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RISMedia’s 2012 Real Estate CEO Exchange: A Forward Look at Making 2013 Your Shake-Out and Break-Out Year

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By Barbara Pronin

If there was an overriding theme to RISMedia’s 2012 Real Estate CEO Exchange, which brought a cross section of the real estate industry’s top movers and shakers to New York City’s Yale Club in early September, it was that 2013 will be the year for brokers to take back the industry; to find your sweet spot, define your own unique niche, and take the leap forward into what could be a break-out year.

“It’s time to candidly examine what we are doing today,” noted RISMedia President and CEO John Featherston, “and to formulate new strategies armed with an arsenal of innovative tools and programs designed to boost business and increase prosperity as the real estate recovery takes hold.”

A recent Ernst & Young survey disclosed that 85 percent of major homebuilders expect to break even or realize net income in 2012 and anticipate major expansion in the coming months, Featherston said—and a poll of chief financial officers at public and private companies last spring reveals “cautious optimism” that the single-family market has achieved stability and is poised for the next growth spurt.

RISMedia’s informal poll of participating broker/owners divulges much the same optimism.

“The underpinnings of homeownership—the consumer’s innate sense of value, community, investment potential, and a place to call home—are alive and well,” noted Ron Peltier, chairman and chief executive of HomeServices of America. “Demand is growing, inventory is low, and interest rates are at an all-time low. This is a time to think differently, stay in control, and be ready to capitalize on expanding opportunities with a plan to meet changing demands.”

Finding your sweet spot, Peltier explained, is not about size or strength. It’s about finding ways to do more with less in order to prosper in the “new normal.”

To help brokers recognize and meet today’s challenges, the day-and-a-half-long CEO Exchange featured a powerhouse slate of industry leaders representing brokerage firms from across the nation, major franchise brands, real estate and association executives, leading mortgage lenders, and a select group of key service providers who are partnering with the brokerage community to more effectively serve today’s sophisticated consumer.

“We have reached a turning point,” asserted Better Homes and Gardens Real Estate Mason-MacDuffie Chairman Ed Krafchow. “In California, it’s a Goldilocks market, moving quickly from cool to hot. We’ve hired 22 agents in the last 60 days as we scratch for inventory and watch average selling prices climb. But the challenges today are very different. We don’t talk about desk space or drip mail marketing or even social media. We talk about social commerce, how many images we’re creating, and how many virtual open houses.”

The switch from “bricks to clicks” is almost universal as brokers begin to think outside of traditional business models and search out innovative solutions for building business and retaining top producers.

Breaking Ground for a New Business Model

“What you do with your physical space is vital,” said Bill Plattos, executive vice president of First Team Real Estate in California’s Orange County. “Each time the market changes, we make strategic decisions about space and agents, carefully downsizing based on who is producing and in what aspects of the business.”

RE/MAX Gateway President Scott MacDonald is opting for smaller offices in better locations—and Coldwell Banker Platinum Partners President Connie Farmer Ray knows strategic downsizing is key.

“We’ve gone from 13 offices to seven in Georgia and the Carolinas,” she said. “But because consumer expectations are changing, we’ve actually grown our IT and marketing departments to maximize our efforts in those areas. We’re doing everything we can to make consumers feel they are a vital part of our company…they can chat live online with agents, watch relevant videos—anything we can do to keep them coming back.”

Exchanging bricks and mortar for technical consumer reach is one way to break out of your old operating model. But for Helen Hanna Casey, the finance-focused president of Howard Hanna Real Estate, the focus is on creating profitable financing solutions and lucrative banking relationships.

“The future has less to do with what the economy does and more to do with running your business like a business,” she said. “Debt ratio to equity is supremely important, and you can’t overvalue the importance of your banking relationships. We send our financials to 10 banks regularly. Court the banks and they will soon be courting you.”

