Rock Solid Melt Down - Tantrum in SD
REALonomics Op-Ed
It looks like some Internet visionaries just don’t fit the mold. Or, perhaps, the mold is now being broken. Or, worse yet, maybe there is only one mold at Prudential Real Estate Affiliates (PREA), into which all brokers must be poured…PREA’s. Is the insecurity inherent in our models finally exhbiting its pathos in ways akin to the melt down of Brittany Spears?
Everyone on the inside of the real estate industry’s news networks is buzzing over the Prudential ouster of Zillow and Trulia from the San Diego Real Estate Conference of Prudential Real Estate Affiliates. Inman News reports brokers in “dismay” over Prudential’s insistence that Zillow and Trulia pack it in and hit the road…20 minutes prior to show time!
REALonomics predicts the damage controllers are going to be out in force.
The Bad Business of Messing with Owners
When the likes of Ed Krafchow, President of Prudential California Realty, calls his franchisor to task for “interfering” with his job, you know you have an issue on your hands.
Franchisors only occasionally show their true colors. So, let’s cherish this moment. Prudential flashed its fury against Trulia and Zillow with a spasm of insecurity. Too many franchisors operate in cultures of control that have been cleverly designed to exploit their franchisees (the broker/owners).
Franchisors have been able to charge brokers fees coming in, going out and if allowed, at all points between, while excercising market control techniques that feather their own nest, often at the expense of their clientel, the owners.
The Knock on the Door - Opportunity Coming to Dinner?
Soon, maybe sooner than we thought, Broker/Owners are going to begin their embrace of open market business models and opt out of the control schemes that lock them into relationships that are out-dated, unnecessary and counter productive to both their existence and their ROI.
The market downturn is creating a definable level of stress and anxiety within the industry. Perhaps the angst is finally going to help us all create better business models for the new real estate economy that actually empower broker/owners to take back the markets.
Prudential’s tantrum will only serve to fuel more discontent and foster questions among their franchisees that will ultimately lead to better consumer-centric business models for the real champions of the industry, the owners.
Damage Control - Diminishing Reality
Trulia’s main man, Sami Inkinen, apparently attempting make light of the situation, minimized his ouster as something resulting from Prudential not knowing they were coming and that “business is business.” Sami, it’s us…we know what this is…the clash of models. It’s about referral fees being charged to Prudential brokers for services you can deliver without fees. It’s the proverbial money trail. It’s freedom models versus control models. It’s Prudential’s executives whispering “get rid of them before we are found out.”
Zillow immediately went into spin zone management that would make Bill O’Reilly and the “Factor” envious, mumbling, according to Inman, something about the timing not being right…”maybe next year.”
The tantrum in San Diego was bound to occur, it was only a question of when, where and with whom the melt down was going to exhibit itself. REALonomics, although not necessarily an advocate of Trulia or Zillow, believes this is a pivotal sparring match that signals something of economic consequence to the real estate industry. Let’s not sweep this under the carpet too quickly. It’s new meeting old. Young lion meeting old lion in the quest for pride domination.
Then too, we can’t blame Prudential for wanting to protect their 20% referral fee being charged to brokers who participate in the Yahoo! program…after all, didn’t someone say, “business is business?”
Is this Crack the San Andreas of RE?
We are finally seeing the cracks in the fundamental foundation of traditional real estate business models. Forget for a moment that it involved Prudential and instead focus upon what the incident means at its deepest level. It means that the traditional real estate model power players have finally admitted that some neo-broker or, perhaps non-broker models, are a threat to their economic viability. This is what this truly means!
The nightmare scenario for some franchisors is the power of technology and the Internet to erode their imposed geographic boundaries known as “MSAs” and “ESAs” crippling their ability to franchise by zip code and thus control markets to their economic benefit.
REALonomics is happy, not for the ouster, but for the event itself, the show, the display, the clarity of definition this brings to the industry. As always, follow the money trail. Once again, it truly is about REALonomics.
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The crack is there and the earthquake is about to begin. The business models of the traditional brokerage firms are already getting challenged and it’s only a matter of time. The consumers want and need change and since they pay all of our (agents) bills in the end, that’s who truly gets the final say.
And like they way Trulia and Zillow handled the whole thing - they should give Prudential some tips on PR.
“Soon, maybe sooner than we thought, Broker/Owners are going to begin their embrace of open market business models and opt out of the control schemes that lock them into relationships that are out-dated, unnecessary and counter productive to both their existence and their ROI.”
An excellent post, gentlemen–in fact one of the best I’ve read in recent memory. I’ve been waiting for some time for a voice such as yours to articulate the heretofore un-articulated.
This post struck a vein and reminded me of an issue that has been troubling me for quite some time. That is I could never understand why the efficiencies in business processes brought on by advances in technology and the maturation of the Interne–and the savings they represent for the “controllers”–have never been passed on to the “clients/broker-owners.” To the contrary, instead of passing on cost savings (too many to enumerate here), the controllers of the traditional business model have only increased their royalty and advertising and referral fees–thereby taking a “double-dip” at the expense of their clients. Unlike most other business models who have passed on savings to the consumer, and there are numerous examples of this, the traditional real estate franchise models have only taken advantage of their clients ignorance in recent years. The clients, well, it’s kind of like “they don’t know that they don’t know” type of situation that has gone on for far too long.
No more!
Perhaps NOW is when the switch occurs,when the controllers are shut down, when the clients are finally free to capitalize on the new openess, and when the young lion strikes down the old snaggle-tooth for pride and dominion.
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