The Next Age Of Real Estate
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The Next Age Of Real Estate

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The Next Age Of Real Estate The Next Age Of Real Estate Presentation Transcript

  • 1
    The Real Estate Paradigm Shift:
    Real Estate’s “Next Age”
    ©2010 Nextage Realty International • NextageRealty.com
  • Paradigms are a belief system – the way we view different aspects of the world in which we live and operate.
    Our paradigms shape the way we do business and make decisions.
    Paradigms are usually difficult to change, and often times restrict our ability to see coming trends and embrace new market innovations.
    2
    Paradigms
  • 3
    Typical Paradigm Shifts
    Horse & buggy The Automobile
    Trains Airplanes
    Radio Television
    Paradigm shifts continue today
    Paper Books Digital Books
    Videos Online Rentals
    Real Estate Franchising, 100%, Revenue Sharing
  • Visionary
    Courageous
    Risk-Takers
    Thick-Skinned
    Leaders
    A Bit Crazy?
    Are You an Agent FOR Change or
    a Victim OF Change?
    4
    Traits That Define the Paradigm Shifters
  • The real estate industry has been evolving for more than four decades, seeking to find a “better way”.
    But in the past few years the pace has accelerated significantly as the challenges presented by current market conditions expose the shortcomings of the existing business models.
    5
  • The time has come to shift business paradigms and move the industry into its next age - operationally, structurally and professionally.
    6
  • “Real estate has never experienced such a ‘perfect storm’ of events and factors, which have combined to force wrenching, dramatic changes upon a staid industry not accustomed to dealing with such seismic shifts.”
    - Michael McClure, CEO, Professional One
    Source: Swanepoel Trends Report 2010
    7
    The Perfect Storm
  • Until the 1960’s the real estate industry remained largely unchanged – relatively small brokerages with a few agents focused on a particular segment of a larger market.
    Then came…
    8
  • The Evolution of the
    Real Estate Industry
    The Birth of Franchising – Stage 1
    Large, multi-office regional companies became dominant in the 60’s by:
    • Creating massive advertising campaigns in local media to build brand awareness
    • Developing their own sales training programs
    • Establishing their own pre-license schools to improve recruiting efforts
    • Building offices with large numbers of agents
    9
  • The Evolution of the
    Real Estate Industry
    Franchises gave the smaller independent broker a way to compete by:
    • Giving them a common brand name that was recognized across the country
    • Providing coordinated sales training for all agents
    • Coordinating group advertising in local markets to create greater exposure
    • Offering recruiting focus and pre-license training to increase agent population
    10
  • The Evolution of the
    Real Estate Industry
    Franchised and independent offices alike were structured similarly:
    • Most agents were on a 50/50 commission split
    • High producing agents received as much as 60/40
    • Brokers paid for most marketing and operational expenses for agents
    • Most agents were loyal and movement from one company to another was rare
    11
  • The Shift to the “I” World - Stage 2
    100% concept gains popularity:
    • Agents operate their own business within a business
    • Agents pay a flat monthly fee (desk fee) plus their own expenses & keep all or most of the commission
    • Agents begin branding themselves at the expense of the company as the marketing emphasis shifts from company to agent – “WE” to “I”
    • 100% companies offer little support to agents as agents operate almost independently from company
    12
    The Evolution of the
    Real Estate Industry
  • The “I” World – Stage 2a
    The 100% concept morphs into Freedom Shops:
    • Agents pay a lower fee – as low as $25/month plus a transaction fee
    • Agents receive very little to no broker support
    • “Everyone for himself” – against everyone else
    • Little to no camaraderie
    • No company loyalty
    • Ultimate example of the “I” World
    13
    The Evolution of the
    Real Estate Industry
  • Residual Income Model – Stage 3
    Profit Sharing (Keller-Williams):
    • Agents are encouraged to help build the company by recruiting other agents, and if they do, they will share in the profits generated by the company
    • Very popular as agents search for income beyond personal production
    14
    The Evolution of the
    Real Estate Industry
  • Residual Income Model – Stage 3
    Revenue Sharing (Exit, Avalar):
    • Agents are encouraged to help build the company by recruiting other agents, and if they do, they will share the revenue generated by agents
    • Very popular as agents search for income beyond personal production
    15
    The Evolution of the
    Real Estate Industry
  • Can these models help brokers and agents meet the challenges of the industry today and in the future?
