realonomics

A Broker from Miami believes he has discovered a possible solution to the real estate market crisis facing the United States. Surprisingly, the solution was discovered on Mars. Yes, Mars!

“When I first saw the NASA photo, I knew instantly that is was cocaine embedded and growing in the Martian real estate,” said Marty Turf, Broker/Owner of Turf Realty in Miami, Florida. “NASA said it melted when they scooped it up…oh, come on…the wind blew it away, everyone knows what happens when you try to scoop up snow when the wind is gusting,” he replied, sniffing loudly to clear his sinuses.

NASA’s official response to the photo was, “it’s just ice.” Turf believes it is not ice but a sign of real estate recovery through new, highly innovative marketing approaches…in fact, he has approached the National Association of Realtors (NAR) with a proposal that would allow certain properties to be induced with approved narcotics in order to improve their value.

NAR Considers Several Proposals

Marty believes that real estate cocaine may provide a solution to the real estate market depression hitting Florida and the rest of the country. He is determined to seek approval from local and national authorities, such as NAR to hide (embed) cocaine in the soil of carefully selected distressed properties, thus increasing their street value (the house, you dummy! Not the cocaine!).

NAR gave no immediate or official response. But insiders tell us that NAR is reviewing a proposal from Mr. Turf. A former NAR official, wishing to remain anonymous, remarked, “This is the first glimpse of any new marketing strategy that could help bring the recovery we’re all looking for…I for one would favor seating a task force to look into the concept of marketing property that has been infused with prescription drugs but not cocaine, heroin and other hard drugs…this would allow property owners and their personal physicians some degree of anonymity under the physician/patient confidentiality ethic.”

NAR faces many obstacles as do Broker/Owners who are considering adoption of new, innovative and exciting marketing programs that move away from websites, real estate magazines and blogs. Since the Martian photo hit the Internet, ideas have been pouring into NAR to consider including traces of Prozac, Ambien and other prescription solutions as substitutes for Martian or other cocaine.

“Nothing could be more consumer-centric than this, let’s forget blogging and social media for just a minute or two and look at what people really want,” said Betchu A. Dime, one of the real estate industries preeminent bloggers on her blog www.WhiteXmas.com.

SNORT Speaks

One analysis submitted by the Washington based group known as the Strategic National Organization for Realty Transformation (SNORT) boldly proclaimed, “Property values could be immediately and substantially increased…almost overnight…creating a wave of new mortgages, inspections, title and escrow services and yes…a new round of wealth.”

SNORT’s report also stated, “People who are standing in the way of this initiative proposed by Mr. Turf are standing in the way of a new real estate appreciation cycle that could escalate prices as much as 50 percent in just a matter of days.”

One Tampa homeowner declared, “We have all been funding NASA for years, it’s time we got something for our money…I’m in favor of cocaine marketing solutions!”

A Palm Beach condo developer had his own spin. “This could revolutionize the dying condo market, bring a whole new definition to ‘undivided interest’ and provide association members with new reasons to celebrate!”

SNORT’s Public Relations and Marketing Manager, Line S. Upsomemore, reports that phones were lighting up from cities around the country. “Most people just don’t care what it takes, they just want their property values high and the opportunity to find a buyer,” said Linus.

NAR could not be immediately reached for comment. No response is expected until after the 4th of July holiday weekend.

Popularity: unranked [?]

We are facing a new syndrome. BBS. Busted Broker Syndrome. Exactly what is BBS, what are its symptoms, what creates it and how is it treated?

“Busted” is not used here as an economic term rather, it is an emotional and mental term that refers to the ability of Broker/Owners to cope with the industry and its myriad pressures, changes, challenges, costs and operating demands.

“I’m burned out, I’m broke and I am busted…I can’t keep up any more,” said one broker to me in a recent conversation. “I want to execute…I can’t execute…I don’t know what to do anymore and I no longer recognize the industry I have been a part of for more than two decades.” “The money is gone, my strength is tapped, my will is gone and my attitude is in the tank…I’m on the edge.”

What is BBS?

BBS is an insipid malaise. Although not officially recognized by the Centers for Disease Control (CCD), make not mistake about it, BBS is real. Ask any Broker/Owner who is willing to engage in a transparent discussion.

BBS begins with the onset of market change, disruption and rapid business evolution that renders the Broker/Owner’s ability to adjust his/her business model to the prevailing transformations taking place within the industry.

Result? BBS increases, confusion, tension and economic and personal stress on Broker/Owners, often causing them to lose perspective regarding their appropriate roll as visionaries and leaders within their company. This diminishes their ability to consistently deliver sound, well-thought-out business solutions to their organizations.

BBS is primarily rooted in the potting soil of industry and market transformation where demands far outweigh the capacity to deliver solutions. BBS is stress that Broker/Owners face in a rapidly changing industry. BBS erodes the self-motivation, self-confidence and even self-esteem of Broker/Owners.

