realonomics

Gambling can be a vice. Gambling can become an addiction. Gambling can ruin a person, a family, a business and even an industry. Yet, every day, we…all of us…gamble. We pick odds, we grasp a nickel between our thumb and index finger and scratch the thin film from our business ticket, hoping this time the numbers will come up right. Yes, we play the odds, stacked as they are, in a high risk industry where scratching and sniffing is becoming an economic norm, rather than a strange exception found only in back alley crap shoots.

The Dealer and the House

Odds, that’s what it’s all about. Sound economic models refuse to transfer the odds of winning to a dealer sitting on the other side of the table. Good business models don’t have to engage in counting cards, another roll-of-the-dice or a hopeful “hit me” in order to survive.

I’ve been watching the closing of real estate offices, title company offices and who could have missed the now 50,000+ mortgage industry employees let go. Each side of the triangle of brokerage, title and mortgage finding that total reliance on transaction revenue alone is akin to scratching lotto tickets. Eventually, the odds go to the dealer and the house.

Stop the Roulette Wheel, Let Me Off

When is enough of something enough of something? We hear stories of companies “hitting bottom” but is that what has to happen for us to scream, “Enough!”

REALonomics has been calling for a New Model Math that rotates the Rubik’s Cube of profitability more effectively, aligning the colors by means of new formulas whose derivations are technology, the Internet, consumer-centricity and industry transparency.

“Let me off” doesn’t mean, “get me out.” The game continues to be played but with a new set of rules where we, the shareholders, take command of the casino and swap roles with the dealer and the house. We should own the models and command the tables.

Cashing in after a Long Night at the Table

Can this industry break its addiction to luck-based business models, (a.k.a. “independent contractors” and “the next market turn around”)? How does our industry make money apart from its sole reliance upon closings? Can we turn the tide of opinion with the consumer toward a whole new service model that earns their trust and us earnings based upon demonstrated expertise in real estate investments? Is our economic model for brokerage, title and mortgage a model sufficient to create new set of winners, if so, who are they going to be and what constitutes victory?

A broker friend of mine once said to me, “I don’t gamble.” I reminded him, “look, we’re both in the high stakes business of real estate brokerage…that’s a form of gambling because we’re betting on things we can’t control and hoping the odds turn in our favor.” He retorted, “Yes, but the difference between me and others is I’ve stacked the deck…in my favor!” This particular broker is right because his operating survival is not dependent solely on his closing revenue.

Do we know how to stack the economic deck in our favor? Can our industry teach itself how to create profits that are no longer dependent on just closing revenue in a luck-based environment we don’t control or refuse to control?

Gambling can be a vice. Gambling can become an addiction. Gambling can ruin a person, a family, a business and even an industry. We need to scratch and sniff until we find a new economic reality…a deck stacked in favor of us!

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