We Need to Talk?

By Jeremy Conaway
January 20, 2012 – 12:11 PM

For many men, certainly those in the Boomer and Civic generations, there are no combination of words that bring so much terror as “we need to talk.” Statistically, almost nothing good ever came from this beginning. Quite the opposite, it generally means that some cherished bad habit or habitual behavior is about to be called on the carpet. Almost certainly apologies and groveling will be involved. If every there ever was a time for a natural disaster to strike, this would be the time after hearing this phrase.

The explanation for the above scenario is simple. The ugly truth behind “we need to talk” is that in genuine relationships the participants regularly interact and communicate (so I have been informed) on a fairly intimate basis. These interactions are not comprised of clever or witty remarks, tired old lines or insincere representations. Such things would be disrespectful in nature. Unfortunately, while many individuals don’t want to be disrespectful, neither do they want to be enveloped by the emotional and intellectual responsibilities of a genuine relationship.

What, you ask, do these ramblings have to do with professional and business interactions within the real estate industry? The fact is that moving forward they will have everything to do with your business success because, as every expert in behavioral psychology can tell you, American businesses and consumers are now entering into the “Relationship era.”

The evidence of this transition is everywhere, but it is most apparent in the amazing shift that has recently occurred in mass media advertising in almost every segment of consumer marketing. Commercials, both print and electronic, for more and more major brands, are featuring interactions and testimony with real or fictitious consumers. Social media and consumer interactivity have become a major force in spreading the message and brand of successful companies and products. In other words your success may no longer be tied to what you have to say about your firm or its services but, rather, what your customers have to say about your services and more specifically, what quality and depth of experience they had while using your services.

As always the difficulty is in the details. What steps does a brokerage or even a team owner have to take to move into the relationship space? Here are six areas to consider:

  1. Honesty: Take the time to sit down and talk about why your firm exists and its value system. If you like the traditional process of pulling the wool over the consumer’s eyes, then you are probably not a good candidate for future success. If, on the other hand, you and your team would like to operate at a higher level, this new era is your golden opportunity.
  1. Sustainability: Businesses now must recognize the haphazard and tenuous nature of success which is measured over the short runs or seasonal terms. In a business environment comprised of evolving and transitioning realities, every business core value must be demonstrated and sustainable regardless of external are environment factors. This is one of the central lessons of the past 60 months.
  1. Accountability: In this new environment, someone must be actively exercising control over every aspect of the business. The essence of a relationship-driven business model is trust and transparency. These elements will only occur when a value driven broker is the supreme commander, the symphony director and the boss. Agents are either part of a successful brokerage team that can generate sustainable profits and dependable incomes, or they are off the bus.
  1. Transparency: Consumer trust cannot be purchased, and it cannot be build upon insincere representations generated in advertising and marketing campaigns. Trust comes from truth and transparency. The age of success through pulling a hood of deception over the eyes of the consumer is essentially over. Today’s consumer starts out every relationship by being cynical and then, almost universally, uses the interactivity and transparency of the Internet and social media to establish trust. Companies who are silent on the subjects of trust and transparency are deemed to be suspect. We are taken back to Eastern Airlines and their suggestion that they had to “earn their wings every day.” Real estate brokerages must not only earn their wings; they must ensure that their customers are willing to articulate the fact that they found trust.
  1. Core Values: Holding the line on trust requires the brokerage to establish and absolutely maintain a sustainable set of core values. Why are we here, why are we doing this? Is it to make money, is it to assist consumers to purchase and sell properties or are we doing this to promote the positive virtues of home ownership? Each of these statements must be supported by a unique set of core values. Every element of the service experience must support the firm’s core values.
  1. Value Proposition: The core values must be delivered within the parameters of a solid and sustainable value proposition. Value proposition is the term applied to the totality of the consumer experience. It is not acceptable to have a transparent website but agents who have not bought into the core values structure. Today’s consumer is focused on trust and integrity and will quickly identify an organization without universally accepted and promoted values. Any defect in the delivery of the promised value proposition will immediately be discovered and reported by consumers.

The concepts discussed above are really not difficult or unduly complex. They are however objectionable to real estate professionals who believe that the basis of every transaction is the power of their personality to force a consumer to act in a manner that is not in their best interests (The People Business theory). Be it price, condition, terms, environmental factors or market factors consumers, when they discover that they have been the victims of such a deal, consumers are now in a position to punish the “perp” in a manner that makes a law suit seem almost preferable.

The good news is that the passion of consumers, who have gone through an experience and transaction that was safe, trustworthy, transparent and that created a positive relationship, will be more than sufficient to carry the reputation of any brokerage into a very successful future. This is the Promised Land.

Brokerages are now facing a split in the road. Take the right turn. It is the only way to go. 

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Will the New Brokerage Business Model Be a Retread of an Old Brokerage Business Model?

By Jeremy Conaway
January 13, 2012 – 4:06 PM

There is an axiom that cautions “Be careful what you wish for”. That advice has never seemed more relevant than today with respect to the continuing transition of the American real estate brokerage business model.

A bit of history. The current business model traces back to 1947, when the dirt peddler of 1939 returned from World War II to discover the post WWII economic boom and the beginning of an entirely new housing market.

Veterans from the farm wanted to live in a different environment and the suburb was created. Veterans whose legacy was without college wanted an education and thousands of apartment buildings were built. Young people, whose siblings had lived down the hall from their parents, moved across town and condominiums and suburbs were created.

The primary driver of this amazing housing experience was a newly redesigned real estate brokerage. The “broker” was passionate, engaged and saw themselves in the opportunity business.

Back then brokers were creating careers for real estate agents and many veterans availed themselves of that great opportunity: low entry costs, quick start, a professional image and best of all, no stinking boss, like that sergeant in the army, to tell you what to do.

The original “broker centric” business model was a miracle to behold. Brokers across the country built strong businesses and in some cases virtual empires around this simple arrangement. Brokers learned to be in charge, even if that didn’t mean being the boss of the agents. It was fair and equitable. Brokers matched their risks with super revenues and agents matched their efforts with great incomes.

The broker centric model remained viable until the mid 1970’s when, for a number of reasons, a Jeffersonian movement swept across the industry. Perhaps driven by the advancing age and prosperity of the first generation of brokerages, or perhaps by the growing strength of the agent force, the relationship between agents and brokers transitioned. In 1974 the REALTOR® movement transitioned to the “All REALTOR®” model, forever banishing a world in which only brokers could be REALTORS®. It was during this period that the super agent and the 80/20 and even 90/10 split began to emerge. During the period of 1975 through 2000 the industry’s entire focus and energy engaged the “Era of the Agent.”

By 2001, another era had begun to emerge. Technology became king and the Internet became the new venue. Third party players extended their influence. Then, even as the market of 2005 shot skyward like a NASA space launch, disaster, in the forms of the housing crash, the mortgage crisis and a recession struck and the real estate dark ages came to be.

