Real Estate Transactions Are Now On the Top of the Stress List

It may or may not come as a surprise to most real estate professionals that it is now public knowledge that, with respect to stress, participation in a real estate transaction is now on par with death, terminal disease, divorce, airline travel and computer repair.

Screen Shot 2015-11-13 at 9.43.26 AMAn article published in the October, 2015 edition of the Harvard Business Journal by Leonard L. Berry from Texas A & M University and Scott Davis from Rice University reports that services such as cancer care, airline travel, computer repair and home buying and selling can trigger powerful human emotions. Even more surprising is the fact that the vast majority of the entities and individuals delivering these services are not sensitive to the level of stress their consumer experience generates. Nor are they provided with the training necessary to either demonstrate sensitivity or reduce the amount of stress their performance is largely responsible for.

By this point some readers will be rolling their eyes and not so subtlety pointing out: Hey, what’s new? This is the way it has always been, this is the way it will always be and as a hyper busy real estate professional I can’t be responsible for the client’s mental health. Buck up consumers!

While there may be no lack of support for this macho position hopefully there will be a few souls who will want to better understand the big picture because there is one. Lets start with a few facts. First, this is not our parents real estate marketplace. A strong argument can be made to support of the idea that as a market we are in the last vestiges of that era in which real estate agents and sales representatives have the absolute power to design and deliver the consumer real estate experience. From a consumer and regulatory perspective we are now in an new era in which the only thing that matters is what experience the real estate consumer gains from their buying, selling and transactional experience and how they can customize that experience to make it a positive one.

Screen Shot 2015-11-13 at 9.52.00 AMThis effort is not without support and facilitation. Leading the charge are the new generation consumers themselves. As a starting point they are no longer in a mood to be victims of provider centricity. They have ceased to see their physicians or their real estate service providers as the center of the civilized world. Empowered by the “Internet of everything,” their peers and friends, they enter the transaction fully prepared and committed to avoid the transactional woes of the old experience.

The second level of facilitation for consumer centricity will come from new age regulators such as a federal agency known as “the Bureau.” Twenty-five years ago this term would have been applied to the awesome powers of the Federal Bureau of Investigation (the FBI). Today the term “Bureau” applies to the Consumer Financial Protection Bureau, a five year old agency that has already earned its bones by bringing order to such high annoyance consumer experiences as student loans, car loans, payday loans, credit cards and, most recently and currently the consumer mortgage experience.

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The “Bureau” is absolutely data driven. Not the data represented by tens of thousands of old musty files hidden away in a basement, but the data of an agency whose primary data mentors in 2010 where Google and Apple. Every one of the consumer complaints either generated or received by the Bureau has been captured, verified, analyzed, catalogued and stored in a system that allows for fast reference and almost instant incorporation into the initiatives necessary to respond to the consumer’s plight.

A review of the Bureau’s recent activities relative to the real estate industry discloses a systematic approach to preparing to regulate all real estate industry activities including those of brokers and agents. The Bureau has already moved to regulate the appraisal, title, mortgage, the transaction sectors and even the allied business elements of the brokerage sphere. Essentially the only element required to close this regulatory circle is pulling in the brokerage and agent. When that moment comes, and in all likelihood it will, the Bureau will be armed with an overwhelming amount of sterling quality evidence in the form of both its own investigations and observations and literally hundreds of thousands of direct consumer reviews (read complaints).

Yet another source of facilitation and support for a consumer-centric movement in real estate may come from the federal and state courts in the form of judgments and decisions impacting the long standing status of the real estate professional as an independent contractor. While the basis in law of such actions have to date been in agency law, there is a strong likelihood that as these actions work their way up the judicial and regulatory ladders, issues regarding public safety and consumer rights will began to enter the case. The recent decision by the Oregon Public Utilities commission determining that Uber driver/partners are in fact employees brings the national score to two in favor of employee status and two against. There are at least two lawsuits also pending on the subject.

Still another source of documentation regarding the possibility of less than stellar consumer experiences being delivered can be found in the records of on and off line agent ranking and rating programs. Not all consumer reviews are converted to numeric scores and numbered star rating scores, as is the case with the Houston Association of REALTORS program. Some agent ratings are used to populate very precise databases regarding specific agent behaviors. Industry wide there are well over 1.5 million such reviews. These databases may ultimately come back to haunt the industry and its participants.

Returning to the initial focus of this column, what should brokers and agents do to lower their vulnerability to the side effects of what is clearly a highly stressful and unsettling consumer real estate experience? The primary answer to this inquiry is very simple. In some way demonstrate that the brokerage or agent gives a damn.

The easiest way to meet this basic test is to undertake some manner of rehabilitative behavior. When theScreen Shot 2015-11-13 at 10.18.47 AM moment comes and one must defend one’s self the simplest solution is to be able to establish with a dedicated file that the brokerage and its agents were knowledgeable and sensitive to the problem. Set about identifying the specific emotional triggers that are set off during the consumer’s experience. Determine which have to exist and which are merely manifestations of an agent’s power. Develop tactics for responding quickly and effectively when intense emotions arise. Enhance the consumer’s control over the real estate buying, selling and transactional experience. Train agents and others within the brokerage who are in regular contact with consumers to respectfully communicate with clients and customers to strengthen their confidence. Most important of all, establish a record of not being too busy to assist.

These are disruptive and difficult times. They call for appropriate levels of management and behavior modifications. Don’t wait for the knock on the door. We can do this.


Avoiding Secondary Disruption With Strategic Design

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A significant number of past commentaries from this column have discussed the various aspects of digital disruption both from the perspective of being and disrupter and being disrupted. The fact is that disruption is a primary factor affecting almost every aspect of the current brokerage scene. Most compelling brokerages are either in the process of responding to disruption or creating innovative disruptions of their own. Sometimes these disruptions are external and impact the brokerage’s competitive position in the marketplace. In other cases the disruptions are internal and impact management and operations.

While disruption, as a business factor for real estate brokerages, is too new to have evolved a classic tactical or response pattern, certain matters are already clear. Chief among those is the absolute necessity that firms adopt and implement their own strategic and innovative course rather than adopting a response strategy that forces the firm to respond anew to each incursion of internal disruption and/or external market or competitive forces as they occur. With few exceptions response strategies equate to being led around by a leash with a blindfold. It is hard enough to anticipate the challenges of one’s own strategic intent let along trying to track and prepare for the unknowns of another’s.

The essence of strategic design requires taking a “total” or “big picture” approach. Brokerages that have a strong articulated strategic intent, set and maintain their own course. While the activities and actions of the market or competitors may require occasional course corrections they do not result in major shifts in strategic course or tactical deployment.

