Originally published 5/6/2008, this blog entry comes to mind as one of the key decisions still left taken by the real estate industry in 2010. After meeting a few companies that are testing out such approaches, we thought it would be constructive to refloat this idea into the minds of our clients. Let’s see if the current market makes them a little more receptive to the concept that performance, not process, matters most….

Ok, stop shrieking. Take a breath. Think this out with me…

There is only one form of competitive performance that matters in business. Did the consumer actually buy from you? That’s it. Whether it’s measured by listing their home with you or buying a home with your help, if consumers are paying you, that means your company is generating value for them. And that’s the only rational and measurable metric of “success” in business.

It’s also one of the best indicators of your future performance. Actual success is the best indicator of future success.

Now consider how this applies to new leads – potential new clients – and how they are handled at your real estate firm. In other industries, if  you sell a product – like a computer or a stock – your personal qualifications to receive the “best leads” from the company is directly determined by the number of consumers who actually bought from you in the immediate past. In most sales industries sales, the only measurement of performance is, well, performance!

Now, back to real estate leads. Today, most companies generate the vast majority of new leads for their agents. They do this through various forms of advertising. These leads arrive as consumers who walk into the office, call by phone or inquire by email. Each lead – which we ought to really call potential customer – costs a lot of money to generate. Yet the vast majority of these prospects fail to actually buy our products and services, even though the same majority eventually buy those services from another company in the next 12 months.

So the consumer isn’t broken. Even in this market, the trouble isn’t that the consumer isn’t buying real estate services; It is that most companies are failing to convert the consumers into deals a greater proportion of the time. So their marketing is working. The problem is their sales intake process.

It’s the case offline and online. Offline, telephone calls, property showings and open house have a huge failure rate to create paying buyers or sellers. Open houses are the premier example. Virtually no sales activity is conducted at an open house. It should be called “house sitting” in most cases. The vast majority of visitors to an open house do not purchase the house they visited or any other house from the agent whom they just met there. In other words, the agent failed to convert the consumer into a customer of that house or any house.

Online, it’s worse. Even scary. In recent studies of brokerages, the average number of leads that are simply abandoned by agents within the first 72 hours is 88%. This means that nine out of ten potential customers never become actual customers of the company. The marketing worked to catch their attention and encourage them to inquire. Yet for some reason, they aren’t actually buying. We could blame the “product” for not turning them into customers – but we all know who chooses the houses and sets the prices they are offered at, so that would be dishonest. In truth, the failure to turn most prospects into customers isn’t because of the commodity we offer; it’s because of something else.

That something else is our new business sales process. Today we call that “leads management” but for most of the industry’s history, we called it “turning leads into deals.” No matter what we call it, the process is gravely dysfunctional at most brokerages today.

Traditionally, most brokerages assign  company-generated leads to an agent according to arcane rules of “fair play.” Essentially, they assign leads to agents based upon non-performance standards. For example, if a consumer sends an email to a broker requesting help purchasing a home in “Andover” the broker usually finds an agent who claims that market area. Simply put, their “territory” on a piece of paper includes Andover. So agents can “claim” leads based upon arbitrary personal preferences.

The broker rarely asks himself, Who has sold the most homes for us in Andover in last month or year?

The same is true for most other criteria like house type or price. If a consumer is interested in a luxury property, the broker matches them up with someone who has taken a “luxury property course” not necessarily the agent who has sold the most number of luxury homes recently. Some agent says they “work with renters” and we direct renter leads to them. Another agent says they are “qualified” to work with land, and we zip land-requests to them. Everyone scrambles to claim their qualifications so they can get more leads. The result is that everyone is qualified for everything, so we’re back to legacy “round robin” lead distribution. And if the numbers are be believed most of everyone isn’t converting any of the leads into actual sales.

If brokers wanted to convert more leads, they need to radically rethink their lead assignment system. Performance is what matters. The only measure of an agent’s qualification to be considered with the high-value opportunity of a potential new consumer is their actual past performance turning leads into deals. Period.

Look at it another way: when you go to the hospital for an appendectomy, do you want the surgeon who is “qualified” to do the surgery because it’s on their general resume, even though they haven’t done one in years? Or, do you want the doctor who does ten appendectomies a week and every patient goes home fine? Do you want the mechanic who can make a flyer saying he works on Mercedes cars, or the mechanic who repairs ten S-class models a week reliably and consistently?

Do new consumers want to work with “qualified” agents or “performing” ones?

Leads are too expensive and too important to simply hand out to the next agent in line. Brokers are converting a paltry percentage of their potential business: Averages are 2% or 3% of online leads, and only slightly more of walk-ins and calls. Agents throw away most leads handed to them: our research indicates that they simply give up after a few contact attempts. The most common reason leads are abandoned is that  ”the consumer didn’t call them back.”

Each lead thrown away is company dollars down the drain. Perhaps companies had this money to burn in days gone buy, but today it’s unlikely they can sustain such a leads management approach. For many reasons – mostly due to lack of manager oversight – most agents treat incoming leads very poorly. They either don’t have the skill or the stamina to work with consumers who are taking their time approaching a volatile market. And they have been empowered to discard – cherry pick, we say – the vast majority of new business that somebody paid to generate. No wonder marketing budgets are going bust.

To turn this situation around, here are three radical leads management ideas whose time has come:

1. Assign new leads to agents who actually convert them. Pick a start date and set everyone’s record at “zero.” Then look back at the last six months of performance. Rank agents according to their actual results, not the towns, property types or price ranges they prefer to work in. Now match incoming leads to those people whose performance record warrants it. Send more leads to the top performers.
2. For everyone else whose performance record is yet to warrant the opportunity of expensive new company generated leads, create an opportunity window. Assign each agent three new leads. Then monitor and measure what they do to them. It’s possible those customers won’t become deals for perfectly legitimate reasons: they are working with another agent, they lost their jobs, whatever. But at the very least, measure the tenacity, stamina and process the agent applied making the absolute best effort to turn that lead into business. Based upon the test leads, qualify or disqualify them for future leads. Then send them back to training.
3. After six months, start incorporating new consumer feedback into the criteria for qualification. While we certainly want to give leads to agents who can close deals, if they can’t create customer service experiences that generate future referrals and repeat business, then they are good but not great. Considering the vast majority of new business in real estate is referral generated, the customer satisfaction element is a critical metric of leads management performance. Survey every consumer from every closed deal. Rank important feedback related to their experience. Collect that information and incorporate it into a new filter for agent performance. Many other companies do this (see Guru.com, where service providers can sell their services online but their customers can “rank” them online which helps new customers evaluate them for new projects).

If you do even one of these three steps, here’s what you’ll get. More paying customers. Happier customers. And natural attrition of non-performing agents. Plus more profit. You’ll be converting more leads because you’ll be assigning them to people with track records of converting leads.

It’s possible that after time, you’ll end up with a few of agents with high conversion rankings and good consumer feedback. So you might have to return to a “round robin” distribution of leads amongst these top performers. All of your non-performing agents will have left (or been fired) so you’ll have the unfortunate problem of evenly distributing business to a few agents who will be converting a high percentage of it.

What a nice problem to have!

This article appears in this month’s e-newsletter from the Women’s Council of REALTORS website.  If you haven’t become a member of WCR, we strongly encourage you to consider joining today! – MF

The answer comes from a simple change of words. Rather than “social networking,” try viewing it as “social network prospecting.” Add one word to the activity, and so much of what needs to be done, and left un-done, becomes crystal clear.

Creating Valuable Dialogue

If we think of social networks as modern prospecting tools, we suddenly have purpose for adding Facebook and LinkedIn to our daily activities. Social media offers a chance to communicate with prospects and clients. Unlike traditional one-way media, social media creates dialogue with our sphere of influence. And dialogue is critical to creating prospecting outcomes, especially referrals and repeat business.

It is different than our social networks with family members. Certainly let your hair down when updating and sharing with your inner circle of relatives and friends. However, where social networking meets your business sphere, it’s critical to remember what you’re supposed to be doing online — prospecting by building and maintaining business-valuable relationships.

Social prospecting changes what you might post on your wall. Gone are the updates of today’s breakfast cereal or latest weather patterns, because your prospects’ time and attention is too valuable to inundate with mundania. Likewise, many advertising activities should be off-limits in new media – especially incessant and irrelevant postings of the latest listings, price changes and open house times.

If you are prospecting, why is such seemingly real-estate-specific content off limits? Because announcing new listings and price changes amounts to advertising, not prospecting. It’s announcing, not engaging. It talks “at” your sphere of influence, not “with” them – and it’s the fastest way to get them to disconnect from your presence. It doesn’t add value, because if they are interested they already can obtain such information from your Web site and/or e-mail alerts.

More simply, it makes no sense to spam your sphere’s wall with such content because you’d never do it in person. If you were meeting a past client for lunch, would you whip out your latest listing sheet before ordering drinks? Would you interrupt every topic with the latest price reductions scrolling across your smartphone? Of course not. You’d talk to them, ask them what’s important to them and engage with them, not your products. As in real life, so in virtual life.

Prospecting with social media requires the highest form of relationship management: community. It is about maintaining relationships between people, not products. Otherwise social media becomes just another Sears catalogue of your stuff. And people stop visiting. Prospecting by building relationships means social media activities become easier, clearer and more likely to help you reach your goal of building more business.

In fact, good social media prospecting can be done without “updating” anyone on anything. Really. You can create and reinforce relationships without being the primary talker. As long as you’re the best listener.

Let your sphere of influence do all the talking. Just be watching and learning, and when necessary, posting helpful comments on a conversation they started. Suddenly you don’t have to think about what you’re going to say, post, link, photograph or update at all. You simply have to look, listen, read and learn. And be there at the right time. Social networks will even notify you – if you’ve missed a comment, of an upcoming birthday, of someone you haven’t connected with in a while and so on. Prospecting couldn’t be easier.

A Constant Flow of Opportunity

In the top 10 reasons people buy or sell real estate, listing sheets, open house updates or even price updates are never mentioned. Nor tax credits, Web sites and so on. Certainly not postcards or newspapers.
People buy or sell real estate because of things that happen in their lives. They get married or unmarried. They get promoted or fired. They have another baby or the youngest finally goes off to college. They are entering the workforce or leaving it. This is why people buy or sell real estate and when they need a REALTOR®.

In the old days, learning about these things from our prospects was hard, almost impossible. They didn’t want to spend time with us on the phone. They shied away from personal conversations at open houses or when trapped in our cars. Asking consumers to open up took a huge leap of faith, even when they were past clients.

In modern times, it’s exactly the opposite. Everyone wears their life on their sleeve and their “wall.” Everything and anything happening to them is posted, tweeted and texted to the entire universe and to you. “Joe is retiring. Sally got married. Betty is having another baby.” Things that create a need to buy or sell real estate are public information. It’s right there for the picking if we know what we’re supposed to be doing online: prospecting.

Social media prospecting is better than being a spy. It’s like telepathy for our sphere of influence. You can see exactly when to reach out and touch someone with a comment, an e-mail or even (gasp) a telephone call. More likely you’ll have to text Gen Y, who doesn’t answer the phone, but they will be first to tell you what’s happening in their lives. Social media prospecting means a constant flow of opportunity for well-connected sales professionals.

Of all the ways we make selling real estate harder than it has to be, social media doesn’t have to be one of them. I suspect we didn’t like prospecting by phone, so we invented the Do Not Call List. Now it’s nearly illegal to phone a prospect. We can’t afford prospecting by postcard, which is fine because it’s colossally ineffective unless your target market is postal workers. Even open houses – perhaps the last place to meet new customers face-to-face – have suffered from agents who scrunch their noses at nosy neighbors who stop by. At some point we’re going to run out of ways to build our business without busting our budgets.

So try calling it social media prospecting and see what happens. Suddenly a Facebook page isn’t such a scary necessity for generating referrals and repeat business. Focus on prospecting, not advertising or announcing, for clarity on how to interact. Watch, listen, learn and then place a judicial comment or two. You don’t have to say much or often, to be in the right place at the right time. And it’s about time you started prospecting with social media.

Ford is the best historical example of the Failure Mindset: Where it once dominated the automobile industry, its “you can have any color you want, as long as it’s black,” mentality led it within a few short years to a second- and then third-tier spot in the business. Other companies followed the same path. Motorola once held the largest share of the cell phone market with its popular Razr phone; then slipped into obscurity after its “we’ll stick to this model” formula left it out of touch with increasingly savvy younger customers. And IBM’s story is legend: From global pacesetter to near-bankruptcy in one generation, the stories of how “the IBM way” tried to rewrite its customers’ businesses rather than support them are basic reading for how not to run a corporation in the modern economy.

One might think that with such clear examples over the last century that modern businesses would clearly understand and avoid the Failure Mindset. Wouldn’t a constant policy of  innovation and customer responsiveness be the standard, not the exception, in the 21st century? Obviously not, especially in legacy industries like booksellers and real estate brokers.

Barnes and Noble is a case in point for the Failure Mindset. A simple anecdote explains it all. Yesterday I ventured into the bricks-and-mortar of the local B&N for the last time. Not just because I am a proficient consumer who does more than 50% of his shopping online already. But because the experience of the Failure Mindset was so pervasive that B&N might not even earn my online business in the future, either.

Browsing the bookstore on a chilly winter Sunday afternoon isn’t shopping; it’s a pass-time that used to involve sipping coffee while getting started on your new book. Except that I couldn’t find the book I wanted, because I had forgotten the author’s name. It was then that I encountered the Failure Mindset.

I expected to find no employees on the floor – razor-thin margins limiting staff these days. What I didn’t expect was a complete obliviousness to the modern consumer: There wasn’t a single computer anywhere I could use to search for the book I wished to purchase.

There were two computers on each floor, but both were unattended by staff. As a Gen X’er, I attempted to access them anyway, but they were blocked by passwords. After looking around in frustration for another machine, I got into the checkout line. When my turn came, I asked if there was a computer somewhere I could use to search whether my desired book was in stock and where it might be located.

That’s where I experienced the Failure Mindset full force. I was told that there were no computers for customers to use. I had to tell the staff what I was looking for and they could look it up for me. When I replied that there were no staff to ask on the floor, I was smugly told that I was talking to one now. When I noted that it seemed silly in this day and age not to have a computer for customers to use on their own, I was informed that it wasn’t “how we do it” at Barnes and Noble. So either tell the clerk what to search for me, or move out of the way for the next customer.

