There’s always something to howl about

Sharks – Pilot Fish – Dinosaurs – And Wishful Thinking

Don’t ya love it when a new way to call something old catches on? Smallish independent real estate brokerages are now often referred to as ‘indies’. Due to lower operating expenses, more agents working at home, and a perceived technology gap the size of the Grand Canyon, they’ll be an important factor in the death of the so-called BigBox (BB) mega-brokerages. In essence, by being meaner, leaner, and effectively leveraging their edge in all things hi-tech — the dinosaurs die the death of a thousand cuts.

And Al Gore invented the internet.

Been hearin’ this for so long I was shocked earlier this month when the phone at the 250 agent Keller Williams office was answered when I called. πŸ™‚ I consider the lead recruiter of that office, a longtime friend, a legit superstar. Also, I’ve known their new Designated Broker since the late 90s or so. When I spoke with ‘Jane’ the recruiter, she laughed at the thought of indies sending her company to the boneyard.

In fact, in her firm’s experience, they’re the ones who’ve not only ended several indie firms’ existence, but absorbed them into the cavernous BigBox operation — often swallowing them whole. Indie owners don’t like hearing that, but it’s a fact about which I no longer become amazed, as it happens too often these days.

Much of the discussion on this topic is skewed by, what are in my opinion, false premises, wishful thinking, and putting the emphasis on the wrong syl-LA-ble much of the time. GM didn’t go off the rails cuz they’re too big, or that other, smaller, more tech-savvy carmakers beat them. They simply didn’t make cars as well as most of their competition.

The false premises used for arguing the imminent demise of the BBs is their ponderous nature, hiring practices, low tech approach, basic inefficiency, and out of control operating expenses. Paradoxically, those are merely the result of the real reason some BBs won’t be with us soon, if they don’t change their ways.

It’s the business model, not the size.

Those who insist on hiring newbies by the gross, while paying so-called top producers 90%+ will get what that model is virtually guaranteed to produce — a slow death. It reminds me of the business genius who once said they’d make up the nickel lost on each sale through volume.

Still, that’s not the issue underlying the conversation, in my opinion.

Access to the MLS by the public is also a false issue. The heated debate about hoarding the information has some merit, but isn’t the game changer from where I sit. (And please don’t try to draw me in on that issue, as I’d hafta go up three rungs on the ‘I Care’ ladder to be apathetic.) The public can have all the access it wants, but if your firm is the listing agent, you control things. Whether through the MLS, some website, or strings and cans, they’ll hafta go through you to make a sale. My first several years as an agent were spent in a firm that wasn’t a member of their local board or the MLS from Day 1. It was the most prolific house selling brokerage in San Diego County for five years running, closing 1,000+ sides per year, every one of those years. The Board/MLS begged the broker to join, but that’s another story. Bottom line? They needed him, not the other way around — and they knew it. Especially those firms who listed little if any property.

Listings are the only thing that keeps indies afloat.

Most indies adopt models making them the real estate industry’s version of Pilot Fish. They feed off the big sharks. As long as the shark lives, so do they. (The analogy falls apart a bit when one notices they also help sharks by eating parasites. But that’s a difference conversation altogether. πŸ™‚ ) Though many of them, admirably, make big bucks, they often look in the mirror each morning and see the big proud Shark, instead of the dependent Pilot Fish they really are.

As long as there are prolific listers in a given area, indies based on the buyer agent model will do well, all things being even. There are BBs who are listing machines in their local markets, and they’re thriving. My buddy at KW has literally closed the doors on many buy oriented indies cuz the owners saw the gold mine of listings available to their buyer focused approach. In other words, they decided to attach themselves to the biggest baddest Shark in the area. Predators keep their distance, and they’re on the inside of the listing gold mine with a pick and shovel.

The loud bellowing you may be hearing are the indies who specialize exclusively in buyer representation. They’re gettin’ upset cuz they think maybe they’re about to be bashed. Not true. Some of my best friends are buyer agents. πŸ™‚ In fact, they do whatever it takes to be my friend, cuz without listers like me, they’d die on the vine. But listers don’t need you, you need them. They can choose to exist without you, while you simply don’t have that option. Yell all ya want.

As Grandma often observed, “Point weak, shout loud.”

Sharks not only feed themselves but the Pilot Fish who feed on their leftovers. An inelegant way of phrasing it? Perhaps. But true nonetheless. The BBs that consistently list properties as the predominant source of their income, and lead generation, will survive, sometimes in spite of themselves. Those who list AND raise their hiring standards, modify their compensation policies, and give more than lip service to technology will not only survive, but thrive.

