Relationships Vs. Transactions
Back in the day.
Back in the day when dinosaurs roamed the earth, real estate brokers literally had the only keys to all the houses for sale in their market. There was no internet back in the day. There were multiple listing ‘books’ of listings that brokers had exclusive access to. Information about listings was strategically disseminated in the local newspaper or real estate marketing magazine.
When you were part of an exclusive club – the local board of Realtors – that controlled all the information about the listings in your market, you could afford to run a transaction based business. I am sure many real estate veterans would argue this point but let’s be real, the business was vastly simpler than it is today. Buyers had to go through a broker who was a Realtor to get information about houses for sale in the area.
There was no other way.
Real estate today.
Fast forward to today, and the world of real estate has changed dramatically. Brokers no longer hold the keys to the kingdom. Zillow, Realtor.com, HGTV and the rest have given light and life to what was privileged information. This information revolution resulted in a lot of dead dinosaurs.
While many of the industry’s former leaders were left behind by technology, a few insightful veterans and new licensees realized they had to approach the business from a new perspective. That perspective had to include building productive relationships with clients and continuously adding more and more value to the client experience. In short, the successful among us became passionate advocates for, and partners with, our clients.
Working by Referral
Working by referral is the essence of our company. As I discussed in my book A Real Estate Agent’s Guide to the Good Life – What You Should Expect From Your Broker, early on in my career I realized it was going to be much easier (and less stressful) to take the long view for my business and create advocates for my services and expertise.
During my first year as an agent, I discovered Top Producer. At the time this was the premier real estate tool for keeping track of client information and staying in touch. It came with templates for different letters and marketing campaigns. It helped me leapfrog far more experienced agents in my office in terms of both sales and productivity.
Top Producer also made me wonder why my brokers did not run the entire office around these basic principles. I was still pretty naive about the whole independent contractor / broker relationship back then – but still I could not shake the intuition that there had to be a better way to run a brokerage.
Buffini and Company
Later in my career as a RE/MAX franchisee I was introduced to Buffini and Company. Buffini and Company is a real estate coaching company that champions systems for working by referral. When I brought their 100 Days to Greatness training program, now called Peak Producers, to the agents in my office, I began to envision a real estate office environment where working by referral was an integral part of the DNA.
I soon found that only a small percentage of my agents were willing to commit to the work and the processes that working by referral entails. After all, taking the long view is not always conducive to making next month’s mortgage payment. Nevertheless, the agents who did embrace the concepts were by far the most productive agents in my office. They were also the ones who required very little of my time.
My dream real estate office.
I started to dream about what my life would be like if the only agents I employed were agents who wanted to work by referral. What if we built a company around agents that shared my philosophy? We may not have the largest firm in town in terms of agent count, but we would likely be the most productive, and dare I dream, the happiest?
Building a company around ongoing productive relationships with our biggest fans seemed like a no-brainer to me. The icing on the cake was creating over time a predictable, sustainable, and even steadily increasing income stream. Working by referral is the first step to a profitable brokerage.
Avoiding the Commoditization Trap
One of my ongoing motivations for creating a real estate brokerage platform centered on the needs and desires of our clients is to avoid the commoditization that is sweeping our industry. Increasingly, customers and prospective clients view all real estate professionals as being alike. Consequently, many broker owners feel the only way they can survive is to cut their commissions and fees and try to compete on price. Personally, I am not interested in a pay cut.
One way to avoid the trap is to package our unique methods and processes in a fashion that authentically speaks to our desired clients. The second way is to cultivate ongoing relationships with clients where the value they receive from the service, information, and ongoing counsel we provide exceeds their expectations. The way to accomplish these twin strategies is to create a brand that communicates our unique place in the industry.
Branding
According to the American Marketing Association Dictionary, a ‘brand’ by definition is a “name, term, design, symbol, or other feature that distinguishes one seller’s product from those of others.” What sets the most successful brands apart however, is a set of documented unique methods and processes that result in a consistent and satisfying client experience.
One of the best known examples of a successful brand is McDonald’s. Not only is the brand ubiquitous and instantly recognizable, we know intuitively what it stands for. One of the pillars of the McDonald’s brand is serving consistent tasting food in thousands of restaurants all over the world. They do this through detailed unique methods and processes that each and every restaurant must adhere to. They begin the indoctrination process with new franchisees and managers at their famous Hamburger University.
Training and ongoing support is the centerpiece of all great brands and franchise operations. Training and support is the center piece of our brand as well. We ask our broker owners and managers to become Buffini and Company Certified Mentors so that they can facilitate the twelve week Peak Producer training program for new and experienced agents alike. This is the first step in our indoctrination process for our agents.
Training and Support
There is one glaring difference between a business like McDonald’s and a real estate brokerage. Every person who works at McDonald’s is an employee that receives a W2 at the end of the year. The majority of the people who work for a real estate brokerage like ours are independent contractors who receive a 1099 at the end of the year.
Most broker owners and real estate franchise operators use this as an excuse to avoid the hard work of creating a culture that both embodies and celebrates the core values we espouse. Just because we have no formal ‘control’ over our agents as traditional employers does not mean our agents will not adopt the core values and beliefs that are the basis of our unique methods and processes.
In my experience, an independent contractor who is completely responsible for their personal income and well-being will be a far more passionate evangelist for their company’s products and services than a 9 to 5 employee who simply needs a job.
I see the traditional independent contractor relationship we broker owners have with our agents as a source of great strength when it comes to building and expanding our brand. Our very best agents believe in our mission as much as I do. It goes without saying that we are 100% dependent on our agents to ensure a unique, consistent, and successful client experience.
Our Right-Fit Agents
Obviously not every licensee in the world is a good fit for our company. There may be only a few thousand agents across the United States that share our core beliefs and values. We are not a body shop. We are a premium brand that only desires to support and serve the agents that leverage the business platform and strategies we provide to the maximum possible benefit. We are looking for agents with a business owner mentality that are experts at helping people buy and sell houses.
Care to learn more?
Interested in quick dive into your personal mindsets and motivations as a real estate entrepreneur? Take 15 minutes and complete the Broker Profitability Partnership Mindset Scorecard.You will get instant results and insights into how you approach our business that you may not even be aware of.
As an added bonus, once you complete the scorecard you will receive a free book called Your Broker Profitability Mindset Scorecard – 8 Real Estate Career Mindsets Growing or Slowing Your Business Right Now.