Technology Turning Points

At the same time, we need to be leveraging mobile technology to engage consumers, create brand awareness and capture unique consumer data, noted John Lim, chief executive officer of Mobile Real Estate, a mobile marketing and technology company whose OSM Partners has performed successful marketing initiatives for major companies, including Anheuser-Bush and the National Football League.

“Your migration to mobile technology should be doing more than supporting your online presence,” Lim said. “It’s changing the way real estate happens forever, and it needs to be making you money.”

In the past year, he pointed out, more than 100 billion searches transpired on Google mobile, including the 20 percent of consumers who went to Google for real estate searches.

“For brokers, as for all business people, the Holy Grail is to be on top of that Google search list,” Lim said, “and there are definitely ways to do that in your local market. That is the focus of our business.”

But if mobility becomes ever more important as physical space is reduced, so do rapidly changing developments in social commerce and interactive marketing.

“Shiny objects come and go,” noted Ken Jenny, managing partner of Mediatise, LLC and a recognized expert on real estate marketing. “Before you dream up—or pay for—questionable solutions, you need to put an empty chair in your office to represent the consumer and ask it, ‘What do you think? How do you want to do business?’”

For John Reinhardt, CEO of New York’s Fillmore Real Estate, it’s “bricks to clicks to tricks,” like an alert program or “matchmaker system” that delivers data to customers in the precise way they want it delivered—and even helps identify why a consumer purchased a property from another company instead of through the listing agent.

For focus group advocate Walt Baczkowski, vice president of sales and marketing for Point2 Technology, it’s developing relationships with MLSs, brokers and franchises and syndicating listing data and Web solutions that give the agent specific tips on what a consumer is looking for. The company currently pushes 1.3 million listings daily to more than 70 real estate portals.

For Century 21 Award President David Romero, it’s spending 20 minutes on his smartphone each morning—all it takes him via Facebook, YouTube and his personal blogs to share culture, relate to agents, provide pertinent content and company updates, and otherwise promote and encourage a more productive work day for all.

“Mobile technology is a game changer,” said Lim. “It has changed consumer behavior forever, and it should vault mobile strategies to the very top of every broker’s to-do list.”

Increasing Marketshare – Your Way

The signs are clear in most regions, CEO Exchange speakers agreed, that it’s time for brokers to emerge out of safety mode; to assess the gradually recovering market and look for new ways to turn it to advantage.

“Like everything else in the ‘new normal,’ increasing marketshare takes decisiveness and original thought,” observed Featherston. “It’s time to find your niche, expand your horizons and develop new revenue streams—and to strike now, while the iron is hot.”

Rick Davidson, president and CEO of Century 21® Real Estate, looks to leveraging the global marketplace. “International marketing is an $82 billion opportunity,” he said. “Foreign investors see the United States as a safe haven for investment, and one that’s filled with incredible value. Use social networking and explore relationships with industry trade groups like the National Association of Hispanic Real Estate Professionals (NAHREP) and the Asian American Real Estate Association (AAREA) to develop marketing and referral systems that work for you.”

For Coach REALTORS® Co-owner Georgianna Finn, increased revenue is about acquisitions and roll-ins that build brand and footprint—while Todd Hetherington, CEO of Century 21 New Millennium, sees the targeted recruiting of dynamic leaders and superior coaching as key to growing from within.

“Mainly,” said Hunt Real Estate ERA President Peter Hunt, “increasing marketshare is a matter of executive vision—having a concrete business development plan, analyzing branch by branch and person by person, allotting space to productivity and creating innovative training programs and marketing pieces.”

Linda Sherrer, president of Florida’s Prudential Network Realty, has been focused on sustaining and gaining marketshare via several important niche markets: REOs and builder services, and fine-tuning the goals of the company’s relocation department to center on corporate destination and departure services, especially in international settings.

“Moving forward in each of these areas,” she said, “has helped us retain talent and produce revenue during the downturn and leaves us poised now for further expansion as the economy and the markets improve.”

