Consider this: Cable companies, the gatekeepers of home entertainment (with the worst customer service records of most industries) have seen their business model turned on its head.

“Streaming this” and “downloading that” has changed the way people access their entertainment choices and the once-powerful (and single product) cable companies are being forcefully shifted to a new model of not only delivering content but also being the delivery pipeline of content they do not control.

Now consider this: Realtors, once the gatekeepers of home listing and pricing information through their publications and closely held MLS data, (with consumer opinions that hover around that of a stereotypical used-car salesman) are being confronted by the same winds of change.



“Googling this” and “social sharing that” is replacing the exclusive sales information that was once the cornerstone of a real estate agent’s business. The similarities of the forced changes to business models are astounding when put under this light.

Cable companies have embraced the role of the “entertainment delivery supplier”. They have evolved along with their delivery systems to maintain their evolving business model, raising their customer service standards in an effort to not be pushed out of relevance.

Real estate professionals, in the same way, must change their business model to embrace much more than listing and sales data. They need to evolve into a model that is more readily accessible and is more relevant to the consumer than simply processing the home purchase transaction. By becoming a larger part of the home ownership lifespan of the consumer and providing excellent customer service throughout that lifespan, a real estate professional’s future relevance may not be an issue.

In order to find the value of a real estate agent, as seen in the eyes of the consumer, we must first identify the aspects of being an agent that tarnishes the profession:

  • Real estate agents make an exorbitant commission for a minimum of work.
  • Real estate agents force consumers to pay more by causing bidding wars and inferring competing offers.
  • Real estate agents have a minimum education, which casts the profession as a “last choice” career option for those other-wise unemployable or not motivated to find “real work”.

These issues (among others) must be confronted and discussed in public, and the conclusions need to show that the professionals who call themselves Realtors do work hard, always put the interest of their clients first and are educated and experienced within the real estate industry standards so they are capable of providing the expertise and excellent customer service consumers demand.

Should the pay structure shift away from the commission model to a “pay-per-service” model that accountants use? Would a menu board offering “a la carte” service options shine a light on the value of real estate professional’s services to be ordered?

The competition would certainly heat up for listings as consumers shop around for prices and services to compare. The number of people in the industry would decline as many would not survive the scrutiny that a standardized and competitive pricing structure would create.

Should the real estate sales profession have additional certifications to help set the “better professional” apart from the part-timer or new salespeople?

When professionalism and experience are easier to identify in a real estate person’s title, it will allow for a greater understanding of a person’s capabilities in the industry that goes beyond the usual “No. 1” or “Highest selling” marketing testaments many real estate brokers use to set themselves above the larger pool of licensed agents.

Is it possible to open up the home seller/buyer processes so the general public has a better understanding of the complexities involved with each transaction?

The average homeowner will purchase five houses in their lifetime and their experience will vary with each transaction. How can they possibly understand about the intricacies of the transaction when they do not deal with it more often? It is precisely this reason why great auto mechanics and lawyers earn a good living: the average person just expects it to work and for the professional to get them the outcome they desire. We can draw a straight line within these comparisons that anyone can understand.

Real estate professionals must work as a cohesive group to elevate the stature of the profession in the eyes of the consumer, not only in the practice of real estate but in the ways the information is held, to which the consumer now expects greater access.

We can no longer be regarded as gatekeepers but as advocates who work for the better interest of our clients at all times.

Professionalism and dedication to customer service is what will rebuild confidence in the profession, but only if it becomes an industry-wide standard.

26 COMMENTS

  1. Unfortunately Buyers Reps cannot bypass Bill 55 even if the Buyers Lawyer instructs the Buyer Agent to keep the details of any failed offer private.

    If your Buyer requests and then instructs you to keep their details private you are now required to relinquish that Buyer Agency Agreement.

    We contacted 6 highly respected big volume real estate lawyers and asked them if they could agree to a client’s failed offer details be allowed to be retained and stored by someone they have no agency relationship with. All 6 said no.

    • Ross,

      Those “6 highly respected big volume real estate lawyers” who wouldn’t agree to having their “client’s failed offer details retained and stored by someone they have no agency relationship with”, what remedy did they suggest? Did they (lawyers) suggest that their clients should only write successful offers, so as to avoid any conflict with Bill 55?

