When Your Brokerage Becomes Your Top Competitor

[dropcap character=”I” color=”green”]I have written a great deal about our evolving industry and the decline of large firms and national or regional brands. These realities were seminal in our thinking as we were forced to consider not becoming part of a franchise. In the 6 years since Bella Casa’s inception the data has strongly supported our conclusions that we could be more successful as a powerful local brand and better for our brokers if we were not saddled with extra expenses. In the recent housing depression, we would most certainly have failed if we had gone the traditional route!

There is one more little-known secret I would like you to think about as you consider your next career home. The declining brands are systematically becoming direct competitors of the very agents who give their money to keep them in existence! The changes stem from the fact that these behemoth organizations are suffering from declining revenues as we witness an explosion of small and local brands, and agents functioning as sole practitioners. Additionally, tough competitors raise the expectation of agents (splits and caps) so the contribution of each agent to the franchise is shrinking. The solutions for this problem are either to expand and grow numerically (something almost impossible in this market and our new age), or raise franchise fees, commission contributions, add numerous fees and expenses, or develop more income streams through affiliated businesses which the agents are pressured to use. But there is a third way to counter their financial losses…

What assets do large firms have that they can take advantage of? What is their core competency that can be put to good use to increase profits? They are big, they have enormous reach into almost every market, they have brand recognition, and they already have a significant web presence. Think like a business person; what would you do?

If I cannot grow the number of agents (the problem is that I am destined to lose more), and I cannot find more fees and income streams for them to pay, then I will find what the agents need and sell them to our own brokers, for example, someone similar to this Forex Broker who may be able to help them! Becoming part of the investment world can be a little daunting to those who are new to stock trading. However, there are some companies such as IronFX that might be able to help by giving you financial advice when it comes to the stock market and trading. What does every new agent need and all other agents want more of? Leads!

And so today, many of the national companies have become middle men in our industry. They have shifted from serving their customers to fleecing them. They use their assets to steer prospective buyers and sellers to their websites, harvest their contact information and search information in order to sell them back to their own people for referral rates we understand to be from 35% to 50% of the commission generated.

Many of us recognize that this is the business plan of a lot of internet companies. Up until the housing industry crash, there was an explosion of mortgage and real estate related companies online through which national advertising sought to glean contact information of seekers and horde internet traffic so they can sell them to Realtors® and mortgage brokers. These companies exist only online and there is little to no value added service, they just sell the leads for monthly fees or commission splits. When Realtors® buy these leads (often out of desperation), they only feed the beast which will one day enslave the real estate industry. It is free enterprise at work when entrepreneurial companies create such enterprises and we should admire their savvy instincts and initiative where opportunity is found. But when our own mother or father does it to us – is that natural and right?

The current recession has thinned the ranks of these companies because real estate has not been profitable for over 3 years. This is actually good for the national real estate companies. Real estate is their core competency and they can add true value-added services for these web travelers. The opportunity now is to buy some of these entities or create other ones and use them as stealth sites to corner internet traffic. It is also to use their own well known websites to collect valuable leads, and then sell them to the people motivated to buy them.

Real estate agents are hungry, poor, and needy. They may not be able to pay up front but they will pay if it comes out of a commission split. If I make only half of what I normally would, half is still better than nothing. Of course some will be willing to pay less up front for more leads to work with. Most often, these leads are not qualified in any way, they are just the addresses of internet surfers who have visited a real estate site.

What Should You Do?

  1. Consider carefully whether to pay for internet leads from any entity.
  2. Find out what other websites your national brand or franchises own. They may be real estate search sites (stealth sites) or mortgage related, foreclosure related sites etc.
  3. Ask about the availability of leads from your franchise company and what the costs are. How are they dispensed, as select favors or for sale?
  4. One symptom to check to see if your company practices being a middle man is this: Go to the national brand site, the corporate HQ on the internet, and search in their site, (not through google etc) to see if you can find yourself. If you cannot get to all local agents at all, or in a few clicks, then this site is being funded by you to be a competitor of yours.
  5. Develop your own systems and methods for finding leads directly and develop your own marketing presence so that anyone on the planet can find you directly. In an age of technology, you do not need the middlemen to become successful. You can be successful because of your own initiative and according to your own designs.

Meet Our Agents
Randy McCreith, Principal Broker
Bella Casa Real Estate Group