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True Confessions of A Real Estate Broker

The times are indeed changing.  I am not a real estate salesperson.  I am the broker/co-owner of a small real estate office.    Please put the hammer away, Greg.  My partner Bob, and I, opened it up precisely in order to own our own systems,  and develop our own approach to business.  Initially, it was just us, but after over 25 years in the business I realized I wouldn’t mind having a few agents on board to help with the heavy lifting.  And while I certainly don’t want to milk any underlings, there are bills to pay.

So here’s the question … In true Web 2.0 spirit I am putting it out to the community.

Gentle readers, if you were a broker-owner of a small independent real estate office, just precisely how would you structure your business to survive in the Web 2.0 world?  Or is the extinction of the broker/salesperson model so close and inevitable that it would not be worth the effort?

Could a small independent brokerage reinvent itself based on, say, a team concept?  What commission split would you offer agents?  What services would you provide for agents, or not provide?  

Any and all comments and opinions are welcome.  Thank you, everyone.

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  • 44 comments

    44 Comments so far

    1. Brian Brady May 30th, 2008 5:42 am

      “Could a small independent brokerage reinvent itself based on, say, a team concept?”

      Mike Farmer’s exploring this on Bonzai.

      I think a group of agents (and a lender and national title company) can create a national brokerage, for big markets, leveraged off “back-office” infrastructure

    2. Cheryl Johnson May 30th, 2008 6:06 am

      I wasn’t aware of Bonzai, I’ll go ahead and add a link … so others can check it out: http://bonzai.squarespace.com/

    3. Hunter Jackson May 30th, 2008 7:41 am

      Cheryl,
      As a young agent (less than 2 years experience) that takes every piece of information he can receive, I believe that YES, you can re-invent yourself.

      Of course you know this.

      One thing stood out to me, and that was commission splits.

      To me as a young agent, I look less at commission splits as my ROI through splits. I am with a company that offers 70/30, and am staying despite other companies that offer 100% for a small monthly fee ($300) because I see the ROI on the 30% I put forward.

    4. Cheryl Johnson May 30th, 2008 7:55 am

      Hunter,

      OK. Please understand I am not being argumentative … I am asking this question in order to get ideas for my own business….

      What precisely do you get in return for that 30% ?

      Brand-Image?
      Leads?
      Office space?
      Does the broker pay MLS fees or anything like that on your behalf?
      Does the broker provide a computer?
      Does the broker provide office supplies?

    5. Chris Lengquist May 30th, 2008 8:06 am

      Who has time to think about all this? I’m just showing, listing and selling houses. :)

    6. Bryan Casteel May 30th, 2008 9:23 am

      The real question is “how do you create value”. If you charge a split without value you have a dying business model. One model that is taking off is Teams or Partnerships. I am part of an agent Partnership in Cincinnati. There are four agents in our partnership and we are adding four more. I split each commission check with the partnership to pay for building the business (web sites, leads, admin, etc.) The Partnership also pays my desk fees. At the end of the year we split the remaining profit based on partner ownership.

      Agents have joined our partnership because we add massive value (lots of leads, web sites, admin support, etc.) and the partnership model provides everyone an opportunity to own part of the company (equity upside).

      When we started the partnership we evaluated the different brokers in town to determine the broker that provided the right level of service given the split/desk fee. We did want some service, but not a lot. It is interesting to note that we did not go with the cheapest broker; we actually valued the services another broker provided (even though his desk fee was a little higher). We would never go with a 70/30 broker.

      At the end of the day we are building a business. We own our client database and our lead generation tools. We could move to another broker if the current broker was not providing value. In fact, we could also start a brokerage, but we are not into running a commodity business!

      If I where you, I would first think about what value can you can provide and who would value from your service. My partners do not want a lot of service from a broker. Other, newer, agents may want more service. Figure out who your client is and how you can add value. Should you start a partnership inside of your brokerage? I would first ask “What value would you provide to a partnership?” Stay focused on the value you add and you will be ok (unless you add no real value – then you are toast). Good luck

    7. Cheryl Johnson May 30th, 2008 9:57 am

      I have an idea – Let’s role play for a minute. Imagine I’m a perky new agent instead of a gray and grizzled veteran.

      Suppose I walked into Bloodhound Realty and said, “I like what I see you guys doing, I’d like to be an agent here.” Greg, what would you offer me?

    8. Hunter Jackson May 30th, 2008 10:26 am

      Cheryl,
      For my 30 percent I get…

      Training. Of course I read a lot on my own, go to the places I want to on my own etc. But basic training

      Office. I have an office with computer (which I don’t use) phone (again, needless) printer, scanner, fax, copier. Of course desk and conference table.