  2. Robert,
    The paradigm shift that is needed is not something that organized real estate itself can create or embrace. Although the comparison between those that owned the exclusive rights to the data pipe that enters a home and those that owned the exclusive rights to real estate transactional data are in fact valid, the infrastructure both legislative and corporate prevent organized real estate from transforming itself as cable companies have.

    The paradigm shift you hint at is simply impossible inside the ORE as the long list of self serving stakeholders who basically control the direction of the business would see their business models become extinct under the model that is now needed. From Top (CREA) down to the real estate broker owner, all profit from the structure that exists today and their entire businesses rely on a model of numbers not quality.

    Sadly RE/MAX was on a path towards a new “Above the Crowd” standard except the market correction of the 90s and bankruptcies of broker owners caused standards to be lowered as profits were sought. The 90s caused an entire industry to morph into a numbers game and a pyramid model based on an upline revenue stream. The 2000s brought massive agent profits that allowed even more numbers to be added.

    It is simply impossible for the current pyramid scheme to be brought down from within.

    Regards
    Ross

  3. Carolyne,

    While I didn’t consider the original submitter’s article worthy of REM, you’re off-topic, lengthy, letter to yourself here, is theoretically a different story.

    In future, I hope that Jim the Editor will consider such “stand-alone” submissions from regular contributors for publication as featured articles — especially when a contribution might be viewed as a Primer. After all, the benefits of education are limitless!

      • If, per chance, you refer to such appearing in any post of mine, chalk it up to the “Auto correct” fly by that clearly has a mind of its (not it’s) own, even after proofreading. I surely know the difference.

        And, off-topic: clearly there would be more posters joining in and contributing a wealth of knowledge, but for fear of your personally calling them up short.

        Advice, though not asked for – when you are having a bad hair day, perhaps best not to take it out on other people, who give of their own valuable time and expertise in sharing with the industry community.

        Cordially
        Carolyne L

        • Carolyne,

          Anyone who believes in what the say or state, when it happens to also be the truth, has nothing to fear from anyone, here. Furthermore, duress as a concept is also not applicable to a forum, such as this. When someone fears scrutiny, the reason for their fear is more than likely their own. REM doesn’t suffer a problem with those who are afraid; REM suffers a problem with those who are fearless. I do what I can do, to ease REM’s suffering.

  4. What the newbies need to know is that higher Real Estate Education is in fact what’s precisely needed, to be a bigger part of the answer. Would anyone ever suggest that the fact that a lawyer has a Law degree, isn’t of critical importance to their abilities? However, the Law degree follows the undergraduate degree. In terms of what has transpired in Organized Real Estate, we should have been — at least — jumping ahead to teach our: Real Estate Degree, but clearly haven’t been doing so, in most Provinces.

    Think about what is currently required in Ontario (OREA) before someone can apply for a Real Estate Licence. In the Pre-registration Segment one is given a maximum of eighteen months to learn four separate courses that require a total classroom time of: 175 hours — which represents five, 35 hour, weeks. This is far too much time to give someone to learn material that they won’t be putting into practice soon enough. This approach is totally inconsistent with what someone would typically give to a professional career, from a time commitment and from a financial commitment or in terms of a financial inconvenience. In fact, there is far more required of a modern day hair-dresser or stylist!

    The writer of the main article here, further demonstrated his oblivious mind with the following: “Should the real estate sales profession have additional certifications to help set the “better professional” apart from the part-timer or new salespeople?” Robert, this has already been tried for quite some many years, it’s called the: FRI program — a Fellow of the Real Estate Institute of Canada, and the following is what the REIC have to say about their FRI designation:

    “Gain greater skill, confidence and professional recognition in your field.The FRI designation elevates your status as a real estate practitioner who has acquired practical skills and knowledge and met our nationally recognized standards of high business standards and ethics. The FRI designation is acknowledged by the real estate community as a standard of excellence and accomplishment.”

    Ironically, Robert, what Realty Point is trying to accomplish with your plan, to : “transform your identity from “salesperson” to “Broker of Record”, is similar to the objective of the FRI program — in that, there is a suggested financial gain to be had, from a suggested elevated status. From my perspective, as being part of the real estate community, I don’t accept the FRI Designation as automatically elevating anyone’s status, to me — contrary to what they’ve taken the liberty of suggesting is the case, for the Real Estate Industry. Apparently, the most popular FRI course spans three days.