What made the Failure Mindset even more amazing was that – as I walked away, having refused to comply with the smugly unfriendly process – there was a Nook kiosk off to the left of the registers. The Nook is an e-book reader that lets consumers search and purchase electronic books and magazines anywhere using wireless technology. It’s so advanced that it’s better than the convenience of purchasing online. Instead of visiting the physical store or logging onto the internet from your home computer, consumers can search and purchase from anywhere with unlimited 3G cellular internet access. It’s the next generation of book consumption, powered by a friendly interface.

The Nook is not smug. And it’s not mired in “the way we have always done it.” The Nook is an example of the Success Mindset. And it was right there in the middle of the Barnes and Noble store.

Now I’ll admit that I didn’t purchase a Nook at that moment; I was too frustrated to think about giving Barnes and Noble any of my money. Yet I left the store wondering how it’s possible for a company to be so smart and dumb at the same time? There wasn’t a computer for customers to use – in this day and age? I had to tell a staff person what to search for me – like I was incapable of doing it myself? I had to wait in the checkout line – without anything to checkout – in order to talk to a cashier whose mindset was do it our way or move out of line?

Of course, this made me think of my own industry. Failure Mindset still occurs when consumers try to navigate the brokerage business – online or offline. We still have real estate websites that make customers register before letting they can search for homes. Agents smugly throw away online leads from customers who are “just looking for information.” Either make an appointment or contact me later when you’re ready. It’s still common practice to hold a bricks-and-mortar open houses on Sunday afternoons, a time totally inconvenient to busy Gen X and Gen Y consumers. Because we’ve always done it that way.

And then I heard a beep, as my smartphone alerted me to a new message on my Facebook page. It struck me that I could ask my friends for the name of the author of my book – and they’d readily, quickly and pleasantly reply – plus refer me to other books I might enjoy. I could have searched for my book’s author using the smartphone’s browser. I could even have ordered it – from Barnes & Noble’s online competitor who didn’t even have bricks-and-mortar stores or an eye-rolling staff member. It was encouraging to think that some companies had learned the lessons of the Failure Mindset, and were actively pursuing the opposite.

It seemed paradoxical that Barnes and Noble would have such a poorly engineered in person experience for customers, within sight of it’s modern, wireless, customer-driven always-ready-to-search-and-serve product. If I do order an e-book reader in the future, I’ll probably order it from online. After checking with my friends in my social network for feedback. And probably from a website with friend chat-based customer service if I have any questions.

E-readers could finally close the doors of every remaining brick-and-mortar bookstore forever. They are products built from a strategy that listens to customer feedback and designs an innovative experience geared to the way the customer wants it to happen, not the other way around. They are even better than internet ordering, because you don’t have to wait for delivery. Some people lament that e-readers will eliminate an entire industry of traditional book sales – including the experience of browsing the aisles and touching the books.

From what I experienced of the Barnes and Noble Failure Mindset, perhaps they should.

On Screen: Real Estate Industry news launch for February 9, 2010:

• The Wall Street Journal reports that Fannie and Freddie have already consumed more than $111 billion in taxpayer dollars. And they are likely to need more.
• A real estate bubble in Canada looks like it’s already inflated and expanding. Some markets are experiencing surges of 20% month-over-month, and it shows no signs of stopping.
• NAR Economist Lawrence Yun finally acknowledges that the tax credits are causing housing data to skew wildly every month in the latest release of pending sales figures from the National Association of REALTORS.

On Screen: Expert Advice from Industry Leaders:

• Steve Harney reminds REALTORS that the housing “recovery” is shaky in “Built on Jenga Blocks.”
• Stephen Fells offers ideas on how REALTORS can keep an eye on what the social sphere is saying about their business in “Why Every REALTOR Should Use Google Alerts.”
• Ron Hahn offers thoughts on how branding differentiation works in the real estate industry in “Interesting Branding Insights: Real Estate Companies Pay Attention!”

On Screen: Technology Trends (with Comments)

• Cisco says there will be more than 5 billion personal devices connected to wireless mobile networks. (Important trend considering under 50% of REALTORS reported using a smartphone last year).
• Comscore research shows that more than 178 million US citizens watched more than 33.2 billion videos in December 2009. (Amazing considering so few property listings have videos on them.)
• Nielsen research says that use of social networking online soared more than 82% last year over the year before. (Yet less than 35% of REALTORS had a social networking presence in 2009)

On Screen: Smart Ideas to Sell More

• Entrepreneurs should beware “vanity metrics” when measuring true performance, says the Harvard Business Review.
• Timeless ideas on innovation from Peter Drucker at Human Resources IQ’s website.

On Screen: But Wish it Were Not!

Here’s the MLS photo of the week from “Really Bad MLS Photos” group on Facebook:

Thank goodness, then, for Hagerty’s Quarterly Housing Report.

Real estate professionals love to say that “all real estate is local.” Yet most real estate analysis contains very little local data. The traditional real estate “comparative market analysis” (CMA) is economically useless: Not only does it rely upon incredibly inaccurate and unverified data entered by agents barely conversant with their MLS software, such reports suffer from the biggest defect possible:

Lack of context.

Real estate agents can tell you how many homes are on the market. They can tell you the trends in new listing volume, sales units and homes that failed to sell on a given day. They can tell you how much a property sold for – even as a percentage of its asking price. And then they can’t tell you almost anything else that would be useful to purchasing and owning a commodity like a home.

Which is why they start talking about nonsense like school systems, parks, subways and other mundania.

Never have you seen a broker’s market report that contains a trend-line for local tax rates – a very important piece of information for owning a commodity that carries an annual “fee” attached to it. Nor do such reports show current rates and trends for other supporting costs, like local cable television, electricity, trash removal or any other “ownership load” related to the future requirements to service (ie., pay for) the home. In fact, it’s amazing that any decisions whatsoever can be drawn from the local real estate agent’s report, when so much contextual decision-making data is left unaccounted for.

Almost any other commodity purchase with an “ownership duration” requires contexts. Take the simplest of such purchases: a new car. Consumers don’t simply evaluate features or prices when comparing models. They examine “ownership” costs – like fuel efficiency, average repair costs, and even projected resales value. Their decision to purchase a model is based upon data points within a broader context.

Try to ask your REALTOR for your home’s projected resale value the next time you meet with her. Yeah, right.

Such lack of context and content is no longer acceptable to today’s housing consumer. Generation X is used to seeing the “full story” when it comes to purchasing anything of lasting value – whether it’s a laptop, automobile or home. They want to see the behind-the-scenes costs to construct, acquire, service, maintain and own the commodity. They understand that large purchase decisions don’t exist in a vacuum but a constellation of conditions.

They know how much it costs to run the television, not just purchase it.

Yet when it comes to buying or selling houses, so much contextual data is left unverified, or simply unmentioned, by the advisors to the consumer. That’s why new reports – such as Hagerty’s Quarterly Housing Report by James Hagerty at the Wall Street Journal is such a refreshing improvement. Certainly, it’s just a start. There are many factors left out – such as tax rates, energy costs and local tax impact. But the mere fact that it presents home prices and inventory in the context of unemployment and foreclosure rates – in one simple table – is a step forward in consumer education.

And makes Case-Schiller seem downright silly.

Ironically, real estate agents generally operate from the premise that people buy homes for “other reasons” than price. Countless stories (and industry cliches) claim that buyers choose homes for emotional reasons, like location or how it “feels.” Yet the modern consumer isn’t so fickle, or vacuous, as to simply fall in love with a home, regardless of price. Most certainly not during a recession. Consumers have been schooled to ask for “operating costs” – energy, taxes, water, repairs – and they understand the concept of “trade in” value for the future. They have lots of experience buying expensive items based upon the monthly fee – whether it’s data  plans for expensive smartphones or fuel economy for expensive hybrid automobiles. It is senseless to think such issues do not matter when it comes to purchasing a home, a commodity of far longer lasting value and higher cost.

Hagerty’s Quarterly Housing Report makes a start of positioning homes within contexts – beyond emotional data such as greenery or convenience to shopping. Even after the housing recession, local data on unemployment, tax trends, energy costs and other operating factors will be required reading for Gen X and Gen Y consumers. In a future of windmills and solar panels, maybe even weather patterns may become valuable context for the housing market.

It’s time for better reports for home consumers on what makes for a good decision in housing purchases. Case-Shiller’s focus on volume and price is outdated: It treats homes as if they were pork bellies or cell phone minutes without any other influencing factors. And traditional real estate market analyses must evolve as well. Buyers of the future won’t let their emotions carry them away – at least not so far, any more – especially when the market requires them to put real money down.

But that’s a report for another day.

Look, I get it: Times are tough in the housing industry. The market fell more than 17% in December and an era of free Federal money is coming to a close. Even with a vote to curtail inflationary spending by big government, Massachusetts still leads the nation in housing inflation. Case-Shiller’s latest report puts Boston housing at 153 on the scale – meaning homes are up 53% from the 2000 baseline. Nobody can possibly believe that’s a realistic level of appreciation, even if liberally applied.

But just how far will the real estate industry go to turn things around? Will they start by keeping overpriced homes on the market? Will they try finding buyers with more than 3.5% down? Might they even stop shilling for the government’s tax credit program, which merely transfers dollars from one part of Massachusetts’ economy and to another? All of these seem like good places to start – but to try any of them, agents would have to agree that markets are ruled by the laws of supply and demand.

Not the stars and planets.

Enter the witches. Forget economics! Massachusetts real estate agents are getting serious about turning around the market. They are calling upon powerful forces – on broomsticks no less – to descend from the heavens and restore balance to the housing market. Relax everyone: The housing problem is about to be solved.

Back by popular demand: The “all new” Feng Shui class at the local Association of REALTORS. (I am purposely omitting the hyperlink to the actual class, for fear of creating a negative psychic link between the class and my blog.)

Now, I admit I’m not a very superstitious person. I think it’s bad luck to be superstitious. Plus, I went to a school where we read books – you know, those things that teach you ideas like the principles of economics, marketing concepts, reasoning and trifling other things to help mere mortals cope with the modern world.

Apparently, however, I missed all the really good classes. I’m going to call my old college advisor and find out why he didn’t sign me up for a potions class. And defense against the dark arts – I would have enjoyed a class with Professor Snape. Herbology with Professor Sprout might have come in handy with all the headaches these days. And who wouldn’t have enjoyed a few semesters of transfigurations with Professor McGonagle, turning buyers into closings?

Funny thing, though: my invitation to the newest Feng Shui skill-builder came to me by email. I would have thought I’d have received a scroll by owl. Or at least had a premonition that the class was coming up. I must have missed the divinations class, too.

No matter! I can make up for it all now as a Professional Real Estate Witch or Wizard! Years of wasted time learning about things like supply-and-demand be damned: All I had to do was burn some incense and cleanse the bad spirits from the marketplace to increase my referrals. My personal success would have been assured by now, if I’d only used the right colors on my business card, with a few carefully inscribed success symbols. Just how many points are there on the pentacle? No wonder I failed geometry – I should have been taking neuromancy!

I assume if I take the class that I’m going to become powerful enough to help others, too. I should be able to call up the forces of the four winds,  the earth and the sun – and restore the entire housing market with a wave of the wand. Maybe my compass can tell me how to realign and balance the entire economy!

Of course, signing up for the class is not as easy as I thought. No, I can’t register online. Nor could I register by email. I actually have to call the Association to reserve a seat. You know, make a call on a device of science, which operates by the laws of physics and makes possible affordable communications according to the laws of economics. Seems a bit ironic, but I’ve tried to conjur up a reservation through telepathy for almost an hour and all I got was a headache.

Maybe there’s a Feng Shui incantation that eliminates headaches along with bad housing markets?

On May 1, 2010, we’re going to see what two massive collapses in five years looks like in a commodity market. Make no bones about it: we’re talking a whole new housing wasteland when Uncle Sam takes the real estate industry off life support.  And there’s little chance it’s not going to happen: FHA has begun tightening the screws this month. The White House is looking for a fight with banks – and it just proposed a moratorium on all non-defense-related spending. Even Barney Frank, Patron Saint of Fannie Madoff and her relatives Freddie and Ginnie are about to be disowned. According to the Wall Street Journal, Frank was quoted as saying, “As I believe, this committee will be recommending abolishing Fannie Mae and Freddie Mac in their present form and coming up with a whole new system of housing finance.” A bit late, considering the government poured more than $100 billion into the dysfunctional funding family.

Of course, nobody should really be surprised. There is no free lunch, even if Uncle Sam is paying. Consumers are learning this the hardest of ways in the recession, even though it’s crocodile tears for the loss of equity for the sub-prime set. Yet the ancillary damage to neighbors, businesses and jobs caused by the housing bubble – an inflation-fiction everyone knew was a fantasy – is why the housing industry needs to be preparing now for the Day After.

Because it’s going to be a very cold Spring.

On the Day After, there will be no more gimmicks to gin up the housing market. Already, credit is drying up for all but the absolute best borrowers. Big banks, berated but able to make money overseas or in stocks aren’t going to make real estate lending their recovery centerpiece. Attempts to regulate them back into the plain vanilla lending business will simply cause them to shed their lending operations, leaving small banks to pick up the slack. Without Fan/Fred/FHA backing them up, minimum standards for small banks to lend into a further-declining housing market will be draconian. So the real estate’s industry will finally get what it’s wanted for the last decade:

To keep banks out of real estate.

Maybe it will become a cash market. Unfortunately, most real estate agents have no idea how to work in a cash commodity market. During the boom little or no qualification of buyers was needed; any buyer with a pulse would do. After the crash, buyers were backed by the government. More than 25% were made with only 3.5% down. Once that pyramid collapses, buyers are going to need real money – hard cash, not a temporary loan until their tax rebate comes in.

Finding cash-ready customers isn’t something REALTORS have had to do in decades; and most never have.

Equity is also going to be a necessity. Owners will need to have real equity or no mortgage, the case for more than 50% of owners in America, to become qualified candidates for selling their homes. But finding sellers with equity is a far cry from the “take any listing, no matter how poorly priced” practices that dominate the real estate industry today. Again, how will agents target-market owners with equity when their standard practice is mailing street-alphabetized postcards to neighborhoods?