Screen Shot 2015-09-18 at 1.48.53 PMThe first requirement for brokerages seeking to adopt strategic design as their Screen Shot 2015-09-18 at 1.53.13 PMlead business strategy is the designation of a specific individual to be the firm’s Chief Design Officer (CDO). While such a title may sound arrogant and expensive the fact is that while the strategic design concept requires group participation it will not respond to group command. Someone must have overall responsibility. This is not to suggest that such a responsibility is, for the small and medium firm, a full time position. It does, however, suggest that this responsibility is best held by someone other than the senior executive or managing broker/owner. Strategic design programs work best when the senior executive is available to support the program from a distance by mediating the conflicts that naturally follow any plan that requires significant change.

The second requirement for a successful strategic design program involves implementing a program that addresses the full range of the firm’s strategic intent rather than on a crisis-to-crisis basis. Some of the best brokerages in the country are in the process of addressing disruption on a piecemeal basis – a little here and a little there. Something in this office and something else in another office. A little upgrade to recruiting, a bit of transaction management, a few agent ratings, a new age manager here next to a 30 year expert in the downtown office, a new website that almost addresses the shortcoming of the old one, and perhaps a thought about regulatory compliance. This approach to disruption will ultimately leave these firms even more vulnerable to the ultimate disruption of an alternative brokerage model that will “Uberize” the real estate industry by offering a completely new A to Z consumer and financial experience. There are now several entities in the market that are making those kinds of noises.

In a strategic design scenario the brokerage, under the oversight of its design chief, creates a vision, master plan, and blueprint that addresses every aspect of the firm’s operations three or four years out. Most firms will attempt to implement this change process over a twenty-four month period. One of the key tactics here is to ensure that each action item undertaken will fit precisely into the ultimate overall strategic design. During this period a change in any of the elements will require an adjustment in all of them in order to allow the entire design to work as a productive and profitable system. In the piecemeal approach each of the individual segments may be absolutely perfect but if they cannot come together as a relatively flawless system they will not be management or accountable. This is why the industry at this point in time is so vulnerable to an ultimate disruption scenario. Existing systems that reflect, “how we have always done it” are neither flexible or nor defendable in the face of disruption.

Screen Shot 2015-09-18 at 1.46.59 PMThe third requirement that must be met has to do with the fact that in most cases strategic design project also require major changes in the corporate culture. Many brokerages have, over the past decade, spent fortunes purchasing new technologies. Unfortunately they have found that new technologies laid over legacy cultures are neither effective nor generate an acceptable return on investment. Sometimes a successful strategic design process is more evolutionary than revolutionary. Experts like Mauro Porcini, PepsiCo’s Chief Design Officer suggest this culturalization process involves several stages.

  • Those responsible for the strategic design process must never forget the “dark day of the innovator.” Investing the time and effort to create innovation through disruption and design frequently creates a situation in which the rest of the team is unable or unwilling to either recognize or celebrate the genius of the innovations being introduced. Self-confidence and faith are a must.
  • It is not unusual for significant players within the brokerage to suggest that the status quo is working just fine and that the suggested disruption will never work. These issues must be addressed head on often with terminations and new hires.
  • Even when the significant players are on board with the strategic design process there will be lessor players in the brokerage environment who will openly or secretly reject and attempt to sabotage the new design. The brokerage’s boomer generation agent contingent is often a nexus for this level of “opposition.”
  • When the brokerage environment appears to have reached a critical level of support for the strategic design, it is often still necessary to move the process forward by playing the “trust me” card.
  • Although the members of the team may appear to be, at least tentatively, in place and supporting the process, it is still important to have embedded a number of “quick start” elements that will demonstrate early success and confidence in the program.
  • Finally, there is a moment in time when the process turns the corner and ownership of the innovations become more or less universal. It is at this point in time those who have been dragging their feet suddenly want to offer suggestions relative to how the innovations might be made even more effective. This is known as the “confusing day of the innovator.”

Strategic design has become a key feature in many leading business entities. It offers a proven methodology for meeting the threats and realizing the opportunities of disruptive innovations. This is yet another example of the age-old axiom that the perfect defense is an optimum offense.

Management Migration: A Sign of the Times

Screen Shot 2015-08-18 at 8.39.39 AMThe conclusion of the industry’s recent round of summer presentations and articles provides an opportunity for reflection and consideration regarding what lies ahead for fall and winter. As has been the case for the past few years, increasingly dramatic transformation continues to occur. Issues regarding the control and processing of listings and other real estate related data, the emergence of the hybrid brokerage culture, the continuing demise of MLS organizations and REALTOR associations, the sharpening of the consumer expectation and the industry’s almost myopic focus on all things ‘portal’ provides the framework for this ongoing discussion.

Certainly one of the most significant dynamics currently driving the industry is the almost universal sense that little or no change will be initiated or driven by the traditional brokerage element. With few exceptions, like great fortresses along the Maginot Line, they stand bravely facing out toward the forest, awaiting their fate at the hands of those that will carry the day forward.

Yet, under the umbrella of the forest there is a great deal of activity. Record numbers of more aggressive agents are abandoning these fortresses seeking refuge, safety and success with brokerage organizations that appear to be preparing to take both a leadership position and the advantage of the evolving marketplace environment. Many of these agents are entering into new brokerage relationships that involve levels of compliance, accountability and discipline that would never have been possible in the traditional sector.

These agents may constitute the first wave of the new movement. If that is the case the second wave is likely to consist of the brighter and younger managers who are increasingly recognizing that their futures are likely to depend upon getting onboard and up to speed with a brokerage that is preparing to align with the trends, emerging rules and realities of the new industry environment.         Screen Shot 2015-08-18 at 8.41.51 AMIn July of this year I found myself engaged in a riveting discussion with a group of clients, all of whom are very successful brokerage management executives. The conversation worked its way through a number of interesting issues before coming to rest on the subject of management careers in the real estate industry. It was at this point that one of the participants assumed the leadership position and sharpened the group’s focus by sharing the fascinating story of her recent career changes.

This individual is no ordinary soul. Her career achievements include being both a longtime super high production agent and a record-setting large office manager. She has recently executed a really interesting career strategy that involved a number of rather dramatic tactics. As I listened to her story it occurred to me that hers was really the story of our current industry. I hope the reader will find the following thoughts both interesting and beneficial. In order to avoid irrelevant complications, this individual’s name and current and past relationships have been purposefully omitted.


What went wrong with your former brokerage relationship?

“I was observing fast moving changes in the industry and the marketplace not so much by following industry events as by listening to my better agents. Many, especially the younger high performing, were very aware of how the industry was changing. Increasingly their conversations evolved to asking what their brokerage was going to do to get on the new track.”

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“At the same time I was attending management meetings where I observed no such discussions at all. I saw no apparent interest or willingness to change business strategies or tactics. Attempts to exercise basic leadership energies and perhaps get the senior team to consider alternatives were quickly rejected. As I became more engaged I couldn’t see that there was a plan in place or a process to get one started. It seemed to me that the ownership and senior management was not committed to future success but rather merely surviving the storm.”

How did your former career relationship make you feel as a professional and an individual?

“I was concerned for my agents but even more frustrated at not being able to work with my team to take advantage of opportunities that were so obvious. I was unable to find a way to be effective. The message of senior management seemed to be to stay the course and everything would be good.”