    Ontario and other Provinces in Canada, need to substantially elevate the content of the curriculum that is mandatory as part of the Real Estate licensing process. The curriculum for the Provinces, Real Estate Licensing Courses, need to be at a level or degree and beyond, where programs such as the FRI Designation are clearly redundant and furthermore this would be stated as an objective, publically. It needs to be absolutely clear who is taking the lead regarding the education of Real Estate Practitioners. With the following announcement the REIC is attempting to draw practitioners to them, sooner: “New! We have removed the experience requirement to apply for the FRI designation program”
    I don’t feel it’s in the best interests of consumers or this industry that any identifiable group of Real Estate practitioners should or could have a perceived marketing advantage over others, as a result of a practitioners standard industry education not being close to the level, it should be. Reputation should distinguish one practitioner from another, for the most part.

  5. “Real estate agents make an exorbitant commission for a minimum of work.”

    Really?

    Last time I checked there were just over 64,000 agents in Ontario and just over 25,800 active listings in the province (roughly 16,800 freehold / 9000 condo). Hmmm…that works out to a whole lot of agents doing NOTHING. I wonder how much they get paid for that?

    “By becoming a larger part of the home ownership lifespan of the consumer and providing excellent customer service throughout that lifespan, a real estate professional’s future relevance may not be an issue?”

    Really?

    Keyword Robert “may”. Anyone can list their own property on MLS for a few hundred bucks now a days. Sure we all know that these FSBO properties tend to be overpriced, but those that are “priced right” sell. In fact, pricing it right isn’t hard either. Just take a moment and Google the following: “Sold Listings MLS”. You’ll find a number of sites offering free daily emails containing sold MLS information. What was that thing you were saying about gatekeepers of information?

    “Should the real estate sales profession have additional certifications to help set the “better professional” apart from the part-timer or new salespeople?”

    Really?

    Additional certifications is your answer? Additional certification implies post-licence acquisition. Let’s start with a minimum educational requirement from an established Canadian university? Why is it that you need a degree in law to practice law, a degree in medicine to practice medicine, but just about anyone with a heartbeat can get their Real Estate licence? Does “enrollment fees” and “annual dues” have anything to do with that? And professionalism isn’t taught. As the old saying goes, gentlemen are born, not made. You will either conduct yourself as a professional or you won’t. That’s a moral decision one must make…and no amount of additional certification will change that. As for the part-timers, something tells me with the pervasive undercutting of listing commissions, and what would appear to be a new trend in declining co-operative commission (2.25% anyone), reality may very well dictate that unless you are part of the 5% who can do this full time (without relying on your significant other’s income to pay your bills) the only way to survive in this business is to hold a part-time gig.

  6. ” . . . Now consider this: Realtors, once the gatekeepers of home listing and
    pricing information through their publications and closely held MLS
    data. . . ”

    You are about 20 or 25 years behind the times if you feel that Realtors get paid for being the keepers of the secret real estate information. We tossed that model, before it tossed us, in about 1995 with our decision to put MLS information on the internet, freely available to all. Since then, the industry has prospered. Why? Because information isn’t what our service is about. It never was. You want information? Dial 411. You want to be led safely and securely through a complex transaction by a knowledgeable and regulated professional who by law holds your interests foremost? Call a Realtor.

    “Should the pay structure shift away from the commission model to a
    “pay-per-service” model that accountants use? Would a menu board
    offering “a la carte” service options shine a light on the value of real
    estate professional’s services to be ordered?
    The competition would certainly heat up for listings as consumers
    shop around for prices and services to compare. The number of people in
    the industry would decline as many would not survive the scrutiny that a
    standardized and competitive pricing structure would create.”

    One might think so, but this has been tried many, many times and it still only catches a few percentage points of the market. Why? Because the price of the service is not the major determining factor the public uses in selecting an agent. In the hierarchy of decision making, a seller’s decision turns first on results, then on relationship, thirdly on reputation and finally on price. If it wasn’t so, discount shops would have all the business and the major brokerages would have shuttered their shops long ago.

    I like your comparison to auto mechanics. I frequently compare our industry to the transmission repair business. Transmission repair is something about which I know very little except that it is expensive. I use the service only rarely and when I do, I hope to find a competent shop that will accomplish the job correctly the first time, and that I won’t be fleeced on the price.

    I know I have options – Canadian Tire sells all the tools I need, I could do it myself. But I don’t; it is too risky, too time consuming and the only way I’ll know for sure the quality of the outcome I’ve achieved is if it breaks again – and I can’t afford the time, trouble and money to do it twice.