      Mls dues: no. Nar: no (I’m not a member).

      I also have an office manager which makes all of my copies, inputs listings, makes flyers, virtual tours.

      Oh, and E and O insurance.

      I feel it is woth it just due to the things it takes off my plate. When I get to the point I need an assistant, it may not be worth it anymore.

    9. Jeff Brown May 30th, 2008 10:28 am

      Brian pointed you to Mike Farmer, as I also intended. I would say reading what Sean Purcell has to say on the subject would also be very helpful. He’s been talking about what I think he’s termed, ‘Super Teams’ for quite awhile now. It’s pretty interesting, and makes a lot of sense.

      If Brown and Brown ever hire agents we’d do it Sean’s way.

    10. Cheryl Johnson May 30th, 2008 10:39 am
    11. Greg Swann May 30th, 2008 10:50 am

      > Imagine I’m a perky new agent instead of a gray and grizzled veteran.

      > Suppose I walked into Bloodhound Realty and said, “I like what I see you guys doing, I’d like to be an agent here.” Greg, what would you offer me?

      A bottle of cold water and safe conduct through the miasma of mammals to the front door. ;)

      Seriously, we have zero desire right now to add agents. In Arizona, self-employed brokers or corporate brokerages with two or fewer licensees don’t have to have a policies and procedures manual, and that by itself is a great incentive to stay small. We use contract labor when we have more chores than we can handle, and at some point we may outsource work requiring a license to a virtual assistant. But I can think of a zillion reasons why we would rather not hang any other licenses.

      That said, if we actually did add an agent today, our policies in place are to pay $200 per transaction to the broker plus a deductible for E&O. There is no monthly fee. This is my deal, too: I get two hundred bucks cash for my own deals, and everything else goes to corporate — that blonde with the long legs you met in Phoenix. If we provided the lead, the brokerage would take 20%.

      For what it’s worth, if we ever actually do add agents, I would expect that we would structure things more like a team: One voice, one product, one rainmaker, with the rest of the team delivering the product. But now we’re talking about things that sound like jobs — regular hours, scheduled breaks, sick days, vacation days, employment law. This we will not ever do, so we come back to contractors and offsite virtual assistants. I don’t ever want to have a W-2 employee or anything like it, so we’ll have to find our own way to grow.

    12. Brad Coy May 30th, 2008 10:55 am

      Cheryl,

      As an agent/co-owner of a boutique brokerage I thank you for asking the questions. These are the types of answers I look for when browsing through online RE communities.

      We are always looking for progressive ideas. I’m hoping this thread continues.

    13. Jeff Brown May 30th, 2008 11:27 am

      Greg — >For what it’s worth, if we ever actually do add agents, I would expect that we would structure things more like a team: One voice, one product, one rainmaker, with the rest of the team delivering the product.

      That approach has been our model since we left SD in late ’03, just not as honed. It’s worked spectacularly well for us and our clients.

      We now have teams in several states, in some states more than one team. We’ve been rainmakers since then too — and for other agents in far away states. Sean’s approach is one of the ways Josh and I are looking to improve our own model.

      Yesterday we turned a ‘bored meeting’ into a real live ‘what are we gonna do in the next seven months’ meeting. I came away with two thoughts.

      1. I was freshly invigorated with the new puzzle pieces we’re about to implement.

      2. I’m not the smartest guy in our company whose last name is Brown.

      I’m learning to deal with it. :)

    14. Anonymous May 30th, 2008 12:28 pm

      What services can you provide agents? What roles do you need filled and what roles are reserved for you and Bob?

      First you have to define strengths and weaknesses in light of business goals.

    15. Brad Nix May 30th, 2008 12:51 pm

      As an agent, managing broker and co-owner of a small brokerage in Metro Atlanta I thank you for bringing this topic to the BHB community. I echo Brad Coy in this being a primary reason for my involvement in the RE.net. I want to innovate and understand how to deliver value to the agent and client of tomorrow. With all of the catch-phrases being said… Maxsell Real Estate currently offers 4 different plans. We give our agents the ability to pick what best fits their business plan. We offer 75/25 splits, 100% plans, team plans, and even old school 50/50 pans. It really depends on the agent, their needs and their individual goals and plans.

      I think we are bit different in that we only broker about 35% residential properties and the rest in raw land and commercial transactions. I feel strongly that our diversity in experience allows us to be the go to resource in our local market. We can do anything from development of raw lots to office condo space to single family resales and new home sales.