Through what process did you set about getting your career back on a course that you deemed to be appropriate and meaningful?

“I tried hard to convert my influence into leadership for positive change. I offered to become a change advocate. I offered to use the offices under my management as examples. When these efforts failed I made the decision to take my career in a new direction.”

At what level of detail did you negotiate your new position?

“I searched for firms that seemed to have a clue about what was happening in the current marketplace. I made the decision not to associate myself with those for whom retirement was the next stage of their career. I was focused on finding a position with a firm that not only understood the industry’s direction but also had a business plan that would allow them to take advantage of the new environment. I wanted to be with people who were looking to success ahead not behind. I understood that it takes more than a plan to succeed but I also understood that a team cannot succeed without a plan. I believe that my career is now back on track and that my talents are being used to their greatest extent and appreciated.”

What advice would you share with others in like circumstances?

“For someone who is in my former position I would say you have to follow Screen Shot 2015-08-18 at 8.45.49 AMyour heart. If you are in conflict with your best feelings it is probably time for a change. Search for that place or that relationship that you feel that you can make a difference. Our world and our industry are changing as we know it and those who don’t change with it are going to be left in the dark.”

“Success moving forward will require a partnership based on emotional relationships between brokerages and agents.”

With each passing month our industry becomes more focused on objectives and destinations that are inconsistent with “how it has always been done.” It has become more than clear that over the near term future the changing industry and market environment, its productive agents and those who manage will demand a business model that conforms to the new expectations. While there is no certainty of success in this environment, it has become obvious that without an innovative and adoptive business plan and wide spread collaboration, accountability and support success will likely be impossible.

What Is The Deal With the Millennials?

Brokerages are currently being challenged in their efforts to capture a commanding share of what some in the industry are trying hard to classify as a “Millennial land rush.” The fact of the matter may be that the current situation may not constitute a land rush at all but rather a generation playing out its unique developmental destiny.

The industry’s conference and literature environments are currently awash with presentations and articles about the consumer behaviors of the 80 million Americans between the age of 18 and 34 that comprise what is generally known as the Millennial generation. While much of the information that is being shared is simply a rehash of extremely limited professional and previous offerings, there is one new publication that meets everyone’s five star test of relevancy, accuracy and power.

Last week the Pew Research Center, a unit of the Pew Charitable Trusts, issued what is probably, at this point in time, the definitive report regarding the Millennial Generation and their current interactions with the housing industry.

The Pew Charitable Trust is an independent non-profit, non-governmental organization (NGO), foundedScreen Shot 2015-08-11 at 10.11.16 AM in 1948. With over US $5 billion in assets, its stated mission is to “serve the public interest by improving public policy, informing the public, and stimulating civic life.” It is, by any criterion, an amazing fountain of knowledge that matters.

The Pew report is entitled More Millennials Living With Family Despite Improved Job Market. The report contains a revealing analysis of U.S. Census Bureau data regarding this increasingly important demographic. For real estate professionals seeking to effectively work with this group the following insights will be essential.

  • The post great recession economic recover has now been in existence for over 5 years.
  • Despite this history fewer individuals within the 18 – 34 years old group are currently living independently in their own households than in the height of the recession in 2007.Screen Shot 2015-08-11 at 10.12.44 AM
  • The employment economics of the Millennials are also recovering nicely. In 2015 Millennials with a college education will make an average of $51,000 while those with a high school diploma and “some” higher education will make about $30,000. These statistics suggest that income is very close to having recovered to pre recession rates. Some experts suggest that what the Millennials lack is not adequate income but rather the ability to live on the same level as their boomer parents.
  • 51% of Millennials with a college education are running their own households as opposed to 43% of those without a degree. These statistics are somewhat below pre recession rates.
  • The data also suggests that while the repayment of education related debt is a factor in deciding whether or not Millennials live independently it is not as critical a factor as previously thought.
  • The latest census data indicates that there has been no significant increase in the percentage of Millennials living with their families since 2007.
  • Neither is being “doubled up” (either living with parents or having a roommate) significantly increased since the recession.
  • Of special interest to housing and real estate professionals is the fact that in 2015 only 25 million Millennials head up their own households compared with 25.2 million in 2007 despite the fact that there are some 3 million more individuals in this demographic group. This has had a very negative impact upon the housing market. There is no evidence that household formation rates in 2015 have significantly increased over 2010.Screen Shot 2015-08-11 at 10.13.58 AM
  • Another demographic factor impacted by the recession was college enrollment. During the 2010 – 2012 period there was a dramatic increase in enrollment but those numbers have retreated over the past three years. Despite media stories that suggest that higher education doesn’t “pay off,” the evidence provided by the Pew report differ dramatically and suggest that education, even with student loan debts, remains one of the best investments a young individual can make.

The relevance of the information presented in the Pew report is something that every real estate professional should study and apply to their own unique business. They should beware of the stereotypes and generalities that are currently being peddled as contemporary marketing savvy. Many are nothing more than short-term observations that their authors are attempting to convert into long-term marketing wisdom.

What the Pew report was not charged with, and did not comment on, are the vast number of philosophical, lifestyle and cultural factors that are now formatting the lives of the 18 to 34 year old set. The factors that are contributing to the hesitancy of the Millennials to engage in certain housing decisions (e.g. purchase) are complex and significant. They go well beyond how agents are interacting, what they are saying and how they are presenting the issues connected to owning one’s own home. They are not all about economics.

Perhaps the most significant of these factors is that many were raised by the most complex of all generations; the “boomers.” Only history will disclose the full impact and force of having boomer parents. Boomers themselves demonstrated the impact of having “civic” generation parents. Most couldn’t escape that oppressive environment fast enough. The Millennials are demonstrating just the opposite behavior. The basis of this attraction and relationship may well be the foundation of the real estate industry’s challenge with this demographic.

It is becoming increasingly obvious (Supported by the Pew Report) that the impact of the recession on the Millennial generation may be far less than previously assumed. A strong case can be made to support the idea that what is happening relative to this generation and its housing decisions may well be a product of the culture in which they were raised. Consider the fact that nearly 50% of Millennials who have purchased a residence received significant funding support from their families. What expectations will these actions by Boomer parents carry into the future? Given the economic realities of upcoming retirements, is it possible that Boomer parents will demand repayment of these grants at the very moment that the Millennials are feeling the heaviest burdens of raising families?

It is way too early and there has been far too little history connected to the Millennials for real estate professionals to believe that a dependable set of Millennial centric rules and procedures have emerged. Caution is the key here. Do some homework and closely track emerging research such as that recently contributed by the Pew organization.

The Potential Perils of Being Out of Control

Screen Shot 2015-07-17 at 9.12.57 AMThe American residential real estate industry is currently going through a quiet but particularly dramatic phase of its contemporary history. Brought about by the now almost two year old announcement by the Consumer Financial Protection Bureau that, effective August 1, 2015, it would be developing and enforcing a new set of lender mortgage disclosure and RESPA audit rules the various segments of the industry are demonstrating a number of reactions and responses.