Most concerning is the current march of the lemmings: A “get it while you can” attitude that’s leading agents like moths to the flame, except on the Day After, it’s going to be a mushroom cloud. Look at their advertising – it’s all about getting the tax credit, putting as little as 3.5% down – any trick in the book – except, finding buyers who can really afford to buy a home and sustain a mortgage during the greatest recession in decades. The industry has been busy with the 300,000 extra sales that the November-near-end to the tax credits created. But have they simply been adding fuel to the fire? Ask FHA, who says nearly 15% of its mortgages entered delinquency after only one payment last year.

So buy today; foreclose tomorrow. But at least the agent got a check in the meantime.

This is no way to run an industry. No way to plan the seeds of a real recovery, or create the conditions for sustained long-term growth. And it’s really no way to treat customers, who, in the end, will barely be unpacked before they are thrown out of their new house. On the Day After, when all of the “extra” sales that would have occurred in the second and third quarter of 2010 have been rushed through in the first quarter of the year before the money runs out, just what to real estate professionals expect to be doing?

Hopefully it’s not listening to its economists, especially the puffery coming from the National Association of REALTORS‘ chief economist Lawrence Yun who claims that, “By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year.” At least he got the job market part correct: With long-term unemployment reaching 17% and without easy government money, just how does he expect the market to benefit from “more balanced inventory”? Have we forgotten the millions of foreclosures Fannie and Freddie have been hiding in their pockets – or was RealtyTrac’s announcement that 2.1 million foreclosures in 2009 was up 21% from 2008 and 120% from 2007 not in the NAR’s spin-cycle? Even if Yun is correct and housing inventory stabilizes, that only means prices are going to rise. It’s already happening in some areas of California. Sounds nice, doesn’t it, for housing prices to rise – unless, of course,  you’re a marginally-employed buyer with shaky credit and not more than 3.5% down payment.

Does the Day After have to be a wasteland? Probably not – but it won’t get better with real estate agents sticking to the current script. Simply lowering listing prices until they can get a government-subsidized buyer to qualify and make an offer before they lose their job isn’t the solution. But like the last time the market collapsed, simply going around saying we know it’s coming, but doing nothing about it, isn’t either.

What should be done, to prepare for the Day After the government takes the housing industry off life support? Those answers will come in our next installment. In the meantime, the most important thing real estate professionals can do is take the first step: Look ahead, over the horizon, more than just the next few days or few weeks. It’s coming – we’ve already seen the signs – the first shots across the bow. Whether it’s an Administration berating banks for not lending or the Congressional Finance Committee Chairman suggesting they scrap the housing subsidy system, the signs are clear. For a while now we’ve been worrying about a “W” shaped recovery in the housing market.

It seems more likely that rather than just another “little dip” then a rising recovery, we’re heading into a nuclear winter that always starts on the Day After.

Next edition: Planting the real seeds of a Spring Recovery.

Imagine a company that rarely recruited. What would it look like? How could it possibly expand or grow without constantly adding more salespeople to its staff? You don’t have to imagine it, you can find it today – just not in the real estate industry. In fact, you can find many companies so focused on productivity that they only recruit when absolutely necessary. They have the recruiting/productivity management process so well implemented, they have also never had a layoff!

Ever.

Such a company is Aflac. In a recent interview with CNBC, Aflac’s president made a statement that snapped heads to the screen: Aflac has never had a layoff. Not once. Even with 4,700 employees.

This week, Aflac’s stock hit a 52-week high and the company announced it was actually hiring during a recession. How could it possibly have this level of strength and expansion, in the insurance sales business, when the entire insurance industry is off by half compared to 2007 levels?

Maybe one reason comes from Aflac’s CEO Daniel Amos’ philosophy to, “… not overhire during peaks and during the valleys… put on hiring freezes.” This approach, of course, is completely opposite of the real estate industry’s typical approach, best described as “hire all the time.” Whether the market is up or down, recruiting is the magic talisman of profit-making in real estate. During the 2005-2007 boom, almost 250,000 additional real estate agents entered the business nationwide; since the recession, more than 300,000 have left.

But during both periods, brokers were still hiring!

We’ve long contended that constant recruiting without productivity-driven expansion is the sign of a sick company, if not an irrational industry. The costs of adding, training and mentoring additional salespeople is not what it used to be, when all an agent needed was some business cards and an MLS account. The legal barriers to entry may be low in real estate, but the financial costs (marketing, technology, training) of adding agents is higher than ever. Not to mention such operational challenges as team disruption, disruptive personalities and diluted management attention that occurs when  someone new enters an office.

The Aflac story demonstrates how a rational, productivity-oriented alternative to the recruiting turnstiles found in the front doors of real estate brokerages actually works. When markets peak, a focus on per-person productivity for existing staff – including almost certainly technology and system efficiencies – permits the same number of people to handle cyclical increases in business. Only when absolutely necessary is new manpower added to the mix. Profits are maximized this way, especially for individual commissioned sales agents. The  company reaps higher returns and hopefully saves or invests for the day business returns to normal (or falls). Rarely does Aflac suffer a glut of agents competing – and diluting – the per-person margins especially during market downturns.

That’s why they can expand even in the recession.

All of this presupposes that companies are focused on individual and organizational productivity – not sheer volume. It means each agent maintains a significant and consistent production level of business every month. The per-person productivity must be both high and sustained. More importantly, non-production is not tolerated in the hopes of the mythical “one deal” an agent might bring in. For Aflac to hit its 52-week highs, you can be sure they don’t have a bunch of insurance agents sitting around resisting prospecting calls or social networking, waiting for their one deal to come in.

It’s a different way of thinking about the sales business. In an August 2009 interview with CBS, Amos said, “We have never had layoffs in Aflac’s history…We will let an unproductive worker go in a minute. But, if you are a great employee, we will do everything in our power to keep you.” Note that he said employee, too. Aflac has never laid off employees because there were too many bloating their payrolls, including benefits. Compare that to real estate brokers who struggle to fire (and then seek to hire more) non-producing independent contractors.

Not too many real estate brokerages today are hitting 52-week highs in their stock or company value. But plenty of brokers are still running around hiring agents of marginal productivity. Perhaps the Aflac spokesduck can teach real estate brokers how to avoid quacking-up by the time the housing market turns around.

From Wall Street Journal Chart

At the start of 2010, REALTORS need more from their news sources than footsie interviews with government policy makers. In the January edition of REALTOR Magazine, another opportunity to set the record straight and get critical insights for its members about FHA’s role in the marketplace was wasted. Here’s a short list of alternate questions REALTORS need to ask policy officials soon.

In classic “let’s all get along” style, the National Association of REALTORS’ Magazine sat down with FHA Commissioner David Stevens to discuss how, as they headlined it, FHA was “prudently keeping the housing market alive.” Given that 2009 was an unmitigated disaster for real estate – both consumers and agents – I’m wondering what FHA’s definition of a “dead market” would have to look like. Maybe we’ll learn that later this year?

You can read the article for yourself, so let me get to the point. NAR put the key question to Stevens: Will FHA need a bailout? Answer? We verify income. We document things. We have to keep 2% reserves by law, and we have $31 billion in capital. Today we’re fine; if a double-dip were to occur, we’d be in the same boat as the other big banks.

So, no answer.

REALTORS need better answers and guidance from policy officials. Not just a rehash of the same-old, same-old stuff. For example, where was the follow up with this question: Mr Stevens: Do you mean FHA won’t need a bailout the same way the other big banks did, even though they had lower exposure to risky loans than FHA does today and far more capital than your $31 billion?

The rest of the interview goes into mundania like loan limits and condo rules and paperwork. Wow, really good stuff that today’s REALTORS can thank their magazine for saving them the time to look up online.

REALTORS need to get policy officials pinned down on the future of the government actions in housing market. Otherwise,  REALTORS will cease to be the “voice” of real estate and end up the “mouthpiece” of it instead.

Off the top of my head, I think REALTORS need to  know the answer to these issues, so they can advise their customers – especially those who are contemplating using FHA finance. Here’s my imaginary interview with Mr. Stevens and FHA:

Mr. Stevens, in November the Wall Street Journal reported that your “capital-reserve fund fell to $3.6 billion as of Sept. 30, down 72% from a year earlier, leaving reserves at just 0.53% of the $685 billion in total loans insured by the FHA.” Can you tell us how this corresponds to your initial statement that you won’t need a bailout, and whether $30 billion in reserves would be enough money to make up for shortfalls?

Mr. Stevens, recent data released by HUD and FHA show that the rate of delinquencies for borrowers of FHA-backed mortgages was faster than at any time since 2004, with more than 15% of borrowers more than 60 days behind within the first year. Does it concern you that FHA-backed loans, even with all their documentation, may be a significantly riskier pool and defaults could destabilize the market further?

Mr. Stevens, we’re hearing a lot of news about borrowers who are simply walking away from their mortgages, even though they can make payments. These strategic defaults are occurring because owners have lost the equity in the home, some despite sizable down-payments. Do you think there’s an increased risk of that happening to FHA backed loans due to its low downpayment requirements – and if so, will your reserves cover that risk?

Mr. Stevens, we’ve heard that someone borrowing a $200,000 home with 3.5% down can receive that money back in the form of the home buyer tax credits. This means that many borrowers are essentially putting no-money down of their own. We’ve seen how this “no skin in the game” has a direct impact on consumers’ decisions to walk away from loans. Are you concerned about this fueling higher default rates in 2010?

Mr. Stevens, can you tell REALTORS how decreasing the amount of money a seller can contribute to closing costs is going to help move excess inventory from the marketplace? It would seem that lowering the contributed funds limit would slow the pace of home sales at a time when sellers may be using closing contributions as a competitive advantage to attract buyers.

Mr. Stevens, recently FHA announced plans to increase its credit score requirements for borrowers. We’re also hearing that credit card companies are cutting back their customers’ limits, which can immediately change their credit scores because their previous balances will now look like “higher” percentages of lower limits. Can you explain how FHA will account for what could be a broad “downgrading” of credit ranking due to changes in credit card policies and reporting?

Now, it seems to me that these are the kinds of things REALTORS need to know about FHA, its impact on their customers and their business plan for the future. What a shame that REALTOR Magazine wasted two pages to essentially a “press release” memo about FHA’s requirements, paperwork and role in the condo market. When so much public policy plays havoc with even the most local-of-agent’s business plan, it’s time for real estate leaders to ask the tough questions. If not for themselves, then hopefully for their customers.

REALTORS need to get in front of this problem. Consumers don’t read the full reports but they do see the headlines. That’s bad news for real estate agents. Case-Shiller gets regular headline news, drowning agents’ voices.

Consumers implicitly trust Case-Shilller because it appears “scientific.” That’s unlike their usual experiences with house value “estimates” from agents or websites. REALTOR data is perceived to be self-serving, and MLS systems are based upon terribly incomplete information. Even sales prices are worrisome since some systems use tricky days-on-market reporting.

And then there’s Case-Schiller.

Great damage has been done to the housing market’s ability to recover by the Case-Shiller report. Every time this hobgoblin of an analysis is published, buyers and sellers are further misled about the market. Even real estate brokers can’t match up the reports conclusions with the realities of the marketplace.

Case-Schiller data is not inaccurate. It’s the conclusions drawn from it that are erroneous.

Sellers and buyers are led to believe that the market is turning, up or down, every time the report is released, because media headlines are tailored and spun for news value, not consumer decision making. And Case-Shiller does very little to correct this themselves, for unknown reasons. Perhaps they just like the press spotlight.

Every few months, Case-Shiller tells sellers the market is back up, or falling again. That’s a conclusion anyone could make – with 50/50 accuracy and no need for all the data and studying. But it’s confusing sellers. Likewise, buyers await a bottom that has either already passed them by, or is yet to come. Again, a 50/50 shot that requires little more than a flip of the coin.

That’s why REALTORS must vigorously address the erroneous conclusions every time Case-Schiller is published.

Don’t expect the media to do it. It’s not in their interest. Micro-blips up and down grab attention and sell ads.

Real estate professionals should be the ones analyzing the data and communicating with consumers about what it means. Every time the Case-Shiller-Erroneous-Conclusion Report is published, agents should apply the data to their local market conditions. They need incorporate their experience and knowledge of the local market – and cast the Case-Shiller data within the pricing and buying conditions their actual customers might experience.

Not simply parrot its conclusions on their blogs.

How should REALTORS address the Case-Shiller conclusions? Here’s the short list:

1. The Case-Shiller report – especially the headlines derived from it – is all about averages. Statistics can be made to say anything. Averaging a national market is troublesome for local sellers. Case-Shiller define the “housing market” as the top 20 cities in the country. Yet any conclusion about the “market” is like averaging the temperature of the country. On any given day, the national average might be 40 degrees Fahrenheit, but that doesn’t mean it’s not minus-2 in Bozeman and 80 in Miami. Certainly, some cities are affected by national trends, such as retirement destinations and vacation markets, but Case-Shiller doesn’t account for those trends. Its headline conclusions are just a mashup of averages. So sellers in a declining market hear that the market is turning,  even though two feet of snow can still fall in Yellowstone in June.

2.  The report is backward facing. Case-Shiller reports on what happened not what is happening today. This is incredibly misleading to sellers who have to price  their homes for sale today and tomorrow. The December report saying prices went higher – in October. That’s virtually meaningless to a consumer today, especially if mortgage rates have risen in the meantime (as they have). Try selling a lower-priced stock today at last month’s higher value. Yet buyers and sellers see Case-Shiller conclusions as “news” that leads them to  believe such trends are relevant today.

3. Falling or rising trends depend upon perspective. The report covers more than a decade of data. It fixes values at 100 points as of 2000. From that point, you can look at data as higher or lower depending upon what time frame you select. But consumers think of value as a function of when they purchased last. If you bought a home three years ago, the market is down. If you bought in 2002, the market is then you’re up – in every market, including Nevada, Californa and Florida.

4. The report does not account for one-time or market distorting events. One of these was the collapse of the mortgage market. Prices declined rapidly because exotic financing and Federal interest rate intervention suddenly stopped. Case-Shiller conclusions today about falls from that period are exaggerated because real value didn’t rise: it was merely inflation. Likewise, more recent conclusions about stabilizing prices are also erroneous. The December report uses October figures to claim the market is flat or rising. But that data was skewed by the (expected) expiration of another the Home Buyer’s Tax Credit. Short-term units and prices rose only because buyers thought the credit would expire. Still, the extension of the credit didn’t prevent the top 20 cities from reporting real year-over-year declines.

