Why Real Estate Brokerages Resist Change
I recently had a fascinating conversation with another industry professional who made me laugh even though the topic was very sad. This person made an analogy to dinosaurs and the Ice Age that rang true as it relates to what is happening in the real estate brokerage industry. “Our industry (in general) is like a herd of dinosaurs grazing on dry grass wondering what happened to the green grass while, in the distance, a glacier is slowly coming down the side of the mountain ready to make fossils out of all of them.”
Harsh? Yes! Somewhat true? Yes! All the signs are there:
- Physical plant overhead bankrupting brokerages;
- Internet leads going unanswered;
- Websites still looking like static brochures; and,
- Agents leaving the business.
Yet these and many other issues remain, all too often, unaddressed by brokerages either out of fear, ignorance, or hope that the market will return to “normal” so we can all wake up from this nightmare. Guess what? It’s not going to happen so if you are not willing to embrace change and innovation, you might be, metaphorically speaking, find yourself “stuck in the ice”. There is a great site called www.coolquotes.com that I refer to when I want to communicate an idea with a quote. Here are a couple of good ones that should get you thinking:
“He who rejects change is the architect of decay. The only human institution which rejects progress is the cemetery.” Harold Wilson
“Not everything that is faced can be changed. But nothing can be changed until it is faced.” James Baldwin
As humans we don’t like change and as real estate professionals we have had the additional burden of a tough market for the past few years which has kept our focus on survival rather than innovation. When you add all that to the fact that the consumer’s expectations have continued to grow you are faced with a huge gap between innovation and expectations. So here we are, what are we going to do? Are we going to go the way of the dinosaur or are we going to take the bull by the horns and make the changes that are necessary to reinvent ourselves for future success?
Here are a few things to put into your reinvention playbook:
- Create a vision
- You need to lead the charge by living your new vision
- Remove obstacles and create short term wins
- The changes will not take hold over night so build on successes
- Create a new corporate culture
- Make innovation part of everything you do
- It’s not too late but you have to start today!
Well said. Resistance to change. It reminds me of when I was a kid riding rental horses. Once you got to the end of the trail and turned around the horse would head back to the barn as fast a possible no matter who got hurt (and it was usually me) and it was impossible to get it off the beaten path. People don’t like to make mid-course corrections. A swift board to the head usually helps.
Jose,
I love your thoughts and they do make me smile. Our industry does have people that are looking to adapt and change but you are right the majority just sit back and wait. Maybe comments like yours might wake up a couple of owners that want to embrace change but don’t know how. Hope ou can show them the way. Love the analogies and the sight with the quotes!!
Ray
We are facing these challenges as you mentioned right now. We are setting our new course to make positive changes in our marketing efforts, especially social marketing, lead generation, and SEO techniques.
Change is inevitable. We must be innovative to survive.
I appreciate all the comments, and I believe you are right on target with this post.
Thank you.
Nice article Jose. Based on knowing some of the corporate cultures in the real estate business, I would say that we will have plenty of oil to use in our cars for years to come.
I agree with your reinvention playbook suggestions completely. I’m also keenly aware how in trying to save themselves many brokerages are too close to the trees to see the forest. How does a broker begin to create a vision when their glasses are fogged? With unsurety most brokerages hesitate to change because of their inability to see where they should be going. When they experience a little success they will try to keep repeating what they did thinking that’s the answer. But, that’s part of the problem – as in “who moved my cheese”? There’s insecurity in creating a new corporate culture, yet building on Covey’s 7 Habits can go a long way. Having seen so much change in my 38 real estate years it pales in comparison with what has happened in the last 10 years. Does anyone know what tomorrow will look like? The proverbial train is leaving the station. Does the broker hop on without knowing the destination? Or, is their security in knowing they’re with all the other dinosaurs, and the glacier be damned? Thank you for the stimulation.
Very well put Jose. I run a RE brokerage firm in India. The lessons are the same here. The challenge is within. We need to embrace change – technology et al. Most importantly the mind-set to look outside for cues to make us current, more knowledge based and useful for the clients. Innovation and the way we adapt it in the organisation and in our professional life is critical to survival and prosperity.
OK… so we all agree… NOW WHAT?
I don’t get any push back with my comments even with the most “pre-historic” of brokerages. They nod their heads and agree but then they do nothing.
Therein lies the opportunity for the rest of us! Many fortunes have been made in times of great transition. Now is the time!!
Stefan Swanepoel had something interesting to say on the topic the other day. I asserted that the reason the real estate industry is so slow to adapt is because the vast majority of practitioners are independent contractors. The brokers have little power or authority to push down change upon their agents. “You can lead a horse to water, but you can’t make him drink.” comes to mind in this situation.
It is quite possible that some of the newer business models like Redfin’s and others may force that change upon the industry as they have more of an employee model where they can dictate changes to their agents. It still amazes me that with so many different business models out there, the consumer still largely views every real estate agent virtually the same.
The agents and brokerages who can differentiate themselves and position themselves effectively will have tremendous opportunities.
Although the independent contractor arguement is valid, I would say the root cause is that brokers have not historically held their agents and managers accountable. Just because they are independent contractors doesn’t mean brokers should not set goals for them and hold them accountable to those goals.
What about all those agent coaches that charge a lot of money… why do they exist?
Well, here are a couple of things we are working on to at least lead the dinosaur pack…
- Meet raising customer expectations by surveying them during and after the transaction. Only doing after surveys gives us no chance to correct.
- Teach our agents about internet reputations, and how easily they can go south. Knowing that our customers may grade us publicly puts some pressure on staff and agents.
- Hire agents from non-traditional sources, which brings new thinking into our business. Train those agents, but also give them the freedom to pick their own methods, not just how past top-producers have done it.
Of course, it is hard to launch new projects under current financial conditions, but what choice do we have?
Great feedback to lead the dino-pack. You are absolutley right, there is no choice and the sooner people accept that the sooner you will see change in our industry. Until then, the opportunity to continue evolving versus become a fossil increase dramatically.