The dark ages have been over for a couple of years. In many parts of the country the market is exactly where it should be, given the statistics of the past 30 years. Interestingly, the market returned in a whole different form and substance. The fact that brokerages continue to bleed, and agents continue to bemoan, is not a market issue but rather a brokerage business model issue.

The “broker centric” model, developed to bask in the glow of the post WWII economic boom, and the “agent centric” model, developed to capture the boomer generation’s glory days (including a 13 year heart throbbing boom), were designed and developed for market characteristics that no longer exist.

The good news is that the industry now accepts the fact that there will be a new brokerage business model. As always, the devil will be in the detail.

The bad news is that too many industry experts are suggesting that we return to the “good old days” and create a new broker centric business model.

This line of reasoning could not be more wrong. It is short sighted and fails to take into consideration the most important change characteristic of all.

Throughout the post WWII economic boom the consumer was, by and large, an uneducated and unsophisticated chump. The simple fact was that there were enough resources around that a certain percentage of consumers could get exploited without raising any undo attention. Even the magnificent boomers, with half of their membership being lawyers, took their hits in stride. There was so much raw economic opportunity that the consumer just kept on marching across the landscape.

Today the entire consumer sector is alive and motivated by knowledge, sophistication and power. Witness the recent events regarding Bank of America, the Coke can, Netflix and a dozen other examples of enhanced consumer power. Today’s consumer has the sophistication to discover what’s wrong and the Internet and social media weapons to punish and even destroy the offender. Experts tell us that this is just the beginning of new “Era of the Consumer.”

Given the above history and circumstances, why would anyone suggest that our industry should (or even could) return to a broker centric business model. If all the evidence points to an increasingly powerful consumer, with the knowledge to know the difference and the power to make things right, why would the real estate industry start the next era by posturing for a battle with the consumer?

If it is because there is a sense that consumers won’t allow a profit to be made, that is false. If it is because there is a sense that the consumer doesn’t want to use professional services, that too is false. If it is because we believe we can dominate today’s consumer as we did in the past, think again.

The fact is that we know exactly what today’s consumer wants, because they are us! We want simplicity, innovation, speed, relationships, entertainment, collaboration, transparency, value, integrity, scrutiny, customization and community service. We also know all of these things today’s consumer wants reflect precisely the parameters and performance characteristics of a great business in today’s economy.

Let’s vote for consumer centricity! Then we can get on with a whole new era of brokerage success and profitability.

 

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How Will High Performance Agents Fit Into the New Industry Models ?

By Jeremy Conaway
December 13, 2011 – 4:03 PM

This article is about an interaction that is becoming increasingly more common throughout the industry – a call for consultation from high performance ($12M +) agents, in the most immediate case, three “30 something” high producers. A pre-dinner interaction at a posh bar and a vegetarian dinner with a giant mushroom is today’s equivalent of yesteryear’s rib-eye dinner. These are the blessed moments, wherein participants speak of their hopes and fears.

The conversation starts out slowly, because it would not be cool to suggest that there are any problems in the historic paradise of those agents who are at the very top echelons of marketplace production. We talk about who is living where, the last fabulous vacation, how really good everyone is doing this year, the best place to buy great shirts.

Then, slowly, the conversation begins to find traction in the realities of today’s conflicted marketplace. Shared observations about current practices, recent experiences and new market variables. Casual questions about what is happening in other markets. Thoughts are shared about how things are ‘changing’, and apparent solutions. By the time the second glass of Silver Oak hits home, the real issues begin to hit the table.

For years the upper 10% group has been told, and willingly accepted, that their status, incomes and practices would be immune from any changes sweeping across the market. Now, for the first time, they are becoming aware of the fact that the new convergence-impacted marketplace, with its emphasis on profitability, will render them as irrelevant as are their less productive brothers and sisters. They are coming to grips with the fact that they have more to lose. They have begun to think about what they should be doing to protect their current market position, while at the same time integrating into the new practice model.

The first step that agents must take to protect their future positions is to gain a conversational expertise on exactly what is happening in today’s American real estate industry. After being told, from your early days in the industry, that you are invulnerable, it is a major wakeup call to suddenly realize that your survival isn’t a matter of self-determination. Positioning one’s self to be knowledgeable puts one face-to-face with the industry’s silence regarding current directions. Things are so bad that it is actually possible to attend some of the most important industry meetings without hearing a single thing about current challenges or future directions.

Consider the following (A checklist format has been incorporated to enhance the ability of this material to support a discussion format):

• The current brokerage environment is a very complicated one.

___ Few have made a market level profit over the past five years

___ Many are near the end of their financial resources and most have been unable to make necessary capital improvements

___ Few if any sales or acquisitions are occurring other than “shotgun marriages”

___ Most have been operating on minimal staff and a very liquid bricks and mortar formula

___ The average age of brokers is over 60

___ There is little or no capital in the sector except that coming from parent company donations and broker asset liquidation

___ Few brokerages have created transition plans and fewer yet are discussing future options with their agents for fear of breakage.

• Brokerage relationships are, and will continue to be, critical to agent careers.

___ Moving forward, much of the business will be controlled by larger entities who either have powerful Internet and consumer positions or relationships with those who do

___ Productivity, accountability, profitability, specialization, standardization and transaction management will be hallmarks of the these entities

___ These entities are not likely to enter into agent relationships that are not capable of generating
market level profitability

___ Without a clear and compelling plan, which includes appropriate synergistic agent relationships, a
brokerage is not likely to succeed in this new environment

• Agents must understand what they can’t control.

___ The economics of free enterprise

• It’s primary function is to drive profitability

• Function will inure to an entity that can integrate it into a profitable package

• A 2 trillion dollar plus industry will not be allowed to drift within the economy

___ The realities of the consumer control

• You will not be allowed to operate out of your car

• Consumers will want the strength and stability of an organizational structure of some kind

• Perhaps your team will morph into a brokerage, but how will that help you?

• Focus on what you can control.

___ In all likelihood you will spend the remainder of your real estate career with some manner of
vision/plan/structure

___ You will want to be situated when the economy settles into its new configuration and consumer centricity
reaches its zenith

___ Over the next eighteen months you have an opportunity to make decisions about what kind of structure
you can accept and support

___ The Agent must know what kind of vision plan structure of which to be a part

___ The Agent must be willing to work to create and contribute to that kind of vision/structure

___ The agent can determine the characteristics of a structure that would be acceptable and compatible,
so long as it meets the ROI requirements.