These points might seem like economic arcana that statisticians would  fight over. Yet there’s real danger that such theoretical errors harm actual consumers. Every new Case-Shiller report has become a media sensation and a public event. Its conclusions become news that consumers talk about around their dinner table. Decisions about pricing and purchasing are influenced by the so-called conclusions of the Case-Shiller report.

Possibly, bad decisions, because of bad conclusions.

REALTORS need to be more vocal interpreters of such pronouncements about “the market.” It’s dangerous to consumers and brokers to simply parrot Case-Shiller headlines, and have the industry itself come to false conclusions about what’s really happening in housing market.

At Matthew Ferrara & Company, we don’t believe in the “overcoming weaknesses” method of business planning. Rather, we think everyone should focus on their strengths and find ways to maximize the use of them every day. If your resolutions involve working on things you don’t like to do, don’t have a propensity for, and mostly do poorly, you’re heading for underachievement, frustration and disaster. On the other hand, if there are some things you’re already doing that leverages your natural talents, you enjoy doing already and would be more inclined to do more of or better, those should be the focus of your strategy for the next twelve months of business.

Focusing on your strengths lets each of us create business resolutions that best suit us – and therefore have the greatest chance of success. Rather than adopt someone else’s “must do” lists that we’ll never even try, we’ll be more successful if we take our “already doing” list and fine-tune it. Here are ten ways to do just that.

1. Know your strengths: The first thing you need to do is identify what you already have some talent for doing. Very few of us have talent for everything in business. So we need to figure out where our talents lie and organize our strategy around them. So sit down and make a list of what you are already doing that you do fairly well every time. Every other resolution you’ll make must focus on taking those talents and turning up the “volume” on their effectiveness.

2. Accept your strengths: If you list the things you have talents for, you’ll also bring to mind everything you’re not so good at doing. Make a side list of those things. Review the list and label each one “QP” or “NC” – Quick Possibility of mastering and improving or No Chance of being really good at soon. There are some things you might be able to improve – if they already relate to your existing strengths. Maybe you’re a strong prospector, but you are fairly week at generating new contacts. That is probably a QP with a little technology and technique. On the other hand, if you are really bad at paperwork and numbers, then list if NC and put it aside. You will deal with it – but not personally – later.

3. Outsource everything that’s a NC or clear waste of time. Look at your No Chance list from #2 above. Decide whether you can simply stop doing it (and nobody will notice) or if it’s a vital activity required for your success. If it’s vital, determine how you will outsource it. Remember, you’re already not doing it – or not doing it so well you should stop doing it harmfully – so someone else is going to have to do it for you. Find an office staff, another agent or third party business who can do it for you – at peak quality and performance – and resolve to stop wasting time trying to fix things you’re never ever going to actually do well.

4. Set goals, not to-do lists for your business. Rather than make a list of lots of things you’ll buy, try or do, focus your mind on the most important outcomes you wish to achieve in your business this year. Stress and chaos are created by task-oriented planning. You can easily create a list of things you can never get done in the time you have each day. If you want to succeed differently this year, stop worrying about tasks and keep your mind on the goals. Whether it’s financial, professional or personal, three clear and measurable goals which you review and keep in mind every day will more effectively guide you to what needs to get done than a “master list” of intimidating to-do’s and tasks.

5. Organize your time. Most business professionals make the mistake of trying to organize their tasks, rather than their time. They erroneously think the goal is to find the magic combination of scheduling tricks to get the most things done in the least amount of time. That works if you’re a machine on an assembly line. However, most real estate sales is knowledge work, and your brain cannot work “on command” in an unbroken stream of activities. Deal with your time differently this year, by organizing it into periods of most useful outcomes. Determine what is most useful to your business – prospecting, training, presentation skills, negotiating – and then organize your time around getting those things done consistently. Look at the week and ask yourself how to best use the time you have to work towards your goals. Then schedule the right amounts of time to using your best talents to achieve those goals. Eliminate, delegate or forget about everything else.

6. Get effective before you get efficient. We sometimes mistake efficiency for effectiveness. This often leads us to mis-use our talents and time, and especially technology. For example, using technology to organize our databases and create labels for mass mailings may be highly “efficient” compared to the days when we tried to remember everyone’s name and send handwritten notes. However, it could be massively ineffective if the consumer’s preference for contact is email or social media. When you look at turning up the volume on your talents, don’t just take for granted that improvements come from simple efficiencies. You could outsource your prospecting calls to a call center, who could call 1,000 people a week for you; but that might not be nearly as effective as making friends with your past ten clients on Facebook, and writing a personal note on their Wall each week. Both are prospecting. One is efficient by volume. The other is effective by goal.

7. Fire things. Just like you clean out the drawers of your desk at the end of the year, simply throwing away paper and items you packed away rather than dealt with all last year, start your new year by firing everything that no longer works toward your goals. For managers, this might be non-productive salespeople, unattended office meetings, or handing out leads to agents who just throw them away. For agents, this might mean unreasonable sellers who refuse to market-price the home, buyers who won’t work under contract and other agents who refuse to pull their own weight in a deal. Your problem solving must be different this year. If avoid-and-forget didn’t work for you last year, fire-fast-now might be the different approach you need.

8. Stop copying others. Too many of us think that if we just copy someone else’s activities, we’ll reach the same success they have achieved. This is a bad strategy for two reasons: We only see the outward side of others’ success, without the back-story of challenges they handle, but some of which might sink us. We are simply not the same people; problems they can handle with their talents could overcome us if we have different strengths. Secondly, copying others activities means implicitly accepting their goals. Our goals should direct our own activities; There are many paths to success, and it’s important for each of us to follow their own. Some agents achieve high sales performance with lots of technology; others are masters of the telephone and handshake. Both can achieve measurable successful outcomes – based upon different strengths. But adopting the techo-approach for a techno-phobe could be the wrong strategy, and vice-versa.

9. Listen to customers. Lots of consultants, planners, leaders and technologists in the industry claim special access to the future. They have systems, tools, programs you can purchase to get there. Some work; some don’t. But what always works – every year, boom or bust – is talking to customers. They will tell you exactly what they want, how they want it and how they would like to pay for it. And since they pay the bills – not create them, like everyone else – they should be your most important source of information. Then you can go back to the others and ask how their products and services jibe with what consumers are saying, and incorporate the best of these into your optimal use of time and talents.

10. Get to work. While this sounds obvious, it is most certainly not. Most people go to the office but never go to work. They hang out, chat, catch up, eat lunch, run errands, do paperwork, upload a file, check their email, and lots of other activities. But they never actually get to work. If your job is to make sales, then going to work only happens when you make sales. At the very least, you’re only working when you’re doing activities that directly correspond to the next sale you will make. The sales will not make themselves. Others – your fellow agents, your broker, the government – will not make the sales for you. If you want to really do something differently in the next twelve months, then go to work and get to work for every minute you’re there.

So there’s a quick list of ten things to do differently in 2010. Note that none of them are silver bullets, get-rich-quick schemes. There’s not a single specific techno-gadget or snappy-comeback to use for or against consumers. The list requires each of us to assess, evaluate, plan, organize, delegate, focus and do that which is necessary to reach our goals in 2010. To create your next year of success, wishing for a thing is not enough to make it so. It’s time to do the right things – and differently – to make next year your best in the business.

What happens on January 2, 2010? It’s the first acceptable day to get back to work in real estate. Saturdays and Sundays are usually workdays for real estate professionals, but none in the last year will be as important as this particular Saturday:

The first work day after millions of listing agreements expire at the end of 2009.

Certainly, someone will argue that ambitious real estate agents could pursue expired listings on New Year’s Day – but let’s at least pretend to some decorum in an industry that usually spends most of its time at the jewelry-booth at its Annual Convention. Leave the First off-limits, if not just for hangovers.

But on Saturday the Second, the gloves come off. And they should. It’s going to be a field day for every over-priced, newspaper-and-postcard marketed listing that failed to sell in the last quarter of 2009. Most listing agreements run 3 or 6 months, and many consumers tend to think in terms of calendar periods. So the end of 2009 is a very natural “end date” for thousands of listing agreements nationwide.

So you’d better be prepared for the first work-day after. And that means starting today.

Smart real estate agents should be laying the groundwork in December for Saturday the Second of January. It starts with information gathering – like making an appointment to tour potential future targets before they expire. Sure, you probably won’t know which homes exactly are about to expire at the end of the year. But it doesn’t take a math whiz to run a MLS report by days-on-market. Just sort by 75 and higher; or 160 or higher. Then make some appointments to see the home before it possibly expires.

And take some notes. Maybe even some photos.

Oh, that’s naughty, you say! Coal for you, in your stocking! Isn’t that the entire point of targeting expired listings, anyway? To demonstrate you can do what the other agent couldn’t or wouldn’t – which is get the job done, using ambitious techniques. It’s called sales, and not everyone gets a trophy.

If you wimp out on the ambitious technique, then at least printout some MLS sheets and file them in advance. This will provide you with more information in case your MLS system purges data when a listing expires. It will be helpful to identify any weaknesses in the past marketing strategy being used, like awful photos, weird-abbreviation descriptions and missing data.

And if there was a virtual tour, was it a silent-movie?

Speaking of movies, that’s be another thing to prepare now, so you’re ready to target expired listings on Saturday the Second. Record a video or two or three about why homes don’t sell, good marketing techniques and current market conditions. Upload it to YouTube and post it on your blog. Then promote the video to the local marketplace. Provide consumers with information in advance about why (their) homes didn’t sell. That way, when you reach out to them on the Second, some sellers might recognize you from your video.

Recognition is important, of course, so make sure you tell the people who already know you that Saturday the Second is a big day. That means creating a campaign over the next few weeks on Facebook, Twitter and elsewhere to spread the word: Should anyone in your sphere of influence know anyone whose home might be falling off the market at the end of the year, share your video with them. Or contact you. Referrals still represent the single largest source of new listings. So why not get referrals of expired listings? At least you have a targeted date and time to push for them at this time of the year.

Which brings us back to Saturday the Second of January, 2010. What’s your plan for the big day? Will you have a marathon telethon, hitting the phones hard enough to make the New Year your best ever? Are your email marketing pieces ready to follow up with every call you make? Have you prepared your market reports and customer trend graphs to offer sellers – and you’ll just stop by to drop them off? You can’t possibly start doing this on January 1st, and there will be some holidays and hangovers between now and then.

So get to work now, because the importance of January 2, 2010 cannot be underestimated. On that day, careers will be won and lost. The seeds of success will be planted, or hard ground lost by those who thought that now is the time to slow down. That’s the funny thing about real estate: We actually know when the most important days of the year will be. Now it’s up to each of us to decide whether we’ll be ready for it or not.

Let’s hope so!

Being part of the real estate industry is one of the most exciting careers in modern times. It’s no small thing to say that REALTORS make people’s dreams come true. One’s home is at the center of their lives: It’s where families are born, people grow and play, and where we gather for dinner. Home is where people gather to enjoy the world. And especially the holidays.

Sometimes it’s around the pool and barbecue; other times it’s around the oven or fireplace. Almost always it’s around a table – with family and friends. In each of our homes, stories are told, and memories are made. Owning a home is the foundation of building our lives.

The real estate industry plays a very special role in people’s lives. We are charged with the responsibility for their most valuable assets. We affect an item full of emotions and memories. We become a part of a complex – joyous, stressful, exciting – period of people’s lives. And when it’s all said and done, we have done something wonderful: We’ve created another special place in the universe.

Some say real estate isn’t brain surgery: True. But it is a matter of life and death. The American Dream is about home ownership. Enjoying life to the fullest best happens when we own our homes. And the rest of the world believes it, too. Liberty – and the fruits borne of that tree – come from unfettered personal ownership of property. It wasn’t a fluke that Jefferson wrote, “Life, liberty and the pursuit of property,” in his first draft.

Today, real estate professionals around the world are changing lives through home ownership.  It’s an awesome responsibility. And a wonderful career. Millions play a part in reshaping people’s neighborhoods, countries and futures. Top sales agents and busy assistants, hard-working managers and risk-taking brokers: Together they make the machinery of home ownership run. So families can grill or swim or play or dine or simply warm their toes around the fire.

So as our thoughts turn to family and friends, to meals and gifts, to joy and cheer, let’s not forget to give thanks. To the millions of hardworking agents and managers – to the builders and bankers – to the trainers and teachers – and the industry leaders worldwide – raise a glass once and proclaim. Home for the holidays is made magical by our friends, the REALTORS,  every day of the year!

According to research by the National Association of REALTORS, buyers habits are changing when it comes to real estate. The report, recently released by NAR, asked more than 100,000 consumers to rank the usefulness of information sources to their efforts to learn more about the marketplace. The good news was that for the first time in years, the real estate agent edged-out the internet for top-spot as “very useful” (81% vs 77%). The bad news is that, by a factor of 4, most buyers think open houses suck.

Within the margin of error, the agent-vs-internet top-spot is essentially a tie. That’s good, because the agent-as-most-useful had been on a steady decline for the last decade. Landing on-par with the internet is mostly good news, depending upon how you interpret it. On one hand, it could mean that today’s agents are providing excellent information and service when buyers contact them. On the other hand, it could mean that REALTORS have been putting steadily worse information online, to the point that the consumer feels their online listing content is so poor, they might as well just contact the agent (and get it over with).

That would be unfortunate.

If we compare the data year-over-year, some of the results seem ponderously unchanged. For example, the 2008 survey indicated that 46% of buyers felt yard signs were “very useful” compared to 42% in the 2009 survey: considering the data margin, it seems strange that usefulness of yard signs in the era of foreclosures-on-every-corner remained about the same. Not to mention most yard signs today still don’t feature text-message options to attract and inform Gen Y buyers.

Makes you wonder.

Then there’s the surge in usefulness in two categories that is noteworthy: Billboards went from near-bottom 9th rank to 4th ranked usefulness this year. So did television, which was in the last spot in 2008, but earned the middle spot this year. Most observers would think we’d think these rises as unbelievable, since neither seems like a growing medium to reach modern consumers. But their rise is mostly due to steep falls in other categories:

• Home book magazines dropped from 27% “very useful” to 90% “not useful.”
• Newspaper ads went from 29% very useful to 98% “somewhat to not useful.”