Over the past two years the mortgage and title sectors invested significant energies and resources into creating processes and procedures that will ensure that its business practices will be in compliance with the new rules. Both deserve a hero’s medal for the millions of dollars and human resources that they have invested into making sure that the return of regulation to the industry is accomplished with as little disruption as possible.

The fourth player in this historic drama, the real estate services or brokerage sector, has also executed on a number of significant reactions and responses. Instead of acknowledging the new rules and doing their best to comply, by and large the brokerage sector has elected to effect a combination of ignoring the rules and denying any potential impact or liability.

In its defense the brokerage sector was, to some extent, relying upon representations by its advisors in organized real estate that nothing in the Dodd Frank consumer protection act of 2010 applied to them. For much of period since July of 2013 brokerage sector inquires were met with an absolute assurance that there was a specific provision and a political promise that nothing in the CFPB program was relevant to brokerages and agents.

This convenient reality remained in place until early spring of this year when inquiring minds began to realize the significance and probable impact of the new regulations and altered RESPA procedures. By early April the alarm had been sounded and, while even then the majority of the brokerage sector refused to consider the ramifications of the new regulatory threat, significant numbers of firms undertook to respond to the threat posed by the Bureau’s efforts to protect the real estate consumer.

What became relevant at this point was the internal experience of the brokerages that made the decision to respond to the new CFPB rules as they undertook to protect their consumers, agents and stockholders against the very significant downside of interacting with a regulator that is (1) consistently demonstrated over the past 48 months its commitment to make all elements of the real estate transaction safe for the American consumer (2) following an unfaltering course of notice and focus in that direction and (3) armed with both enabling legislation and a demonstrated willingness to use its ability to levy significant financial sanctions ($5,000 per day per file fines) against offending and non-complying parties.

Screen Shot 2015-07-17 at 9.40.19 AMIt is sufficient to say that as brokerages have attempted to affect some level of control over their transactional operations they have discovered what many have always known. After decades of deferring command and control, they now find themselves almost totally unable to exercise even the most minimal impact over they’re most basic processes and procedures. Even when faced with the certainty of failed audits, immense fines by an agency who gets to eat significant amounts of what it kills and the high potential of lawsuits from engaged consumers whose lives become disrupted because of non-complying transactions, the internal constituencies of many brokerages refused to submit to even the most basic of best practices and transactional safeguards. It would appear that the industry’s traditional adage that “I don’t need no stinking boss” has risen to become its nemesis and “Achilles heel.”

For many brokerages going through the process, the findings have been nothing short of horrifying. The broker’s almost total lack of control coupled with the refusal of agents and, in many cases, managers, to comply with management systems and internal rules has been alarming. One of the more classic examples was a firm that discovered that the local MLS records reflected over 500 listings attributed to the firm that it didn’t know existed.

What makes these brokerage experiences even more alarming was the recent release (May 15, 2015) of the courageous NAR DANGER report. This document, commissioned by NAR and totally unrelated to the CFPB and its current initiative, the first of its kind in the industry, skillfully documents the concerns of dozens of top industry executives and decision makers that this very thing might happen.

Many within the industry saw the recent CFPB decision to defer rule enforcement by 90 days as some manner of political or strategic victory. Those who are most familiar with what is happening here realize that the delay will only serve to amplify the existing circumstances. The bureau will be that much more prepared to execute on its mandate, the mortgage and title sectors will be that much more competent in their compliance and the brokerage sector will be that much more unprepared to protect itself and its consumers.

What then can a brokerage that has not undertaken or been able to effect actions to protect itself do at this late moment with only 90 days remaining in the countdown? The simple answer is due diligence.

One morning or afternoon on a date after Saturday, October 3rd, your receptionistScreen Shot 2015-07-17 at 9.17.06 AM may look up to see one or more individuals introducing themselves as being from the Consumer Financial Protection Bureau. They may announce that they are present to conduct a TTILA/RESPA audit.

What happens from this point forward may have everything to do with the size of the fine that will ultimately be levied on your brokerage. This moment in time compares rather nicely with being pulled over for a traffic violation. Why do some drivers receive citations while others depart with a warning? As any officer will tell you it has everything to do with the driver’s respect and common sense. Enforcement discretion is never awarded to jerks.

Just as a significant percentage of drivers pulled over elect to respond by being hostile, argumentative and even combative so will a like percentage of brokerages fall into the same trap. The operative assumption on the part of auditors is that the treatment they receive is very likely to be the same treatment that the brokerage will give to a consumer with a problem.

Screen Shot 2015-07-17 at 9.22.58 AMGiven these circumstances how should the brokerage respond? Leaving CFPB personnel standing in the lobby while contacting the broker, calling legal counsel, asking for a search warrant or demonstrating a belligerent attitude is not the right answer. The first contact, and all subsequent contacts within the brokerage, whether they have been there for ten-years or just happen to be walking by, should respond as if the brokerage is prepared for such an audit. To a great extent the auditors will judge the brokerage on the basis of what due diligence is in effect.

If the auditors’ request to see the firm’s TILA/RESPA Audit procedures file and the response is that “there is no such file,” what does one imagine will be the response? Does, “Oh, no sweat, we will come back next week” sound correct? If the brokerage doesn’t respect the law or the consumer enough to have such a file then there is really nothing to discuss, it is now just a matter of how much the fine is going to be.

What should be in this magic file(s) is the evidence of what efforts the brokerage has made to comply with the new rules. This effort is referred to as “due diligence.” It is the sum total of the efforts made by the brokerage to prepare for an audit. One doesn’t have to be an expert on fires to prepare for a possible fire. Initial due diligence is nothing more than common sense and respect. It is time for the industry to demonstrate these qualities. We can do this.


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The Fine Art of Due Diligence

Screen Shot 2015-06-30 at 5.10.43 PMOn June 24th of this year the Consumer Financial Protection Bureau (CFPB) proposed a two-month extension of the effective date of its “Know Before You Owe” mortgage rules. The proposal, if approved by the agency’s internal processes, will extent the effective date of the rules to Saturday, October 3rd. The rules, also known as the TILA-RESPA Integrated Disclosure rules, require easier-to-use mortgage disclosure forms that clearly lay out the terms of a mortgage for a homebuyer. The RESPA rules (circa 1974) speak for themselves.

The news of the extension was met by the real estate industry with a number of responses. A significant segment within the industry didn’t notice it at all choosing to ignore the rules as they have done from their initiation some two years ago. Another segment within the industry simple elected to ignore the notice. Finally there is that segment that realizes that these rules will have a significant impact upon their businesses but are, as of yet, uncertain what actions to take.

This piece is directed to this last group. If, after all of the information, commentary and “wake up” calls that have been distributed, a brokerage firm or its management team still believe that the new rules will have no impact, then the foundations of one amazing surprise have been laid. Try not to gasp when you see the amount of the fine.

The following information is provided for those brokerage executives and managers who recognize that they must take some action, and soon, to avoid a regulatory catastrophe.