• Here are some recommendations

___ The broker must be a leader who is willing to be in control

___ That leader must have a documented vision that can be articulated. “Trust me” is no longer acceptable.

___ That leader must be willing to share the vision plan, and the execution.

___ Your leader must be willing to help you navigate an agreed upon career path

___ The Agent must be willing to merge their career with the vision plan.

• The vision/plan must have the following traits:

___ A Detailed succession plan

___ Generate a market level profit and return on investment

___ Be able to grow and prosper within the chaos of extreme competition

___ Be consumer centric

___ Be Internet fused

___ Document acceptable standards of practice

___ Provide the Agent with a comprehensive data package

___ Demand and enforce universal accountability

___ Utilize acceptable financial management procedures

___ Have an enlightened corporate management team

This is an amazing time to be in our industry. However, the practices of the past several years that have contributed to the industry’s current distressed condition will not long prevail. Agent/Brokerage relationships will be critical moving forward, but many Agents will not willingly bare responsibility for their role in that relationship.

There are a great number of practice options for agents who are willing to become part of a profitable, productive and structured brokerage team, but very few options for lone rangers.

Talk to your broker today about the road ahead. Be knowledgeable and demonstrate your understanding of how the new environment will impact your practice. It may be one of the most important conversations of your career.

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What is a Student of Our Industry?

By Jeremy Conaway
October 31, 2011 – 12:25 PM

One of the many joys of my work is being able create and innovate with some of the most intelligent men and women in the country. I was so engaged one afternoon last week with a group of real estate professionals in Tennessee when one of my companions uttered what, in retrospect, seems to me to have been a genius observation. As the group labored its way through a particularly strenuous discussion regarding the current industry environment, one of the participants, Sam Martin of Chattanooga, preceded a comment by saying, “I consider myself a student of our industry, but I fear there are not too many of us.”

The brilliance and validation of Sam’s comment is being reflected in way too many discussions, blogs, presentations and discussions by, and between, individuals associated with today’s real estate industry. There is now a growing sense within our community that something is very wrong and has been very wrong for a long period of time. At first we blamed it on the crash of the market, then it was the recession and then it was the market. Even more recently it was the economy. But as each of these faceless causes has passed, our attention has remained focused on the seemingly undeniable fact that perhaps our problems lie closer to home that these global issues.

An extremely relevant essay by Professor Donald Simanek of Lock Haven University cast light on the subject.

The Merriam Webster Dictionary defines a student as one who studies, an attentive and systematic observer. Dr. Simanek takes the definition of a student a bit further. He suggests that being a student means engaging in what he calls the four As: attitude, academic skills, awareness, and accomplishment.

Simanek goes even further. He adds the following characteristics to his definition of being a student.

  • Self-discipline. The successful student will learn to budget time, and use it efficiently, and will do the things that need to be done, when they must be done, whether or not one feels like it at the time .
  • Initiative. In short: doing things without being told. The student doesn’t wait for assignments to read ahead in the textbook, or to seek out and study related books to gain understanding.
  • Breadth of interests. Great environments provide great opportunities to broaden interests and explore new things. But those who confine themselves to the things they have always done, avoiding anything new and unfamiliar will squander a valuable opportunity.
  • An open mind is a mind receptive to examination of new ideas and facts. Having an open mind does not mean that one jumps on the bandwagon of every new fad. A better characterization of an open mind is one that is willing to dispassionately and rationally analyze new ideas, weighing them objectively against established knowledge and the facts at hand.
  • A critical habit of mind. Life is more than the retention of dated information. It includes the ability to acquire new information, to critically evaluate that information, and to correctly and effectively use it. With so many information sources at our disposal in this computer age we are awash in information, and in danger of information overload. But much of that information is fraudulent, worthless, incomplete, or just plain wrong. It has always been so. One of the benefits of being a good student is the ability to see through false and unfounded claims and outright deceptions.
  • Perceptiveness. The more you learn, the more perceptive you become. One learns to “read between the lines.” The good student no longer needs everything spelled out; but can fill in missing details. They aren’t dependent on being shown; they can puzzle things out for themselves.
  • Objectivity. Non-students take an “egocentric” view, expecting everything to have some relevance to their needs or desires. Non-students impose strict interpretations on things they learn, and avoid learning some things because they don’t seem important at the time. Students learn that mere unsupported personal opinions have no value in a professional discussion. Students learn that the world does not revolve around them.

Today’s American real estate industry is facing one of the most critical periods in its long history. The current crisis is not the product of a market or an economy, but rather our insistence on viewing these circumstances from the perspective of our individual best interests. We have seemingly lost touch with our legacy of working together and more importantly our ability to combine our mental resources.

We have begun to keep the company of and to pay tribute to an increasing population of pirates, predators, foragers, pillagers, plunderers and more than a few fakes. None of these individuals or their gangs intend to contribute to the common good of our industry but seek to take advantage of the current situation and the confusion that it has created.

The crisis is being exacerbated by many of the very individuals that have been charged with protecting the industry and ensuring its successful future. In today’s hostile and conflicted real estate industry, it is no longer possible to tell friends from enemies by the color of their uniform or the name of their organization.

Protecting ourselves, moving forward, will require us to reenergize our lost skill of thinking and acting like the students of our own destiny. It is time to come together and bring the four “A’s” into our professional lives.

  • Maintain a positive attitude and use the light that it provides to think your way through the current confusion.
  • Drag your academic skills out of yesterday’s trunk and put them to good use. Learn about the amazing dynamics and forces of today’s real estate marketplace.
  • Be aware of what is really happening in the industry and market around you. Be aware of the less than noble agendas of so many of those who would suggest that their mission lies in protecting you.
  • Be a person of accomplishment and achievement. Take your life off of hold and reconnect with the passion and excitement that brought you into the industry in the first place.

Understand that today’s real estate marketplace is generating is a whole new set of opportunities, competencies, rules, and relationships. Don’t be guided by the course and rules of 2004, they will only serve to ground you on the shoals of irrelevancy.

Victory in the battles that lie just ahead will not come from compromising values and ethics under the guise of protecting the status quo. Victories will come from real estate professionals who approach their futures like students, by engaging their minds and potentials into a new marketplace. Defeat will come from those who refuse to be students of their own destiny and cast their lot with others who are confusing protecting the status quo with moving the industry forward.

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Whoops, There Goes Another Rubber Tree Plant

By Jeremy Conaway
October 20, 2011 – 11:15 AM

What does an ant, that is trying to move a “rubber tree plant”, have to do with the contemporary real estate marketplace? For that matter, how does a ram, that wants to topple a “billion watt” dam, figure into our current industry landscape?

Both of these references come from that famous song “High Hopes”, first popularized by Frank Sinatra, with music written by Jimmy Van Heusen and lyrics by Sammy Cahn. It was introduced in the 1959 film A Hole in the Head, which was nominated for a Grammy and won an Oscar for Best Original Song at the 32nd Academy Awards.

The song is about the importance of positive thinking in the face of difficult times; the need to maintain, well, high hopes and about the fact that good things happen to those who keep the faith.