      As for value to my agents… we provide E&O, office manager to input listings, office space with computers, wifi, printer, fax, copier, scanner, conference room, plasma tv with pc connection for presentations. We answer phones with a live person M-F 9to5 and are always available to help fax/email info to clients. I offer training on a one-on-one basis or small group setting, no massive presentations to take notes – agents actually do the work and learn first-hand. We generate a lot of leads and share those at 20% to 40% depending on nature and type. We give email, doc hosting, calendar, etc…via G Apps and we also provide free fax to email conversion for all agents. We have custom contract forms and online web forms to facilitate transactions. Our sale meetings are more like an open forum for agents to share ideas, ask broker and each other questions, and we try to have a quality guest speaker bring lunch and deliver valuable messages and good networking opportunities.

      I am a firm believer that my networking as a broker benefits all of my agents. Therefore I am active as 2nd VP of our local realtor association, serve as director at a local bank, and volunteer for local charity. Having a visible face for your company in the community is valuable to agents. Of course, I encourage them to do so as well, but it never hurts to have someone network for you and your business.

      With all of that said, I still want to more ideas and better ways to provide value!

    16. Kevin Warmath - Alpharetta Real Estate May 30th, 2008 4:08 pm

      I’m an agent with a large national brokerage. I pretty much run my own business under the umbrella of the national brand. I pay for everything…all i get in return is E/O insurance, a national brand and a broker who can occasionally answer a question. This value add by the broker leaves me scratching my head when i get my commission checks.

      What would I like? More leads. Who wouldn’t? I spend most of my time generating leads. I’m not really a realtor, i’m a lead generator.

      My broker provides zero leads: don’t know that they should. I’m the rainmaker. I’ll probably wind up getting my broker license and hanging a shingle.

      What would I pay for besides leads and insurance? Mentorship. Now that is pricelss. Not that i can’t do it on my own with enough persistence, but if a mega-producer of 100+ transactions a year put me under his/her wing…particularly if i were younger…that would be the BOMB!

    17. Brad Nix - Woodstock Real Estate May 30th, 2008 4:16 pm

      Kevin:

      I must agree…of all the things I do for my agents, the leads are what makes them happiest.

      How many leads would be satisfactory for a broker to provide an agent? How many leads would it take to get you to leave the national brand and choose a local broker?

    18. Cheryl Johnson May 30th, 2008 5:27 pm

      Brad … ~Damn~, that’s a good question!

    19. Sean Purcell May 30th, 2008 5:27 pm

      Cheryl,

      I contend the current brokerage model is already dead and just does not know it yet. Jeff Brown was kind enough to link to my post in his previous comment so I won’t repeat myself here, save to say: Greg Swann is (as usual) right when he talks about (the brokerage’s) insane real estate-favoring tax laws. Do not create a new brokerage system based on the ideas and practices that led to the current system’s demise.

      Here’s the dirtly little secret that needs to come into play more: greed. The current system is based on the greed (or, more politely, the financial needs) of a broker. For reasons too numerous to put in a comment (Hmmm, I feel a post coming on :) ) this system does not provide the required incentive to attract only top agents. The best new system will be based on the best representation of greed (financial need), thus eliminating the part-time, almost good and “surviving on family referrals” agents that necessarily bring down the overall average level of professionalism.

      Think law firm

    20. Kevin Warmath - Alpharetta Real Estate May 30th, 2008 5:58 pm

      @ Brad Sounds like you are trying to recruit me ;-> But here is my question back to you: Even though leads are most treasured, why do i need you to generate them for me now that I know how?

      Yes, most agents would kill for leads because they are too lazy or too something to generate them. They’d probably fumble them anyway. Are they the type of agent you want to attract?

      However, some of us are starting to figure out this internet thing and web2.0 dohicky, so what can a broker offer me that I can’t already do for myself? Perhaps some systems (transaction mgmt) that i don’t already have ironed out and boxed up?

      Yes, leads would be nice from my broker, but since I had to eat and feed my family, i’ve learned how to find some on my own.

      @ Cheryl It depends on what you call a “lead.” I think you have a couple different types of agents out there: the one tx a month; the two tx a month and then the four tx a month.

      Do you want leads for buyers or sellers or both? the only way i know how to do it is know your goal and back into the number of leads.

      I think a nice proposition to a (new) agent would be I will give you enough leads (whatever that turns out to be) for you to do $300k per month in sales volume = $9k in GCI = $96k per year before any splits. You can figure out what you want to charge for this.

      My $.02

      k.

    21. Brad Nix - Woodstock Real Estate May 30th, 2008 6:10 pm

      @Kevin No doubt I’d love to have agents like yourself working at Maxsell. I also understand that you have figured out the lead generation portion of RE. But you have to hang your license somewhere (unless you become the broker yourself) and I am just curious as to what the Agent 2.0 is looking for out of Broker 2.0? You mentioned leads as a key issue. Are there others?

