Terabitz Blog

Brokers, change your ways

Quit what doesn't work and start reinventing things that do.

Seth Godin covers this practice extensively in his book, "The Dip," and nowhere can it be more appropriately applied than to today's brokerage model, which is running full steam on yesterday's expense engine. Brokers are struggling to stay on top of their business, as the cost of maintaining failing operations add insult to the injury of the declining economy and stagnant housing market. Many brokers are in need of a new direction to help them through the remainder of this housing recession.

To do this, they need to let go of old habits, processes and the apron strings of traditional models that continue to cut into revenue and that no longer make sense. Here are the six things brokers need to let go of today:

People. Reducing headcount is the most difficult thing for us all to do but is also the most logical place to start. It's heart-wrenching and personal and it never gets easy. Unfortunately, however, it needs to be done and the sooner the better. Begin with the folks and/or departments that are not performing. Trust that their lack of production is not only affecting the firm, it's affecting others inside the firm that are producing. When you take this sort of action, the signals you send across all channels will, in fact, energize the entire organization. Next, remove those parts of the organization that are not necessary to your core business. If it isn't core, you might very well be able to reduce its cost by outsourcing. This is particularly true of administration, internal support, information technology, accounting and other such groups. Become better organized and leverage technology and you won't miss the "luxuries" of support staff to which you have grown accustomed. Start now.

Expensive Applications. Another by-product of the boom are clunky brokerage applications that can be easily swapped for freeware that works as well if not better than what your vendor custom-built for you years ago. From mail servers to comparative market analysis (CMA) tools and lead management, alternatives are now available that did not exist a year ago that are sleek, easily programmed and simple-to-use and can replace a host of aging functionality. Brokers, think of replacing your e-mail system with Google or Yahoo mail. Think of replacing your contact management system and calendaring with ones available for FREE. When you have a system that you get only 3 percent use out of, is this worth the cost?

Web sites. Is your Web site designed to be consumer friendly? Does it offer the tools and information that a CONSUMER requires? If not, throw away that old Web site and replace it with a new one that does. Your site should attract and engage customers while allowing you to capture business. Remember that your office on Main Street has been replaced with the one on the Web.

Advertising. I know some sellers still expect print ads to advertise their homes, as do agents. But how much longer can brokers continue to feed these fantasies? And so what if you've advertised on search engines for the last five years. Are these efforts returning value that pencils out at the end of the day? Too much of brokers' money is being wasted on the wrong ad buys and destinations that no longer provide the best visibility and return on investment. And even more money is wasted on the ads themselves, replete with bad copy and missing the key triggers that will incite a quality call-to-action. Brokers, start tracking your Web ads. Measure every penny spent. Scrutinize the ad copy. And quit everything that no longer works.

Desk fees. Granted, this is how some brokers make money and yet even the term seems so antiquated as the need for a desk -- let alone many of the things that come with it -- are of no use to agents today. Analyze the tools you are supplying your agents and how often they are used (if at all), then compare that to what you could be offering them that applies to today's business. You may find that many of your agents are already paying outside vendors for things you could be providing, such as Web sites, blogs and listing syndication, among tools and services. Study your own agents, find out what they need to operate efficiently, and match these needs to the most basic functionality they crave. You will find that in many cases you are overpaying for technology that is not even being used.

Physical space. Today, it is possible to run an entire company virtually. Agents don't need office space. Accounting departments don't need office space. IT people don't need office space. In fact, brokers don't necessarily even need in-house accounting or IT staff since all of these services and more can be outsourced. Between task-flow software, cloud computing, digital paper and e-signature, and working from home, most medium-sized companies can go completely virtual and most very large firms can scale down immensely. Seek out a $500 lease on office space for meetings, and relegate your agents to work from Starbucks and the host of public destinations where free Wi-Fi exists. Let's face it: As walk-in traffic has waned, agents need to be as public and available as they can.

We are in an incredible time of transition in the real estate industry. Brokers are continuously rethinking costs, investments and processes, and considering options to cut costs and improve efficiency.

