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It is not for the faint of heart, those that write and then believe their own press releases, adopt "ostrich posture" or say "This too, shall pass" to defend inactivity. Nor is this for those individuals whose commitment to real estate, even in boom times, was "part time salesman". This information is intended for thoughtful consideration by full time Real Estate Brokers and Practitioners who are passionately committed to building wealth for themselves and their clients through real estate transactions, investing, lending and the Real Estate Profession as their Career Path for life. We must fight for our careers, our wealth, our quality of life and the future of our families. We need to change both our relationship to our Clients and our significance to their success. We need to lead by example: "Do as I do, not just as I say." This will establish our ultimate credibility and justify our survival.
"Houston, We Have a Problem!
By Magi Bird
For years the Real Estate Industry has said: You are a Real Estate Professional if; *You get a License *Join a reputable Brokerage *Get quality in house training from your Broker *Join NAR, the State and Local Board of Realtors *Join and participate in your local MLS *Take Continuing Education *Earn Designations *Practice Ethically *Practice Legally *Are diligent in verifying the facts you represent *Demonstrate competence in all you do *Disclose all material defects *Disclose Agency and Conflicts of Interest *Protect your Client's Interests, Funds and Confidentiality *Never undertake a job you are not qualified to do *Never give advice you are not qualified to give. *Treat fellow practitioners with respect. *Perform all obligations in a timely manner. All of these activities are a minimum standard of performance and yet our profession has a 90% failure rate and an average income that would make any other profession blush. Can you imagine someone reasonably competent with numbers becoming a licensed CPA and working for $40,150 a year? Yet that was the mean net income for Real Estate Practitioners in 2008 according to www.bls.gov. Show Me The Money! The real money must be in owning the Brokerage, right? According to the same source, the mean income for Real Estate Brokers in 2008 was $57,500! Can you visualize spending an estimated $10,000 per person to open, furnish, supply, carry and staff a Real Estate Office for 22 full time Agents: the generally accepted minimum for a Residential Brokerage to break even. Then train, supervise, be legally and financially responsible for every word spoken and act committed by those agents for the fabulous compensation package of $28.75 an hour?
Before I Alienate Everyone Reading This: I know you are not average and do not fall into the mean incomes shown. I know that almost every professional I have ever met cares deeply about their clients and doing the right thing, both legally and ethically. I also know that to earn more than the mean industry income requires the practitioner to work evenings, weekends, holidays, and to be on call 24/7. Success in real estate as practiced today means making compromises between the needs of your business, your family, the days of your life and sometimes your health. To compete in the industry today, you must complete, hire or approximate all of the following actions; To Do List For Brokerage; 1. Build a Personal Brand/Company profile. 2. Hire and train agents/assistants to service specific sections of transactions/business activity so you can cover the overhead. 3. Stay in constant contact with past Clients so they don't forget you. 4. Prospect, prospect, prospect! 5. Get more Designations and pay to belong to the issuing organizations. 6. Social Network, the more the better! 7. Blog, Blog, Blog.... 8. Advertise, advertise and advertise! 9. Build a Website 10. Market globally but find a niche that works locally. 11. Hire and train more agents/assistants to handle increased volume. 12. Do more deals to afford the new agent/assistants. 13. Join a lead generating service or two, or three. 14. Join a newsletter service. 15. Hire SEO Services 16. Advertise, advertise and advertise! 17. Attend Continuing Education Classes, again and again and again. 18. Build, buy or join a transaction coordination platform. 19. Hire more agents/assistants to handle the program and the updates. 20. Work longer, harder, more efficiently to afford all the above. 21. Hire and train more agents/assistants 22. Download all the real estate in the country to your website. 23. Send squeeze page ads to drive traffic to your website. 24. Buy more insurance, licenses, permits, pay more dues and fees. 25. Pay increased wages due to minimum wage law. 26. Pay higher operating costs and taxes, due to inflation. 27. Buy upgraded Software, auto responders, make links and drive traffic 28. Build email lists and data bases 29. Fire the web guy and start over. 30. Repeat from the top 31. Repeat from the top 32. Repeat from the top.
The definition of insanity: "Doing the same thing over and over again in the same fashion, while expecting different results!" It is self defeating to continue doing more of what is not working well to begin with.
