reading Rich Dad, Poor Dad to Flip It, the Independent Consumer cuts a wide swath through the market after market with the conquering stance of Attila the Hun.

Independent Consumers gobble up top-selling business books like Freakonomics; A Rogue Economist Explores The Hidden Side Of Everything. You know, the one written by Steven D. Levitt and Stephen J. Dubner. They informed the consumer of the REALTOR'S® secret cipher and how to decode it. Somehow, I never received my decoder ring.

Secret Decoder Ring

For example, they state that “fantastic” and “charming” is real estate agent code for the house doesn’t have any specific attributes worth describing. “Great neighborhood” signals buyers that, well, this house isn’t very nice, but others nearby may be. An exclamation point in a real estate and is bad news for sure a bid to paper over shortcomings with false enthusiasm.

The title of Chapter 2, How Is The Ku Klux Klan Like A Bunch Of Real Estate Agents?, pushed my buttons enough to start a running diatribe with the authors. It also fueled the Independent fury of the consumer. And, furthered their disdain forego ads, ego websites, and ego marketing and sales pitches of any kind - like how many millions of agents have sold.

Pulled in by the hype and the fact that it related to their job, real estate agents, brokers, and wanna be’s were glued to the same TV shows and read the same books. “Ah ha,” they cried, “they really don’t need us” and "Ta Da," the surge of discount real estate companies! Yup, offices, real and virtual, opened en mass to feed the greed of the independent consumer. Three percent, two percent, one! And, still, the independent consumer wouldn’t bite.

Who Was That Masked Man?

Real estate consumer awareness and consciousness had never been higher or more Independent. Lending institutions saw the light and ran to fulfill the demand for the American Dream of homeownership. With a multi-year history of rising home prices, lending institutions hired anyone who could fill out a form, rushed them through school, and "Out of the west with a cloud of dust and the hearty Hi Ho Silver, the Loan Arranger!"

They flooded the market with easily bundled and sold SUB-PRIME loans! After all, they are called sub-prime for a reason! Anyone could get a loan on real estate. “Yea,” cried the market! And EVERYONE bought Dependents, Independents, and even a few real estate agents.

Bubble Bubble Toil And Trouble

When the housing market cooled in early ’05, the naysayers were quick to blame everything - the Internet, over-inflated prices (true in many areas), sub-prime lending (again true), aggressive lending practices (true), and, Al Gore and global warming. I blame the naysayers and the real estate industry’s inability to respond quickly to the consumer need for independence.

Why blame the naysayers? It’s simple, 70% of the people who hold licenses make less than $1,000 a month. “Does that include part-time?” In my humble opinion, there is no such thing as part-time agents; there are productive and non-productive. I think most will agree with me that at $1,000 per month, 70% of the people in real estate are failing in business. People who fail in business almost never accept that it’s their fault. Therefore, when the bump appeared in the market, they roared their discontent. Add this to predatory lending practices, and you get what we got.

It’s a rhetorical question but who does the media listen too? The loudest voice and, when that voice says, “Oh, the market’s down. Listings aren’t selling. I can’t find buyers. I’m starving. Sellers are in trouble.” The media quickly jumps in. Agreed, there are struggling areas of the country, but more areas are holding their own. And it’s business as usual. After all, it’s called the market, not the sure thing! The market is ALWAYS up and down. However, negative media generates consumer reluctance. And that, too, is normal. Remind you of King John?

Acceptance Of Consumer Independence

Real estate professionals slowly learned that when suspect buyers or sellers land on their website, they don’t want to jump through hoops, they don’t want to fill out forms, they don’t want to disclose what they are looking for, who they are, or how much they earn. They want to see HOUSES, and they want to see them NOW! If a real estate website doesn’t give them what they want, they leave and never come back.

Companies and associates that didn’t understand this and some still don’t, lost valuable market share. Still relying on brand loyalty, many dinosaur companies lumber about claiming that the Internet will be the downfall of the real estate industry like it was to the travel industry. To this, I say, “STOP IT!”

Real Estate Information Is Everywhere

Look at Zillow.com, Google.com/Base, Trulia.com, and others that provide real estate information on every city, village, and town at the click of the mouse. These companies don’t want to be in the real estate business like the real estate community feared. They are in the information business, a model whose revenue is based solely on ad sales. In an open forum with Saul Klein at last year’s NAR convention, Rich Barton, Chairman, and CEO of Zillow and Justin McCarthy of Google said they want to be the real estate information source for the real estate industry and the consumer. Why not! It’s not the agent’s job anymore.

According to a recent California survey, 86% of buyers use the Internet as part of the real estate purchasing process even before they start looking for specific homes. And 100% said they started looking at houses first, agents second.

‘Second’ is good news. At least they are looking for agents. Here is what is happening with ALL the information available to ALL the consumers, the FED’s clamping down on mortgage lenders predatory practices, negative media, consumer reluctance, and non-productive agents falling out of the business like flies, those remaining are banding together in Interdependence.

A New Dawn Of Consumer Interdependence

Real estate finally caught up with what’s happening on the Internet. Facebook, My Space, RealTalk, ePROTalk, and Personal Blogs, People; i.e., consumers, gathering together in a ‘Community,’ a ‘Social Network of Knowledge’ - an open sharing of information, available for discussion, and input of others. Wow, did we just meet at Runny Mead for a beer?

Look Out Meteorologists - It’s Time For The Realoligist

No more coveting information and knowledge - a transparent real estate market! I want to have a morning show on television that gives daily real estate market updates. Imagine me with a big map of the US showing population gains and losses - area by area, city by city, housing prices, what’s selling and what’s not, and what’s in demand. The number of homes sold, newly listed, average days on the market, and market absorption rate.

Talk about a social network of knowledge; it’s Interdependence to the fullest. Each morning, we highlight a different city. Divide the city into sections, like most cities are already, and give the same information we have been giving for areas of the country. Add another feature on employment figures, specialty job markets, and cost of living indexes wow, what a show. A real reality show, I guess I’ll call Trump.

Gifts From The Evolved Consumer

Let’s look at the bottom line of this Consumer Evolution. A huge percentage of the population of America has the dream of Home Ownership. Because of this Evolution, real estate is now more accessible to more people. This free market, built around a social network of knowledge, will make buying, selling, speculating, leasing, renting, and developing real estate easier than ever. And, no one person or industry will hold the keys to the kingdom. Productive real estate associates will get out of the information booth and step up in stature to that of real estate advisor, and consultant.

The numbers of non-productive real estate associates will dwindle as offices become smaller and brokers refuse to support them with desk space. Every time the market staggers, the industry loses a great number of non-producers and those who just age out. But this time will be different; smartly connected agents will take their place, polish the profession, and prosper.

The Evolved Consumer knows the value of the real estate professional. Yes, they have the information, but they don’t have the time and knowledge to put the transaction together. Their demands are strong. They want a fast response e-mail isn’t fast enough - text messaging is. Your smartphone is the office of the connected agent who can be and live anywhere. What once was a 24/7 profession is now more like a 4/7. The time agents save with virtual transactions, text messaging, and fewer showings pays off BIG.

Dependence, Independence, Interdependence

It’s not a Fad for a fad is revolutionary. It’s a TREND which is EVOLUTIONARY! Viva the Evolution, where smart, hard-working people pool their knowledge and information for the betterment of all.

(Rossi, Certified e-PRO Trainer, ROSSI Speaks, Inc. Edutainer, Humorist, Coach, & Bon Vivant, and author of Dog Eat Dog & Vice Versa: 9 Secrets To Put the Bite Into Your Marketing.)