      Is it possible to assemble Agents 2.0 into one brokerage? or has the disinterbrokeration created DIY Agents who don’t want/need brokers? I personally feel that group knowledge and shared resources among Agent 2.0s would create a killer atmoshphere and the ultimate brand for the future marketplace.

    22. Kevin Warmath - Alpharetta Real Estate May 30th, 2008 6:46 pm

      That’s the $64,000 question and i guess the one that Cheryl was asking: is there a place for Broker 2.0?

      Maybe the answer is Partner 2.0 like Bryan alluded to he is doing.

      One of the concerns in the back of my head is that Agents 1.0 who have evolved into Agents 2.0 are not the type that like to socialize. They are lone wolves.

    23. Brad Nix - Woodstock Real Estate May 30th, 2008 7:14 pm

      I don’t know the answers, but I love the quest for them. I can say that I am trying to reach Broker 2.0 (whatever that means) and it must appeal to some agents (1.0 and 2.0). We have grown from 6 agents to 23 in 2 years without any ads to recruit, no pyramid scheme, no retirement planning, or other gimmick. We have only had 1 agent leave our firm in 3 years and I asked him/her to move their license.

      The main reasons agents call me to interview is because of our reputation for technology utilization and of course our local market presence.

      How this plays out in the long run? I hope to develop more Agent 2.0s from within Maxsell and welcome other Agent 2.0s to join the cause. If I lose them because they don’t need Broker 2.0, then I’ll have to reconsider my goals. Time will tell.

      …the lone wolves will always be lone wolves.

    24. Sean Purcell May 30th, 2008 7:17 pm

      May I suggest that we reframe the discussion? Referring to Agents and Brokers #.0 is constraining in and of itself. Instead, what if we first stipulate to the need for a brokers license to conduct business and simply agree to acquire this unimportant piece of framed wall decoration in whatever manor dictated by the state. Then we are left with two types of people:

      Rain Makers (RM) – those that can and do generate leads for this business

      Rain Collectors (RC) – those that are good in this business but need to have leads generated for them

      Now we have only to decide what the relationship between RMs and RCs should be in order to create the most success (in whatever way success is defined by the founding agents). How many RCs does it take to handle the business of one RM? Naturally depends on the ability of the RM I suppose. Does the RM represent a balanced stream of leads? Maybe your entity should have 2 or 3 RMs in order to insulate from the variability of the market. Again, how many RCs are now required and what specialties should they have?

      In this way it becomes a discussion of provider and provided for. Much more honest and clear than the convoluted and, in retrospect, inaccurate discussion of what a broker should provide or an agent wants/needs.

    25. cindy*staged4more May 30th, 2008 7:23 pm

      Hi

      I am probably out of bounds here since I am not a real estate agent/broker but I am in the midst of expanding my business and toying with the idea of modeling it after a real estate brokage.

      Anyway, it sounds like a lot of questions you have revolve around employee vs. company and how can a company survive in the ever changing world. I want to point you to Chip Conley’s new book Peak. I recently heard him speak and he focused on employee mentality, reinventing for the ever changing world, and consumers psychology. He talked a great deal about focusing on developing personalities and great company cultures, and more importantly how these aspects interwoven each other to create great companies.

      When I was reading your questions and comments I wasn’t thinking as a broker’s point of view but from a consumer’s point of view. I recently hired a commercial broker to find a warehouse. Ultimately as a consumer, other than working with someone who knows what he/she is doing (which is frankly almost everybody), what differentiates my broker from the next is that I like working with him. He is happy and loves his job and that shows through his diligence in finding me a new space. He cares about what he does and his job performance.

      My point is that employees’ attitudes toward their company are great identifiers if I want to hire them or not. It says a lot about the company and how they treat their employees. Happy employees do happy work. If the employees feel they are doing great work, the retention rate will be higher than firms that simply hire people who work.

      Web 2.0 or not, the world is leaning more toward collaborations and unique company cultures. Most people when they talk about working for google they don’t talk about how much money they made, they talk about the free massage they get at the office, they can bring dirty laundry to work, and they have all you can eat and world cuisines.

      Ultimately as a small business owner, I want my employees to be happy. Because if they are happy they will want to make the company better by developing innovative ideas, talk to their spheres about how cool it is to work here and clients will feel that excitement too.

      Just my 2 cents.

      Cheers,
      Cindy :)

    26. Tom Vanderwell May 30th, 2008 7:35 pm

      While I don’t have anything of substance to add to this discussion, I’d like to throw two comments into the mix:
      1. You guys are awesome for asking the questions and searching for the answers. What a tribute to a true professional you all are and I take my hat off to you.

