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

  • 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.
    Paradigms
    • 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
    Typical Paradigm Shifts
    • Visionary
      • Courageous
        • Risk-Takers
          • Thick-Skinned
          • Leaders
          • A Bit Crazy?
          • Are You an Agent FOR Change or
          • a Victim OF Change?
    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.
    • The time has come to shift business paradigms and move the industry into its next age - operationally, structurally and professionally.
    • “ 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
    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…
    • 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
    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
    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
    The Evolution of the Real Estate Industry
    • 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
    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
    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
    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
    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?
    • 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
    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
    Challenges for today and into the future
    • Most industry leaders agree that the current real estate business models are broken and no longer work for either brokers or agents.
    • “ 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
    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
    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
    What are the experts saying?
    • “ Brokers need to change their business model NOW.”
    • — Sherry Chris – Better Homes & Gardens Real Estate
    • Source: Swanepoel Trends Report 2010
    What are the experts saying?
    • 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
    How have the traditional real estate franchises reacted to the challenges?
    • 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
    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?
    • 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
    Can any model survive in this economy and marketplace?
    • The “We” model of real estate is structured not only to survive in this economy and marketplace, but to thrive when a lot of the other models are consolidating, losing offices/agents or going out of business.
    • 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!
    The Future of Real Estate
    • 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
    Now…Is The Future of Real Estate
  • There will NEVER be a better time. ©2010 Nextage Realty International • NextageRealty.com NOW IS THE TIME!