BBS thrives wherever a Broker/Owner is operating a traditional brokerage business environment that is confronted with changes it does not understand, cannot readily adapt to and seemingly cannot control. This is the optimal eco system for the onset and growth of BBS.

Symptoms of BBS

BBS begins with a set of often ignored emotional symptoms that find their ultimate expression in the actions and reactions of the Broker/Owner. Again, rapid, unchanneled and uncontrolled change is where BBS thrives…change is not where Broker/Owners thrive…thus, the two are in conflict from the outset.

Symptoms of BBS start with a sense of fatigue and diminished motivation when faced with the daunting challenges of a rapidly evolving industry. Stress begins to cloud business judgment and creativity is replaced with survival instincts…hanging on, hoping and waiting for a new market cycle and a general inability to create outcomes.

Other symptoms include poor financial judgments, borrowing excessive amounts of money in order to keep the brokerage operating, neglect of fundamentals such as recruiting and market expansion, technology and Internet solutions designed to curb overhead.

Under these conditions loss of hope, despair and depression can take hold of a Broker/Owner so that he/she can actually become immobilized and sometimes unwilling or unable to cope with the obvious needs of his/her company. Things grind down and sometimes the organization ceases to exist as it once did or, unfortunately, doors are closed.

Broker/Owners are becoming increasingly disillusioned with their position within a rapidly changing and chaotic industry. Like anyone, when a person of leadership is overwhelmed with too much change too fast, that person can feel as if he/she is clinging to life on the edge of a precipice.

Symptoms of BBS often include an attempt to move faster than is necessary, less than optimal decision-making, diminished objectivity, poor financial decision-making, short-sightedness, erosion of personal relationships and a sense of doom and gloom. Folks, this is real stuff!

BBS is real. It’s not a joke. This post is not hyperbole or satire. This is not humor. We are dealing with real people who run thousands of real estate companies. We at REALonomics talk to Broker/Owners almost every day. We hear their stories, listen to their frustrations and attempt to console them by delivering some business solutions to their market and financial dilemma.

Something new is emerging as we listen, dialogue and coach. There is a very real set of emotional, financial and operating issues facing Broker/Owners specifically and real estate practitioners in general. As an industry we have little or no emotional or financial mechanisms for assisting career Broker/Owners who are overwhelmed. Why?

Causes of BBS

What are the specific causes of BBS? There is an emotional, psychological and spiritual dimension to all businesses. We call it “culture” or “model” or something less dramatic in order to distance ourselves from discussing sensitive, deep dimensions of an owner’s dilemmas in operating and sustaining a real estate business.

The causes of BBS are diverse and complicated. BBS isn’t like the common cold that comes and goes in a few days. The influences of BBS take place over the long haul. BBS gains momentum within a Broker/Owner who really cares, who keeps plowing his/her field…the one that takes care of his/her agents, participates in the local, state and national organizations and is always trying to do what is right.

BBS has a common set of causes, however. The biggest cause of BBS is rapid, overwhelming change followed by a lack of preventive inoculations such as access to powerful business models that work, personal coaching and capital.

BBS is caused by a sense of inadequacy that grips an owner. This inadequacy, left unchecked, extends itself into the capacity of the Broker/Owner to implement new operating models called for in the consumer-centric era.

BBS can cripple an Owner’s ability to re-inventing his/her business, creating a perception of isolation (yes, one can be public and still be isolated). BBS works over time creating confusion, anger, guilt, frustration and a sense of hopelessness that can overwhelm Broker/Owners.

The real estate industry is clearly in the throws of an upheaval that can potentially annihilate our most precious resource, the career leaders, Broker/Owners. These are the men and women who have been on the front line for a long time carrying the financial and leadership load. These have become the vulnerable ones.

Solutions and Cures for BBS

Unfortunately, there is no quick-fix solution. However, if our industry values Broker/Owners, and we know it does; and if the franchisors value their Broker/Owners, and we know they do; and if our myriad local associations, core service providers and others value the important place Broker/Owners occupy within the industry, we should have professional, business and financial support mechanisms in place that can bring assistance to Broker/Owners in time of need.

REALonomics believes that the plight of Broker/Owners is reaching dangerous levels. Much of the situation is swept under the rug as Broker/Owners quietly close their doors and walk away from careers that sometimes span decades.

REALonomics believes that the situation could become pandemic resulting in the loss of much of the industry’s true talent and leadership. REALonomics believes Broker/Owners are core assets to the industry and assets should be treasured, protected and supported during difficult times with business and financial assistance as well as development coaching and peer support.