Lets set the stage first. One morning or afternoon on a date after Saturday, October 3rd, your receptionist (hereinafter referred to as your first line of defense) will look up from her or his desk to see one or more individuals introducing themselves as being from the Consumer Financial Protection Bureau. They will not be in uniform but they will produce acceptable identification. They may announce that they are present to conduct a TILA/RESPA audit. They will request to be provided with a space from which to conduct their work. They will further request that certain files be produced.

What happens from this point forward may have everything to do with the size of the fine that will ultimately be levied on your brokerage. The likelihood of a fine is almost a certainty since few brokerages, regardless of size or management sophistication, have recently gone through either a TILA or a RESPA audit. In 2014 such fines against brokerages ranged from $10,000 to hundreds of thousands of dollars.

At this point in the process one could compare what is about to happen with being pulled over for a traffic violation. Why do some drivers receive citations while others depart with a warning? As any officer will tell you it has everything to do with the driver’s respect and common sense. Enforcement discretion is never awarded to jerks.

Just as a significant percentage of drivers pulled over elect to respond by being hostile, argumentative and even combative, so will a like percentage of brokerages fall into the same trap. The operative assumption on the part of auditors is that the treatment they receive is very likely to be the same treatment that the brokerage will give to a consumer with a problem.

Given these circumstances how should the first point of contact respond? Leaving the CFPB personnel standing in the lobby while we contact the broker, calling the brokerage legal counsel, asking if the Bureau has a warrant or demonstrating a generally belligerent attitude or bearing are not the right answers.

The correct answer is that the person of first contact, and all subsequent contacts within the brokerage, whether they have been there five minutes, one day, ten-years or just happen to be walking by, should respond as if the brokerage is prepared for such an audit. The auditors, who will, for the first few months or so, understand that the brokerage is likely not fully prepared, judge the brokerage on the basis of what due diligence is in effect.

If the auditors’ request to see the firm’s TILA/RESPA Audit procedures file and the response is that “there is no such file” what does one imagine will be the response? Does, “Oh, no sweat, we will come back next week” sound correct? If the brokerage doesn’t respect the law or the consumer enough to have such a file then there is really nothing to discuss, it is now just a matter of how much the fine is going to be.

What should be in this magic file(s) is the evidence of what efforts the Screen Shot 2015-06-30 at 5.13.10 PMbrokerage has made to date to comply with the new rules. This effort is referred to as “due diligence.” It is the sum total of the efforts made by the brokerage to prepare for an audit. One doesn’t have to be an expert on fires to prepare for a possible fire. Initial due diligence is nothing more than common sense and respect. The file might contain evidence that the firm has undertaken the following:

  • To be aware of the new TILA rules and existing RESPA regulations and be committed to protecting clients and consumers to the fullest extent
  • To inform its staff and agents that these rules and regulations exist and to have evidence of their agreement to comply
  • To provide competent orientation, training and coaching on the new rules and existing regulations for all responsible parties, staff and agents
  • To establish competent policies and procedure that inform and protect customers and clients regarding the new rules and existing regulations
  • To designate specific individuals to be responsible for various elements of its compliance program
  • To initiate specific procedures to monitor compliance and respond to possible violations including written warnings and appropriate sanctions
  • To monitor the CFPB website for new developments

Screen Shot 2015-06-30 at 5.14.12 PMThe creation of the file doesn’t require lawyers, experts or days of work, nor does it guarantee that there won’t be a fine. These are common sense steps that any reasonably competent executive or manager should be able to complete. There will be plenty of time for bureaucratic complexities. As the Bureau and the industry experience with these matters grows so, will the file and the programs it supports.

In the mean time the sage advice is to “show you give a darn and DO SOMETHING!”

Stand By For Position RPR Verification

Last month we reviewed the down to earth business intelligence and guidance provided to the brokerage community by a recent series of industry conferences renown for the depth of their research and the accuracy of their presentations. In preparation for this month’s information you are requested to immediately climb to 55,000 feet for a more extended view of the circumstances that will be impacting, if not controlling, your businesses and marketplace moving forward.

The events of Saturday, May 16th will, in all likelihood, impact the operation of your business more than any other single day in recent history. This is, of course, a reference to the National Association of REALTORS® Board of Directors meeting held in Washington, D.C. and the positive vote taken in support of NAR’s partnership with Project Upstream as well as the funding of both Project Upstream and AMP (Advanced Multi-List Platform).

The following comments benefit generously from comments made by Dale Ross, the uber gifted RPR CEO. The partnership between NAR and UpstreamRE, LLC will leverage the RPR technology platform to develop a new data management service for brokers known as Project Upstream. The events of May 16th culminated several months of extensive discussions between the leaders of many of the nation’s largest brokerages, franchise networks and NAR. They created a significant opportunity for the industry to leverage and take advantage of RPR’s five-year investment in data and technology.

In light of the importance of these events additional clarification may be necessary. It is common knowledge within the industry that NAR, through its wholly owned subsidiary, the REALTOR® Property Resource, has, over the past five years, invested millions of dollars into what may be the finest real estate database ever created. It is also widely known in the industry that RPR’s first attempt, in 2010, to bring the benefits of this database to its REALTOR® constituents was something less than successful. Even today, five years later, our ever-present industry observers, many of whom have no claim to creativity or innovation, continue to rave on about this early shortfall.

Well, that nonsense can now be silenced forever. Because of the courage, resilience, insight and leadership of Dale Stinton and Dale Ross, NAR and RPR were, with the assistance of some of the brightest minds in the industry and in the midst of one of the most intense conflicts in the industry’s history, able to bring the lessons learned, experience and assets created by that investment into the arena to bring the parties together and allow them to move forward on common ground, not bifurcated turf.

Lets bang on that drum one more time. The RPR investment will now take its place in history as one of the smartest business strategies ever orchestrated by organized real estate. At the very moment that circumstances suggested a violent separation of organized real estate and big business, the RPR investment stepped forward to make the difference.

With this event in place a number of philosophical and business issues arise. Consider the following.

  • Will those industry personalities who fancy themselves permanent critics now transition to support this epic opportunity or will they continue to wallow in an historic mud bath and confusion?
  • Will those talented minds that were able to bring peace and a whole new standard of quality to the industry demonstrate an equal level of talent by lending themselves to the difficult task of development and implementation that lies ahead. Success over the next eighteen months will require honesty, collaboration and faith. Unfortunately the path ahead will also be vulnerable to the actions and words of those who have no real stake in the game and relish ambushing the process as a form of intellectual entertainment.
  • Finally, and perhaps most importantly, will a critical mass of brokerages and agents rise to the opportunity created by this agreement to create a true future focus? These are exciting times, but only for those who elect to be participants rather than spectators.

What does all this mean to millions of productive REALTORS® and successful brokerage firms? Project Upstream will be built on RPR’s Advanced Multi-list Platform™ (AMP™). AMP provides a new technology foundation for MLSs to serve brokers and agents. This unified platform will have two distinct servicing components. Upstream will be a single point of listing entry, management, and distribution for brokerages. AMP is parcel-centric database to power MLS services.