We should all have high hopes about the future of our great industry.

In mid-September Redfin, a Seattle based “new generation” real estate brokerage with operations in a dozen or so real estate markets across the country unveiled its “Redfin Scouting Report”. In its most basic form, this is a web-based search that was attempting to return statistics on the professional activities and success of real estate agents within the markets that Redfin serves. Information such as neighborhoods served, properties listed, properties sold, buyers represented, time on market, and sales price versus listing price. In other arenas these are referred to as Agent Performance Statistics.

From its very beginning the Redfin program was fraught with accuracy, data, licensing and public relations problems. The blogosphere was explosive in its coverage of events, some positive and most negative. Finally, in early October, Redfin announced that, for various reasons, the entire program had been scrapped.

During the short weeks of the program’s existence, pretty much the entire real estate industry reacted as if it had been struck by lightening. As one of the industry’s most articulate observers, many were drawn to the comments of Brian Boero of 1000 Watt Consulting, who blogged that the Redfin product was, “the most disruptive online real estate play in years”? It was, in every way, a classic market game changer.

So why was this such a big deal? What is so important about agent performance statistics? Actually it is quite simple. For the past several years consumers have made it abundantly clear that one of the most critical pieces of information that would make them feel safe in the transaction is knowing something about their agent’s competence, experience and success.

Surely no one can be surprised at this disclosure. We all agree that the purchase/sale of one’s residence is the single most important financial transaction in modern life. In fact our marketing plays on that distinction.

Is there anyone left, within reach of the Internet, who doesn’t attempt to research and learn as much as they can about almost every transaction, interaction or experience they enter? Forget critical things like potential spouses and cardiac surgeons. Think about more common experiences like the best $6.00 hamburgers on Yelp and $4.99 rental movies on Rotten Tomato. We live in a world where would-be diners want to know which chef is cooking before they commit to a reservation. What if it was their son, daughter or grandchild in need of a special medical procedure? Would anyone just accept whoever was on duty at the local “Doc in the Box?”

What makes this lack of disclosure even more interesting is that the industry is risking its reputation, and perhaps its future financial viability, in an effort to protect marginal performers, agents who are new to the industry and individuals who aren’t even agents yet.

As we have discussed multiple times before in this column, these issues are not a matter of blind loyalty to the industry. They are a matter of learning to live with the fact that in today’s real estate marketplace the consumer is the single most powerful entity on the scene, and is gaining more power and influence every day. Unless we align our interests with this consumer, we are paving the way for the entry of new competitors and additional government regulation on one hand, and a continuing deterioration of home ownership as the centerpiece of the American dream on the other hand. This is not about the status quo, it is about a new marketplace that is taking shape around us.

This being the case, and given the fact that agent background information is some of the most sought after information in the marketplace, we should give an award to whatever powers have been successful in denying the consumer this information for this long. Now that was a game changer.

So what lies ahead? The Redfin episode, regardless of their agenda or motivation, represented an attempt to breech a perceived wall of silence. The mere fact that Redfin was willing to risk the public ridicule and abuse they are now experiencing should be sufficient evidence to establish just how important this information is to both the consumer and any inside or outside competitor.

Rather than focusing our attentions on punishing Redfin for, what may well have been, a botched power play, and desperately seeking to raise the walls of non-transparency, we should be interacting on a whole different level. Do we really believe that we will be able to hold the line on denying the real estate consumer the very information they hold most dear, at the same time as we exhaust our resources trying to convince them to re-enter the real estate marketplace so that we can support our careers, build our businesses and feed our families?

Do we understand that every time we lose one of these battles we permanently destroy another part of our already diminished value proposition?

Where is the leadership that should be gathering us to think our way though this dilemma? Where is the intellect we need to work with to solve this crisis and meet the needs of our consumers in a way that is fair and viable for all concerned? When will we work together, as indeed our trademark branding suggests, to build a better future for all the participants in the real estate transaction?

Agent performance information is just one of a number of issues that we will be facing over the next twenty-four months. Today’s real estate industry is alive with bright, articulate and sophisticated people at the agent, brokerage and organized levels. We can use these issues to both prevail and to create a more powerful, productive and profitable future for ourselves and the REALTOR® of the future.

Lets recall the final verse of High Hopes ….

All problems just a toy balloon

They’ll be bursted soon.

There’re just bound to go pop

Oops there goes another problem kerplop.

We can meet these challenges. We can prevail. We just have to meet them with our heads together.

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Is There A New Ethic Out There?

By Jeremy Conaway
October 12, 2011 – 10:56 AM

Like many boomers I have generally ignored the growing “occupy Wall Street” movement. By virtue of age, gender and entrepreneurial bent I have been unwavering in my support of no holds barred free enterprise as the ultimate American business tool.

The system has been good to my wife Marlene and me.  Despite meager beginnings we have six college degrees and two successful businesses between us and we have enjoyed one heck of a great lifestyle over the past thirty years.  Things aren’t as good as they were five years ago but it is still reasonably good.  We were able to help our son graduate from law school and pass the bar last summer.  He could find a job any day now.  We are big on being thankful.

Over the past several years we have lost tens of thousands of dollars from our retirement and savings accounts.  Sure we had the feeling that what went wrong was more than “the turn of the dice” and “bad luck” and perhaps had we watched our “money guy” more closely our loses might never have occurred.  We know there are no guarantees in the investment world and that eternal vigilance is the cost of success.  Besides there is enough left over to start building again. We weren’t anticipating retirement anyway.  It wasn’t the complete disaster that happened to others.

Last year when Marlene and I finally got the message that it was time to learn from the idiocy of our McMansion (That after all we weren’t forced to build) we were the only seller out of thirty eight in our market price bracket who managed to both sell in 2010 and realize 94% of our asking price.  So there was that luck thing again and how could we complain about that?

We have always been fiercely loyal and thankful to my clients and my wife’s patients who have made our good life possible.  I cannot help but notice that more and more of my client’s assets are being invested in “Global” (Read not USA) markets and I understand that this too is the conventional wisdom.  I try to be philosophical and say to myself, this is just my son’s world in which to survive and after all, at least he is not facing the draft and a trip to Danang like his father.

So with this knowledge and wisdom firmly in hand I have, to this point, chosen to ignore Michael Moore and the Occupy Wall Street movement (Just like I ignored the Vietnam war protest in an earlier life).  These must just be losers who can’t compete.  After all, one of my closest friends, the ultra conservative psychiatrist, assured me that the unions were paying all of the protesters in any event.

Last week I decided to purchase the new iPhone to replace my old iPhone.  I decided to keep my existing carrier but to use a vendor who might have more time so I could avoid standing in line with ten thousand children while I addressed yet another new technology.