      2. As a lender, my situation is a bit different, but in many ways it’s also similar. I’ve learned a lot from this discussion.

      Thank you.

      Tom Vanderwell
      thomas.vanderwell@53.com
      (616) 292-7559

    27. Brad Nix - Woodstock Real Estate May 30th, 2008 7:36 pm

      I’ll gladly switch to any acronym, catch phrase or pronoun we want to label these parts. However, it does not make the statements more honest, clear or more accurate. Using your terms, our conversation has the broker as provider and agent as provided for. We are still left seeking the same answers, however you want to label the parts.

      I do see some points on RainMakers having an impact, but to think our industry will become all RM’s and RC’s is not feasible to me. The public will demand other alternatives. This is why I can drive to a nearby intersection and choose between high-end steak house, standard national chain and fast food burger. Some like the high-end, some like the low-end and some like it middle of the road.

      The middle of the road agent will always survive on friends, family, and personal network. How do we see these being pushed out?

    28. Brian Brady May 30th, 2008 8:08 pm

      I don’t know if this helps but I see a delegation of specific function for any healthy team:

      http://www.mortgageratesreport.com/rainmakers-and-dealdoers

    29. Sean Purcell May 30th, 2008 8:15 pm

      Brad,

      I beg to differ. The way in which we define the nature, parts and actions within a problem are of paramount importance to the type of resolution we come to regarding the problem. For instance, you said:

      Using your terms, our conversation has the broker as provider and agent as provided for…

      but that is not it at all. In fact, by redefining the terms I am expressly trying to point out one of the problems: the broker is not a provider. The broker is a designation and in and of itself immaterial to the success of the real estate agency going forward.

      Why would an RM (or an RC for that matter) wish to have a % of their income given to someone who buys desks or pays the office rent each month? That can much more profitably be assigned to an office manager, who also handles the hiring of a receptionist, the coordination of monthly bill paying and making sure the office plants get watered!

      (Please do not confuse my derision of the broker designation with derision of you or anyone else I do not know. For all I know you are a huge RM within your company. But if someone’s only role is as I described above, we can quickly progress in this discussion with the very act of switching our terms and more accurately describing those functions.)

      to think our industry will become all RM’s and RC’s is not feasible to me. The public will demand other alternatives… (e.g.) high-end steak house, standard national chain and fast food burger

      I don’t agree with the analogy. Variations in price and therefore value to satisfy the public is an important discussion, but not germane to this discussion on how to structure the restaurant itself. I have yet to hear the public demand alternatives to save food handling and professionalism no matter what the dining experience may be. More importantly, the public has no valid say in the structure of your business as they are not restaurateurs… or real estate experts. We are not discussing how to better serve our product here, we are discussing how to better run our kitchen. It is assumed already that if you do not put out a service (or meal) that the public wants you will not long be in business.

      The middle of the road agent will always survive on friends, family, and personal network. How do we see these being pushed out?

      This, is exactly what I see going away thanks to disbrokeration. Once you base the structure on a publish or perish type of ethic, the revolving door of “family survival” agents will disappear quickly. The broker system encourages these “middle of the road” agents. (I do not wish to put words in your mouth, but I am going forward assuming this is a metaphor for agents that are not very good and would not make it save for the fact that a broker somewhere is hoping to make a nice commission off of the agent’s immediate family before pushing the agent out the door for the next “middle of the road” agent. A type of broker lead generation. :) )

      In the Super Team concept there is no incentive and no reason to keep dead weight. This not only makes the team more successful, it has the added benefit of raising the professional and educational levels of the real estate field as a whole; which is something we also discuss quite a bit around here.

    30. Sean Purcell May 30th, 2008 8:20 pm

      Brian,

      I agree. We both use the term Rain Maker, but you use the term Deal Maker where I have said Rain Catcher. Your term is, as usual, more poetic and less irritating. Thanks for being so consistently and irritatingly less irritating. ;)

    31. Brad Nix - Woodstock Real Estate May 30th, 2008 8:52 pm

      @sean We could debate whether brokers are providers or not all night. Let’s be realistic and say that both types of brokers exist. Let’s also remove me (and you) from the equation as we don’t each other at all and the last thing I want out of this is to offend anyone.

      I joined this discussion to learn.

      I still don’t get the need to redefine terms and change the conversation which was broker to agent (and in the context of these comments Broker-Provider to Agent-RainMaker)? Just because Broker is a designation, it doesn’t eliminate the value brokers can bring to an agency and to agents themselves. To discount brokers as just people who pass tests and hang licenses on walls is a disservice to many quality brokers all over the country.

