February 2009

The Principle of Extraction

My original document entitled The Ten Commandments of the New Real Estate Economy sets forth a set of new economic principles…laws, if you will, which will need to be adhered to in the Third Economic Wave of the real estate industry, known as the Consumer-Centric Era. This blog, Extract, is a derivation of the 9th Commandment which reads:

Thou Shalt not Self-Capitalize but Extract

“Technology,” said Paul Zane Pilzer, in his 1990 book, Unlimited Wealth, “defines a resource…and determines our ability to find, obtain, distribute…”
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# 8 – Why Buy What’s Free?

The Ten Commandments of the New Real Estate Economy form a blueprint for thinking about the economic models associated with contemporary real estate brokerage firms. The eighth commandment is:

Thou Shalt not Attempt to Purchase Markets

Many owners have been led to believe that we can buy market presence and therefore, inherit the dominance that comes with such presence. This has resulted from the merger and acquisition mania that has permeated the industry. Is this good REALonomics?
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ISMs in Your Model – 7th Commandment

ISMs are a part of economics and certainly a part of the real estate industry’s operating models. ISMs, misunderstood and misapplied, have created problems in the world at large and the real estate industry is no stranger to the same quirky phenomena.

From a REALonomics standpoint, there are two ISMs positioned at the north and south poles of our 2007 economic spectrum. Like water and oil, they mix not…they are antithetical to the Third Economic Wave of the real estate industry, known as the Consumer Centric Era.
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Cat Counselors…Herding Chaos

Economics, as a discipline, is about the management of assets as a priority. Indeed, REALonomics has addressed the management of the real estate industry’s true business asset, the markets.

Like Cat Counselors, real estate company owners have spent inordinate amounts of time attempting to manage real estate practitioners in ways as bizarre as the industry itself. Many owners will privately acknowledge their dissatisfaction over the requirement to engage in herding chaotic environments filled with self-serving independent contrators that distract them from true ROI engagement. What should owners manage?
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Jack’s Beanstalk, the Asset Fairy Tale

This, the fourth installment of the Ten Commandments of the New Real Estate Economy, addresses the asset fairy tale plaguing our business models. For a moment, let’s set aside Jack and the Beanstalk thinking and ask ourselves, what is a real estate company’s core asset?”

Let’s go back a few decades to the beginning of the Second Economic Wave (circa mid 1970s until 1994) of the real estate industry; it is here that we begin to see the struggle for asset definition coming clearly into focus. The Second Economic Wave is the era of the agent-centricity; wherein the agent-dominated business models began to emerge and with them the redefinition of “brokerage asset.”
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