To my great surprise I discovered that my carrier had changed plans some fourteen months ago and had failed to inform me that under the new plans I could have saved over three hundred dollars per month.  Four thousand dollars, wow!  Back in the roaring times that would have been chump change but today….. well it might have paid for a number of things that have been taken off the good life list.

So how was I supposed to feel about this finding?   I tried out the, “hey they got me” approach but it didn’t feel so good.  I was left to ask if this is really the rule of American business.  Is its ethic anything you can get away with is just good business?  Opp’s have I just become a protester?

What do those in the Wall Street movement know?

  • They know that millions of Americans have lost their savings and their retirement
  • They know that millions of Americans have lost their homes and their home equities
  • They know that billions of American dollars are being moved overseas and that only chumps invest in the domestic market in amounts greater than are necessary to escape regulatory or political scrutiny.
  • They know that a very small group of money guys, who were wise enough to put themselves in positions of financial trust, have realized profits and wealth far beyond what even the infamous Yuppies aspired to.
  • They know that these end games were not accidents but rather came from techniques developed and deployed by the brightest minds in the American economy.

What do those who are active not know?

  • They don’t know the rules of today’s business world because they aren’t being documented.  Like the Civics’ fraternal lodge of old the current rules are being handed down behind closed doors between the old order and the new
  • They don’t know what role patriotism is playing in today’s scenario
  • They don’t know what role ethics are playing in today’s scenario
  • They don’t understand why business is abandoning America
  • They don’t know what vision the folks in control have for American in five years.

The protestors are currently being criticized because they can’t or refuse to articulate the specifics of their complaints.  But where would you start in the above scenario?  They are caught in the same trap as the women’s movement of the 1960’s.  They know something is wrong but they can’t put their fingers on what it is.

The protestors are not criticizing the rules; they are asking that the rules be clarified. This would be tantamount to the Vietnam protestors asking how we were going to win.

So what (Thank you for your patience) does this have to do with the real estate industry?  We have our own growing protest.  It surfaced again last month with the events surrounding the Redfin Agent Survey Program.  We all know that one of the top two or three pieces of information that consumer would like to have in order to declare real estate a safe activity is information about an agent’s history.  It is a very simple issue.

If our industry’s position is that you get what you get in terms of agents then we need to declare that to be the rule.  If we truly believe that an essential part of our business value proposition is to protect the same new, inexperienced and/or incompetent agents that are bankrupting our brokers rather than the consumers who just wants to be able to trust us then we need to make that declaration.  Is our self-respect and personal ethic really comfortable with turning our heads and acting like we don’t know what the consumer wants?  Doesn’t it make sense for the future of our industry and home ownership in American that we consider acknowledging our society’s growing demand for transparency and openly embrace or reject that concept?

With this step the consumer can then make a decision whether they want to play under these rules or not.  My suspicion is that they will make another election.  But that is exactly what is going to happen if we keep turning away from this very simple expectation.  We can win this battle but the first step is realizing that it is going on.

Oh by the way, I know something about that Michael Moore fellow that he would not want you to know.   Over the past six years he has partnered with a super conservative Rotary Club in Traverse City, Michigan to rebuild a classic 1920’s movie theater, to create a world class film festival and to give birth to an economic renewal of our downtown that is producing new jobs, raising property values and, heaven forbid, giving rise to a whole new sense of community between young and old alike.   There, that ought to ruin his reputation.

 

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What Is It Like at Keller Williams Mega Camp?

By Jeremy Conaway
October 11, 2011 – 11:02 AM

Wow, an opportunity to attend the American real estate industry’s premiere career and motivational event. This is the event that personifies personal growth, professional achievement and business success. Just the act of placing Mega Camp on one’s calendar is exciting.

During the two weeks preceding the event one can feel the anxiety for what one instinctively understands will be a life-changing event.

The last week becomes abysmal. The industry media seems to be unaware about what is about to happen. Stories about encouraging renters to move to Detroit, the arrival of the new iPhone, the relationship between marriage proposals and real estate closings, REO properties being used as movie sets, a 13 year old boy and his luxury home blog, and the mind numbing facts surrounding pop singer Rihanna’s lawsuit against her agent become annoying and irrelevant.

Finally the aircraft door closes and the final stage of the journey begins. Imagine, over 8,000 of the top performers in our industry, from all over North America, are winging their way to what for the next week will be the epicenter and energy core of the real estate constellation; Austin, Texas.

The Olympic level aura surrounding the Keller Williams Mega Camp and Masterminds event is no accident. It is the result of three energy forces that come together with a crystal clear focus, a precise purpose and a remarkable level of passion.

The first energy force is generated by the creativity and talent of KW’s corporate special events team led by Mindy Grubb, Stormi Boyd and Alex Welch. These folks understand how to create, execute and promote a “super bowl” level event. Mega Camp is the perfect combination of color, lights, sound, video, architecture and most importantly, devastatingly relevant content.

The second energy force comes from those within the KW community who are selected to present, perform and share the program. Whether from the corporate team, market center administration or real estate services each individual is on that stage because they have talent and something they want to share with the group. Mediocrity does not appear on the Mega Camp menu.

Keller Williams owes much of its success to the precise discipline, structure and mathematics that have driven its success over the past many years. Gary Keller is the architect, the Von Clausewitz, of the organization and Mark Willis is its Alexander the Great. At mega camp this year both played out their roles to perfection.

But the KWI leadership team is anything but stagnant. Over the past several years the organization has spawned a number of dynamic leaders. The sponsor of this year’s Mega Camp was MAPS Coaching, a division of KWI that has taken what used to be an elitist concept to what, within KWI, has become standard equipment for success. MAPS’s President Dianna Kokoszka was a ubiquitous influence throughout the program. In so many ways she demonstrates both the why and the objective of coaching as a professional tool.

This year’s rising star was Ben Kinney the all-pro operating principal from the Bellingham, Washington whose matter of fact analysis of success in the current marketplace caused such a stir at this year’s Gathering of Eagles event. If Nike were sponsoring Mega Camp Ben would epitomize “just do it.”

The third energy force comes from the participants themselves. One does not attend Mega Camp, one engages it. Mega Camp is not a spectator sport it is an immersion activity. Attendees do not stroll into the room fifteen minutes late; they explode into a perfect space to find a seat that will give them the best interactive perspective. One does not depart Mega Camp with bags of free junk, attendees leave having been indelibly marked with the knowledge, philosophy and motivation that comes from spending high energy days in a special place with thousands of individuals who at the very least can claim the title of “winner.”