      In fact, based on your descriptions I think a RainCollector can make just as good a broker as a RainMaker (maybe better). Furthermore, a good broker can accelerate a RM’s production with additional services: advertising, tools, training for RM’s team members, processing, meeting space, ideas, leads, the list goes on. Granted the RM could do this work themselves, but at what cost of $ and time? If the RM pays Broker X and it costs the RM Y to handles these items (where XY, then by all means your model is better. I just think it’s too generic for you to think RM’s can’t benefit from brokers. Its a case by case basis and very dependent on what the broker offers and the splits they charge. Thus we are back to the original discussion of how Brokers can innovate and deliver more value to agents.

      As for eliminating the middle-of-the-road agent, and I’m not sure this is necessary in our industry (or any industry). But let’s assume this is a goal. The best way to remove them is to raise the barrier of entry. Tougher testing, more continuing ed and general increase in cost of licensure will do far more good to remove the weaker agents than trying to wait on Super Teams to raise the bar. If States allow same licensing practices, then “family survival” will always exist.

      Why would a family member pass a licensed relative to hire the Super Team without seeing value in doing so? And it would have to some serious value for many to risk family politics or pass on a free service discount.

      I understand your Super Team concept and I see it work locally (even within my company). I am not knocking your ideas. In fact, I think they are brilliant, just not universal and not prophetic of things to come. There are too many benefits (and yes, some only perceived benefits) for going with an established broker.

    32. Brad Nix - Woodstock Real Estate May 30th, 2008 8:56 pm

      I must have a hit a backspace on accident and X and Y’s don’t make sense at this point. (we need an edit comment option here)

      The point was if XY, then your model is better.

      Its a case by case basis and very dependent on what the broker offers and the splits they charge. Thus we are back to the original discussion of how Brokers can innovate and deliver more value to agents?

    33. Brad Nix - Woodstock Real Estate May 30th, 2008 8:59 pm

      I see it’s an HTML issue. Sorry for the confusion.

      “If the RM pays Broker X and it costs the RM Y to handles these items”

      My point was if X is less than Y, then RM should work for broker. If X is greater than Y, then RM should go without broker.

    34. Sean Purcell May 30th, 2008 9:20 pm

      Brad,

      the last thing I want out of this is to offend anyone… I joined this discussion to learn.

      Well said. We may disagree on various points but the objective (at least on this thread) is to learn, not offend.

      I do agree with you that an RC may manage the company as well as or better than an RM. As a matter of fact, I see the real potential for a managing parner within the “named agents” (which I have left out of this discussion to my dismay). My point is not to suggest that the RM do much, if any of these duties. The RM’s job is to make rain. And that is the essence of why I see the Super Teams being the future: making rain is the first, primary and only required aspect of a successful real estate team – whatever the structure.

      All other roles are secondary and much more easily filled. Without leads, however, there is no reason to open the door in the morning. Basing a plan on buying leads rather than generating them will most likely lead to an even quicker demise when a team moves into the neighborhood that understands farming, perceived levels of expertise and 2.0 marketing. The RM is the King and so the structure should be based on two things: what makes the King happy (what keeps him/her generating leads) and what removes any drag (what generates the most net income from the King’s leads).

      I don’t mean to generalize when it comes to brokers, I just don’t ever see the modern role of a broker defined in a way that supports the existence of the role. I know we disagree here, but I see the broker as fallout of disintermediation.

      I am not going to engage the “increased barrier to entry discussion” here. It is a good one and we have had it more than once on BHB, but I didn’t even intend to comment this much. I was going to agree with your initial words and agree to disagree… but I just can not seem to stop myself!

      Great post Cheryl.

    35. Brad Nix - Woodstock Real Estate May 30th, 2008 9:25 pm

      Great comments and value added Sean.

      I think we are close on many levels. I just see the broker (or at least some brokers) as having skills and scale that may benefit the Super Team in cost savings and time saved. However, there will be times when this is not true and the Super Team should go it alone.

      I look forward to reading more of your posts and comments in the future. Good might my friend.

    36. Jay Thompson May 30th, 2008 9:38 pm

      Great post CJ (and equally great comments). As a freshly minted broker building a small “boutique” brokerage, this is of great interest to me.

      We fully intend to stay small — read lean and mean. We don’t hire “fresh outs”, only experienced agents, preferably those with existing technical skills. BUt their attitude is by far the most important thing.

      We charge minimal E&O fees (some brokers make a killing just on E&O…). We sell real estate, not insurance.

      Splits are very aggressive.

      We’ve got no brick & mortar office. That appeals to some, others not so much. That helps reduce cost that we can pass on to agents, and clients.

      We’re just starting a collaborative “brokerage blog”. Time will tell how that does.