If you are a broker you are about to have a data experience that will allow you to “call the shots” and customize that experience like never before. If you are an agent you are about the experience the excitement of working with a system that has the strength and universality of attract hundreds of new features and functionalities.

Recall how excited you were when you bought your first smart phone and visited the “app store.” That wonderment was possible because of the stability and predictability of the basic platform (your phone). The same dynamic will, in the near term future, be available to the industry MLS subscribers.

The beneficiaries of this new way of doing business will be many. Brokerages will now be able to design profitability and unique consumer and agent data based experiences into their systems and procedures. Agents will be able to celebrate individuality by designing and implementing data related services that are unique to their market, professional talents and personalities.

The most important beneficiary of this new world will be competitiveness. A whole new generation of agents will be engaged in “doing it their way” within the constructive structure of rules and roles that that are ethical, profitable and consumer centric.

Now is the time for brokerages and REALTORS® to begin the process of preparing for the new world. Don’t wait. As always the early adopters will gain the upper hand.

Please return to your regular altitude and prepare to file a new flight plan. We hope you have enjoyed the view ahead.

Is Your Firm Engaging The New Status Quo?

Like many business, cultural, sporting, academic, and social activities there is a season for real estate industry update and status conferences. During the disclosure season each of these events adds just a bit more clarity to the ultimate question; what is new regarding real estate brokerage and marketing operations?

Screen Shot 2015-05-19 at 2.49.25 PMWith the adjournment of last week’s National Association of REALTORS® Legislative Meetings & Trade Expo (AKA Midyear Meetings) in Washington, D.C. the industry’s 2015 update season came to a close. During the past 90 days a plethora of meetings including, but not limited to Inman Connect, T3, Gathering of Eagles and last week’s NAR meetings provided the industry with a glimpse into the current status of a brokerage business and operations environment that has found itself mightily impacted by a wide range of trends, directions, and forces.

There can be no doubt that each of the hundreds of observers, who participated, attended and/or evaluated these events, came away with a slightly different impression. The industry media, over the next ninety days, will be awash with impressions and opinions. Be that as it may, there are a number of conclusions that are high enough up the intellectual pole to be universal. The objective of this piece is to attempt to present these new foundational realities.

The following five statements are nominated to head the “most impactive” list.

  • Various presentations by senior industry (as opposed to organized real estate) leaders contributed to an overall understanding that moving forward brokerage operations in many ways will end up farther afield from the traditional model that previously imagined. This in turn leaves a sense that current efforts are in the nature of “getting ready” for the ultimate rather than being the ultimate.
  • There is an increased understanding at the highest levels that the industry is not maximizing its profit potentials.
  • The current record level of public ownership of industry infrastructure and its demands and expectations regarding profitability is impacting virtually every aspect of the industry.
  • Increased levels of direct and intense consumer interaction are forcing the industry to meet new levels of interactive and experiential demands and expectations.
  • The value propositions of the franchise, brokerage and agent sectors are loosing traction in the eyes of their respective customers.

How then are these four factors influencing the current industry environment? First of all it is important to note that while in some cases they are operating severally or individually, in the majority of cases they are converging with each other to impact jointly or in combination with one another or lessor factors.

Screen Shot 2015-05-19 at 2.52.01 PMThe traditional brokerage business model has evolved to focus on profitability. This transformation is driven by a growing sense that if it doesn’t get its profitability act together two probable results will occur. The first is that Wall Street will withdraw its support of the current business model, and the second is that forces currently outside the industry will introduce a new business model that will combine new factors and functionalities that will render the current business model irrelevant and even more ineffectual.

The industry appears to have gained a more complete understanding relative to the effective use of agents. The industry is shifting its focus away from the traditional idea of sending thousands of misdirected and underprepared agents out to fish by themselves every morning, and hoping for the best. In its place are a number of new strategies that call for maximizing agent effectiveness through agent teams, standards, best practices, accountability and metrics driven management.

The industry is developing a whole new approach to the concept of the “lead.” Gone are the days when firms view leads as agent generated business opportunities that may or may not be pursued based upon an agent’s mood or attitude on any particular day. In this new brokerage world every lead is presumed to have profit potential if it is being engaged by appropriate and timely attention. One major firm provides agents with five minutes in which to respond to a lead before other options and company resources come into play with a maximum of seven minutes to direct contact.

The role of agent teams is shifting from gang-like entities to very sophisticated and highly managed groups of agents operating in close coordination with other brokerage assets and resources under the terms of carefully designed and negotiated written agreements. Agent teams are transitioning from profit wasters to profit generators.

The two developments cited above have come together to require much more sophisticated agent recruiting procedures. Profiling and other psychology based procedures are providing a much higher probability of success not just from a productivity or financial perspective but even more importantly relative to the would be agent’s ability to engage brokerage standards and best practices, respond to brokerage supervision and collaborate with other members of the brokerage team. These developments clearly signal the end of the agent centric era.

As the brokerage environment has moved forward to incorporate these new factors a parallel understanding has emerged regarding the need for classic leadership skillsets and competencies on the brokerage’s management team. Here again the traditional “keep agents happy” at any cost philosophy is transitioning into a sense that brokerage management systems, not agent attitudes, must set the brokerage’s pace, tone and impact.

One of the most interesting developments of this new brokerage Screen Shot 2015-05-19 at 2.47.30 PMbusiness model has been the discovery that the brokerage’s corporate culture may be one of its most valuable assets. More and more firms are now incorporating the ideas originated by Patrick Lencioni that creating a “smart” company (One that uses strategies, marketing, finance and technologies to drive success) is good, but nowhere near as effective as also creating a “healthy” company designation (adding minimal politics, minimal confusion, high morale, high productivity and low turnover to the “Smart” mix.

All of these factors come together to merge with what appears to be the most challenging issue facing today’s real estate industry. This of course is meeting the needs, expectations and demands of the contemporary real estate consumer. Perhaps more than any other operational statistic, the fact that 44% of consumers are currently finding the property they ultimately purchase without agent assistance, set the tone here. Today’s consumer is nearing a point of believing they can do the deal without agent assistance.

Whether this is true or not isn’t really an issue for the brokerage. The point of conflict occurs during the discussion of service pricing. Even those consumers who recognize the need to use an agent (still the vast majority) are not clear relative to the value proposition. From the brokerage perspective if the consumer doesn’t believe there is value in the agent, they are highly unlikely to find value in the brokerage. There is a growing understanding that the agent sector is basically unwilling or unable to carry their part of the value proposition argument. Thus it becomes increasingly clear that the brokerage may have to carry both.

These observations leave us at the edge of where the conversations of the past few months have dared to extend.

There is a new brokerage business status quo out there. But wait, there is more! Even before industry travelers had a chance to pack their tents and head home, had already announced a new promotional campaign that appears to have the potential of stimulating a whole new round of change and transition within the portal sector.

