Business Development – Roadmap to Recovery
You would think that after the tumultuous drop in real estate values and sales, the influx of national lead aggregators and the negative view of agents by consumers, that something would change in the business development real estate model.
Unfortunately, several factors have lead to the status quo:
First, there is the agent/broker mindset that listing information is private property. This also includes the local MLS…since it is made up of regional broker groups. This fundamental mistake opened the door to many of the industry’s current business development troubles. Consumers became angry over the protectionism and began looking for other sources of information. Entrepreneurs saw this gap and sought ways to provide the information for free, and ultimately, to capture leads to sell as a revenue source. Do you see where this has led? Consumers saw less value in professional agents, i.e. lower commissions, and broker gross revenues deteriorated due to referral fees paid to the national lead aggregators.
Second, agent control of the brokerage business development has led to higher splits, lack of brand consistency, and falling profitability. Much like the current situation with US car makers, why would you continue to prop up a failing business model? Who works for whom, anyway? The reality has created this never-ending downward spiral: fear of agents (so they won’t leave) vs. reduced income and profits. This does not allow for restructuring and investing in the future of the business. The other tenet of this point is that agent education in the use and value of new technology (and the understanding that this will increase their productivity) is vital in getting them on board and working as a team under a local brand.
Third, and in sequence to the previous two points, brokers have failed to adequately implement porpoer business development and adapt to the consumer demand for access to free information….specifically in the technology realm. We all know the NAR estimates that upward of 86% of consumers begin their home search online. Yet, only the lead aggregators as a whole have utilized the available technology for lead capture, contact management, and ultimately, some customer loyalty. Many industry leaders point to the real estate office of the future as a more virtual model. Maybe so, but most definitely, the incorporation of web-based, consumer-friendly platforms with back-office lead management and monitoring, is the backbone of any future model.
Brokers who see the value of this busness development retooling will reap the benefits of cost controls, budgeting efficiencies, and to the extent possible, more predictable results. As I have read many times and believe, anything you can measure, you can manage. New focus on these efforts by brokers will build consistency in brand representation, agent activities and consumer interaction. Done properly this will be paramount to regaining profitability, and adding value to the transaction…..which the consumer may find welcoming.
Filed Under: PCMS Blog • Real Estate Consulting
About the Author: Jay Teresi is a 20 year, seasoned, real estate and financial services professional based in Rochester, NY. After a successful career in the financial services industry, Mr. Teresi founded a real estate brokerage firm in New York City 10 years ago and has also worked for a national real estate franchise organization. He recently joined PCMS Consulting to head up business development in New York, Connecticut, and Western Pennsylvania.