      What do we offer our agents? From a pure “tools” perspective, things like signs, post installation, etc. More importantly, we offer an established web presence, listing syndication, single-property sites and advice/guidence in building “web presence”.

      I don’t think of our agents working for us. It may sound hokey, but we work together. I’m trying to bring in agents that will compliment each others existing skill sets and are bright, innovative thinkers so we can all grow together.

      I’ve turned away far more than I’ve brought on. Some were shocked, pissed off even. “But you have to hire me” one said. “I’m a Top Producer!” Yeah, with a “me centric” attitude and almost complete lack of customer service skills or desire. That’s not going to fly. He can go hang his license with any of hundreds of other brokers within 10 minutes.

      Likewise, we don’t hire someone simply because they have a license and a pulse.

      We didn’t start our brokerage to make money off agents. We started it for the freedom to do what we wanted. We’re taking on a few that fit in with our philosophy (and that happen to be well positioned geographically — Phoenix is a big spread out city). Our hope is that we can collaborate and combine our skills to better serve our clients.

    37. Lynn Byrne - Daytona Real Estate May 30th, 2008 9:40 pm

      All,

      This is great discussion. I have been with the big guys, and have managed offices for them as well. For the past three years, I’ve had my own brokerage with just a few agents.

      My frustration with the national companies was exactly as expressed, what was I getting for my 20-30%? I generated my own leads and sales, and maintained my own team.

      So for my $90,000+ a year on average, with commission cuts and transaction fees, I was getting a conference room, unreliable phone messages, and limited broker availability. Advertising was ineffective. There is something to be said for brand recognition on the listing side, but buyers don’t care.

      As a top producer, I am willing to pay something for the administrative burden of the broker, but not 20-30%. I am also willing to pay for leads on a referral basis, in addition to what I generate myself. Otherwise, I’m looking for the broker to stay out of my way.

      When I was a new agent, my frustration was with finding a broker to provide a training program. One-on-one mentoring was not available, and there were no formal programs anywhere. I essentially learned on my own. Fortunately I could sell before I came to real estate, so once I figured out RE marketing, I was on my way.

      I believe the new model will be based on the contribution the broker is providing to their agents. If you are providing training / mentoring / leads / you merit a higher percentage of that agent’s commission. If you are providing office space, computer access, and clerical services, you are competing with Starbucks and Kinkos. That’s not worth a whole lot.

      Clients want the basics. I return my phone calls. Clients tell me they selected me as their agent because of this simple courtesy. They also want competence – knowledge of local markets, taxes, closing, etc. Then they want to feel, for at least once in their lives, that they are the most important client that the agent has.

      I sold several homes to a couple who were blown away when I had my son create a video of a property that they wanted previewed before they traveled 900 miles to see it. We sent the disc overnight, they got it and we had a raving client.

      Information about properties will become free. Value will be added from authority and trust and perceived authority and trust. Clients want to work with agents who simplify the process and help them wade through information overload and conflicting information and opinions.

      Technology is an enabler, but my website, and online and off-line advertising have not sold a single property. I’m the closer, and they are tools for one part of the process, but not the process.

      I see the broker of the future providing basic tools and coaching similar to professional sports teams with stars, veterans, young players and rookies. Each player will is paid based on their contribution, and the team succeeds when they play well together.

      Finally, lead generation is gold. I know of one agent who has never sold a property, but makes his money from referrals. He makes more money from his lead generation than he would if he sold himself. We may want to look at other industries for team models of administrators, marketers and sales closers. Specialized experts who are able to accomplish more together than they could separately.

      Regards to all,

      Lynn

    38. Brad Nix - Woodstock Real Estate May 31st, 2008 4:52 am

      @Jay I started Maxsell with the same attitude, “We didn’t start our brokerage to make money off agents. We started it for the freedom to do what we wanted.” You Rock!

      @Lynne I was with a large brokerage for 8 years prior to starting Maxsell Real Estate. We went thru two national brand buyouts in 8 years and agents became numbers, clients became stats. Small brokerages can do it their way.

      I believe the most successful small brokerages are a hybrid of large broker skills/scale and Super Teams.

      Great post and comments by all.

    39. Charles Woodall May 31st, 2008 5:10 am

      This is a great discussion, but everybody seems to be forgetting the 80/20 rule. It is hard for those cruising around the RE.net to remember that, because you all are on the cutting edge of technology adoption and new marketing methods. You are the 20%. Think about the office you are in now. Tell me if I’m wrong about the ratio.

