PROView - June 2008 - (Page 24)

Brokerage design When to Quit and When to Stick by Jeremy Conaway, President, RECON Intelligence Services These are challenging times in our industry. As many markets move into the 33rd month of the down cycle the efforts of brokerages to succeed and stay focused have taken on an almost marathon like quality. Many cannot remember not having been out of breath, and “hitting the wall” has taken on a whole new meaning. For thousands of American real estate brokers the real issue has become twofold. While meeting the challenge remains critical, finishing the race in good position for the next round has become critical. According to bestselling author and Olympic blogger Seth Godin what really sets the superstars apart from everyone else is their ability to escape dead ends quickly while staying focused and motivated when it really counts. What has now become clear is the fact that struggling to survive this period in the industry’s history is a dead end (“Cul de sac” as Godin terms it) if the objective of that effort is not going to prevail. selves. There is more to go. This business model will never come back because there is no reason to bring it back. What will come back and what will succeed moving forward is a whole new business configuration. A business configuration that recognizes where we are today and where we will be tomorrow but not where we were in 1988. The point of all of this is simple. For brokers who are going through hell in an attempt to save a traditional brokerage model it is time to quit. For brokers trying to find their balance and equilibrium the perfect touch point is Seth Godin’s book The Dip. Godin is the best selling author of such business classics as Permission Marketing, Unleashing the Ideavirus, Purple Cow, and his latest marketing masterpiece, The Meatball Sundae. The Dip supports the stressed broker on every page. Godin points out that winners quit fast, quit often and quit without guilt until they commit to beating the “right Dip.” Winners realize that the bigger the barrier to success, the bigger the reward for getting past it. There is no reason to continue to beat one’s head against the wall trying to save a business model that hasn’t worked properly for the past several years and will not work effectively in the sustaining market that will find its way to our industry in 2009/2010. Such an effort is a classic dead end. Success in real estate ahead is all about a new business configuration. It is about rearranging the pieces of the old model. There is no guesswork involved, the research has already been completed. There is no leap of faith. There is however a moment of contemplation and a mighty jump in self-confidence. We know so much about the future of this great industry. We know that the market will return. It matters not that it will not be a 7 million units, we did just fine under five million up to 2000. We know that the consumer will demand, and deserves, a whole new experience. We know that our businesses, services and the transaction will be centered on the web. We know that in our next effort we are going June 2008 “The web is not a selling medium, it is a buying medium. It is user controlled, so the user controls the user experiences.” In plain English it is now obvious that the traditional real estate brokerage business model that has been in use since 1947 is simply no longer functional as an investment quality vehicle. The evidence is everywhere. Consider the fact that the average pretax profit for the traditional brokerage business model has been somewhere between abysmal and non-existent at 4.3% and 5.4% for the past several years. Consider the comments of Home Services of America CEO Ron Peltier, the keynote speaker at the recent 2008 Connect MLS meeting, who declared that the traditional brokerage business model is dead and that three quarters of brokerages where broken. Consider the fact that without core service programs few brokerages would be making any profit at all. Consider further that the market for this antique business model has now been reduced to “roll up” transactions that net out at 15% of 2007 company dollar. Finally, consider the fact that few brokerage firms in business today have not been subjected to round after round of hunkering down that has left them shells of their former 24 PINELLAS REALTOR® ORGANIZATION

Table of Contents Feed for the Digital Edition of PROView - June 2008

PROView - June 2008 Contents Chairman’s Notes Sustainable Lifestyles Greening the Not-So-New House Green Renovation Checklist Green Building Tips Going Green PROActive You Have 30 Seconds to Prove Your Value Marketplace Analysis Home Sales Report PRO Biz Calendar of Events & Programs New Members and Affiliates

PROView - June 2008

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