The residential real estate boom is over!
It will not be back for 15-20 years. Even if you work in a City or State where real estate values have fared relatively well, new laws, higher taxes, consumer expectations, new regulations and economic fallout will permanently change this Industry.
Short Sales: Taking the Long Road to a Slow Demise;
I understand that you are out in the field making a killing in Short Sales! Translation: You are now working frantically to do deals that will take 2 or 3 times longer to close escrow, have a higher fall out rate and will pay commissions from 30%-60% of what they were 2 years ago. Have you reduced your business expenses by 40% to 70% or more? Have you reduced your household expenses by 50%, 60%, 70% in order to survive on your after tax income? Or are you trying to double and triple your transaction count to stay even? Have you or your Spouse taken a second job to stay in the Business? Are you doing every business activity by yourself because you terminated your support staff? We are only 40% through the Commercial Property deflation spiral. What do you think this downturn will mean for your business, your family, your health and your wealth?
How long can you tread water?
The amount of money printed by the Fed and the massive deficit will cause horrific inflation. The effect of monetizing the bailout programs and government expansion will be camouflaged for the next two years due to the collapse of pricing on homes, cars, consumer products and service providers who will cut to the bone to stay alive. Most won't. Inflation is already evident in increased costs of food, energy, taxes, fuel, governmental fees, fines and penalties. Do you have a plan to deal with these realities or do you feel exhausted, angry, scared, overwhelmed, confused and powerless: with habit driving you through your day? I will let you in on two secrets. 1. You are not alone and you are not paranoid. No matter what the "talking heads" say, this is the worst economic disaster since 1929 and our guts know it. Many successful people are preparing for the worst and few know what the worst may be. All of them know it won't matter which party is in power. Economic spirals are not changed by politics or policy. Spirals are simply accelerated or slowed in the short term by governmental intervention, they must run their course before the turn around and we are not yet half way through this one. 2. There is an alternative. We have an opportunity to adapt our business and evolve into a different kind of Professional. It requires defining ourselves and our work differently. It involves focusing our business 180 degrees differently than you do today. In other words: discomfort, change, a steep learning curve and risk in the short term in order to survive today and thrive tomorrow. I ask that you do not react to this article and try not to defend your practice or your business. I know these thoughts appear threatening and arouse anger. While both anger and rebuttal feel constructive they are actually distractions. As small business owners we protect our businesses as we would our children. This is a reflection of how much we cherish them and how much money, time and effort we have invested in their success. To a great extent our Business defines who we are and our purpose for being on this Earth. For the sake of economic survival, look at your business objectively. As a financial enterprise, what would you pay for it today?
Research the Statements I Have Made and Draw Your Own Conclusions:
Post your income, deduct your expenses, calculate the number of hours you work, then divide. When you have your answer, you decide. Are you being fairly compensated for the hours of your life?
1. That the present Retail Brokerage model is: Broker, broken, broke... 2. That most of us are not in this business for the money. 3. Most of us receive great satisfaction by changing the lives we touch for the better. 4. Anyone making that commitment deserves huge compensation in return.
5. This industry needs to be fundamentally changed as a business model. 6. That a "win-win-win" model for Broker, Agents and Clients is possible. 7. It is more profitable and satisfying with less risk than the current model. I believe it because I have built it, run it, taught it, duplicated it, proofed it and it works! It is not a franchise, a software package or a Brand. It is an entirely different way of thinking applied to real estate. There are a thousand current practitioners in the US and half century of proof. You can learn how to do it too. Look for events scheduled by the National Council of Exchangors, The Society of Exchange Counselors or Steele 300 Strategists. These events offer an opportunity to do actual transactions in a structure you have to see to believe. See for the first time what some have described as the “Commodity Trading Floor of Real Estate”. This is a 50 year old concept and the best kept secret in real estate practice today! Magi Bird, EMSMaster, CEO of www.RealtyEquityMarketor.com and Founder of Remcor Educational Systems; Author and Speaker for NREIA and Designation Instructor for the National Council of Exchangors; is available to Speak at your next Convention. Email firstname.lastname@example.org or www.REMarketor.com.
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