Now if only REALTORS would show their sellers this data, they might get on with actually selling more homes and raising margins in 2010. But don’t bet on it.

The research number that worries me the most – and brings into question how agents took top-spot this year – is the data regarding the usefulness of open houses. In the 2007-2008 time period, buyers ranked open houses as “very useful” 40% of the time; They said 92% of the time they were “very to somewhat” useful. But in the last 12 month study, buyers only ranked open houses very useful 10% of the time. barely 35% of the time did buyers feel that open houses were “very to somewhat useful.”

So, basically, buyers think open houses suck.

The real estate industry should be shocked and worried. Alas, more REALTORS seem focused on how much free money it can get from Uncle Sam, to fund FHA loans, so more people can put even less of their own money down on homes they’ll be defaulting on at a soaring rate in the future. Once again, something’s rotting on the inside, while all eyes are focused elsewhere. Let’s hope nobody tells their clients – the sellers.

Why might it be that buyers find open houses so useless? The data doesn’t say, but I have a few suspicions:

1. REALTORS themselves consistently badmouth open houses. Perhaps they have created a self-fulfilling situation from their own attitudes. Ask any agent what they think about open houses and you’ll find no lack of complaints. Neighbors are nosy (thus, routinely ignored). Agents have convinced themselves that consumers don’t want to be “sold,” justification for standing around saying little to nothing. And rarely do you hear the words “Would you like to make an offer?” from the mouth of the agent (nor their surrogate assistant) at these sales-less selling events.
2. If they aren’t soundly ignored, then most buyers are intimidated by the open house experience. Too many agents have been taught the “Gunslinger” theory of objection handling. “Go ahead, punk. Make my day!” so they can “overcome the objection” like a quick-draw contest. Gen Y is completely freaked out by this environment, because when they grew up, everyone got a trophy! They can’t possibly out-draw Top Agent Betty Barracuda, so they rapidly walk through keeping their opinions to themselves. Even Gen X sees no reason to engage in a shootout with someone who won’t really answer their questions unless they register or sign a representation contract. There are plenty of other houses to  see without the hassle, like the For Sale by Owner (ie., Bank) down the street.
3. Open houses are still done on Saturdays and Sundays – because that’s when most Baby Boomer agents have free time. But Sundays aren’t free time for the typical buyer, made up of Gen X and Gen Y’ers. Their weekends are busy with personal life, kids, or simply sleeping after a 60-hour work week. Visiting houses isn’t a priority. So maybe open houses are useless because they are held on the wrong days at the wrong time. For the consumer, that is.
4. Managers have no idea any of this is happening, because the last time a manager went to an open house to coach their agents was probably….. um….never. The sales event has been essentially unsupervised for years – and remains unimproved, or worse, degraded. This year’s consumer data proves it. Without proper management or coaching, agents struggling with the few modern consumers who do stop by won’t spontaneously improve their outcomes all by themselves.

It begs the question as to whether consumers would prefer visiting a car showroom to a Sunday open house.

Either real estate is a sales business, or it’s not. Either the sales event has to be convenient and conducive to the buyer’s preferences, or they won’t show up. Either the agent is going to be useful, or they will not. When four out of the top five “very useful” sources of information this year were not a human being, the industry should stop and ask why. As for the fifth most useful place buyers used to find a home – open houses – it actually had a human being present. But in less than 12 months, consumers ranked it four-times lower in usefulness than the year before.

In the mind of consumers, open houses suck. Not even a recession can account for this.

As usual, let’s start with the research. Last year, more than 50% of home sales were to first time buyers. The average first time home buyer was 30 years old, and the vast majority are under the age of 44. The move-up seller is also squarely within the 30 and 47 age bracket. From a real estate standpoint, the target buyer and seller for the next few years is essentially Gen X and Gen Y. With less than 19% of sales happening with consumers over the age of 55, let’s just say the 401k-home-equity-drained-downsizer is not going anywhere for quite some time.

Now let’s assume an operational premise: Successful real estate sales requires brokers to sell real estate the way buyers want to buy, not the way they (or sellers) want to sell. Of course, we know this lesson goes largely unlearnt in the industry, as the proliferation of newspaper and postcard marketing are two of the three pillars of failure for most brokerages (constant recruiting being the third). But for the sake of argument – and hope for the future – let’s assume that someday soon this lesson will be understood and brokers will sit down and ask themselves:

How does my customer use the internet?

Not, how do I want to market homes to customers? If we leave it to brokers, we know exactly how they want to market homes – even online. We don’t even need to mention them here – but a fruitless search through REALTOR.COM should prove the point. And when it comes to social media, the case becomes worse, not better. Just based upon the number of friends updates I’ve had to “hide” in Facebook lately, it’s clear that many agents have not understood that social media is about relationships, not e-blasts of their overpriced listings or open house dates.

If we think about how the real estate target buyer uses the internet – especially social media – we’ll see that games are vital, not incidental, to our marketing strategy. Playing online video games isn’t just an introvert’s pass-time any more. Farmville has more than 72 million active users. That blows away every real estate website – combined – if you consider these visitors play multiple times a week, and often for 20 minutes or more per visit.

Now would you like to play a game?

There is nothing comparable in online real estate marketing as we know it to game-playing online. Of course, the activities are different: REALTORS are simulating their product catalog online, and game players are entertaining themselves. But the objectives are not dissimilar: REALTORS hope to connect with their sphere of influence via their websites, and game players are already connected to their sphere of influence – and interact with them nearly daily – through the gaming nexus. Social media gaming, in other words, is just another excuse to get together with friends.

Of course, some of those friends may also be clients – past, present or future. It’s no different than the days when we used to play games – like golf or bridge – with our networking buddies, past clients or Association friends. It’s simply moved online – because so has the consumer. Keep in mind that Gen X grew up playing Atari and Nintendo games; and Gen Y doesn’t know fresh air exists. The 20-something buyer literally evolved online, interacting with friends online via XBox and Playstation, while exploring dungeons and foreign planets. Their sphere of influence was largely virtual. And unlike the coffee shop or golf course, it met just as regularly.

Online.

This is why social media game playing is a powerful sales tool. It connects people to people, not people to machines. Gen Y doesn’t want to “search your website” and then wait for someone to return their email (assuming they ever do). They already eschew search engines, preferring to ask their friends what cars to buy, schools to attend – and agents to use – via social networks. They don’t talk on their phones, and they don’t check voice mail. They don’t go out to play – so they won’t be seeing their Baby Boomer laywer or accountant or hairdresser or real estate agent at the local pub or health club.

In fact they won’t see them at all – if those people won’t show up online.

Gaming is about relationships. Competitive “war” games let Gen X’ers pit their mobsters, vampires or poker hand against their peers’. Collaborative games like Fishville, Farmville and Cafe World let Gen Y’ers play nice with the collective. But note that none of these games is played alone. They all involve playing with others.

And that means building and maintaining relationships.

Relationships, which are the heart of successful sales practices. In the past, relationships were built by a traditional sales theory that revolved around an advertising-prospecting-proposal structure. Maybe that sales structure is evolving, along with the modern consumer. Decision making processes in consumption are not what they once were: Gen X’ers don’t believe one word of marketing from anyone, and Gen Y’ers are usually put-off by pushy-scary-closing methods that make up the classic Top Agent Betty Barricuda sales playbook. Even awareness marketing is changing, as fewer people use the newspaper-phonebook-mailbox channels to gather product information, but return to the “town square” model of friendly referrals and family advice.

For Gen X, it’s important to use trusted vendors their peers prefer. For Gen Y, advice from the family, extended but reachable online, is more powerful than any price inducement.

That’s why playing games online matters. It’s a chance for sales professionals to make friends and interact in non-traditional sales environments. They can play winner-loser games with Gen X prospects, and earn their respect through game-play competition. Such respect can later be translated into sales propositions and referrals in the future. Gen Y prospects can become part of your company’s family by participating in collaborative games, egg-hunts and “sims.” They will readily accept new connections from anyone working toward the same goal. Later, when the goal becomes buying or selling a home, they will be primed to trust someone who they have already worked with to reach a (entertainment) goal.

Clearly, playing social media games is time well spent building relationships that are the foundations of future business. There’s no doubt that the next generation of real estate consumers is socialized and prefer to interact through this medium. And it’s not just younger generations of consumers: According to a study done in the last 5 years for AOL Games, “women over the age of 40 play most often and spend the greatest number of hours per week doing so, beating out both adult males and teens of both sexes.” The study also shows that adults are more likely than teenagers to play online games. Maybe that’s why Nintendo’s marketing strategy for the Wii features people of all ages – young to old – playing together.

Now it’s time for the real estate industry to understand that social media can build relationships that turn into business.

And isn’t that the name of the game?

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I get it. Times are tough. It’s a recession, and most businesses are watching every penny. Business spending on marketing and customer service tools has dropped along with the overall economy. Yet the last time I went to my local shoe store or vet’s office, I don’t remember these fancy gadgets – that not only drew my attention, but taught me something useful about their products, and enticed me with up-sell offers.

In the same day, I got a glimpse of two industries that are headed into the future with every intention of remaining competitive. Take, for example, my vet: We actually don’t visit the vet often – maybe a couple of times a year – so certainly not often enough for us to browse their shelves of specialty cat-food, play-toys and pet wellness items. Today, however, one of my cats needed some blood work, so while the vet took her into the other room, we were left waiting in the examination room. Usually, in the past, these were sit-and-stare-at-the-wall moments, waiting for the doctor to return. Not this time, however: There shining bright and inviting on the wall was an LCD screen inviting us to “touch anywhere” to learn more about our pets.

Instantly, we were engaged in the system. The system called Pet HealthNetwork was full of learning content.  Touch here to learn about the breed. Touch there to learn about common health issues. Touch here to learn about products and procedures that can help your pet lead a healthy and long life. And – of course – such ideas could lead to questions about which products and goodies we could pick up on our way out the door, too.

What a clever idea – to put a pet-like-WebMD right on the wall, make it easy to navigate by touch, and get your “customers” involved in your business. In the few minutes it took for the test to occur, we had look at two short articles, a video and a checklist. We even emailed ourselves a copy and a link to the video so we could play it again back home. When the vet walked back in the room with our cat, my Blackberry had just beeped indicating our email had arrived with our requested information.

Later in the day, I was running some errands before heading on the road for another three-city tour of seminars and leads-management workshops this week. After such a busy fall schedule, I really needed a new pair of shoes, so I decided to try the local Main Street shoe-shop, rather than brave the mall on a pre-holiday weekend. I didn’t really expect much for selection or price, but not only was I pleasantly surprised on both, I was again amazed at another small-time-shop using technology to work with customers.

This time, it was a computer kiosk brimming with information about shoes. Not usually exciting stuff, you’d think, but the technology was full ofsurprised. Rather than focus on the inventory of shoes – like sizes, styles, colors, heels and straps – it focused on the experiences of wearing and enjoying life with shoes. You could look at activities and hobbies – and get a perspective on which shoes would support that activity. Or you could look up any feet troubles you may have – aches and pains or walking disorders – and learn how different aspects of shoes could improve or support proper foot function.

Again, a combination of text, diagrams, pictures and videos explained the issues and options that customers might be experiencing. Powered by a system called iStep, the overall experience focused on helping the customer reach hist goals as a foot-wearer, not just advertising the particular shoes the store had on sale. In fact,  I could actually step on a pad and the system would analyze my feet to tell me about my particular foot-features, and options for maximum footwear results!

In both cases, technology made it possible for customers to learn more about their options while the service personnel was busy. It let the consumer tailor their experience and find information they were interested in – and learn about related issues they might not have known. It used friendly touch-screen simplicity and sent home copies of requested information without a single printout or flyers.

In-store kiosks aren’t new technology. Bookstores have been using them for years, to make finding books faster – and self-serve. Even ATM machines are a kind of kiosk, displaying searchable information like balances and offering information on ancillary products like mortgages based upon the banking profile of the person using the machine.

You have to admit it’s new to see such things at veterinarian offices and shoe stores. Not to mention touch-screen, multi-media approaches. We’re talking about service locations where it was typically necessary for someone else to be involved in providing customers with information and recommendations.

Where the doctor or shoes salesman were in control.

In the  traditional model of vendor-to-consumer  information transfer and knowledge-to-decision consumption, the customer experience depended totally upon the particular person they encountered. If you got the good vet, you got great information and service. If you got the unhappy shoe-salesman, you got basic shoe-box delivery and a blank stare as you figured out if the shoe was on the right foot.

The process could be awesome or awful, and totally out of the control of the consumer.

This approach left consumers very much out of control – for either information or decision-helping knowledge. And for Gen X and Gen Y real consumers, it’s just not an option to be uninvolved in the process. Ironically, all it took was the introduction of a little technology – at the point of purchase – to make such a significant change. And engage the modern consumer.

Of course, there’s a parallel to the real estate industry here, and it’s fairly obvious. Look in the typical brokerage office’s reception area: Are consumers asked to wait – are they asked to get engaged? Can they browse your inventory, company information and ancillary services while they wait? Do they view your office as somewhere to go to learn about the market or access trustworthy educational content during their “exploratory” phase in real estate? If an agent leaves consumers in the conference room, are they consumers left to stare at the wall, or a dusty pamphlet, because your network geek is paranoid about offering unsecured internet access to visitors to your office? What if a consumer strolls by your window: Must they decipher printouts or are they stunned by a LED electronic experience  in the window?

Go one step further – to the hundreds of other real estate sales locations your company has. Oh, yes, you actually have hundreds of offices throughout your marketplace, didn’t you know? Every car of every agent, and every home they show is a place where a portable kiosk could make a difference. They’re called laptops – but just how many of your agents actually take them along for the ride?

And let’s not forget our favorite sales-failure location: open houses. Strategically placing two or three laptops throughout the house, with additional photos, videos, maps, and reports would make it possible for browsing buyers to get involved, and get excited about the home – even if the agent is still cowering with the cookies in the kitchen.

As it turns out, the vet called later to say the cat’s tests were fine. I watched the kiosk video again, and bookmarked their site in case I have other questions later. My new shoes fit nicely, and after filling out the customer service survey online, I received an instant coupon by email for a discount on shoe polish or water-proofing. What an efficient way to up-sell a recent customer; and it all started with the kiosk.

