Letters to the Editor
Re: Who had the biggest impact on the real estate industry during the last 25 years?
From my university business-educated and corporately trained point of view, the biggest failure in the history of organized real estate is the total disregard of the single most important goal of any real business, and that is to earn profits.
Why does such a massive industry with enormous sales dollar volumes struggle to make profits, particularly at the sales representative level? Why does our industry have the unspeakable failure rate that no other major industry has? The truth is real estate has become a non-business-like industry. Take for example any Fortune 100 corporation – General Electric, Ford, Apple, Pepsi – in order to profit, they must function. That’s why they have entire departments devoted to critical functions: finance, accounting, compliance, sales, marketing, public relations, legal, human resources, technology, product development, customer service – and every employee brings a specific expertise to the team. Together, everyone benefits from the momentum and synergy of the collective force.
There was a time when real estate salespeople performed no other task than just “selling” and the brokerage took care of all the other critical functions required to run a real “business”. Then in the 1980s along came Re/Max and introduced the independent contractor concept to the real estate industry, and destroyed the industry as we knew it. Independent contractor also means the salesperson now has to be their own functional expert and do all the functional tasks themselves, oh yes, and find time to actually sell real estate too.
Let’s be clear, “if” an individual came into real estate, already experienced with deep knowledge of critical business functions, they could become a real estate superstar. But let’s be honest, less than one per cent of real estate salespeople become a superstar. Statistically, just about every newcomer thoroughly lacks any real skills required to become profitable. Back to independent contracting – a model that offers the salesperson the allure of keeping a higher percentage of elusive commissions and in return, for a smaller share of commissions, the brokerage no longer provides (meaningful) support in all the critical functions necessary to run a profitable business (key word, profitable).
Even more important than the gutting of business functions from our industry is the complete and utter elimination of accountability. Our industry has salespeople running around ill-equipped to do their job properly and profitably, and then lets them do whatever they want, whenever they want. It’s absurd and asinine. In the real business world (where they actually make profits) any employee who fails to show up for work, every day, on time and act like a professional, perform competently and achieve results like a professional, would simply get fired. But in real estate such existence is the norm. It’s so absurd that most brands measure their success by the size of their tribe of such “salespeople”, where by contrast in the real business world the only true measure of success is profits.
Re/Max pats itself on the back as a trailblazer for bringing innovations to our industry, but in my opinion, bringing independent contracting to real estate has proven to be the cause of the single biggest failure of our industry in the past 25 years. How ironic that Re/Max recently announced the termination of one of its franchisees, operating in a major lucrative GTA market, touted for having 350 “salespeople”, yet incapable of paying its franchise fees.
Ross Gligic
Broker of record, president
Best Real Estate Inc.
Burlington, Ont.
