{"id":542,"date":"2006-10-15T12:11:55","date_gmt":"2006-10-15T19:11:55","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=542"},"modified":"2006-10-15T12:12:38","modified_gmt":"2006-10-15T19:12:38","slug":"when-real-estate-brokers-face-a-substantial-cost-for-head-count-only-the-most-profitable-heads-will-survive-unsevered","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/542\/when-real-estate-brokers-face-a-substantial-cost-for-head-count-only-the-most-profitable-heads-will-survive-unsevered\/","title":{"rendered":"When real estate brokers face a substantial cost for head-count, only the most profitable heads will survive unsevered . . ."},"content":{"rendered":"

Mark Nadel’s white paper on real estate commissions<\/a> is very thoroughgoing, rich in detail and a rational understanding of human motivation — without slipping over to the hyperbole that afflicts much criticism of the residential real estate industry.<\/p>\n

But Nadel is an outsider, so, while his diagnosis of what ails our business is spot on, I don’t get the impression he apprehends the underlying causes of our belligerent sclerosis.<\/p>\n

I wrote the text quoted below a couple of weeks ago<\/a>, and I need to come back to do it better justice. But it remains that the real estate brokerage<\/i> business is not so much about selling real estate as it is about milking agents.<\/p>\n

There are at least three components that have made this industry amazingly stupid, as compared with any other business in the capitalist system. The first two are commissions and licensing, but the third, and by far the most consequential, is the safe-harbor income tax exclusion. Because brokers can “hire” everyone as an independent contractor, they have no reason to cultivate human capital — the only kind that really matters. This was a foolish mistake, and it may well be the death knell for traditional personal-service real estate. One of the things we want to do, in the long run, is effect a totally different kind of business model for real estate representation. This again could result in huge costs savings for buyers and sellers while increasing our own profitability.<\/p>\n

Want to get the bums out of this business? Make real estate brokerage so efficient that only smart, honest, ethical people can make a living. Profit is the purpose of capitalism, but a gradual movement toward moral perfection is a necessary secondary consequence.<\/p><\/blockquote>\n

Getting rid of the broker-level license would help<\/a>, but don’t hold your breath. Getting rid of the safe-harbor withholding-tax exclusion would achieve a similar effect. When real estate brokers face a substantial cost for head-count, only the profitable agents will survive in this business.<\/p>\n

This alone is probably not enough to get brokers to behave like the owners of other professional-service practices, but it’s a step in the right direction…
\n<\/p>\n

Technorati Tags: Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Mark Nadel’s white paper on real estate commissions is very thoroughgoing, rich in detail and a rational understanding of human motivation — without slipping over to the hyperbole that afflicts much criticism of the residential real estate industry. But Nadel is an outsider, so, while his diagnosis of what ails our business is spot on, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,6,5],"tags":[],"class_list":{"0":"post-542","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-disintermediation","7":"category-marketing","8":"category-real-estate","10":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":679,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/679\/content-piracy-on-the-renet\/","url_meta":{"origin":542,"position":0},"title":"Content piracy on the RE.net . . .","author":"Greg Swann","date":"November 25, 2006","format":false,"excerpt":"An aggregator weblog called Real Estate Chatter is resyndicating the feeds of these 25 real estate weblogs:Altos Research Real Estate InsightsAppraisal ScoopCarnival of Real EstateMike's Corner Web 2.0 For Real Estate ProsNAR in the Newsrealestate.com.au News & ViewsOverseas Property Blog :: guide to international real estate investmentPressReal.comSeattle's Rain City Real\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2830,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2830\/while-the-national-real-estate-market-is-soft-google-pay-per-click-real-estate-advertising-still-going-strong\/","url_meta":{"origin":542,"position":1},"title":"While The National Real Estate Market Is Soft – Google Pay-Per-Click Real Estate Advertising Still Going Strong","author":"Doug Quance","date":"March 24, 2008","format":false,"excerpt":"Is Your Online Marketing Costing You Too Much? As one of those with an online presence, I am always interested in how others attract \"eyeballs\". Back in the early days of Google, I proudly staked my claim on some choice keywords in their pay-per-click program - which brought me a\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1538,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1538\/an-renet-taxonomy-identifying-types-of-real-estate-weblogs\/","url_meta":{"origin":542,"position":2},"title":"An RE.net taxonomy: Identifying types of real estate weblogs","author":"Greg Swann","date":"June 14, 2007","format":false,"excerpt":"This is a first strike at a taxonomy of real estate weblogs. Taxonomy is the science of categorizing things. Of course, not everything can be neatly categorized, but the elucidation of categories can focus the mind, helping us to understand where certain weblogs might fit, which are hybrids of two\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":346,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/346\/how-i-feed-my-hungry-mind-my-opml-file\/","url_meta":{"origin":542,"position":3},"title":"How I feed my hungry mind: My OPML file . . .","author":"Greg Swann","date":"September 18, 2006","format":false,"excerpt":"The other day I highlighted some real estate weblogs that I read every day, and, while that article is true, it's not the whole truth. The Republic gives me all of 350 words in which to map whatever universe I see behind my eyes, so I end up focusing on\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1056,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1056\/real-estate-carnivals-nigel-swaby-wins-carnival-of-real-estate-investing-our-own-allen-butler-wins-carnival-of-real-estate\/","url_meta":{"origin":542,"position":4},"title":"Real Estate Carnivals: Nigel Swaby wins Carnival of Real Estate Investing, our own Allen Butler wins Carnival of Real Estate . . .","author":"Greg Swann","date":"February 19, 2007","format":false,"excerpt":"BloodhoundBlog was this week's host of the Carnival of Real Estate Investing. Nigel Swaby from the Salt Lake Real Estate Blog was this week's winner, with Creative Financing - Conversion to Traditional Mortgages. We had a total of seven entries and four judges: Michael Cook, Cathleen Collins, Jeff Brown and\u2026","rel":"","context":"In "Blog Carnivals"","block_context":{"text":"Blog Carnivals","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blog-carnivals\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":337,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/337\/here-are-some-blogs-that-stay-on-top-of-real-estate\/","url_meta":{"origin":542,"position":5},"title":"Here are some blogs that stay on top of real estate","author":"Greg Swann","date":"September 15, 2006","format":false,"excerpt":"This is me from today's Arizona Republic (permanent link). I wish I could deliver an SEO boost to the weblogs mentioned here, but I doubt that will happen. First, the paper didn't create links for the web-based version of this story. And second, the Republic hides everything behind a for-pay\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=542"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/542\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}