By Bill Hubbard
Selling real estate 40 years ago was a very different job than it is today. Brokerages were brokerages. They brought something to the table for their Realtors. Companies generally took 50 per cent of the gross commissions earned but they handled all the marketing and advertising in return for those fees. Brokerages were partners with the sales reps in the business of finding and servicing buyers and sellers. Then the pendulum swung.
Independent contractor status swung into the business and the birth of the 100-per-cent concept was born. Brokerages stopped being brokerages and started being landlords. They sold a brand and they sold space and called it a desk fee.
Some companies refused to adapt and tried desperately to hang onto those high fees and the old model of doing business. If those companies hung onto their old concepts of the business, they did not survive. Franchisees and franchisors and independents all had to eventually assume that the fees had to be reduced if they were going to compete and survive. The salesperson had spoken and we as brokerages had to listen.
The real estate business continued on like this for a couple of decades. Then something happened. The birth of the Internet has changed this business for ever. It took our product away.
Our product in the ’60s, ’70s and ’80s was information. We had The Book – our MLS book. Not long after we started showing houses to a buyer with our MLS catalogues, the buyer realized that they had to have that book. But we were forbidden to give it to them even though a lot of us did – but just as a tease. We would never just give away our product, the information. That would be like being a car salesperson and coming to work Monday morning and all the cars had been given away on the weekend because the owner had gone mad. The salespeople would wander around the lot wondering what to do.
But that is exactly what the Internet did to our business. It gave the information away – free, if you can believe it. All of a sudden we had an entire industry that had to find a new product. We had to find a new way to bring value to the table.
That value had to be service and expertise. It was the only way to distinguish ourselves from our only real competitors, the buyers and sellers themselves. Because Realtors were independent business people now and the Internet had changed their product, they now had to find a way distinguish themselves as a better, more profitable way to sell or buy a home compared to the buyers and sellers doing it by themselves. Not only that, throw in a new business model that is showing the sellers how to sell their home online for little or no money. Imagine that.
Realtors in the ’90s and right into the first decade of the 21st century were focused on one major advertising ploy, search engine optimization (SEO). This was challenging and hard work with lots of late nights. How do I get my listings to come up before anyone else’s listings? Then the last knife got thrown into the backs of the over-worked Realtors of the early 2000s: Web 2.0.
In this broker’s opinion, social media is the final weight that is going to swing the pendulum back. It all dawned on me when I was sitting in my office with one of my Realtors discussing her goals for the next year. She was crying. She said, “Bill, I am working twice as hard as I did last year and making half as much money. I am up until one or two in the morning doing YouTube videos, Facebook ads, Kijiji ads, Craigslist ads and Castanet ads and then trying to do all the communications with my clients as well.”
A light went on in my head. The pendulum was swinging back. Realtors needed brokerages again. Right around that time I was introduced to a very different brokerage model in Kelowna B.C. that was so far outside the box I could not believe it was actually working. Ken and Grant Wiebe, a father and son team, owned the Century 21 office in Kelowna and had created a compensation plan called Vision 25. In this plan the brokerage took back control of the marketing and advertising. They sent out a professional photographer to take the pictures, they supplied and installed the signs, they did all the social media marketing including YouTube. They also sent newsletters to all the Realtor’s client base and they did it all for the same split as I was charging.
I later found out that the name Vision 25 came from the notion that the program was predicted to increase the effectiveness of the Realtor so they did 25 per cent more production than the board averages. When they made more money the brokerage made more money and that would finance the new services. Gutsy call if you ask me.
To shorten up the story, it worked. The sales reps’ average production gradually increased to the point where it not only financed the program but made the office more profitable as well.
We now believe that the real estate industry is heading towards a shake up. To survive, brokerages are going to have to stop being landlords and go back to being brokerages. There will be no room for the middle of the road brokerages. There will be a market for people who want to do it themselves and there will be a market for people who want the absolute best in marketing, advertising, expertise and service.
We have since purchased the office in Kelowna and have converted our Vernon and Enderby B.C. offices to Vision 25 as well. The system has held true to its original form. Our customers are getting a level of service and marketing that far exceeds where most brokerages are at. We are supplying those services to our Realtors for no additional costs and our profits are up because our Realtor’s incomes are up in a market where times are tough. The pendulum swung and we are back to being partners with our Realtors, sharing the responsibilities of great service to our customers.
Bill Hubbard is owner/broker of Century 21 Executives Realty in Vernon and Enderby B.C. and Century 21 Assurance in Kelowna BC. He is a 23-year veteran Realtor, and an author and trainer. His book, the Encyclopedia of Selling Real Estate, is designed as an training manual for Realtors.
