This article is about an interaction that is growing more and more common throughout the industry. A call for consultation from three “30 something” high performance ($12M+) agents. It’s a pre-dinner exchange at a posh bar and a vegetarian dinner with a giant mushroom on the plate where the ribeye used to be. These are blessed moments.

The conversation starts out slowly because it wouldn’t be cool to suggest that there are problems in the historic paradise of those agents who are at the very top echelons of marketplace production. We talk about who is living where, the last fabulous vacation, how well everyone is doing this year, the best place to buy great shirts.

The conversation gradually shifts to reflect the realities of today’s conflicted marketplace—shared observations about current practices, recent experiences and new market variables. Questions casually arise about what is happening in other markets; thoughts about how things are changing and apparent solutions. By the time the second glass of Silver Oak hits home, the real issues have surfaced.

For years, the upper-10% group has been told and has assumed that their status, incomes and practices would be immune from the changes that are sweeping the real estate industry. Now, for the first time, they are becoming aware of the fact that the new convergence impacted marketplace, with its emphasis on profitability, will render them as irrelevant as their less productive brothers and sisters. They are also coming to grips with the fact that they have more to lose. They have begun to think about what they should be doing to protect their current market position while at the same time integrating into the new practice model.

The first step agents must take to protect their future positions is to gain a conversational expertise on exactly what is happening in the American real estate industry today. After being told for many years that you are invulnerable, it is a major wakeup to suddenly realize that your survival isn’t a matter of self-determination. Positioning oneself to be knowledgeable also puts one face to face with the industry’s silence regarding current directions. It is so bad that it’s actually possible to attend some of the most important industry meetings without hearing a single thing about current challenges or future directions.

Consider the following (a checklist format has been incorporated so this material may be used for discussion purposes):

The current brokerage environment is a very complicated one.

  • Few brokerages have made a market-level profit during the past five years.
  • Many are near the end of their financial resources and most have been unable to make necessary capital improvements.
  • Few, if any, sales or acquisitions are occurring other than “shotgun marriages.”
  • Most have been operating on minimal staff and a very liquid bricks and mortar formula.
  • The average age of brokers is 60+.
  • There is little or no capital in the sector except that coming from parent company donations and broker asset liquidation.
  • Few brokerages have created transition plans and fewer yet are discussing future options with their agents for fear of breakage.

Brokerage relationships are and will continue to be critical to agent careers.

  • Moving forward, much of the business will be controlled by larger entities who either have powerful Internet and consumer positions or relationships with those who do.
  • Productivity, accountability, profitability, specialization, standardization and transaction management will be hallmarks of these entities.
  • These entities are not likely to enter into agent relationships that are not capable of generating market-level profitability.
  • Without a clear and compelling plan which includes appropriate synergistic agent relationships, a brokerage is not likely to succeed in this new environment.

Agents must understand what they can’t control.

  • The economics of free enterprise
  • If primary function is to drive profitability.
  • Function will inure to an entity that can integrate it into a profitable package
  • A $2+ trillion industry will not be allowed to drift within the economy.

The realities of the consumer control

  • You will not be allowed to operate out of your car.
  • Consumers will want the strength and stability of an organizational structure of some kind.
  • Perhaps your team will morph into a brokerage but how will that help you?

Focus on what you can control.

  • In all likelihood, you will spend the remainder of your real estate career with some manner of vision/plan/structure.
  • You will want to be situated when the economy settles into its new configuration and consumer centricity reaches its zenith.
  • During the next 18 months, you have an opportunity to make decisions about what kind of structure you can accept and support
  • The agent must know what kind of vision plan structure to join.
  • The agent must be willing to work to create and contribute to that kind of vision/structure.
  • The agent can determine the characteristics of a structure that would be acceptable and compatible so long as it meets the ROI requirements.

Here are some recommendations:

  • The broker must be a leader who is willing to be in control.
  • That leader must have a documented vision that can be articulated; “trust me” is not acceptable.
  • That leader must be willing to share the vision plan, and the execution.
  • Your leader must be willing to help you navigate an agreed upon career path.
  • The agent must be willing to merge their career with the vision plan.

The vision/plan must have the following traits:

  • It must include a detailed succession plan.
  • It must generate a market-level profit and ROI.
  • It must be able to grow and prosper within the chaos of extreme competition.
  • It must be consumer-centric.
  • It must be Internet-fused.
  • It must have standards of practice.
  • It must provide the agent with a comprehensive data package.
  • It must demand and receive universal accountability.
  • It must utilize acceptable financial management procedures.
  • It must have an enlightened corporate management team.

This is an amazing time to be in our industry, but the practices of the past several years that have contributed to its current distress will not long prevail. Agent/brokerage relationships will be critical moving forward, but many will not be agent-only negotiable. There are a maximum number of practice options for agents who are willing to become part of a profitable, productive and structured brokerage team.

Talk to your broker today about the road ahead. Be knowledgeable and demonstrate your understanding of how the new environment will impact your practice. It may be one of the most important conversations of your career.