Yesterday, Joseph Rand said something that I’ve been saying, publicly and privately for a long time. In response to Brad Inman’s article about disruption in the real estate industry, he said, “I’m more optimistic than Brad seems to be that brokerages can adapt, and that they’re the ones in the best position to improve the client service experience.”
According to Rand, the three main reasons why brokers have allowed the possibility of disruption to occur are:
- We don’t train agents to be great at their jobs of servicing client needs.
- We don’t hire for competence.
- We don’t innovate to find better ways to service our clients
And I couldn’t agree more. A couple of years ago I wrote a post titled, Vision, Values & The Real Estate Industry. I said, “People love to blame “the model” and the independent contractor status of the individual real estate agent on the inability of real estate brokers to lead. Furthermore, they blame this model for keeping a truly consumer-centric brand from being established. I think it’s crap.” I still think it’s crap. And if I’m reading him correctly, Joseph Rand thinks it’s crap as well.
“For a generation,” Rand says, “the real estate industry has been focused not on what clients need, which is a better transactional service experience, but with what we need — more leads, more sales, more money.” I’ve never seen a business that could sustain itself over the long haul without focusing on the needs of it’s clients. True business success comes from focusing on delivering an exceptional client experience. And not just to your external clients, but to your internal clients. This is as true for real estate as it is for any other industry.
Does This Require A New Real Estate Business Model?
Put simply, no. It is not the model that is broken. Bill Leider and I started our presentation to real estate brokers at Inman Connect in New York this year with the following statement: The most dynamic challenge you face today is NOT about changing your business model; it’s about improving the way in which you execute your existing model.”
There are fundamentally sound reasons for keeping the current real estate business model:
- It thrives best when you build and sustain lasting relationships.
- The best Brokers & the best agents have the aptitude to do that well.
- The vast majority of clients are not asking you to change your model. They are asking you to improve the quality of your execution.
- When well executed, traditional models can be highly profitable.
While traditional models are portrayed as archaic and obsolete by a small, but vocal contingent of newly minted tech gurus, in fact the opposite is true. If real estate is to be disrupted, it won’t be because of technology. Great brokers will adopt the right technologies. Rand concluded with this, “if we can’t find a way to provide agents and clients value, then we get what we deserve.” Well said, and true.
Successful businesses are built on three elements: culture, brand and values. Real estate brokers need to create thick layers of value, guided by a shared core mission (vision), driven by a clearly articulated set of values and aligned squarely with the products/services desired by their clients.
This is completely within their control.