Matthew Ferrara, Philosopher
 

Lessons from a Manhattan Salon

Yesterday found me on the 15th floor of the New York Times building in Manhattan, part of a trio of industry thinkers including Mike Staver and Steve Harney. Joining us for three hours of  “ask anything” discussion were some of the city’s finest and managers. The host, Leading Real Estate Companies of the World, had brought us together for a second time (the first in Phoenix) in a brainstorming session that had audience and panel each doing equal work. And unlike one of the usual presentations you might attend, the learning flowed both ways, from industry experts both on stage and in the audience. And what learning it was!

Two questions demonstrated better than ever the degree of transformation occuring in those brokerages who are committed to being market leaders. And the answers from both sides of the room proved that, no matter what the struggle, the industry continues to be flexible, innovative and dedicated to its customers.

[Note: The following is paraphrased from each participant, purely from my memory; no exact transcript was used and it’s certain that the audience and speakers were much more eloquent and insightful than my recollection. I have tried to encapsulate the excitement and energy of the discussion, including some of the questions and answers that stuck out in my mind. I think you’ll get the point.]

Audience member: How can we think differently about – and attract new salespeople, perhaps younger, to join our companies and build a long-term viable force?

Steve Harney: Stop thinking of it as recruiting; and start thinking of it as “rescuing” those agents who are at risk of leaving the industry altogether. The biggest danger to the industry today is that experienced, capable and trained agents associated with failing companies may throw in the towel completely if their organization goes under. Focus on these knowledge-experts first and go rescue them before we lose them completely.”

Audience member: What about younger people who aren’t in the industry yet? How do we attract them – since they aren’t really “rescue” candidates yet? Do you think we need to offer them salaries?

Matthew Ferrara: Agent compensation isn’t why people join real estate, nor a major reason for performance or non-performance. And younger people are more likely to respond to the “sky’s the limit” proposition than “it’s $20 per hour salary.” The top agents in the world are paid on commission; the worst agents in the world are also paid on commission. The common factor – being paid by commission – isn’t the deciding factor in their performance. It’s , which creates a performance environment for them, provides the right tools and the knowledge on how to use them rightly, and shows agents what it takes to build a career. Some may never become “superstars” but most should still be able to create viable long-term careers. But that means recruiting agents who are focued on selling to the customer, and worried less about how many ribbons and pins their competition has on their chest.

Audience member: One of the biggest lessons we learned is that when you’re trying to attract younger agents, you don’t want them to be interviewed by their 25-year-plus peers. It’s hard to create a connection with them if they feel like they’ll be working with people their parents’ age that don’t seem to connect with them in the same way.

Mike Staver: That’s where comes in. You have to ask yourself, why would anyone follow you? Do you inspire them to stick with you because of a viable, visionary mission, or just because you are the boss. Age can become less of a barrier if your mission is exciting – and the leaders of your company, including yourself – are committed to it. That’s how to connect with people; not just because you all have the same iPhone.

This kind of back-and-forth happened for two-plus hours. And I found myself more energized by what was being asked and offered by the audience as much as by my peers in the front of the room. Then the “biggie” question hit:

Mike Staver: Let’s ask the audience a question for a change. What is it that the real estate industry is “pretending” not to know? In other words, what is it that we all go back to our offices and ‘know’ is our biggest concern, but we’re pretending like it doesn’t exist?

Audience member: That someone will come along with a model and blow away all traditional brokerage. Redfin and Foxtons almost did it. What if the next company that tries succeeds in finding that formula?

Audience member: That we don’t really know what the customer experience is like because we’re always looking at it from the inside out. Even when we try to measure and survey our performance, it’s really designed and analyzed with the answers we wanted to hear anyway.

Steve Harney: That on December 31, we’re going to have the biggest day in American history for expired listings. And on January 1, will our agents be prepared to take advantage of the situation. And are we sharing this information – including the upcoming shadow-inventory that’s also going to hit the market – with our sellers so they understand what the real market looks like and we can advise them to make good decisions?

Matthew Ferrara: That the real estate industry still works too hard, in general, and produces to little, per person. It’s the easiest business in the world that we make harder than it has to be. Most agents put in too much effort and time to make less income than a coffee barrista. Even the successful agents spend more time trying to make $100,000 than top performers in other industries. I think the biggest thing we’re pretending not to know is that our production model isn’t keeping up with the modern world and that the era of 60-plus hour workweeks, inefficiency and redundancy, is slowly killing our current top performers and scaring away our potential future ones. And it’s bankrupting too many brokers along the way.