    16
  • For Agents:
    • Limited to earning commission exclusively from their own production
    • Their own production is limited to their available time and energy
    • Continued pressure to perform leads to burnout
    • Not really ”building a business, just “doing” business – income stops when personal production stops
    • Offices are closing because agents are leaving for other industries due to a reduction in income
    17
    Challenges for today and into the future
  • Challenges for today and into the future
    For Brokers:
    • Agent Recruiting – Broker (and manager, if any) are the only ones interested in recruiting
    • Agent Retention – Agents are continually enticed to join other companies with higher commission splits or lower desk fees creating huge agent turnover
    • Brokers lose quality agents that open their own brokerage business - thus training their competition
    • Agents are competing against each other rather than working as a team
    • Desired company profitability is difficult to achieve
    18
  • Most industry leaders agree that the current real estate business models are broken and no longer work for either brokers or agents.
    19
  • What are the experts saying?
    “I don’t think a pure brokerage play as a business strategy is a viable play in this economy or going forward.”
    — Ron Peltier – President & CEO, HomeServices of America
    Source: Swanepoel Trends Report 2010
    20
  • What are the experts saying?
    “In cases where their franchising is faltering, the culprit is most often that the models of the real estate company are not suited for these times.”
    — Byron Ellington – Chief Products Officer, Keller Williams Realty
    Source: Swanepoel Trends Report 2010
    21
  • What are the experts saying?
    “[We are seeing a] decline in the number of ‘big box’ real estate office operations, which simply cannot survive given the high overhead levels typically associated with such large operations.”
    — Michael McClure – CEO, Professional One
    Source: Swanepoel Trends Report 2010
    22
  • “Brokers need to change their business model NOW.”
    — Sherry Chris – Better Homes & Gardens Real Estate
    Source: Swanepoel Trends Report 2010
    23
    What are the experts saying?
  • How have the traditional real estate franchises reacted to the challenges?
    • Multiple franchise brands under one ownership
    • The real estate business model continues to evolve – constantly searching for a way to deal with the realities of today’s market and the challenges of tomorrow
    • Historically independent regional brokers are moving towards franchising
    • NAR now provides much of what franchisors used to
    • Other vendors and suppliers have also filled many of the gaps in tools, training and support
    24
    • Many franchises have cut back on expenditures and staffing, which affects services offered to franchisees
    • Fewer franchises, fewer agents…and lower profits, if any
    • Trouble justifying the royalties paid by franchisees and agents
    • Many franchisees and agents now question the value of the brand name – which most feel is the only real value they’re receiving from their affiliation with the franchise
    25
    How have the traditional real estate franchises reacted to the challenges?
  • Are these the solutions - the proper and necessary paradigm shifts that will lead the evolution of the industry into its next age?
    Is there a business model that will address the challenges?
    26
  • Can any model survive in this economy and marketplace?
    27
    • Traditional models struggle with their “value proposition” – what do I get for what I pay?
    • 100% models struggle with changes in market conditions – cyclical nature of the business
    • Profit sharing models can only share profit when there is profit
    • Residual income potential in revenue sharing models must be large enough to be enticing
    • Regardless of the model, the customer MUST always come first
  • The “We” model of real estate is structured not only to survivein this economy and marketplace, but to thrive when a lot of the other models are consolidating, losing offices/agents or going out of business.
    28
  • The Future of Real Estate
    Stage 4 – The “WE” age
    • The traditional real estate model is broken.
    • Nextage Realty is built for the future of real estate!
    • Nextage Realty’s model is leading the evolution of the real estate industry!
    29
  • Now is the future & Nextage Realty is NOW:
    • Strong Franchise Support System
    • Strong Training Systems & Mentor Program
    • Team Atmosphere
    • Recruiting Solutions – National Team Building
    • Retention Program
    • Unlimited Earning Potential
    • Predictable Residual Income
    • Consumer-Centric Focus
    30
    Now…Is The Future of Real Estate
  • 31
    There will NEVER be a better time.
    NOW IS THE TIME!
    ©2010 Nextage Realty International • NextageRealty.com