Yet I wonder what I’m going to see when I visit my neighbor’s open house tomorrow.

The house down the street just went on the market, with a local Main Street real estate shop. What do you think I’m going to see when I enter the $1.2 million dollar property’s sales event? Will there be a laptop glowing on the counter? Or do you think I’m going to be asked to sign in on a photocopied sheet and encouraged to take a copy with me of the – ugh – pathetically-printed listing sheet?

Hindsight is always 20/20, they say. Unless, of course, you spend most of your time navel gazing. So it’s almost myopic to point out that some ideas’ time has come. And other ideas’ time has passed. On one hand, it’s time for every sale to include in-house ancillary sales. On the other hand, it’s time for NAR to give up the dream of one HAL-like central database. Didn’t they find the bellybutton lint the last time they tried it?

Some of us might recall a time when both of these ideas seemed like a good thing. Creating a central database of properties nationwide – the elusive national MLS – and incorporating ancillary sales like mortgage and warranty into every deal. The first idea resulted in a horribly disfigured technology experiment. REALTORS themselves came to hate their own national marketing site, REALTOR.COM – for all sorts of reasons. So they punished it by withholding data – or uploading junk, if you consider the quality of most of the photos. As for selling more ancillary services, a few companies successfully deployed such “one-stop” services that are today helping to pay the bills when plain-old home-sale commissions cannot.

At the time, each of these innovations was hailed as the industry’s response to customers’ desires for “one stop shopping.” They were unveiled as centerpieces of REALTORS-at-the-center-of-the-deal strategies. Ancillary sales are keeping the doors open at many companies these days. The national website has become an embarrassing central repository of inaccurate and low-resolution data.

We could use more of the one, and less of the other, these days.

Turns out ancillary service dollars would come in quite handy these days, since selling short sales and foreclosures won’t put gifts under the tree. As for opportunity lost, REALTORS disdain for the site that bears their name keeps them from leveraging what would have been handy cost-savings for agents who cannot afford to pay-per-click these days.

Certainly, don’t blame consumers: we love one-stop shopping. We preview, select, test and finance cars within the same building. We  browse, pick and purchase – with a store credit card – clothing at retail shops. We click, configure, cart and ship computers from one website. We’d prefer to have more of everything integrated; but we really don’t need to see every car, shirt or computer available nationwide in one database.

Really.

I thought all real estate was local, anyway? Oh, never mind. But really, this isn’t a story about saying we should have done more to integrate ancillary sales into every deal. Consumers will force that upon the industry eventually. Rather, this is a story about vision going forward. And unlike selling more ancillary sales – which was simply ahead of its time – it doesn’t look some pet projects will take REALTORS into the future.

And the biggest example of blurry vision is the National Association of REALTORS new “Property Resource” database.

Once again, another centralized database project promises to make REALTORS invaluable by putting every home on the map into a single website. Oh, there will be the usual nooks-and-crannies: tax, zoning and past-sale information. Wow. Really potent stuff.

Can you say abacus?

But this time it will be nationwide! Did nobody at NAR read their own consumer study,  indicating the average person moved a mere 13 miles from his previous address? But the database will include neato-features like forms! As if making the paperwork easier is what ails real estate sales these days.

Did I miss a decade or something? Are there really any REALTORS out there struggling to find such data locally? Could someone point out the big crowds of consumers that are in desperate need of instant parcel and school information from their agent? Or do they have that stuff already…….

Once again it looks to me – an admitted contrarian – that a vision of the future is being obfuscated by the shades of the past. RIN, REALTOR.COM and now RPR. How quickly we forget. Like admitting the bubble will pop someday, but resisting efforts to integrate ancillary sales into every company transaction. So we’d have something to sell when it does.

The National Association of REALTORS is trying to solve a non-problem: They keep trying to create the single biggest housing database in the mistaken belief that it will suddenly solve all of the problems in the business. It’s a glaringly Baby Boomer project – to recreate the Sears Catalog of real estate – with no Gen X or Gen Y consumers on the mailing list.

But it’s got a snazzy acronym: RPR. Maybe they can name the next big project RIP?

Everything about this project is backwards. It’s claimed that RPR will let REALTORS “respond quickly to consumers” who want information on any of the 147 million parcels in the country. Are we talking about the same REALTORS, 50% of whom, according to NAR”s own studies, don’t own a smartphone? The same REALTORS who can’t upload decent photos to REALTOR.COM? The same REALTORS who won’t offer their in-house warranty or mortgage service to buyers, well, just because.

Or is this just a “get even” play – to finally get back at REALTOR.COM or Zillow or Trulia, for beating them to the punch. NAR’s own press release hints at it, saying RPR will offer its members such data, “rather than requiring REALTORS to purchase data aggregated by third parties.”

Further, are any of the data elements RPR will provide actually missing on most websites consumers use today? Do not the top 20 real estate sites online offer neighborhood, tax, demographic, school, and other data today? As for liens, zoning and permits: Find me one buyer who asks for such information, and I’ll show you a builder who already knows it.

NAR says this project is part of their “Second Century” initiatives for the real estate industry.  I can’t really see how. Unless NAR means the Second Century AD.

Download a copy of the latest survey of REALTORS by the Center for REALTOR Technology and you’re certain to be fascinated – startled, perhaps – at what’s happening on the Bat-belts of modern agents trying to make buying and selling homes a twenty-first century experience. While the report is no page-turner – in fact, it looks a bit like it was produced on a Commodore 64 with dot-matrix fonts – a few facts stand out, highlighting just how easy it should be for serious salespeople to scoop up market share in the months to come. And all they really need would be a Blackberry and a thousand bucks.

Speaking of Blackberry, while a whopping 32% said they used one as their primary mobile phone, the report barely breaks 50% of REALTORS using any smartphone, even including Palm or iPhone devices. So that means consumers have a 50/50 shot of their agent having mobile access to email, MLS data or social networking. I wonder just how many Gen Y buyers can do that kind of stuff? But I digress…

Of course, who needs a smartphone when the top three methods for keeping in contact with past clients was (in ranking order) email, phone calls and postal mail. Surely you can always boot up your Windows 95 machine and log on to AOL to send that email, and crank out some ALL CAPS LABELS to send your holiday cards, right? No hope for active clients, either: same tools in the same order. A quarter ranked social networking for “business purposes” while an equal 25% were “not sure” what they were supposed to do with it – joining the 16% who didn’t use it at all. Now, where did I put my envelope sealer? Damned paper cut again….

No surprise, then, when you get to page 10 and learn that 54% of the respondents did only 1-10 deals in the previous year. Too bad the survey didn’t break that down to further, because I’m betting a lot closer to 1 than to 10.

Ironically, 73% of respondents said they used the internet to shop online for both business and personal reasons; yet a third of them had never used YouTube. Almost six in ten did not download podcasts; iTunes, YouTube, it’s all for kids… And one in five never sent text messages either. Well, it’s hard on their Ernestine-era bag-phones, right?

For those REALTORS trying to avoid the government’s 1-penny per email message fees (didn’t you get that email, too?), their strategy of hiding behind  tin-can-era systems seems to be working. About 1 in 3 REALTORS were using some form of free web-mail, like Yahoo or Google, while 14% were still using Outlook Express (stop giggling) and some 6% were keeping AOL on life support. The rest were making a few blips on the flat-liners like Earthlink, Comcast or AT&T mail. Only a third of REALTORS were using Outlook – and the survey didn’t mention if that was downloaded or on corporate Exchange servers. Still, two out of three messages potentially related to the largest financial transaction a consumer can make is likely to be transacted on a public, un-accountable, can’t-reach-tech-support and is-it-really-confidential email system. No worries there.

In the “you don’t say” category, 33% of respondents ranked their MLS system’s value as “neutral to poor.” That’s an amazing number for something someone pays for monthly; of course, most MLS systems are monopolies, so it’s not like the local REALTOR really has any choice. Agents usually have little choice but to pay for data locked into one vendor platform; even if they pay twice to use third-party software, that doesn’t rebate their MLS fees. Even gerrymandering the Association lines with “board of choice” didn’t offer relief: too many MLS systems are statewide. Still,  the MLS industry’s  1 in 3 customer unhappy-ranking is higher than a car salesman, right?

Deeper data on social networking usage shows some optimism: About half of respondents said they used Facebook daily-to-weekly; 25% said the same for LinkedIn. About 6 in 10 REALTORS did not have a Twitter account – about the same that didn’t have a mobile smartphone, so that makes sense, since most tweets are mobile and only 62% of REALTORS sent regular text messages on their phone. And less than 1 in 5 used ActiveRain daily or weekly.

More than half of REALTORS said they used social networking to communicate with other REALTORS, but only 7% to communicate with family and friends. Good news, at least, came from data showing 73% of social networking efforts were toward consumers. That’s good, because most REALTORS also indicated that the “very important” sources of their business were repeat clients and referrals – nearly 30 points higher than plain-old “internet” advertising. Pretty cool.

Somewhere amongst the bank transfers from Nigeria, it seems that 1 in 4 REALTORS didn’t get the memo that making consumers register for listing information isn’t a good idea. It’s likely they made up a higher proportion of the 73% of REALTORS who said they were not satisfied with the number of leads their website generated. And said they didn’t receive “enough” email from their former clients. Connections, anyone?

Amongst the weirder questions asked by the survey was, “If you use mapping on your MLS, which elements do you find useful?” Huh? Shouldn’t this be asked of consumers? Who really cares if 13% of REALTORS use maps to find places of worship or 23% used a map to find house numbers (???). Of course, the 71% who said they used mapping to create driving directions does make a little sense – considering they didn’t have a fancy-schmancy smartphone with GPS to help them get there. Now I get it….

In the end, it always comes down to money, so let’s run the numbers. Looks like 49% of REALTORS spent $1-100 per month on productivity technology. About 11% spent $250 or more per month on technology. About 52% of agents spent less than $500 annually on their websites, with 11% spending nothing (yes, zero was a choice). 5% of agents spent more than $2000, and 7% of brokers spent more than $5,000.

At least there seems to be a trend: half of agents do less than ten deals annually, don’t have a smartphone and don’t invest that “savings” into their websites. The only question the survey doesn’t answer is: the chicken or the egg?

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Each year, as thousands of REALTORS descend upon some unsuspecting city in American, we bring you observations from the event, complete with raised eyebrows of all kinds. This year’s Annual Convention of the National Association of REALTORS in San Diego is no exception: the 14,000 vendors, agents and industry leaders left us with no lack of bizarre, cool, finally and funny observations to share with you. So, without further ado, here goes.

Bizarre: Do you think that – if the REALTOR convention happens in a city with a high homeless rates, we’d talk about it at a session or two? It seems the height of irony that so many “home ownership professionals” gather in places like San Francisco, San Diego, New Orleans and Washington DC – ostensibly to learn new ways to sell more homes – only to find themselves taking the bus from hotel to convention center because the streets are overcrowded with people without homes. Am I the only one who noticed this, all these years?

Now, this isn’t to suggest that real estate conventions should only be held in places with low homeless rates but it is to say that maybe we could dedicate a few educational sessions on homelessness (beyond the awards for those who have dedicated their time building free homes). Moreover, how about just one mention of the problem by the guests from Fannie Mae, Freddie Mac and HUD?

I, for one, would have certainly traded such a session for the painful minutes spent in the uber-dull bloggers lounge.

Equally bizarre were some of the “new” vendor ideas this year. Certainly, customer appreciation ideas have taken a hit this year, as lower commission margins limit the options for thanking clients. That seems the only possible explanation for the appearance of the kitchen cutlery booth. Nothing says “thanks for your business” quite like a clever cleaver. Good luck trying to get through airport security. And while the “personal massager-shaped” virtual tour camera company didn’t make it this year, the kaleidoscope camera-lens company took its place. Even Galileo couldn’t have come up with a more unwieldy lens. Straight out of the playbook of the Hubble Space Telescope, this uber-lens of SLR’s could not only take a virtual tour, but could highlight the cracks in shower tile from forty feet away. No word on whether insurance would cover the chiropractor appointments needed for carrying this beauty. Nor any idea of who still uses an SLR these days. Can I get a roll of 400-speed film, please?

Correspondent Jimmy Olsen will update us on the come-back of traditional film at the NAR convention, just as soon as he gets back from the $5.25 Starbucks stand in the hallway. Can I get FHA financing with that?

Ultimately, the most bizarre was the Kodak bizaar – which featured a new array of inkjet printers with postcard-photo-printing capabilities. Resisting the urge to turn over the tables, I managed through gritted teeth  a question: Where was the display of their new Zi8 hi-def flip-camera, considering I had one in my pocket? Unfortunately, I wasn’t fast enough with it to capture the blank-stare that answered me. Somebody hadn’t done their homework about the future of real estate.

Alas, we’re in for another year of postcards and pathetic listing sheets.

Still, there were plenty of cool developments this year, and not just in the vendor booths. One of the coolest things I heard was the tremendous audience response to sessions by some of the smart new speakers on the circuit. For those attendees tired of hearing that the “basics were back,” many people told me that the 9 am Sunday morning effort to see Steve Harney was worth the entire trip. No doubt in my mind, as Steve should be at the top of the short-list to have at your company this year. No end of positive comments came of the WCR education sessions at the

Westin. It just goes to prove that great education can fill the room – and WCR continues to prove that it can do just that (mercifully without resorting to tedious panels that sucked the life out of most of the NAR sessions all week).

Also in the cool column was the appearance of William Shatner, who generated a line so long that everyone wondered why there wasn’t a transporter handy. The Thespian showed he’s still got what it takes to take the Command Chair of any event, even if he clearly cannot fit in his gold shirt any more. Still, the Gen X meta-icon shamed more than a few Boomers to visit the Verizon booth and finally get a smartphone.

A few items made it to the super-cool list, like DotLoop, an online forms program that finally does it right. No more “substitute typewriter” approach to filling in forms. These guys actually digitize the data into a database. How refreshing for a vendor to figure out that filling in forms doesn’t involve merely substituting for white-out. Not to mention that inviting consumers into their transaction was a very Facebook-like experience. Good luck to this company. Let’s hope they break the Association-Forms-Committees’ hold on Archaic Transaction Management Policies nationwide.