The difficult part of reporting Mega Camp is that during its run it provided dozens of seminal moments. Here are but a few:

  • Gary Keller takes the stage with a woman carrying a guitar and announces that he has adopted a new theme song entitled “Its My Life.” He apologizes that he hasn’t had time to learn to play it yet and asks the woman if she might do so. The song is perfect and the woman turns out to be three-time Grammy nominee, songwriter and recording artist Pam Rose. The day is off to a great start.
  • The Mega Agent program is centered around Gary Keller facilitating several panels of agents who, using KW strategies and tactics, have and are experiencing phenomenal levels of professional and financial success in what many consider a less than grand market. As each super star comes into the spotlight Gary skillfully asks the questions that put that individual’s success in the perfect light. At the end of each interaction he magically inserts the question; “could any KW agent do this?” Each time the response is short and to the point “yes, if they follow proven techniques.”
  • On Wednesday Mark Willis takes the stage to deliver the State of the Company address. Willis is a classic new age CEO with the energy and charisma that not only directs KW’s day-to-day energies in the field but is also provides the force that is motivating Keller William’s ascent to the number one position in the industry. His energy and his personal style are all about the right person in the right place. The attendees hang on his every word as he challenges them to meet his “11” challenge (you just had to be there).
  • The primary champions of Mega Camp are those who achieve incredible results using KWI technologies and practices. While Ben Kinney may be the current star of this group it would be a close contest. For example, who would have thought that Craig’s list would have warranted an hour-long presentation? Well, certainly the agent panel that generated hundreds of closed leads from that system. This group demonstrated over and over that high performance real estate is a matter of focus, design, accountability and absolute follow through.
  • The unsung heroes of Mega Camp are those who have worked with the KWI team to create, execute and train thousands of successful agents on a technology platform that approaches fantasy levels. KWI technology chief Cary Sylvester thrilled attendees with the stunning results of the current package and the exhilarating potentials of what lies ahead. At Mega Camp the comment “I am not very technical” is not a confession of failure but rather a statement of challenge. These people get it!
  • The technology star of the show was KW’s new transaction (read career) management program eEdge. The more one learns about this system the clearer it becomes that the rest of the industry simply doesn’t get it when it comes to TM. From lead to lifetime relationship here is a system that is redefining the real estate value proposition for both the consumer and the agent.

As KWI moves closer and closer to the vaulted number one position in the industry many observers are watching closely to see which of the characteristics that brought it to this point will be continued or lost into its next level of success. It was a great relief to discover that the incomparable KWI culture apparently will not be a victim of success.

For all of those who thought that Mo Anderson and their own tears only made appearances at the Family Reunion event guess again. The object of KW Cares this time was the community of Joplin, Missouri. Earlier this year Joplin suffered the ill effects of a powerful tornado that took dozens of lives, destroyed thousands of homes and left a twelve-mile long path of destruction.

As a starting point Tuesday night’s “Party With a Purpose” event raised over $100,000 that will be used to support a special needs sports venue to be named for Will Norton, the 18 year old son of a KW agent, who lost his life in the storm.

But the most stunning display of culture, family, and yes love, came as Joplin market canter principle Doris Carlin undertook to share with the attendees the events that followed the Sunday morning tornado. In a stirring presentation she took the group through the ten days following the storm. She lovingly described each and every step taken to care for KW family members, to find the deceased, the survivors and finally the Joplin community. The video of her presentation will forever set the standard for class and distinction. The lives of those who witnessed her grace and composure were forever changed.

We are all back home now. Back to living our day-to-day lives. It turns out that the industry media didn’t notice Mega Camp. But every so often my mind returns to Austin and a smile forms as I realize that all 8,000 of us are now somehow better persons. This too is the Mega Camp experience.

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When Will Online Consumer Convergence Near Its Flash Point?

By Jeremy Conaway
September 7, 2011 – 11:40 AM

A convergence is the process by which projections, objects, forces or trends converge to create a new outcome that redefines the original environment or condition.

A convergence is currently being played out on the Internet in the real estate space. How might this drama play out and how it might impact your career or business? When might this convergence reach its zenith, what might that look like and what should brokers be doing to prepare for that moment?

The playing field:

There is only one playing field, the Internet. This observation does not ignore the efforts being made by tens of thousands of agents and brokers in their attempts to capture and engage the consumer in communities throughout North America. It does however recognize that these “local” efforts in total are dwarfed by the metrics of online consumer participation. This battle will be won or lost online.

The cast of characters:

The primary players in the convergence are real estate portals, real estate consumers, real estate brokers and agents.

Various experts place the level of consumer online participation in the real estate space somewhere between 85 and 93 percent. It is abundantly clear that the consumer will be the key-determining factor dictating the real estate transaction moving forward.

The consumer has developed a number of expectations regarding their buying and selling experiences. These expectations have subsequently become demands. These expectations are convenience, the ability to hear other consumer’s experiences, accessibility to ratings made by previous consumers, total price transparency, relationships and a virtually unlimited choice. These demands are now being extended to off line or person-to-person interactions for which consumers still express a clear preference. Consumers now expect from their agent or brokerage experience what they have been experiencing online.

The term “player” refers to an individual, firm or entity that has reached a level of influence that will allow them to make a difference in the market moving forward. There are several real estate portals that have reached “player” status. Zillow.com, REALTOR.com, Homes.com, Google base, Yahoo.com, Turlia.com and oodle.com to name a few. Over the past few years these sites have invested millions of dollars aligning their functionality with contemporary consumer expectations and demands.

Zillow.com is the poster child for this group. Zillow (NASDAQ: Z) is an online real estate database that was founded in 2005 by Rich Barton and Lloyd Frink, former Microsoft executives and founders of Microsoft spin-off Expedia. The website primary consumer service uses a proprietary algorithm called the “Zestimate” to appraise property values based on undisclosed factors. Sellers can use Zillow as a marketing tool by appraising their properties, posting property information such as improvements and access to major roads and comparing nearby property value appraisals. Buyers can freely access and track such information online. The website currently tracks 72 million valuations throughout the United States. It has encountered controversy the degree of inaccuracy and alleged inconsistencies of its appraisal algorithm. Zillow maintains that it has consistently improved its valuation data and ultimate Zestimate numbers. In any event over the past five years it has become a consumer favorite with a steady stream of consumer-approved features, tools and functionality.

Strategies and Tactics:

The online sites and vendors have been working overtime and spending millions of dollars to provide the consumer with the full range of functionality referred to above as the consumer expectation. Steadily over the past five years they have been meeting and in some cases exceeding these expectations. They have become the textbook example of consumer centricity. This performance has won them a growing level of consumer patronage and loyalty.

While a select group of agents and brokers have been recognized for their efforts to adopt consumer centricity and responsive online styled behaviors the majority of the traditional group continues to pursue a 2005 “agent centric” business model with occasional contemporary aspect or functionality. These players have justified their reticence regarding creativity and innovation with references to how bad the market is especially compared to the golden years of the boom and 2005. This approach ignores the opinions of many experts who have stated unequivocally that current market volumes are exactly where they ought to be based upon the past 30 years of market performance. Brokerage profits over the past several years have not allowed for expansion into new service options although there is some question whether or not profits would have been invested in that direction in any event.