Building a new business model as a full-service company is also the goal of Steve Rodgers, president of Real Living Lifestyles in California, whose “Angie’s List meets Amazon” approach fills client needs ranging from concierge home services to video production—largely through establishing affinity relationships with local providers.

“We see ourselves as a conduit to consumers,” he said. “We’re turning services into revenue streams, and our goal is to have our top agents share in the success of the concept.”

A Dash of Uncertainty

Whatever the vision of inventive industry executives—and the visions are many and varied in the wake of today’s increasingly hospitable environment—there are several key pieces of unfinished business in the Legislature that could upend a fragile market recovery by casting a cloud over affordable mortgage lending.

Pending rulings on the Qualified Mortgage and Qualified Residential Mortgage mandated by the Dodd-Frank Act, and the Federal Reserve’s recently proposed Basel III international capital standards, could severely tighten an already rigid credit market and reduce mortgage provider choice, observed Ken Trepeta, director of real estate services for the National Association of REALTORS®.

“Banks and the real estate industry must advocate for sanity among legislators,” Trepeta said. “It is critical that legislators ‘do no harm’ to consumers, the economy or the housing market via these disruptive proposals—or by the potentially disastrous removal of the mortgage interest deduction.”

NAR is taking the lead in the effort to ensure that legislators do the right thing, he noted. Brokers are urged to keep abreast of the facts as reported on realtor.org—and to take an active role in the effort by sending letters and emails to their local legislators and developing a “pre-fab” letter that every agent can quickly “click to send.”

The Path Forward

Anyone who has ever carried a thick MLS book under one arm knows what it means to be relevant. Back in the day, the agent was gatekeeper to the listings, conduit to the lender, and literal keeper of the keys.

But consumers today know everything. They have instant access to the facts and figures that once were exclusive to brokers. What, if anything, remains strictly within the broker’s purview? How do we ensure we remain relevant to consumers going forward?

“Be relevant first to your agents,” suggested Kevin Levent, president of Better Homes and Gardens Real Estate Metro Brokers in Atlanta, where distressed properties still make up a large percentage of the market. “Even FSBOs need us in bad times and in good. Motivate agents by ensuring their intimate knowledge of the local market, and arm them with the tools and social mobility skills they need to connect with buyers of the future.”

No matter how much the consumer knows, noted Houston Association of REALTORS® President Bob Hale, only the agent knows the history and lore of every house in every neighborhood.

“Business intelligence is crucial,” said John Heithaus of MRIS, one of the nation’s largest MLS systems. “You need to pass it to your agent and mobilize and socialize everything.”

“We can’t afford to be our father’s Oldsmobile,” summed up Featherston—“or to stand still as the world turns around us. Maintaining and expanding relevance is crucial. If you’re not there first, somebody else will be.”

Heard in the Hallways: CEO Exchange Takeaways

Reports coming in appear to be universal. Inventory is down, ASPs are climbing, and sales are up in just about every category. Brokers recognize that full recovery depends on job creation, the lending environment, and factors outside the range of industry control. Still, there was no shortage of optimism or ideas, and as we roamed the hallways and listened to the informal chatter, we picked up on some sage observations:

• A gradual recovery is better than a fast one; it’s time to drill down, re-think and repurpose.
• The consumer is changing faster than the industry; you have to be ahead of the curve.
• The world wants to buy here. It’s an invitation to expand your international horizons.
• To rightsize correctly, you have to control occupancy cost, marketing expense and employee count.
• Find your sweet spot by measuring expense against per-agent productivity—and then increase the productivity.
• ROI? Think about craigslist for marketing low-priced properties.
• Less is more; reducing brick and mortar is seamless if you unload square footage as leases come up for renewal and jump in with both feet to the mobile and virtual world.
• Relevancy is a matter of market intelligence; find a way to get it first and pass it on to your agents.
• Raise the bar on ethics and local insight. Nothing keeps us more relevant to consumers than good advice and information they can’t get anywhere else.
• Create thought leaders out of your agents; it’s what will set them apart from the competition.

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