      Reality is that the current broker/agent model isn’t going away anytime soon, mainly because the vast majority of brokers want to tap the sphere of influence of as many licensees as they can, just as somebody mentioned above. When I bought my company in 2004, I saw my options as- 1)strive to hire mostly rainmakers and virtually concede that the personality of MY company will be determined by them, or 2) bring onboard new licensees that have a strong desire to work the business full-time and possess impeccable morals. I can train these folks to be the most knowledgeable in my market and equip them with tools they can learn to use that will set them apart from their competition. This is very much the team concept that has been discussed and yes, the possibility is great that this option will create an office with a bunch of 80 percenters. But it will be decent producers that reflect my values. Call it pie-in-the-sky if you like, but that is my goal. Bottom line is I am willing to sacrifice some income potential to insure a 100% positive reflection in the community.

      I am out here on the RE.net just like Brad and Brad, searching for an edge to help me achieve this goal. For me, this discussion has been a long time coming.

    40. Kevin Warmath - Alpharetta Real Estate May 31st, 2008 5:29 am

      So to summarize a little here:
      1. First comes rain. No rain, no business
      2. (Most) brokers don’t make rain, at least mine doesn’t
      3. Some brokers try to teach the agent how to make rain, but agents are eventually dispatched to “go forth and prosper” (or die).
      4. Some agents figure it out.
      5. Many of these successful agents then build teams, including admin help which they don’t get from their broker either.
      6. The rain maker then becomes disillusioned with the broker and thinks (s)he can do it alone.
      7. Meanwhile, online companies are monitizing the very listings that the rainmaker worked to hard to earn, further irritating the rainmaker.
      8. Lead generation companies pop up and start trying to fill the void left by the brokers and to feed the starving agents.
      9. The market goes to hell making all this more prominent.

      There are people who can feed themselves (hunter gatherers) in the world and people who need to be fed.

      The broker is not a hunter gatherer and isn’t doing a good job feeding the agents.

      Hunter gatherers have needs too, though, just not as many. Some of those have been mentioned in these comments. If Broker 2.0 doesn’t want to become a hunter gatherer for his flock, then he has to figure out how to service the hunter gatherers that he can recruit.

      I like the idea of only paying the broker a nominal desk fee and then a 20% referral fee for any lead that turn into business. Then that puts the broker in nirvana, exactly that place where any good rainmaker wants to be: selling leads and let other people service them. Just like Lynn said, the ultimate model is to just sell leads.

      I would then suggest that the broker needs to stop thinking like a broker (administrator / recruiter) and start thinking like an agent running a big team whose revenue comes from selling them leads and having them deliver a service that is consistent and professional based on a culture the broker creates. Give the “mega” agent a dose of their own medicine: become one!

    41. Don Reedy May 31st, 2008 6:01 am

      CJ,

      First, congratulations! You not only CAN, but clearly WILL become that which you treasure most, the best at what you love doing.

      I have a favorite saying, that I’m going to put out here, on your question, near the ending of all these great comments.

      “A single raindrop seldom thinks itself to be the cause of the flood.”

      You rained on all of us with this question, and we are all soaking that rain up with much gusto.

    42. Brad Nix - Woodstock Real Estate May 31st, 2008 6:28 am

      @Kevin, et al

      #6 is the crux of what I want to resolve and my reason for trying to innovate as a broker/rain maker/broker 2.0/provider/whatever you want to call me. Why the disillusionment and how to avoid it?

      To contend with your list:
      Some brokers make it rain, especially brokers who are active agents.

      Some rainmakers view brokers as outsourced admin, marketing tools, and business services. If X is less than Y and saves you time, why not pay X?

      Finally, (let’s assume I was recruiting you)…If I could make an offer to provide equal or better services plus make it rain and deliver those to you for $6,000 less than you are currently paying your current broker per year, what would your response be?

    43. Bryan Casteel May 31st, 2008 8:19 am

      Kevin is right – the true value every agent wants is help getting a paycheck and the #1 value item is leads and clients. Here are some “from the field” & “tested” thoughts on the partnership as a rain maker.

      The partnership (think of it as a small company) could generate the Leads/Clients for the agents in the partnership. All the agents would be “equal” in terms of opportunity and branding. In fact, the brand equity is built into the partnership name – not an individual’s name. This way partners can be added/removed over time. This is my model and it works. The partnership (not an agent or broker) is the real rainmaker.

      We are in the process of starting new “Partnerships” in other cities using our technology & systems. My founding partners will hold part ownership and we will sell part ownership to the agents joining the partnership in that city.

      Other models will work, but I like the partnership model. In fact, a person has to apply to get into the partnership – We only want partners who will make the pie bigger for everyone.

    44. [...] Bloodhound Blog, we tossed around the idea of what the role of a broker could and should be in today’s real [...]