From cool to finally category came a few small but simple moments that elicited an “it’s about time” from almost everyone. The first one came from the Zillow booth, where their online mortgage tool finally makes it possible to get quotes from lenders without having to divulge your entire financial, personal and genetic history. What a – um – novel idea. And refreshingly consumer-centric (sorry, agents). Then there was the person who, upon exiting my session, turned to me on the escalator and said, “So it would be better if this massive banner said ‘It’s about the consumer,’ rather than ‘It’s all about you, Self-Appointed Superstar Agent!’”

I smiled, thinking that there may yet be hope for a housing recovery.

In the funny column, we can report that there’s no danger that good taste will come to the industry next year either. The bling-booths were as packed as ever, as hoardes of Shiny-Pinned Hallway Admirals rifled through boxes of jingly and glassy with the usual gusto. Maybe it was because the trade show was shockingly scant in size. Or these agents had already achieved every certification available. More likely, it’s just more proof that a simple and well executed business idea works every time. Of all the vendors at the tradeshow, it’s certain that the ones going home with a profit were the jewelers, not the gadgeters.

Just as funny – or at least as much fun – was the lady (who I had seen earlier in a session  explaining the value proposition of real estate agents) who asked if our new video learning community, Real Estate Brainchain, was free. Not unexpected, since discount hunting is the norm for many of the Trade-or-Treaters who picked off all of our pens. Alas, she didn’t see the humor when I asked if she listed homes for free. Did I say something wrong?

Ironically funny was the guard at the door to my session who wouldn’t let two of my employees attend theclass; only one was allowed to accompany me, even though we had paid for a booth and were offering the class for free. Rules are rules, said the rent-a-doorman, even after several students attempted to come to my rescue. What struck me as funny was the blind dedication to doing “what he was told to do,” rather than think for himself, while guarding the door to my session that focused on… you guessed it: Creative thinking for solving the problems of the next generation of real estate consumers.

I’ll let you guess if the guard was a Gen X’er or not.

In all, I still think the convention was a success. Even though attendance was probably the lowest I’ve seen in two decades, it was refreshing to see sessions fairly full and good questions from the audiences. A few firsts happened as well – such as our full-time broacast of live internet television from the trade show, which more than 200 online viewers watched from more than two dozen states. And the first time I’ve ever seen a brokerage concept booth openly and honestly describe itself as a “basic pyramid scheme” without batting an eye. No need to be tricky these days; Just cut to the chase faster then the monogrammed cutlery.

In the end, it was great to see old friends and make new ones. Little Italy offered the best meal in months; and the complimentary bottle of champagne from my WCR friends was greatly appreciated. Having the booth next to Martha Webb and the Certified Home Marketing Specialist was a boon, too, as the popularity of her program drew the crowds that also stopped to see us. And while it was hard to leave the nice weather of southern California, it only took an hour in the airport to know we were doing the right thing. If we think we have it hard in the real estate industry, we should really count our blessings. Even the most skeptical FSBO is a far greater pleasure to talk to than the coutner staff at American Airlines (Miss “I don’t think so!”) or the maddening inability to order three coffees at Starbucks, even after pointing at the pictures of the drinks on the poster at the counter.

Can’t you just wait until the next one?

Real Estate Brainchain combines the power and ease of learning by online video, with a broad array of sales, marketing, technology and management topics from industry experts like Ferrara, Martha Webb, Rich Sands and others, available on demand to meet the learning needs of busy real estate agents. “We already excel at on-site workshops, and delivered more than 4,000 online webinars last year. Now we want to make even more learning available to agents – whether an instructor-led session meets their schedule or not.”

Derek Deveau, who has been leading the Brainchain project, with Laura Fisher, who has been in charge of the technology behind the scenes, both expressed how excited they were with the NAR launch. “The number of people who came over and told us they heard we were doing something new and innovative has been incredible. And almost everyone we talk to says it’s the right product at the right time,” Deveau pointed out.

“Agents have reacted positively to the simplicity of use,” said Fisher. “They love the one-click simplicity of accessing the content, and the system is very easy to search by category, tag or keyword. Learning is literally at their fingertips at any time.”

Rick Calanni, Director of Client Services for Matthew Ferrara & Company, commented on the number of  brokers and managers interested in the system. “For any company, making the hundreds of video lessons we have available to their agents has captured their attention. The need for anytime learning on dozens of topics, at such affordable costs, has never been greater,” Calanni said. And brokers and managers who have visited the site quickly saw the value in the specialty content, like office-meeting video sessions, to make their lives easier every week.

Real Estate Brainchain offers unlimited video learning to individual users for only $19.99 a month. Company subscriptions are also available, depending upon users, with unlimited usage by agents, managers and staff. An affiliate model for real estate Associations, trainers and schools also makes it possible for organizations to offer their own version of the system to their members, with no up-front costs and a revenue sharing model. All members have access to forums, social networking, blogging, a resource library, and free attendance in any live webinars offered each week.

For more information about Real Estate Brainchain, visit www.rebrainchain.com or contact info@rebrainchain.com

November 12 – San Diego, CA – As the National Association of REALTORS Annual Convention opens this week in San Diego, Matthew Ferrara & Company announced the launch of its latest learning service, real estate brainchain (http://www.rebrainchain.com). The new online video learning community features high-quality training lessons for real estate professionals on a broad variety of topics like sales, marketing, technology and management. As easy to use as YouTube, but with real estate specific content, brainchain launches with almost 100 ready-to-learn lessons featuring some of the industry’s top trainers.

“Brainchain changes the paradigm in online learning for REALTORS,” says Matthew Ferrara, CEO of Matthew Ferrara & Company, the parent of brainchain. “In the last two decades, we have repeatedly delivered innovations in real estate training, first by incorporating technology into the classroom, then by creating the industry’s largest delivery system of webinars. We’ll deliver more than 3500 webinars this year alone, but we still don’t think that’s enough availability and affordability for the industry. That’s why we’re introducing real estate brainchain.”

The new platform uses the latest video innovations to change how real estate professionals use the internet to grow their business. While many real estate agents have been using the web to learn for quite some time, “we’re focused on the educational paradigm,” says Derek Deveau, Director of Development for brainchain. “Many agents have attended live webinars online for years; the challenges we’re solving there are to make the content available all the time, and to make them far more exciting than just slide shows and computerized voices. By using a state of the art video studio, we can record and broadcast live, with a higher learning impact. People learn quickly and easily using television today. We’re doing the same thing on the web.” Likewise, Deveau adds, we’re eliminating the scheduling hassles that keep some agents from attending the classes they need at the times they need them.

Laura Fisher, Director of Site Development says that brainchain is designed to get members teaching and talking to each other. “The site’s full of extra features. There’s a forum where members can discuss hot topics and share ideas with each other. The Think Tank provides access to the trainers who are in the videos, so students can contact them and ask questions. And every member can blog about how they are using their new skills and knowledge to advance their careers. By combining social network features with high-quality video learning, we’re really creating a skill-development environment that has something for everyone, and lots of new content every day.”

The real estate brainchain platform will launch at NAR with almost 100 learning lessons ranging from “how-to” lessons on technology, social networking and office productivity, to real estate sales lessons on prospecting, farming, staging, pricing, marketing and management. “Brainchain links together great minds, like Martha Webb, Matthew Ferrara, Rich Sands and others. Each has dozens of lessons that can be watched and combined to create new ways of thinking – new “brain chains” – for real estate agents of the future,” Deveau adds. “It’s going to make an amazing amount of knowledge available to the greatest number of people in a format that’s both easy and fun for anyone to use.”

For more information about real estate branching, visit http://www.rebrainchain.com or contact us today.

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Last year, we posted “Ten Take Aways from the NAR Annual Convention” as bifocal “you gotta be kidding me” and a “here are the future leaders of the industry.” Since then, much has happened to real estate: The economic raccoons were fed some credit-crunchies and they keep coming back for more. Once perennial companies have blown away with the dry, Fall leaves. REALTORS still insist social networking doesn’t exist – since less than 1 in 3 actually have a presence in the medium; and only then, their primary purpose is to post their overpriced listings in yet another website. So while there are expectations that much might change – because it has – we’re also likely to see much of the same, too.

For starters, will there really be 20,000 REALTORS there, as NAR predicts? Maybe. But if there will be less, it says something about “what’s in it for me” more than “I can’t afford it.” Hotel and airfare is cheaper than ever – much like housing is. But the same reasons that buyers aren’t buying homes are also why REALTORS aren’t coming to the convention. They just aren’t sure – beyond the great bathroom with double sinks – what’s in it for them. More classes on electronic lockboxes? More candybars from mortgage companies? Oh, look! We can get our teeth whitened while we wait in the trade show…. See what I mean?

As for educational sessions, there’s plenty good to expect. And once again, it’s the Councils and Designations that lead the way. Ferrara will open for WCR on Saturday, then do an everyone’s invited session on Real Estate the Next Generation.

John Mayfield will show why CRB continues to create innovative leaders, as he talk about new technologies for next year – this, from a designation Council that was smart enough to put its ENTIRE certification process online so they could reach members anywhere, regardless of whether a class had enough people on a certain date. So smart!

Steve Harney is going to blow the doors off the room, at the special Leading Real Estate Companies of the World event – not just because he always does, but because he is focused on what works. Not making your flyers “green” but turning your agents into high-flyers. Of course, anyone who needs more pins and ribbons for their Admiral’s uniform will likely skip Steve’s sagacity, and scurry for sticky-ribbons for just about anything – like knowing how to “talk to old people” to “changing lightbulbs in your listings.” Please, go see Steve, if you plan to being in the business next year.

On the other hand, there will be more time wasted with worried CEO’s about the future of MLS; nobody will bother considering that they are already zombies, because, well, you know, the comparables book might even make a comeback. So, too, with MLS systems…. right.

Things we also expect will be the same this year include the strange “don’t look at me, don’t talk to me, but do you have something free I can shove in my bag” walking of the Trade Show by the attendees. Free stuff? Stick it in. Something that I have to understand – or pay for – no thanks, we already have that in our office.

Oh, and has anyone seen the bling?

There’s always something for everyone at the trade show, though. For those REALTORS who insist they don’t need a smartphone, they can stand in line at the email kiosks and check their AOL accounts. How quaint! Weren’t these people there last year? Yes, and they actually haven’t moved an inch from the same spot – figuratively speaking, that is. Like the swine flu, iPhone’s apparently give some people the hives.

There will be some surprises, of course. Captain Kirk – aka, William Shatner – will beam in for a keynote that will pack the room. People will stand in line to get his autograph. Apparently some HUD/Fannie/Freddie/FHA people will also be doing some sessions. You can get their autographs, too, at the bottom right of the endless checks they’ll be writing to those hat-in-hand attendees. In fact, I’m already surprised – there’s going to be a session on “using laser measuring devices” to measure rooms! A full hour dedicated to the modern tape measure. Surprising, indeed.

I even hear we have a little surprise for people: A new learning service that brings the best real estate minds to your screen 24/7 online for a fraction of the cost of attending a class or synching your schedule with a webinar. What could it be? You’ll just have to stop by and find out. Our booth will be easy to find: Just take a left at the scarves, pass by the jingle-jangle-jewelry and turn right at the Buck-Rogers Clothing kiosk.

According to everyone with a microphone, now’s the best time to buy a home in decades. The recession has pushed home prices and mortgage interest rates so low that affordability has never been better. We’ll even throw in a few free Bernanke Bucks to help you cover closing and commission costs, and rebate you the remaining dollars even if you didn’t pay them in taxes. Between all the rebates, freebies, price reductions and home inventory options, doesn’t it seem strange that the market isn’t roaring? Sure, there’s a bit of unemployment rising here and there, but 9 out of 10 Americans still have jobs. So why are consumer still struggling to take advantage of the sales of the century?

Maybe it’s because they’re still confused. Not about mortgage rates or falling home prices: they get that stuff. Even short-term consumers like Gen Y understands the growth potential of  investing in real estate today, even if the market falls further in the short term. For once, it’s not the raw market “numbers” that are holding back consumers. But it’s something real, nonetheless.

First, let’s ask who the key consumers are in today’s marketplace. Last year 50% of all deals in America were to first-time home buyers. That puts the market squarely in Gen X and Gen Y territory. Baby Boomers only constituted a fifth of the buyers, and Gen X’ers prefer new construction to their parents’ homes anyway. What could it be, then, that’s holding back the X/Y consumer, considering they’re also the ones holding onto their jobs best despite rising unemployment?

That factor is mythology. Not the kind that has Greek heroes beheading Gorgons, but the comfortable-cliche kind that often infects and paralyzes an industry.

The myth in question is that consumers know more about real estate today than ever before.

Really? I’m beginning to doubt it.

It’s certainly true that consumers know more about homes than every before. They can find inventory faster than the 50-something agent they have to beg to respond by email with the lock-box combination. But even if it’s a truism that Gen X and Gen Y’ers can access the housing inventory online faster than ever, just what do they know as a result of it? Pretty much nothing more than construction specifications, sprinkled with the barest minimum of photos and rarest of videos. How does this help Gen X or Gen Y tap into the greatest home sale of all time? Not too much, actually. Raw housing data alone doesn’t do much for preparing, evaluating and deciding which opportunities are best in the marketplace. So the myth that internet inventory somehow has helped consumers buy homes (more, better, faster, whatever) is revealed to be a myth. Even NAR research shows that internet-shopping consumers took longer to decide and buy (although they physically toured less homes) than offline consumers. Anybody who spends hours comparing airline prices for the best deal knows that more data doesn’t mean better or faster outcomes.

The myth is subtle and dangerous, but it’s nonetheless real. Access to housing information – inventory, articles, how-to guides and experts – is now available on every Gen Y first-time buyer’s smartphone. It’s the ultimate level of access to everything and anything you could ask, desire, wonder or need to know about real estate. Except this massive access-ability isn’t causing more Y’ers to buy. Instead, many are putting it off, renting in groups or simply staying at home longer. Just as the early Boomers finally cleared their cellars of their reluctant Gen X’ers, late Boomers find themselves tethered to their Gen Y children while housing opportunities pass them by.

The myth that the consumer has everything they need to make decisions and “jump into the market” is compounded by the subtle ways in which even raw market data is made more complex for consumers than it has to be. The accompanying graphic from Stuff That Happens made me think that even today, most real estate websites are a nightmare to navigate.