We face a couple of huge glitches standing in the way of assistance. These have always been part of the culture of being a Broker/Owner…pride and ego. Our healthy sense of self-determination among Broker/Owners is good and admirable…mostly. But under these circumstances and at this time, some Broker/Owners will have to stop pretending, drop the pretense, lose the ego and reach out for help to those they can truly trust and those who actually care about them as people, not as pawns in the real estate industry’s game of market chess.

How many psychiatrists does it take to change a light bulb? Just one, but the bulb has to really want to be changed.

Popularity: unranked [?]

Ours is an industry not altogether unlike Rubik’s Cube®. The solution to the cube was once something we played with for hours and hours. After all, we had plenty of time and no one was in a hurry. Those days are over. Today solving the cube quickly has become the stuff of world records. If you can’t “speed cube” don’t waste your time.

Contests are held to determine who can execute the exact pattern in the least amount of time. The world record holders are those that can manipulate the cube with the greatest amount of speed. Solving the cube is no longer the game…time is the game.

I call this game “Speed Cubing” and that’s what Rubik’s Cube® is all about today. Solving the puzzle in a slow, thoughtful and deliberate manner has become boring…doing it fast is the new requirement. The Rubik’s Cube® culture now seeks speed solutions…solving the puzzle the old methodical and mechanical way is insufficient.

WATCH THIS VIDEO, THEN, DO YOURSELF A FAVOR AND READ ON:

Speed is Everything. Understanding the pattern is everything. Execution is everything. Agility is everything. Having a well oiled cube is everything…hang-ups are the death knell to solution. It’s not the end game we now seek with the cube…it’s the ability to execute the solution faster and faster and faster and faster.

Moving quickly and managing the manipulation of the real estate cube is the new challenge facing broker/owners, agents and mortgage and title services. Keeping pace is no longer going to be enough. Merely being in the game is no longer sufficient. The tortoise and hare analogy has become all hare and no tortoise.

Flow, adaptation, rotation, pattern manipulation, agility, flexibility, bending, stretching and beating the clock…that’s what we face as the new challenge to our business models. Running at the speed of sound and setting land speed records is how companies will need to manage their models in order to simply stay in the game.

Ours is a 24/7/365 hundred yard dash followed by a 24/7/365 hundred yard dash a 24/7/365 hundred yard dash a 24/7/365 hundred yard dash a 24/7/365 hundred yard dash…next year we will convert this into a 50 yard dash! When we move from a 100-yard dash to a 50-yard dash the speed of our agility and business adjustment will need to be one-third what it was, not one-half.

The distances Broker/Owners will be required to traverse each day will be shortened and the speed required to move from point “A” to point “B” will not be governed by new formulas. In the new race we will be faced with “new real estate model math” a formulas where ten divided by two (10/2) will not necessarily equate to five…but rather, some other solution. What is our plan for working with the new real estate model math where the formula solutions become more bizarre than we ever imagined, such as:

Our point is this; the math we once used is being changed by the realities of the market and the demands consumers are placing upon us.

Our Problem? We can only speed so long. Burnout becomes inevitable at some point. The laws of physics enter into the framework at some point, limiting our ability to shave off another .0000001 second. Collapse occurs when we are pushed too far…too fast…and from too many angles. Exhaustion sets in when any business owner in any industry is faced with models he/she cannot channel, control and direct toward profitability.

Change is the model of our future. Managing and controlling multiple changes in the molten hot crucible of speed is the new required brokerage management skill set. Building businesses with appropriate pace and rythm, building operating models that allow for regulation of the tachometer and possessing the skill to regulate the business throttle has become paramount to adequate and sustained ROI. No speed management, no profit. No change management, no ROI.

We’re only Human. We cannot perpetually run our organizations pedal-to-the-metal if we want to stay in the game. Yet, that is what many Broker/Owners are currently doing. Our operating reference points are being changed and the operating cultures are evolving to a higher plane…morphing into a new life form. As REALonomics has been predicting for years that, “new rules are being written that will govern how the real industry industry operates…and, although we could be, we are not necessarily the scribes.”

Broker/Owners (agents too) are going to be challenged like never before, creating new demand, new rules and new stress in an already vice-like, pressure cooker. Watch for our next post.

Popularity: 10% [?]

In a previous post (Nori’s Leaky World) we spoke about the real estate industry being built, in part, on a control model.

Throughout our history we have deployed control-based business models. Like the real game of Monopoly® our industry has created its own market game board governed by a set of rules we wrote and occasionally edited to extend our control. An owner’s business model was based largely on mechanisms designed to control information, markets, brands and for a long time we even tried to control the real estate agents who were part of companies.

Most importantly, we have historically attempted to control the consumer.

Control and Dominance

Large segments of the real estate industry and its core service providers still engage in Realonopoly, a game about market control and dominance. In the game of Realonopoly we carve out spots within defined markets…we then seek to control our position, until, as we have all experienced in the game of Monopoly®, we can no longer pay the rent; a position in which too many owners find themselves today.

