| Real estate professionals today find themselves on a whole new playing field. The 2006 industry bears little resemblance to, say, its 1996 incarnation. Of course, we all know things have changed. But despite that knowledge, many are clinging stubbornly to the old rules of the game. Significant mistake, says real estate advisor Michael Staver. If you let yourself get bogged down in urgent activity that is not that important instead of performing what he calls high-gain activities—you’re living on borrowed time.Today’s broker needs to function not as a real estate operator but as CEO of a multimillion-dollar corporation. The unpleasant truth is that in times of massive change, those who can’t keep up are likely to get swept away.
The following are reasons why brokers should focus on the profession:
1. Downward pressure on sales commissions. Consumers are no longer willing to pay agent commissions—at least not on the same level that they once were. “Companies and their agents must clearly understand and articulate their specific value as it relates to the customer,” asserts Staver. “It is the customer’s perspective that matters—not yours. The resulting pressure from consumers has brought to the table a need to evaluate how we price a listing and then how we provide for the customer a clear understanding of why it costs X to sell their house. If a clear rationale can’t be established, then perhaps the seller is being overcharged.”
2. A consumer-centric marketplace. Once upon a time, real estate was a provider-driven market. Customers listened to their agent and signed on the dotted line. Today, customers control the transaction. Staver attributes this sea change to the technologically driven flow of information and sense of consumer empowerment that spans many different arenas. “Providers no longer have a monopoly on information,” he says. “Think about healthcare. Everyone on the street can name two or three antidepressants, so doctors have lost much of their authority. And though many real estate professionals tend to cling to the belief that they’re in charge, it’s a delusion. The job has almost nothing to do with selling a house fast; it has everything to do with understanding the hearts and minds of the consumer.”
3. Emergence of alternate business models. Your competitors are no longer limited to other real estate companies like you. Completely new horse-of-a-different-color businesses are springing up to give consumers the information and experience they want and need. And the information-saturated marketplace has forced brokers to reevaluate their strategies. After all, any Mom & Pop company can get on MLS, get every listing, and post it on their Web site. “Consumers think, ‘Well, if you won’t tell me what I want to know, and provide a buying or selling experience the way I want it, perhaps the brokerage across the street will,’” notes Staver. “It’s just a different world now.”
4. An underdeveloped leadership talent pool. The robust real estate market, combined with the tidal wave of change that has swept over our industry in the past decade, has created a whole generation of managers out of former agents. And of course, the harsh truth is that no matter how brilliant and successful an agent might be as an agent, she is not automatically a great manager. “Real estate brokers are finally realizing that leadership skills don’t magically happen,” says Staver. “Development firms like mine are working with brokers to increase leadership competency and bring on board emerging leaders. The industry is in a massive learning curve as people work to learn vital new skills.”
5. Our current market correction. Let’s face it: for the past six years or so the real estate industry has been wallowing in champagne and caviar. A robust market has a way of hiding a multitude of sins. And now that we’re coming to the end of our economic power surge—and Staver insists that it’s a normalization, not a downturn—the receding tide is exposing some disappointing realities. “Homes that would have sold in days might be taking weeks or even months to sell, and people aren’t realizing the exorbitant profits they were a few years ago,” he says. “Many homes never were worth their selling price, but you know, everyone got accustomed to the fever pitch and normal seems slow.
Consumers are anxious, which makes agents anxious, which makes brokers anxious. We all need to take a deep breath and adjust our expectations. And fundamentally, we need to sharpen and intensify our focus on high-gain activities.”
Real estate professionals must break out of their comfort zones and start devoting their time and brain-power to high-gain activities: articulating vision and values, creating a framework for exceptional client experiences, increasing the value of assets under their control, creating a high-performance culture, and finding and developing world-class talent. (NOTE: See tipsheet below for more information on each.)
Tips to remember:
1. Articulate your vision and values. What does your company stand for? At the end of the day, what matters most? Integrity? Excellent service? Making lots and lots of money at all costs? Every company stands for something and leaders must make their values and vision absolutely clear to their followers. After all, people do not function without a purpose. If you are not keeping your company’s vision and values in front of them at all times, they can’t know what to align their behaviors with. Don’t be afraid to be passionate. People will follow you into the depths of hell when you can make them believe in where you’re headed. As Staver likes to remind his clients, “Martin Luther King, Jr. didn’t say, ‘I have a hunch.’”
2. Create a framework for an exceptional client experience. Most organizations are structured to serve themselves, not the customer. But to be truly successful in the Information Age, you must design an experience focused on the consumer experience as articulated by the consumer. This goes much deeper than “customer service,” by the way. You must structure your company around what the consumer really wants, not what you want her to want.
3. Increase the value of assets under your control. If you automatically think “hard” assets like business equipment, you’re on the wrong wavelength. Your most valuable assets are your human assets—despite what your accounting department may believe. (Did you know that on most balance sheets a desk appears as an asset and a person appears as a liability?) How do you increase the value of your human assets? Commit to developing them on a personal and professional level. Help them maximize their strengths to the benefit of your company. “In most organizations, the most successful salesperson becomes a sales manager,” points out Staver. “But being great at selling houses or anything else doesn’t mean you’re great at leading. Smart companies capitalize on the natural abilities of their people and offer the training they need to truly thrive.”
4. Create a high-performance culture. This high-gain activity can be summed up in three simple steps: 1) Articulate your expectations to your people (this goes back to our first tip) . . . 2) Make sure there’s a system in place to give people what they need to achieve those expectations . . . and 3) Be certain you’re holding them accountable for achieving expectations. It’s that simple.
5. Find and develop world-class talent. It’s easy enough to focus on talent when you have a job opening and need someone pronto. Problem is, by then it’s too late. Constantly be looking for and wooing talented people, even if you have no place to put them right now. Do what you have to do. |
