Real estate is a fascinating industry when it comes to making choices about something vs. nothing. Again and again, we see individual agents, brokers, Associations, MLSs, and Franchises make choices to set something when getting nothing may be the better strategy. I doubt that this article will have any change on the bearing of the industry, but in some small way it may influence one or more decisions today or this week by a few people.
Why Do We Sacrifice Long Term Success for Short Term Gain?
In our industry, people too often say “yes” to a bad deal. An example of this would be the business model whereby an agent will rebate their commission to a consumer. Why would a real estate agent accept a $500 flat fee for a transaction? Every one of us knows the hours of time and the level of training, tools, and expertise it takes to represent a consumer in a property trade. $500 is like accepting below minimum wage.
I understand the justification. We hear stories like “well, its only this transaction,” or “we will make it up in volume.” That is shear craziness. Every time a real estate agent agrees to offer their services at a loss, the feed the beast that will overrun their fair compensation. What I am trying to illustrate is that nothing would be better than something. Not accepting the loss on the transaction would be superior to accepting the $500. Whenever I make this assertion, I get no argument. Everyone agrees, but in agreement they deposit one caveat, “If I don’t take the $500, someone else will.”
Why Do We Take Unreasonable Risk with Listing Syndication?
Listing syndication is another example of saying “yes” to a bad deal – or a place when I believe that nothing is better than something. The rationale for making the bad choice of providing data with no return is rampant in our industry. An example of this common practice is turning listing syndication on for everyone. When we ask brokers about it, they say “you never know, we may get a deal.” It is the philosophy that “distribution trumps destination,” as argued by Saul Klein. WAV Group evaluates the effectiveness of syndication every day for an array of brokerages. We see a long list of destinations that do not provide a listing view. We see even more destinations that do not ever provide a lead. Many of the top syndication destinations have fallen below the watermark of one lead per listing per month!
Why do firms continue to syndicate to destinations that produce few if any results? If you think strategically about it, every competitive site that you power on the internet undermines the effectiveness of your own site – or industry sites in general. Again, nothing is better than something. At least if you turn off syndication to unproductive destinations, you have the strategic value of making sure that they will not get into your pocket in the future. Without your data, consumers will not go there.
Let’s Move the Needle – Take Action Now
The truthful reality is that there are those in our industry who will always say yes to a discounted commission, or yes to syndicating data for little gain, or the many other ways that the core of our industry is undermined. But perhaps we can move the needle just a little bit. Here is how –
- Internal Hygiene – Clean up your syndication and remove unproductive destinations. Have a talk with your agents about the issues of discounted commissions.
- Encourage others – Forward this to people to others in an effort to unify our industry around protecting the greater good.