It went on like this for the rest of the afternoon; and it continued later in the restaurant downstairs. Not all questions had “final answers” and many answers created new questions. But the real lessons from the day wasn’t the ideas shared on the various topics, or the discomfort some people showed when asked to challenge their assumptions. The real lessons could be seen during the break, and in the side conversations after the session: Brokers talking to each other and to the speakers with one common theme:

Sure the business is changing, and the future is unknown. But dammit, I’m going to be a part of that change this time around, not wait for it to hit me on the head and then try to catch up.

As Peter Drucker once taught, “The best way to predict the future is to create it.” Yesterday, in Manhattan, a hundred brokers, three thinkers and representatives from the network of Leading Real Estate Companies of the World began learning that lesson. And creating their future, one question at a time.

  • Karen Brewer

    How ironic that you all were in the New York Times building. In my other life, I worked for them for 15 years.
    That industry was then where we are now.
    Newspapers knew that there was something “out there” that was going to change the whole game.(the Web od course)
    There was some arrogance around “always being a place for newspapers” and that people would “always want to hold a paper in their hands.” However, the real problem was that the thinkers on the inside couldnt really come up with an alternative. The old model died before someone could come up with a new one.
    Hard to believe I picked picked two industries that may share the same fate.

  • How ironic that you all were in the New York Times building. In my other life, I worked for them for 15 years.
    That industry was then where we are now.
    Newspapers knew that there was something “out there” that was going to change the whole game.(the Web od course)
    There was some arrogance around “always being a place for newspapers” and that people would “always want to hold a paper in their hands.” However, the real problem was that the thinkers on the inside couldnt really come up with an alternative. The old model died before someone could come up with a new one.
    Hard to believe I picked picked two industries that may share the same fate.

  • I have never liked the term “recruitment” but would rather change the term to ” attractament” (made up word)…but the term applies to giving a candidate the opportunity to match their wants to what is being offered therefore, attracting the candidate without the active “recruting”.

    Our biggest concern: we must insure that we provide information and guidance to our clients that is cmmensuarate with our fee. The ease in getting in this busienss must change; we need to increase educational requirements that insures that the consumer is getting the best advise available; generally this can be done through education first and then experience. The industry is set up so that it is a broker- centric model…it is not…it is an agent centric model.

  • I have never liked the term “recruitment” but would rather change the term to ” attractament” (made up word)…but the term applies to giving a candidate the opportunity to match their wants to what is being offered therefore, attracting the candidate without the active “recruting”.

    Our biggest concern: we must insure that we provide information and guidance to our clients that is cmmensuarate with our fee. The ease in getting in this busienss must change; we need to increase educational requirements that insures that the consumer is getting the best advise available; generally this can be done through education first and then experience. The industry is set up so that it is a broker- centric model…it is not…it is an agent centric model.

  • The problem is that it need to be a customer focused model.

  • The problem is that it need to be a customer focused model.

  • Matthew Ferrara

    Yes. A critical growth lesson for REALTORS is to STOP looking in the mirror or at the competition (who looks just like you anyway) and start looking at the customer!

  • Matthew Ferrara

    Yes. A critical growth lesson for REALTORS is to STOP looking in the mirror or at the competition (who looks just like you anyway) and start looking at the customer!

  • Karen Brewer

    Its why Im not crazy about Active Rain. Its like talking in an echo chamber. My customers have in fact asked me why I work on a fixed commission when it takes approximately the same skill and components to sell a $600,000 house as a $4million house. What say you?

  • Its why Im not crazy about Active Rain. Its like talking in an echo chamber. My customers have in fact asked me why I work on a fixed commission when it takes approximately the same skill and components to sell a $600,000 house as a $4million house. What say you?

  • Matthew Ferrara

    I agree; I think most REALTORS spend too much time ranting with each other – and too little time talking with consumers. I do think a great portion of the real estate sale can be “flat-fee” covered; then you can up-sell extras to those customers who want it. More importantly, in the scale and scope of things, I think consumers are really going to wonder why it takes so MUCH money to sell a home. And that’s because the good seller/homes are subsidizing the bad ones at the same brokerage house. So once again, most customers suffer high prices because brokerage practices “pass along” the bad performance costs to the entire market… ugh@

  • Matthew Ferrara

    I agree; I think most REALTORS spend too much time ranting with each other – and too little time talking with consumers. I do think a great portion of the real estate sale can be “flat-fee” covered; then you can up-sell extras to those customers who want it. More importantly, in the scale and scope of things, I think consumers are really going to wonder why it takes so MUCH money to sell a home. And that’s because the good seller/homes are subsidizing the bad ones at the same brokerage house. So once again, most customers suffer high prices because brokerage practices “pass along” the bad performance costs to the entire market… ugh@