Interestingly enough while this group has demonstrated a rigid adherence to its business model it has not extended a similar interest in either its traditional ethics or basic standards of practice. For reasons too complicated to speculate about it has allowed its agents to exist in an atmosphere largely free of ethical requirements accountability or standards of practice.

Of even greater import this group has empowered the creation of an environment of unmitigated listing syndication resulting in listings becoming an almost uncontrolled commodity.

Anticipating the Point of Convergence:

All of the elements discussed above are in a state of accelerated movement heading toward a point of convergence. Which is to say that we are nearing the point at which these factors will come together (converge) in a manner that will create a new reality for our industry.

There are two questions that readers should be asking themselves. The first is why would anyone invest millions of dollars into these portals and websites? It isn’t for advertising or referral fees neither of which could come close to generating an acceptable return on investment. What is it that these efforts are producing that can generate revenues and returns? The answer is simple. They are creating and innovating consumer convenience, the ability for consumers to hear other consumer’s experiences, the ability of consumers to access ratings made by previous consumers, total price transparency, meaningful relationships and a virtually unlimited choice of inventory. This group is also closing in on the creation of standards of practice for virtually every phase of the transaction. These elements are, of course, exactly what the real estate consumer is demanding. These entities are creating market grade operable consumer relationships.

How then can these relationships be used to generate the revenues necessary to satisfy the financial obligations and aspirations of portal principals and investors? That answer will require some speculation.

Speculating about the convergence:

What is going to happen when all of these factors come together in the marketplace at some point in the next eighteen to thirty months? Go back and visit our friends at Lowes. How have they transitioned the traditional relationship within that industry? When a consumer buys virtually any product that requires installation services they no longer have to rely on an existing or risky relationship with a tradesperson. They are protected and serviced through their existing relationship with Lowes’ that offers a seamless and guaranteed installation experience using a Lowes’ approved and supervised vendor.

This is exactly what will happen with the growing relationship between consumers and the portals. They will create contract relationships with brokers and agents who will then complete the transaction at a much-reduced compensation. This work will be completed pursuant to established and transparent standards of practice.

Take action now!

There is no question that the portals have a significant head start in this process. There is still time for the traditional brokerage to work effectively within this new environment. However this play will not occur until our industry comes to grips with what is really happening including the realities of the convergence. There is no time left for pointing out the obvious. The opportunity that exists is all about effective design, appropriate response, and passionate advocacy. We can do this.

 

 

Jeremy Conaway, Contributing Editor

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Where Do The Hysterics Come From?

By Jeremy Conaway
September 6, 2011 – 9:27 AM

It was by any standards a weird week. It started with the media coverage of Hurricane Irene. Hour after hour of dire and dreadful announcements, horrendous and horrific pronouncements and frightening and onerous representations by a news media that seemed to be trapped in a vocabulary of words and phrases chosen to drive public hysteria. It was an amazing example of manipulation by lexicon. Even when the evidence clearly demonstrated that it was a less than predicted, the intellectual assault continued.

A few days later I was presenting at a REALTOR® event. On the same program was one of the stars of the real estate blogosphere; a fellow whose intellect is overwhelming and whose ability to grasp and analyze the events of the day never fails to impressed me. But on this day he decided that what this audience of bright young industry rising stars needed was a grand dose of hysteria.

He proceeded to deliver a presentation that essentially declared that home ownership is no longer a part of the American Dream or its reality. He embellished his point by articulating what such a disaster will mean to the real estate industry in terms of both commissions and careers.

It was not the first time I had witnessed the “Rental Hysteria” song and dance. Early that same month I attended the Inman Connect conference in San Francisco and watched yet another industry rock star deliver the same message. “No one will have any money, everyone has watched their parents lose their equity, no one will want to purchase a home and the entire industry is headed for doomsday.”

There is just something about this message that is fundamentally wrong and inappropriate. As a student of American history, I am only too aware of the risks and sacrifices that Americans have endured in the name and for the opportunity of homeownership. Each of us has witnessed the terrors and trauma of fires, floods, earthquakes and tornados. At the same time we have marveled at the passion with which these same Americans have rebuilt their lost homes. To suggest that a mere forty-eight months of troubled economics is enough to destroy the personal and cultural values represented by homeownership in America is ludicrous on its face.

Our team includes a board certified psychiatrist and, as is often the case, he got my first inquiry. In response to my questions regarding the basis of hysteria and the rational for driving it he had some interesting answers.

First of all hysteria is “an uncontrollable outburst of emotion or fear, often characterized by irrational behavior.” It rates way up there on the hierarchy of dysfunctional human behaviors. In other words hysteria is a painful experience that causes individuals to do things that they will most certainly regret later on.

My next question elicited information regarding why an apparently intelligent person would undertake to cause such a potentially painful experience for their audience.

The response was a bit alarming. To make a long story short the basis of purposely causing hysteria is simply a “power trip.” Apparently some individual’s egos are driven by their ability to cause others to become out of control and to act irrationally.

I have subsequently learned that this type of behavior has become a mainstay of our contemporary society. Radio commentators, political analysts, religious zealots, and yes, some bloggers, are leading the way. All are attempting to use their positions within the communications media to cause their audience pain and discomfort so that they can appear to be powerful and influential.

The solution to such an attack would appear to be found in the simple act of research and discovery – sort of a “the truth will set you free” approach. So I decided to engage one of my talents and see whether there was any truth in the idea that the events of the past few years had in fact negatively impacted homeownership as a staple of the American dream.

Consider the following findings.

  • In 2010 Fannie Mae completed a study that determined that “Americans’ desire for homeownership was apparent throughout the survey,” but owning a home is no longer seen as the safest financial investment.

But of course the credibility of Fannie Mae could be called into question so the research continued.

  • In 2010 Meredith Corporation researching for a white paper entitled The Rise of the Real Mom found that 46 percent of men in the 18 – 29 age group were of the opinion that owning a home is important. 76% of women in the same age group indicated that owning a home was important.
  • In early 2011 the Pew Research Center completed a similar survey. A robust 81% of adults said buying a home is the best long-term investment a person can make, according to a national survey by the Pew Research Center in Washington.

“Owning a home is really a part of the American dream, and that is just part of the American psyche and something that people aspire to,” said Kim Parker, associate director for the center and one of the study’s authors.

“The study’s results were unexpected, given the deep plunge in home prices and the fallout from the mortgage crisis,” she said. “Homeownership topped the list of long-term financial goals for Americans, according to the study; respondents rated homeownership, as well as living comfortably in retirement, more important than sending children to college or leaving offspring an inheritance.”