Track industry developments closely. This new future has your name written all over it.

Experiencing the Real Estate Master’s Event

The “Master’s” golf tournament held each year in early April is, without doubt, the premier golfing event of the year. Its legacy and traditions in many ways define the very game of golf.

RealTrends Gathering of EaglesThe American residential real estate industry also sponsors a defining “Master’s” level event. It is known as the “Gathering of Eagles” (Sometimes just the “Gathering”). The responsibility for hosting this event belongs to the now twenty-nine year old Real Trends organization that hosted the 2015 edition of the Gathering Eagles event in mid April at the Four Seasons Hotel in Denver.

Over the past few years the rate of change and transition within the American residential real estate industry has been nothing short of historic. Virtually every element of the industry, the marketplace, its demographic and its transaction has been or are being recast and repositioned. Accordingly, perhaps more than every before, the task and challenge of defining the parameters of the contemporary industry through the eyes of the “Gathering” event approached herculean.

Without question Steve Murray and his impressive Real Trends cast of thousands (actually just 14 in number) rose to the challenge. The 2015 edition of the Gathering of the Eagles event did indeed provide attendees with a finely tuned and spectacularly accurate portrait of the leading edge of today’s industry environment.

The event was launched with a presentation by national award winning Director of Marketing for Coldwell Banker International, Sean Blankenship, who established the fact that defining the industry in 2015 meant taking another look at the configuration of the housing inventory, especially as it relates to the ideas of the “smart” or (for the cool set) the conscious structure. Sean’s comments set the stage for a Coldwell Banker produced seminar on that same subject that took place later that day.

The Gathering next delivered an excellent panel on the subject of recruiting competent people to manage the new real estate enterprise. The panel included a number of participants who can take credit for having invented the new brokerage business model: Jeremy Lambert from Your Castle Real Estate, Larry Matos from Century 21 M&M Associates, David Osborn from Keller Williams Realty and Thad Wong from @Properties in Chicago. These are the “young Turks” of today’s industry and in an amazing number of ways they have redefined the art of recruiting and managing sales associates in a manner that ensures the long-term success of the enterprise.

Much of what this group was sharing had to do with adding substance and strength to the brokerage value proposition. Techniques for adding spirit and viability to the firm in the eyes of its agents were another value point. Issues regarding space allocation were given priority. The panel spent a great deal of time articulating the attributes of a great recruiter but in the final analysis it seemed to be all about “making the calls” over and over again.

Once again demonstrating his inordinate skill for creating the “big picture,” Steve’s interview of RE/MAX founder Dave Liniger probed 40 years of innovation, competitiveness and courage to establish the point that some elements of greatness never change. Mr. Liniger’s comments and recollections not only provided a connection of relevance between tradition and the leading edge but also reminded everyone that there aren’t many classic pioneers left in the industry culture.

The appearance and presentation of prolific business author and innovator Patrick Lencioni was another of the Gathering’s high points. Mr. Lencioni’s expertise revolves around the benefits of developing, encouraging and promoting great company cultures. In Patrick’s world, company cultures are the foundations of effective value propositions. His comments served to frame the definition and value of the “healthy” company. He prioritized the four disciplines of a healthy organization. He spent considerable time talking about how to create a cohesive management team fueled by trust. If the Gathering provided an opportunity for its participants to think at an MBA level this was that opportunity. Amazing substance and an impressive learning experience.

The Gathering program next tapped into another asset of leading real estate firms, “Building Great Agent Teams.” For many attendees this panel provided the answer regarding why agent teams are such a “big deal” and how they can contribute to both overall productivity and profitability. Participants included such agent team super stars as Lisa Burridge of Burridge and Associates, Mike McCann of BHHS Fox and Roach and Mark Spain from Keller Williams.

The agent team segment was especially interesting in terms of its point of reference with the brokerage. It established that an agent team does not operate free of management control or influence. The critical point that was made during this program element was that, yes, agent teams can be very effective and can contribute to the overall success, productivity and profitability of the brokerage. However, only if they exist and operate under the terms of very clear brokerage policies and practices. If the right agreements are in place agent teams are in everyone’s best interests. This is all about using new management techniques to meet the expectations and needs of all involved.

The Gathering’s continuing exploration of the contemporary brokerage business model next explored the role of leadership in the new environment. This panel featured some of the most effective executive leaders in the industry. Sherry Chris from Better Homes and Gardens, Brian Fair from Keller Williams Atlanta Partners, Todd Hetherington from Century 21 New Millennium and Merle Whitehead from RealtyUSA brought to the Gathering an amazing level of knowledge and experience regarding how to make leadership an effective and differentiating force within the brokerage.

Among the Gathering attendees there was near universal agreement that leadership is the single most important factor in determining the value of a brokerage. It is similarly agreed that leadership is more than a feeling or an effect. It must be a measurable and focused quality and value. Each of the above experts had developed within their respective companies unique leadership identification, development and integration practices. Each spoke in concise and easy to understand terms how they use leadership applications and practices to move their firms forward. Most have adopted basic leadership qualities from a third party expert such as Patrick Lencioni or John Maxwell.

The appearance of Peyton Manning at this year’s Gathering can only be described as a gift. This gentleman is an athlete and is obviously involved in professional sports. But to use either of these points of reference to define him would be foolhardy. Peyton Manning presents himself more like a Fortune 500 CEO than a sports hero. He was articulate and visionary in his comments and observations regarding an impressive range of contemporary leadership environments and issues. Most impressive was how the audience responded to both his presence and his contributions. If one had known absolutely nothing about him from the onset, the initial impression would nevertheless have been overwhelming. On behalf of all of those who were present for this amazing experience; Thanks Steve.

From the Manning appearance the program morphed into the art-of-the-possible, thanks to the generosity of Coldwell Banker who had imported a panel of young experts to talk about the idea of “conscious” structures (They are no longer called smart houses). This program provided insider knowledge about enhancing one’s life and career success with the modern magic of Tesla automobiles, LG appliances, Lutron switches, CNET magazine and Sengled smart lighting switches. Each of these items has the capacity to fundamentally expand the quality of life. Together they demonstrated an ability to create a whole new life style. Imagine this, all of these features can be added without impacting or modifying the actual structure.

For the last morning of the conference the Real Trends team provided an absolute treat. Scheduled at a time that one would have thought would limit participation, the expanded Real Trends team provided ninety minutes of pure unadulterated knowledge regarding the current state of valuations, mergers and acquisitions. If limited attendance was part of the scheduling strategy it failed. Even at an early hour the room filled long before the program started and spilled out into the hallway. Everyone knew that this would be the “Gold of the Gathering.” This was the opportunity to share the expertise that has always been at the foundation of the Real Trend’s power and influence. No one was disappointed and more than just a few would be nursing their sprained hands from note taking. More than just information, this program element was made even more impressive by the cool and professional way in which the Real Trends team delivered their expertise through a complex series of questions and challenges. They were terrific. Steve has created the ultimate team here.