Brokers: Obsess on ROI

ROI is something we all talk about in business. It's the tell-tale signal that your efforts are either working or they're not. While it sounds easy enough – test, measure, tweak your campaigns – the problem in real estate is that most brokers aren't doing it. Many don’t even know where to start.

Brokers: It's time to seriously ask yourselves, do you really know your return on investment for each and every dollar you spend on technology, lead generation and conversion? In a time when business is scarce, you can no longer ignore this key component. In fact, you should rely on these measurements now more than ever.

Three things to consider today:

You've paid someone to build your Web site, but is your site capturing any leads? Is it delivering any value to you at the end of the day? Are you closing business directly due to your Web site's efforts? How can you know for sure?

Are you paying to publish your listings or send feeds to other Web sites? If so, do you know exactly what you are paying, whether this exposure is converting to closed business and what the price per closed transaction is?

Are all your eggs in one basket? If you're still using print, you probably see this as a big expense. Do you know whether this cost is returning anything to you? If you pulled all your advertising at once, would it make a difference to the amount of business you have coming in? Try it.

Your business depends on you mastering calculations like this. It is important to analyze the source of every lead that comes your way, and it's also not that difficult. Here's how to start:

Go to your Web site provider and get a full report on where all your traffic is coming from. You have to see for yourself whether it's worth it to continue paying third-party publishers and nothing speaks louder than cold, hard facts.

Upload listings feeds to a variety of sites in order to diversify your potential sources of consumer leads. Analyze each feed individually and in relation to all feeds, then rank them according to which are sending you traffic and which are not. Pull your feeds from any place that does not generate traffic or pales in comparison to your top destinations.

A radical, yet highly effective approach to analyzing ROI is to pull all ads and feeds from every place for two months. This will open your eyes to what is working and what is not.

If no one in your office can produce a simple spreadsheet that shows a direct line of where every closed transaction came from, then you aren't properly tracking your ROI.

And if you’re not tracking ROI, well, you can be certain you’re wasting money.

Real estate search has no meaning

Today, all online real estate searches start with a 30,000-foot view of the earth, then pull you into states and cities. If you’re lucky, you get neighborhoods that you can understand in the terms that you have in mind. After this, you must draw parameters around your preference for number of bedrooms, bathrooms and square footage.

But when is the last time that a buyer stepped into a real estate agent’s car and laid out their desires like this? When seeking our next home, we tend to think more about our lifestyle. We want to be able to walk our kids to elementary school and not have to go more than five blocks to get basic grocery items, as an example. A park would be nice.

This is the way we think about buying our next home. This is the way we think about where we want to live. Yet, no MLS systems or real estate search sites capture information this way, let alone enable agents and consumers to search in this manner. Agents include descriptions next to listings, but people rarely pay attention to those due to the twisted meaning of phrases like “cozy and comfortable,” which means small and cramped, or “urban and hip,” which often means crime-ridden and grungy.

What’s missing from real estate is a system that helps push matches to consumers based on their lifestyle choices, their demographic. These systems exist within other verticals. Just look at Amazon, where you can search for a book and be led down a path that offers other books you may be interested in based on what other people who looked at this book also looked at or purchased.

Everyone in real estate has the same product with no different ways of presenting it.

One way to solve this problem is to build systems that capture this information, systems that capture and quantify what defines a livable neighborhood based on buyers’ real preferences. This system needs to capture what the buyer tells an agent when they first meet. “We want a nice, quiet neighborhood where people are friendly and kids have a place to play together. We want a house that fits our family of four, with room for grandma when she visits.” This, rather than “2,000-square-foot rancher with four bedrooms on a quiet street.” See the difference?

It is critical that real estate search systems begin to capture information about what is just down the street or three blocks away, what a school that’s rated a “four” really means, what a buyer is really looking for when considering their next move.

Maybe it’s a wiki that captures this lifestyle information. Maybe it’s agents taking note and quantifying the livable aspects of neighborhoods. Or maybe it’s deeper integration of various data into real estate search. Whatever the technological answer, it needs to infuse meaning into real estate search. If Amazon can do this for books, it can be done for homes and lifestyle.