  • Princeton Survey Research Associates International conducted another survey, comprised of a nationally representative sample of 2,142 adults, from March 15 to March 29, 2010. “The study results are surprising in that so many households still believe that homeownership is a good investment, even after the plunge in home values that has occurred over the past couple of years,” said Celia Chen, a housing economist for Moody’s Economy.com. “The preference for homeownership has deep roots in the history of this nation, and apparently even a severe correction in house prices can shake American’s belief in homeownership only slightly.”
  • Finally, a Heartland Monitor Poll (Sponsored by Allstate Insurance) in March of 2011 illustrates an enduring belief in America and a persistent sense of optimism in Americans’ ability to achieve the American dream. Though the housing crisis has damaged the net worth of families, the poll suggests that Americans believe this downturn is temporary. The survey reflects is strong agreement that home ownership remains a fundamental goal in achieving the American Dream. 

Despite the recession, Americans are very likely to recommend purchasing a home to a close friend or relative.

The overwhelming evidence to support the proposition that American’s love owning, buying, selling, renovating and living their lives in their own homes can be found in many places. Whether the plethora of surveys conducted by institutions of knowledge or the one million viewers that watch HGTV’s nightly programs that focus on these experiences it is clear that homeownership, while bruised, remains that centerpiece of the American dream.

This is not to suggest that our industry will not experience an increase in the event of rental-based occupancy. In fact that appears to have already occurred. There is no evidence that this will be a long-term situation and there is every reason to believe that we, as a nation and as an industry, will find solutions.

Our challenge is simple. First of all we must ignore those who would traffic in hysteria. Secondly we must work together to design, create and promote lifestyles centered on home ownership and thirdly we must use our talents to develop and deliver homeownership options and alternatives.

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What Do We Gain By Having No Standards?

By Jeremy Conaway
August 16, 2011 – 10:19 AM

It was a wonderful summer afternoon with the midday heat allowing the daily “power read” to occur on the deck overlooking Rennie Lake, a classic northern Michigan setting. As I worked my way through my “must read” list Inman News came up and I begin the often-arduous process of working through the most recent postings. Out on the lake the resident Loons were sounding their periodic trumpets the purpose of which is never obvious but the effect of which is always thrilling.

The editor had placed a tempting phrase in the search box, obviously attempting to capture the reader’s attention to what might otherwise have been a missed article. In this case the terminology was “A peek ‘Behind the Curtain’ at real estate practices.” My attention focused I went on to read a six part article by Matt Carter, one of my favorite Inman reporters. It immediately became obvious that this was not just another survey and without question was not just another story. This is the beginning of what many in the industry have been waiting for.

The article was reporting on a reader survey that Inman had recently completed. The survey questions revolved around a series of focused reports on some 38 real estate practices identified in a reader survey as divisive and/or controversial. Each segment detailed the results of the survey’s findings.

The choice of the terminology describing these practices (divisive and/or controversial) immediately caught my attention. Nowhere were the terms illegal, unethical or outright damaging used despite the fact that many of the identified practices were either outright or close call violations of statutes, rules or regulations adopted by the various state licensure statutes, professional standards, ethical codes or MLS operations who claim responsibility for maintaining the rule of law or fairness in that particular area of industry practice.

Similarly the statistical terms used to report on the survey results were also sometimes curious. The survey of agents and brokers asked real estate professionals about both the frequency of more than three dozen questionable customs and practices, and whether the respondents thought such behavior was acceptable or not. When describing the severity of something that was either unacceptable or infrequent the story glossed over responses that often reached 20%.

Inman reported that more than 500 respondents participated in rating the acceptability of those practices, and some 367 participated in reporting on the frequency of those practices in their markets.

I want to say from the onset that I think Matt and Inman News deserve praise and recognition for this work. The report is marvelously non-judgmental especially considering the fact that our industry has, over the past many years, steadfastly refused to adopt any meaningful standards of practice and that has vigorously and sometimes ruthlessly opposed in attempts by groups from inside the industry to do so.

By way of example one need only revisit the efforts of the Real Estate Standards Institute (RESI) in 2005. RESI, organized and funded by dozens of local REALTOR® associations used over 1500 volunteers and the creative energies of Real Trends Editor Steve Murray to create a comprehensive set of real estate standards of practice only to have them summarily dismissed by the greater powers.

The events of the past six years have proven beyond a reasonable doubt the necessity for such standards. Today the economy on which all of our lives depend as well as the lives of millions of American families continue to be grievously impacted by the mistakes that were made during the final moments of the great real estate boom. At some point history will determine how these millions of families arrived at the impression that the bubble would never burst and that they were well advised to proceed with transactions that on their face made no sense. Only history will provide a clear verdict relative to what role a lack of standards played in that disaster. We can only hope that when the final story is written that our industry will be able to be proud of the role that it played.

But in the meantime the story continues to unfold. The past five years have seen the rise of the most powerful consumer the American culture has ever produced. Even now it is clear that for a significant number of reasons this new consumer is not saying, “yes” to an American dream that includes home ownership. The fact that the effective homeownership level is now moving towards fifty percent should not be interpreted as the natural result of a troubled economy or a strained mortgage environment. Don’t be deceived by the fact that the market may well deliver over 5l3 million transactions this year. Consider how many of those are investor purchases and the true picture emerges. The fact is that millions of Americans, especially those within the “Y” generation are just saying no to home ownership.

There is a common perception within the industry that the current dilemma will turn around when the economy comes back to some mystical level. Those who are monitoring the conversations and literature of the 21 – 31 year old consumer group know that this isn’t the case. This massive demographic is questioning not just the investment quality and economic sense of home ownership but, and more importantly, the safety of the real estate transaction itself

The Inman survey will not promote either the stability or the apparent safety of the real estate transaction. Taken as a whole the results of the survey portray an industry driven by a laissez-faire attitude with little or no concern for a nation’s or consumer’s need to feel safe within a real estate transaction.

Is this who we really are? Is this who we really want to be? Is this the image that will drive a whole generation of potential homeowners back to the marketplace? What is our statement to the American consumer regarding the joys, benefits, advantages and, yes, risks, of home ownership. What should our statement be about standards of practice and the safety of the transaction?

Without some sense of safety, security and stability the American consumer will not return to the real estate market. The essence of safety in virtually every field from food quality to automobile design is the presence of transparency and standards. Our industry desperately needs to conduct a dialogue on the subject of standards. This is going to require the work of leaders who are willing to address and solve the difficult issues. This in turn will require taking a few moments to set aside the petty politics and empire building of the current industry environment in order to focus on this critical and ultimate issue.

In the final analysis it will not matter who wins the current jurisdictional and informational battles if the winner’s first act will be to face an American consumer who is openly questioning the validity, voracity and stability of the basic act of home ownership and the safety of the transaction. At the very least we are allowing the standards gap to create yet another competitive advantage for third parties to exploit.

Lets take a moment to resolve the standards issue. We can do this.

 Jeremy Conaway, Contributing Editor

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