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REAL Trending Episode 87: Ignoring the Press, Planning for Election Outcomes, and Brokerage Profits and Returns

On REAL Trending episode 87, we’re going to talk about ignoring the press, planning for election outcomes and a thought about brokerage profits and returns.

Steve Murray:

From REAL Trends, the trusted source for real estate industry news and trends. This is REAL Trending episode 87. We’re analyzing the most important trends affecting brokerage companies and their agents. I’m Steve Murray, president of REAL Trends. Today, we’re going off the beaten path and we’re going to talk about ignoring the press, planning for election outcomes and a thought about brokerage profits and returns. What do these trends mean and how can brokerage firms best deal with them? First, a quick message.

Ready to sell your firm? Over 760 leading firms have entrusted REAL Trends with the sale or purchase of their most important asset, their brokerage company. With a deep knowledge of the real estate industry and current market trends, REAL trends president Steve Murray and vice-president Scott Wright, can represent firms of all sizes models, brands, and locations in the United States and Canada.

Steve Murray:

So ignoring the press. Well, everybody seems to have been stirred up by the news about the judge and the antitrust case and about Zillow opening its own brokerage. And the, I buyers getting stronger and going public, and the publicly held real estate investment trust, investing in other billion dollars in buying single-family homes for rent and everybody’s chattering and commenting on this. And that’s really all it’s good for, just chattering.

We can do the analysis ourselves on Zillow versus the brokerage industry and a better comparison, is Zillow versus Redfin or Zillow versus successful teams. And we’ve done all kinds of economic modeling on it for some of our clients. And you know what? Not that big a deal. Really isn’t, but sure causes a lot of chattering. And if you’re spending a lot of time chattering, you’re probably not spending a lot of time on your business.

Steve Murray:

And when we talk to significant leaders in the industry, and their concerns and their time is spent thinking about all these different new things that are going on. We are reminded by Tom Hanks in the movie Bridge of Spies, an insurance attorney hired to represent a captured Russian spy. And they’ve got this spy in jail and they’ve got him good. They’ve got him clearly spying.

And he tells his client, “Why aren’t you worried?” And the spy’s response, a number of times in the movies was simply, “Would it help?” It does nobody any good in the business, agents, teams, brokerage companies, national networks, to sit and fret about all these different news stories.

Steve Murray:

There are intelligent top-flight people running their businesses and dealing with these issues as they move along. But just remember this, all the evidence, all the facts, still support that relationships are underneath the relationship between buyers, sellers, and agents.

And it’s still relationships between agents and their brokerage company. In fact, we’re an industry of interlocking relationships that make the whole thing work, that delivers the desired outcome. Our thinking is, less time focused on the press, more time on building stronger relationships.

Steve Murray:

Planning for the election outcome is our second topic. Election will be the following week, next week. Somebody’s going to get elected somewhere in the next month, when they get around to counting all the ballots, whenever they come in. And there’ll be enormous outpouring of angst and anxiety and anger about the outcome of the election, but ultimately, we’ll have an outcome of the election. And most Americans will still want to be concerned with their jobs and their children and their housing, and where they may be taking a vacation next year, if at all.

And will the vaccines come out, will they work? Very real concerns. When you consider planning for election outcomes, it’s best to remember, that somebody’s going to win this one way or the other. And yes, public policy will be affected and incomes and tax rates and all kinds of things and regulations. And those will come down the road, one way or the other, good or bad.

Steve Murray:

But in the meantime, you need to plan for your business. You need to plan to know how you’re going to recruit, retain better people, whether they’re agents or staff. And if your agents, how are you going to stay in touch or as Larry Kendall, our friend at Ninja would say, “Stay in the flow with your clients and customers and friends.”

Steve Murray:

Certainly, we can say, one party gets elected remains in control. Housing market will be basically like it has been, although it will slow. This surge will slow in 2021. There’s no question about that. We don’t know by how much. Two, we know that there won’t be big increases in regulations on business or increased tax rates on the returns of business.

We know the other party proposes to raise tax rates, raise regulations of a whole kind, that we’ve already talked about and written about. But let me suggest to everyone who cares to listen, stay focused on your family, your relationships with your agents and brokers, your friends. Stay focused on the fundamentals of relationships in our business.

Steve Murray:

Last comment on a thought about brokerage returns. When we look at the sweep of history of the last 40 years, when the incumbent brokerage companies in the eighties were faced with significant competition from low-cost RE/MAX and top producing agents, were moving to the RE/MAX model, it took time for those brokers to adapt, but they did, and they increased their splits to become more competitive.

They also, to enhance their returns, added mortgage and title and escrow and property management. Later in the nineties, when competition intensified again, as Keller Williams entered the market, brokers started adding things like transaction fees, marketing fees, and technology fees. As again, they had to increase splits.

Steve Murray:

Today, we’re seeing another increase in competition for good, productive agents. And we’re seeing the split move more and more in favor of agents and less in favor of brokerage companies. And we’ve got mortgage and title and escrow and property management and property casualty. We are continually asked, “Well, what do we do now?” Well, one lesson we’ve learned from the past 40 plus years in this industry, is the entity or enterprise that is closest to the consumer.

The buyer and seller, is where most of the returns or at least the best returns are made. So for brokerage companies, we’re suggesting a new approach with agents of a symbiotic nature, where a brokerage provides services to agents in return for having access to those agents databases, for things that do not interfere with or interrupt an agent’s relationships with their customers in the buying and selling of homes. More on this, in a later REAL Trending episode, and in REAL Trends.

Steve Murray:

Learn more about industry trends and success tactics for brokerage firms, agents and teams, as well as listen to past real trending on Apple podcasts, Spotify, Google Play, and others. Visit www.realtrends.com/channels/. This has been Steve Murray, see you on the other side of the elections.

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