Within real estate, mortgage and title companies, creating one’s board is the first initial step; everything flows from there. Position on the board can mean power and power typically equates to a kind of control measured by muscle flexing. Control has historically been everything in the real estate industry.

The ultimate control was consumer control.

Losing control creates a depression and a void…a crack where others can slip in. Yet, it is the contention of REALonomics that each era in the historical timeline of the real estate industry unravels when control is challenged and the challenge typically stems from a change in informational technology…the means by which people gain access to real property data.

Collaboration and Community Forcing Change

Business models typically change when the old models are confronted by new technologies and people empowered by concepts of innovation. Most of the change in business modeling is induced by innovation driving primarily by advances in technology. These advances in real estate technology create a “democratizing” of information, which then empowers others to innovate, challenge the control status of the prevailing models.

This is precisely what has taken place in the real estate industry. REALonomics has presented this as the Democratization of Real Estate, a time where the industry loses its grip on the game of Realonopoly and finally is forced to abandon its position in favor of a new board game. Think of this concept as three distinct eras as follows and notice how transitions occur when new technology is introduced…then, notice how control is relinquished as information is decentralized and ultimately democratized.

Examine the following illustration, extracted from our archives. It demonstrates the evolution of the real estate industry’s business models.

Control works well in business model climates where informational access and free exchange are blunted, where collaboration is limited to the controllers and where the rules only change when the controllers are finally confronted by free thinking people who are initially labeled as rebellious fringe lunatics.

We have now entered an economic era with a new personality being formed by collaboration and communities, rather than control and corporate bureaucracies. Each consumer who is empowered with Internet access is empowered to shape our business models and help us write the rules that will govern The New Real Estate Economy.

There is a new board game emerging that will redefine how we will play the real estate game tomorrow, next month, next year and for quite some time in the future. It’s now a game without many rules, one of collaboration and community, of open, free-flowing dialogue where one person is just as powerful as a group. How do our current models stack up to his new reality.

The question we ask is “Does anyone still want to play the old game, Realonopoly, a game in which we predict there will be no winners?”

Popularity: 15% [?]

The real estate industry has always tried to be a closed environment. The real estate industry has traditionally been a control environment. With few exceptions, our models have typically created an “us” and a “them” or, those who are insiders looking out and those who are outsiders looking in.

We are now facing the prospect that we are them and they are us! The once safe environment of our cozy aquarium is being invaded by “them” in droves. They are asking for all the rights to the environment heretofore granted to the “fish”…us. Or, they are proposing that we leave the tank and join them in a new form of existence.

In traditional business models, secrets are often deemed necessary and access to “insider” (the fish) knowledge is viewed as a threat. Free, open and unrestrained information is usually viewed as a corporate debacle and dangerous to the survival of insiders.

Our Real Estate Environments

The unraveling of any business environment starts at the fringes of the model and moves inward toward the epicenter. That is what is occurring in the real estate industry. The hairline cracks in our closed tank system are becoming open gorges where all that we have held sacred (secret) is spilling into the streets where the distinctions between “us” and “them” are being blurred by the Democratization of Real Estate.

Stefan Swanepoel recently posted the thought provoking question “Is the Future of Real Estate in Google’s Algorithm?” The mere addressing of this interrogative forces the industry to reexamine its operating models in the midst of a consumer-centric era.

REALonomics remains uncertain with respect to the ability of the real estate industry to retool itself for life in a new environment.

Learning to Live Life outside the Tank

My daughter once had a goldfish she affectionately named Nori. Nori lived in a small aquarium on the nightstand next to her bed. Twice each day Nori was fed from an entity outside the aquarium. Nori peered at us, we at Nori. Nori, without fully appreciating her situation, was living a life of total dependency on my daughter.

The analogy hardly needs explanation. We are Nori. Nori is us. My daughter is the consumer. She is one of “them” to Nori.

When it came time to clean Nori’s aquarium, we would all gather around and gently scoop her out with a small net, place her in a temporary environment, clean the aquarium and then return her to the environment to which she had become accustomed. Nori could not live outside the tank…her existence depended upon a certain environment.

Can the real estate industry learn to live outside the tank of traditionalism in a world where the operating rules are decidedly different? Can we live without the aquarium? Can we evolve from dependency on controlled isolation to the open world of life without gills?

Can we learn to live and operate the real estate industry and our local business models outside the tank where we have created and experienced a deceptive pseudo security?

Can we shed self-imposed gills and fins and dependency and control in favor of the freedom of an open sourced environment where tanks are the stuff of folklore and where our lungs can breathe the air of innovation and partnership with “them?”

Popularity: 16% [?]