Pilot Fish are only safe and secure as long as the shark lives. Own a smallish indie and don’t cotton to the idea of working for a BB? Headhunt some listing agents and watch your firm explode. Create your own in-house Shark/Pilot Fish operation. Only at that point will you be truly self proficient.

Please, don’t hold your breath waitin’ for all the BigBox companies to die. It simply ain’t gonna happen. Furthermore, when (if?) the ones still using the flawed models pull their heads out, and become listing machines, they may decide to do what my first employer did, at least in a modified fashion.

They’ll list the property, gettin’ the seller’s permission to delay MLS participation for 2-4 weeks. With 100-500 agents, how many of those listings do you think will sell in that time period? Once they start succeeding there, they’re begin to realize how overvalued the MLS is to them.

That’s when the fun might really begin.

BigBox brokerages are all gonna die? Not in my lifetime. Yours either.


12 Comments so far

  1. […] This post was mentioned on Twitter by Real Estate Feeds. Real Estate Feeds said: Sharks – Pilot Fish – Dinosaurs – And Wishful Thinking: Don’t ya love it when a new way to call something old ca… […]

  2. Ken Brand January 17th, 2011 6:06 pm

    The bitter or sweet truth – depending on which fish you are – well played Mr. Brown.

    PS. For some reason, Pollywog comes to mind. Me and my buddies used to ride our bikes down to the S.D riverbed, explore catch Pollywogs and push those big square tubs down the steam. We used to collect crushed beer cans on Fiesta Island and dad would take the them to the scrap metal recycler and give us the couple of bucks. We hunted for Coke bottles too.

  3. Jeff Brown January 17th, 2011 6:53 pm

    Hey Ken — In this story, the Pilot Fish often take home $100-500K/yr. At that point it’s a good bet they don’t mind that they’re not Sharks. πŸ™‚

    Fiesta Island — Used to end our Christmas Day 15K run there. Freshly baked muffins and hot chocolate or cider. Thanks for joggin’ that memory.

  4. Russell Shaw January 17th, 2011 9:19 pm

    Nice article, Jeff! You had me grinning from the very first paragraph. LOVED, “I’d hafta go up three rungs on the β€˜I Care’ ladder to be apathetic”!

  5. Karen Highland January 18th, 2011 10:06 am

    I’d be interested to know how you categorize the brokerage I’m affiliated with: it’s an “indie” brokerage, but its the largest in the county. It’s a true co-op, with all expenses lean and mean. We have 135 agents, are #1 in listings and sales, and only take experienced agents, unless they are on a team. I predict this model will thrive.

  6. Jeff Brown January 18th, 2011 10:14 am

    Hey Karen — #1 in listings, while running lean and mean with experienced agents, pretty much defines the firm with which I started. #1 in listings is the most important stat. If you mean that literally, you guys will kick major bootie. I agree with your prediction — this model should dominate.

  7. Robert Worthington January 18th, 2011 3:14 pm

    Jeff, you had me going back and forth so many times in your post as to big big vs. indie. I’ll stick with the indie method for now. Great article though. As to the mls coming to an end, it is nice to have all properties in a central location that are easy to find, but I do absolutely get your point about no mls for the first 2-4 weeks, even though it benefits the listing company far more than the seller.

  8. Jeff Brown January 18th, 2011 3:38 pm

    Hey Robert — That last statement isn’t axiomatic by any stretch. My first employer, as the post says, NEVER put listings on MLS and sold more, for as much, generally more quickly than MLS did. The superiority of the MLS is a very well protected myth.

  9. Brett Tousley January 18th, 2011 5:11 pm

    Happy pilot fish here!
    You keep the franchise fees,large overhead, high turnover and significant liability of turning 50 new “real estate experts” loose on an unsuspecting public each year.

    I’ll take your producing agents that are tired of shelling out $20,000 or more a year to a broker that they share with 200 others.

    It’s win-win!

  10. Jeff Brown January 18th, 2011 7:51 pm

    Brett — I fear there’s a possible misunderstanding, no doubt my fault. Pilot Fish are those who primarily represent buyers, and never or rarely list property. What’s hastening the demise of more than a few BBs is that fact combined with their 1962 business model. If you’re an indie AND you’re listing property at a nice clip, I’d say you’re a Shark, Brett — indie or not.

  11. Jeff Brown January 18th, 2011 7:53 pm

    Always happy to learn I put a smile on your face, Russell.

  12. Robert Worthington January 19th, 2011 7:36 pm

    Jeff you’ve still got me laughing on the part where you mentioned Al Gore invented the internet. hahahaha.