And it’s not just our websites that are hard to navigate. It’s the entire process – the real estate transaction, we call it – is a mess of confusion and complexity. Ever wonder why so many deals fall apart? More likely we should wonder in amazement that so many come together. Too much about how the real estate transaction works is still kept secret, mysterious, and dangerously unreliable.

Almost nothing about the real estate transaction that consumers experience today is a simple as using an Apple product. Nor is it as reliable, and predictable, as searching on Google. While previous generations of consumers may have understood – or at least grudgingly accepted – that buying a home was complicated, Gen X and Gen Y just won’t stand for it. It’s why Gen X invented Wikipedia and why Gen Y prefers to shop at places that don’t require you to “negotiate” the final price (think, Saturn).

The myth that’s holding back today’s real estate consumer is that we’ve given them access – fast, online, always – to stuff that matters, when in fact, it’s just the opposite that continues to be the case. If a consumer finds a home they like, all by themselves, online, it still takes hours for someone to respond to their email inquiry. After they list their home with an agent, the single most persistent complaint from home sellers today is that their agent is impossible to reach, and they don’t know where they stand on a convenient basis. We open the doors to potential buyers at Sunday open houses, except that Sundays are as inconvenient as our web search tools for busy Gen X and Gen Y’ers with overloaded weekend family schedules.

Over and over again, we continue to hide behind the curtain, like real estate wizards in a land long forgotten. What is most important to the consumer – the knowledge necessary to assess their options and make important decisions – still depends upon contact with a person. Yet our mythology that the consumer has more real estate information than ever before has caused us to think they have more of us than ever before.

And clearly they do not, because just as clearly, they are holding back from the marketplace.

It’s time for the real estate industry to come out from behind the curtain. And not just the small stuff, like offering easier access to inventory or cutesy checklists for buyers. It’s time for the entire transaction to be laid bare, from pre-start to chaotic-middle to successful-end. All of the players must be put on stage. Anyone with the ability to influence, and especially disrupt, a successful transaction has to be front-and-center before the consumer. They must be accountable. No more blaming  some mysterious third party that still hides behind the curtain.

If Gen X and Gen Y are to follow the road back into the marketplace, it’s time for the industry to address the real estate process. Like McDonald’s once did for hamburgers, it’s time for REALTORS to focus on the process of selling homes. Otherwise consumers will remain confused, befuddled, and mostly afraid of the man behind the curtain. Unlike Baby Boomers, Gen X and Gen Y won’t ever return to the days of “trust me” business relationships. For them, every transaction great and small must be open to inspection, scrutiny – and most of all, understanding.

It has already happened recently. When Cash for Clunkers offered free government money to buy cars, consumers jumped on it fast and furious. The amount offered wasn’t nearly as much as the first time home buyer tax credit, but consumers took immediate advantage of clunker-dollars because there are no curtains left in the car business. Every aspect of the car transaction is clearly understood today – from manufacturer rebates to in-house financing and clear-coating up-sells. Consumers know exactly how it’s going to happen when they hit the showroom, drive the car and then match wits with the sales manager. They know who to hold accountable if financing doesn’t come through; and later, when servicing the vehicle is required. After accessing the inventory “data” online, consumers can make rapid car purchase decisions because they can understand, anticipate and manage the car purchase transaction.

That still remains largely untrue for the real estate transaction today. It’s not enough to just provide data and blog entries; it’s time to open the books and let the consumer understand the process. It’s about transferring control from the practitioner to the consumer: and in an era of the best prices and financing, it’s about the only thing left that hasn’t happened to bring the consumer back to the table.

And until it does, the consumer will remain cautious, and the market flat.

According to the Wall Street Journal real estate blog, a “W” or “U” shaped recovery is shaping up to be the most likely curve for the real estate industry, if not the economy as a whole. According to one property mortgage insurance group, there’s still another 12% drop to go in most markets. And even though some economists think prices will remain flat as inventory stabilizes – and we all know that’s also to be tempered with regional biases, since some housing markets have remained reasonably healthy – the chance for another full year of slow or flat growth will pose serious challenges for real estate agents and brokers who have barely hung on this year.

Now, let’s assume you’ve already cut your discretionary spending to the bare minimum. You’ve even dropped the daily Starbucks. What’s your plan for another year of declining home prices? Even if you sell the same number of units, it still means you’re sure to lose another 12% of top-line revenue. And with gold over $1000 and oil prices hitting a one-year high, a declining dollar means even less purchasing power. So you’re going to need a serious strategy to stay in the business.

Thankfully, there’s help. We’ve got our thinking caps on here at MF&C, and we’ve come up with three quick ideas to help you stick around – even if the “U” becomes a “W” or even a further-declining “M” market.

1. Get serious about the listing price for new inventory. Reference absorption rates with a passion. When you’re sitting across from the table from a silly seller next year, you’re going to stick by your guns. Show the numbers, and then simply refuse to list anything at a price that will require so many adjustments, you won’t even hit the market value before you exceed the average days on market. Just pack up your stuff – you’re already taking a 12% pay cut – when you realize you are sitting across from those unreasonable sellers. Chances are you’ll do better not listing it, and just finding a buyer (considering co-broke losses). Just because there has to be blood in the water before it sells doesn’t mean it has to be your blood.
2. Stop carrying expenses. The recession is teaching the real estate something: Contingency fees cannot create profits if you cannot control the price or positioning of the product. So if your sellers insist on controlling both, then ask them to put some money on the table. If they want a newspaper ad, after you have shown them all of the relevant facts, ask them to pay for it. Should the buyer actually come from the newspaper ad, you can deduct the fee  - heck, even offer to double it, because you can’t lose this bet – off the final commission. Alternately, show the buyers your bills for carrying their property too long. Nothing wrong with itemizing your expenses – lawyers and accountants do it all the time – then tacking on a service fee. Get your expenses covered monthly, if you want to make it through the entire year.
3. Reduce the cost of your new business. The facts do not lie. The vast majority of new business comes from repeat business and referrals from friends, family and clients. And contacting these people should be almost cost free. Just stop trying to find new, cold business, and tap that old social network – phone, email, Facebook, whatever. Because margins count, and if you can get new leads for near-free (you can buy your mother a Denny’s coffee) then you can learn that Aunt Zelda is ready to downsize before she calls that sweet little agent down the street. Lowering the cost of your new business is still possible, even after you’ve seemingly cut your marketing budget to the bare minimum by tapping your referral network.
4. One more idea, just for good luck. This one’s for broker-owners exclusively. Stop recruiting and start coaching. Adding more bodies isn’t the only way to grow market share; in fact, it will only grow your stress, up-front costs and sap your time. Instead, focus on the people you have – and get them into lean, mean effective shape. It’s a recession, right? So you have to do more with less – except that you have plenty of spare capacity already, probably within the people you already have. Stop fooling yourself that adding four more newly licensed agents (read, recently laid off from paying jobs) are going to bring in more deals. It’s time to make management count – and that means working with your people every day.

If we’re going to have a “W” shaped recovery, then let’s make the “W” stand for “Winner.” Should it end up a “U” then let’s make it “Unusual” in our approach. And by all means, let’s not make it an “L” for your “Last” year in the business.

Real estate is essentially a research industry: trouble is, most agents and brokers think the most important research is about houses, prices, square footage and such. Considering the data that sits in most MLS systems – unverified and incomplete – you’d think they would know better by now. In fact, the best research for any sales industry isn’t the commodity data but the customer specs and competition capabilities. Knowing everything there is to know about the consumer – and the competitors who are trying to beat you to their door – is far more fascinating. And given the state of the housing industry, also more revealing.

If real estate professionals take a break from the steady flow of (mostly contradictory and useless) housing data that is emanating from every outlet in the industry, they will be well served to download a free copy of the Annual Profile of Members by their own trade group, the National Association of REALTORS. Even though this report is a few months old, it’s always insightful to review and compare it to your “local” marketplace. If you can see its conclusions in your office or Association, then you can draw some conclusions and adjust your competitive strategy.

Overall,  the numbers tell a startling, if not always consistent picture of an industry in the midst of serious upheaval. For starters, the industry that just a few years ago was growing younger is once again graying; the average member is 54 years old. More than 60% are women, and the average member works a mere 40 hours a week.

Of course, that average member makes less than than a Boston school bus driver: Median sales agents earned $28,400 while median brokers earned only $49,300 (The all-member median was $36,700, with certainly far worse hours and benefits than that bus driver). Even members who were in the industry more than 6 years – a significant benchmark since some 90% of agents never make it that far – only earned between $42,400 and $53,900. An amazing 76% of those surveyed said real estate was their only profession, a waffling number since most also had other sources of household income.

Looking into the average REALTOR’s past is just as fascinating: One wonders just what is in the minds of brokers who are recruiting new agents. Less than 6% of REALTORS chose the business as their first career. About 19% came from other business or financial careers. Some 16% percent were previously employed in sales or retail industries. And nearly 1 in 6 (17%) came from jobs as administrators, office support staff or school teachers. Astonishingly, nearly 48% of REALTORS came from twelve other segments of industry that had nothing to do with direct-to-consumer sales.

Maybe, then, part of the troubles in the business stem from the fact that almost 65% of real estate agents had no prior experience in sales, business or finance before completing their “licensing” course. And even there, they didn’t learn any sales skills.

NAR’s report insists that technology is “vital” to its members’ success, but the numbers don’t tell a convincing story. While 90% said they used email every day, only 78% said they used a cell phone daily, and a mere 42% used a smartphone model. About 1 in 3 REALTORS had a social media presence (although 95% of buyers under the age of 44 had one way back in 2008). And a mere 4% of members said they read a blog daily, as statistically insignificant a number as the 1% who said they listened to a podcast regularly. Thank goodness you can still get 8-track tapes on Ebay.

In fact, only 1 in 3 of the million-plus sales REALTORS claimed to use a customer database daily (17% said a few times a week). A full 9% of those surveyed said their firm did not have a website, although a fraction of those said they planned to have one in the future. So maybe there is hope for newspaper classifieds after all?

Of those members who did have a website, the features and tools seem to be vintage Sears-catalog. While 91% of REALTORS featured their own property listings on their website, only 56% said their site featured virtual tours. Apparently they didn’t get the memo that virtual tours ranked number three on the customer’s most-wanted list in NAR’s similar study of buyers and sellers, just behind multiple photos and understandable property descriptions. Barely more than half of REALTOR websites offered community information, school data , while a third reported offering comparative market data or current mortgage rates.

Any question why the industry average was four inquiries per agent from their websites annually?

Overall, the average agent spent about $650 on technology products and services annually, and $670 on personal professional development.

Now, let’s put some of these numbers together, and create some segment profiles in the industry. After all, one competes against real people, who have certain characteristics that form the basis of their performance.

Bottom Third of Industry: 29% of REALTORS earned less than $25,000 last year. That’s about 450,000 people in neighborhoods nationwide, who are licensed to work with consumers, and do so with the following characteristics:

• 51% of this group has a website
• 46% have earned an industry educational designation
• They completed 1-4 transactions last year
• average 51 years of age
• 27% have been in the business 6 years or more
• generate between 0 and 13% of their business from repeat clients

Middle Half of Industry: 45% of REALTORS earned between $25,000 and $99,000 last year; This group was between 73 and 82% certain they would remain in the industry over the next two years. Their key characteristics include:

• 64% of this group has a website
• 40% have earned an industry educational designation
• They completed between 8 and 12 transactions last year
• average 53 years of age
• about 39% have been in the business more than 6 years
• generate between 21 and 24% of their business from repeat clients

Top Tier of Industry: 16% of REALTORS earned more than $100,000, with fully 8% earning more than $150,000. More than 55% of these high producing professionals had been in the industry more than 16 years. Their leading characteristics include:

• 75% of this group has a website
• 52% have earned an industry education designation
• They completed between 18 and 27 transactions last year ($4-8 million in sale volume)
• average 54 years of age
• about 90% had been in the business more than 6 years
• generate 35-38% of their business from repeat clients

To put these numbers in further perspective, consider how they occur in a typical real estate office. The average agent is affiliated with a firm of about 23 persons. Applying the profiles above, this means eight people in the office produce less than 4 deals annually, the next 11 generate an average of 10 deals each; and five agents generate the majority of the production. From a consumer’s perspective, this could also be seen as a 1 in 4 change of working with the best producers, and a 1 in 3 chance of working with the least productive members of the office.

Working with the best agents becomes a matter of chance: who is most likely to be sitting in the office answering the phone?

Rounding out the report are some general operational results for real estate brokerage firms that should, if anything, highlight avenues of growth for anyone planning to remain in the business next year. (Alternately, these numbers might cause consumers to take pause.) From the data (with some commentary):

• Only 44% of real estate professionals reported generating business from their open house activities, and most of those reported it was less than 10% of their overall business. Alternate view: 6 in 10 agents don’t actually sell the home they spend time in on Sunday afternoons.
• Only 80% of REALTORS placed their listings on REALTOR.COM; even fewer (66%) placed them on their local MLS system’s public website. Alternate view: 1 in 5 REALTORS don’t place their properties on the single most consumer-trafficked website (even if it has become a pop-up and banner ad hell).
• The typical REALTOR only generated four inquiries from their web site, the same as in 2007. So much for taking advantage of the internet revolution.
• Of  REALTOR’s with a website,  the median spent to maintain it was $240 annually. (Realtors who spent more than $1000 on their sites reported more leads – more than three times more – than the average.) Note that one grande Starbucks coffee each business day would equal $767 annually.
• The typical REALTOR only sold 1 of their own listings, but sold 4 of other agents’ listings. Maybe exclusive listing agency isn’t really such a great idea after all.
• 59% of all REALTORS did not participate in a foreclosure sale; 72% did not participate in a short sale either. Of course, those numbers will skew depending upon whether or not REALTORS from distressed marketplaces even bothered to respond to the NAR member survey.

So there you have it. While Case and Schiller and every other schmoo likes to report the state of the marketplace – as if homes could sell themselves – we at Matthew Ferrara & Company thought it might be important to look at just who is involved in trying to turn around the market. After all, REALTORS love to say it’s a “people business” – and we’d agree that it’s about time we took a good hard look at the people who make up this industry and see what that means for the consumer, a housing recovery and a huge chunk of our economic future.