Fact: The real estate industry does support a “Masters” level tournament of knowledge, management skills and productive excellence. It is called the Gathering of Eagles and once again, for 2015, it delivered on its promise to be the premiere industry brokerage event of the year. This impressive achievement left all who participated much more prepared to meet the challenges of the coming year.

T-3 Summit: Another Swanepoel Masterpiece

Screen Shot 2015-04-17 at 1.03.41 PMAs everyone knows there is a plethora of industry conferences these days. Some serve as open markets for industry programs, products and services, while others serve as cultural gatherings for specific industry communities and yet others serve as destinations for those whose annual budgets provide for a wide range of discretionary travel. Each services the needs of a specific industry constituency.

Over the past three years Stefan Swanepoel has become the Michelangelo of the real estate Screen Shot 2015-04-17 at 1.05.08 PMconference circuit and his T3 Summit has become its Sistine Chapel ceiling event. Swanepoel has achieved this status through innovative program design, quality production, the right attendance mix and attention to detail.

This author has had an opportunity to be involved in the production of all three T3 events and is in an excellent position to share the wonderment of the “inside track” that makes T3 an astounding experience.

Anyone who has ever experienced a Swanepoel presentation, publication or analysis can testify to the thoroughness and expertise that goes into its design and substance. The T3 Summit is the flagship of this standard. Swanepoel and his team spend months designing the T3 experience. By way of example, going into the initial planning for the 2015 event last fall the Swanepoel team was tracking 23 specific and unique game changing issues. Over the three days of the 2015 T3 Summit at the Four Seasons Hotel and Resort in Las Vegas participants and attendees had an opportunity to gain in-depth knowledge about the historic basis of each of these issues, plus another five that didn’t even exist six months ago, their up-to-the-minute status and their likely destination over the next year. Each of these discussions incorporated the expertise of its own “recognized” industry thought leader(s), from a cast of 29 such experts, as well as the benefits of a superb facilitator who was responsible for the full range of each subject being developed.

But it is not the mere substance of the program that is the centerpiece of the T3 Summit but, rather, the insights of its participants. The 2015 experience was shared with 288 registrants, the vast majority of which were both recognized industry thought leaders as well as leading industry “C” level executives. The T3 experience is commercial free, without the pressures of sales pitches. The CEOs invited to participate don’t tell stories about what they have heard about specific events or give their canned speeches you hear everywhere else. Rather they share their actual personal views because they were there, they were the decision makers and they caused the events to happen. No format, short of sitting in these executives’ offices and conference rooms, could duplicate the quality and depth of the knowledge and information imparted during the conference. A few more examples;

  • Screen Shot 2015-04-17 at 1.06.54 PMZillow is, at this moment in time, arguably the most impactive force in the North American real estate marketplace. Stefan’s interview of Zillow CEO Spencer Rascoff provided a treasure trove of invaluable information for those who will be sharing a market and/or competing with Zillow over the next year. How does it matter that Spencer’s father spent his career as the CPA for the Rolling Stones? What is the relationship between Ivy League schools like Harvard and the Wall Street institutions? What is a “Wiggle” and what does that have to do with Zillow? The interview started with Spencer as a disrupter and ended with him as a genuinely nice guy. Only Stefan can do that. Perhaps most important of all, what will it mean to the industry when consumers have the ability to “triage” listings. Stefan got Spencer to tell us how Zillow will impact the future role of the real estate agent.
  • Screen Shot 2015-04-17 at 1.09.21 PMAlex Perriello, CEO of the Realogy Franchise Group, shared a very recent and horrifying story about a head-on crash with an ammunition filled truck being chased by police including being in exploding vehicles, experiencing live ammunition “cooking off” and a hospital confrontation. That was only the first ten minutes! Then things settled down and the discussion ranged from his grandfather the barber who always wore a three-piece suit and taught him about customer service, to what current events are shaping the future of the residential real estate brokerage. Stefan is then able to masterfully bring relevancy to these stories and show how Alex’s work is shaping the future role of the real estate agents. Most interesting was Alex’s discussion regarding the similarities between Zillow and Realogy, go figure! How will NRT and its upcoming Zap store impact the industry? What three cycles does he see as being responsible for the industry’s future? Alex’s comments about the immediate future of the real estate brokerage were an experience in and of themselves.
  • Screen Shot 2015-04-17 at 1.10.57 PMBudge Huskey, CEO of Coldwell Banker International gave a Stanford Business School quality presentation about the realities of the current real estate franchise world. He discussed the changing world of the real estate brokerage and the challenges of operating within a global frame of reference. Budge’s comments were nothing short of amazing as he identified the current status and future challenges of the real estate franchise sector.
  • Screen Shot 2015-04-17 at 1.11.51 PMNAR President and CEO, Dale Stinton, brought the audience to the edge of both their seats and collective consciousness with his discussion about NAR’s soon to be released A.N.G.E.R Report (Definitive Analysis of Negative Game Changers Emerging in Real Estate). Imagine retaining, without restraints, industry chronicler and custodian Stefan Swanepoel to candidly interview some 100 contemporary industry leaders about what they see as the significant risks, threats and dangers facing the residential real estate industry moving forward? Imagine putting all of these comments regarding agents, brokerages, MLSs and associations (Yes, even NAR) into a detailed 160-page report that will be presented later this spring, with no censorship. It is the closest the industry has ever come to an industry audit of itself. Stinton also made a number of very pointed comments about NAR’s Core Standards program and the very real possibilities that “failure to comply” could result in REALTOR® associations losing their charters.
  • Screen Shot 2015-04-17 at 1.13.23 PMPam O’Conner, CEO of Leading Real Estate Companies of the World, provided an in-depth view of the realities of the independent real estate brokerage operation including insight into the probability of a new order of roles regarding brokers, management and agents. Always the insightful leader and executive, Pam brought to the attendees a much need “reality” gained from the lessons her members have learned over the last few years. It is not our parent’s real estate marketplace and it will not be a parental solution that takes it to its next level.

On and on it went. Hour after hour of amazing substance and new industry realities.

  • Glenn Kelman, the new business model innovator and emerging genius of the Redfin model, talked about agents as employees.
  • The battle scared wisdom and new insights of Errol Samuelson.
  • Marvin Stone and Jared Conaway prepared the attendees for the upcoming and probable “epic” struggle with the CFPB.
  • Matt Krebsbach, Director and Analyst at Bazaarvoice, brought agent rating and ranking alive with information regarding what it really means and how to use it effectively.
  • Move’s new CEO Ryan O’Hara discussed his first 100 days in office and set the stage for how he will bring to the forefront.
  • A brilliant panel of “under 40” industry CEO’s demonstrated how they not only think differently, but lead differently.

Screen Shot 2015-04-17 at 1.14.26 PMStefan Swanepoel was in Las Vegas last week to meet with 288 of the real estate industry’s highest leaders. It was CEO nirvana and he has become the industry’s de facto facilitator and diplomat. Even by Las Vegas standards, T3 was astounding. For those who were there, real estate wisdom now has a new definition.

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