Lately I've spent a good deal of time talking to brokers across the country who are evaluating their current position and weighing the merits of becoming part of an organization that can deliver resources they do not currently have.
These are challenging times. Over the past five years, commission rates have fallen from 6% to 4.9% nationally, and productivity has declined 16% to an average of just 6.49 closed units per agent. While average agent income increased from 1999 to 2004, much of that increase came at the expense of the broker. Then, in 2005, the industry showed a decline in average agent income, and the projections for the year just ended, indicate an even steeper decline.
Of greater concern is that real estate professionals and the value of their services are clearly diminished in the eyes of consumers. The most recent Harris poll shows an embarrassing 5% of consumers holding real estate agents in "high esteem."
Since the Internet broke our monopoly on information and ushered in a host of new competitors, we have faced a new reality: consumers don't see the value in what our industry does. So we can choose between two courses of action-pursue a low-price, low-service model or add value to our customers' experiences by offering value-based, comprehensive services made stronger through the convenience of one-stop shopping.
Maximizing the value of a client's treasured asset through a complex transaction is a job for a trusted advisor, skilled negotiator and expert facilitator who is in command of every part of the transaction-and who merits a full professional commission. Creating the single-source service environment in which such people can thrive requires:
1Brand. A well-branded company has the presence to credibly position itself as a full-service company.
2 Resources. It takes money to create, acquire or establish relationships with proven providers of transaction-related services and to manage these providers in a way that ensures value delivery to agents and consumers.
3 Credibility. The greatest challenge to building the single-source company is transitioning from a business of independent agents to a profession of interdependent sales partners. Agents must believe in the company and that sort of faith is best based on experience.
4 Leadership. Agents want leadership at the branch and company levels. Transforming branch managers into branch leaders requires cultural change. GMAC Company-Owned Real Estate has executed an intensive leadership development program that has transformed our branch executives into business leaders who help their sales partners identify their income goals and create and execute written business plans that advance their careers.
Only the home-services model can satisfy the expectations of our three constituencies: customers who demand a more cost-efficient and organized transaction; agents who desire more productive and rewarding careers and relief from the administrative burdens of steering the transaction through unrelated vendors; and owners who have a right to a reasonable return earned through the value delivered to the customer and the agent. – Terry Morris
Terry Morris is president/CEO of GMAC Company-Owned Real Estate. Morris heads a team of 3,800 sales professionals and 546 employees who in 2005 recorded a volume of $16.7 billion. GMAC Home Services owns real estate companies coast-to-coast with 95 branch offices in San Francisco and the Bay Area, Chicago and suburbs, metro New York, and New England, including the greater Boston market, Cape Cod and southern New Hampshire.