    I could take it to the cheapest shop I can find. I probably don’t. The outcome is too important to me – price of the service is important but not my major determinant. I ask around, canvass friends and colleagues for a recommendation. Then I interview the shop; check on their reputation, their results, and compare their price. Only then do I make my decision – and price isn’t the top of my decision-making list.

    There will be changes in our industry, but price of the service is not the dominant driver of that change.

  7. And yet Ontario found it necessary to create a law to ensure that all bids on a property are real, not phantom bids. The perception I speak of isn’t a shot in the dark, it’s very real. Consumers demand a better home buying and selling experience. It’s the industry that suffers as a whole when this doesn’t happen.

    • And many provinces also have seat-belt laws. It isn’t because they know you’re going to crash, it’s because they want you to have a safer ride.

  8. Robert,

    I also noted the following information on your Brokerage website, in relation to a condominium project, that I feel is worthy of further discussion:

    “This seminar is open for all licensed Toronto area real estate salespeople. By accepting our invitation and registering to attend this seminar you will have access to pre-construction
    sales information on Wednesday July 22, 2015.

    All real estate agents that attend will be eligible to earn the standard rate of 3% commission on the sale of any of these pre-construction condo units (after a 1% referral fee. Note: referral fee
    not applicable to Realty Point affiliated brokers who will earn 4% commission.).”

    Robert, by offering the 3% selling commission to a cooperating broker, after having deducted a 1% referral fee, is it the expectation that such a Buyer’s Agent (who should be in an Agency relationship in order to accept a referral fee) would then leave their client in your brokerages hands to henceforth be treated as but a Customer? Since your Franchise Broker wouldn’t be paying a referral fee, does that make it easier for them to stick around and represent their client?

    Perhaps RossK is available to comment, on he would handle a situation such as the above mentioned — either from a Practitioner’s perspective or that of an Adviser?

      • Robert,

        You identify as the “Information Manager” for your brokerage. You promote how information is now so readily available online and yet you don’t want to provide this information to me, on-line! If you’re going to talk a talk, you need to walk the walk. Try again.

        • Alan, it’s not a matter of sharing this information online, it’s simply outside of my responsibilities and I would hate to not provide you with the accurate information concerning your query.
          Zia Abbas has the answers so it’s best you contact him directly, and his contact information is on the page you visited.

          • Robert,

            I can accept that you are actually the: Limited Information Manager, as someone who is not a practitioner — however, Zia Abbas is free to jump in here, in your stead.

  9. Robert, the nature of your numb article here motivated me to look at your Brokerages website, to see if there was some further explanation for your subject article or a possible connection.

    It seems to me that by you attempting to make broad negative generalizations of the organized real estate industry, it could be viewed as being complimentary to an element of your brokerage’s business plan — in terms of REALTY POINT, also claiming to have to of a solution to negative industry perceptions, as per the following excerpts (two paragraphs) from your Brokerage Website:

    “The Transformative Solution

    Whether you are a top producer or have an established brand in the industry, at
    the end of the day you are considered to be a “salesperson”. The image and
    conduct of other salespeople reflect upon your image and business practices in
    the minds of consumers. Every salesperson, especially top producers, would
    prefer to take their professional image, and their reputation, to the next
    level and not be grouped among the salespeople that are thought of in less than
    positive ways.

    In order to rise above the ill-formed reputation that consumers have of the real estate
    salesperson in general, you need to transform your identity from “salesperson” to “Broker of Record”, because by owning your own brokerage it automatically sets you apart from
    other salespeople. Being the “Broker of Record” is a designation that differentiates you
    from the majority of others in the industry.”

    Robert, furthermore I must say that I see a potential fundamental conflict between you criticizing the state of organized real estate, in a broad general sense in terms of: competence, ethics and by default, the local governing authority. Should I correctly understand, one key premise of your brokerages suggested innovation, your are proposing to increase the numbers of Managing Brokers or Brokers of Record — causing a higher number of real estate practitioners to only be accountable to themselves, in the initial instance. On the basis of your own arguments herein, our Industry status shouldn’t be compatible with the notion of being able to increase the numbers of Broker’s of Record, or Managing Broker’s.

    Robert, your article may be an attempt, in part, at trying to perpetuate a means to an end, but regardless of that your cart would seem to be in front of your horse!

    • Hi Alan, Thank you for reading the above article and going
      forward even more by looking at Realty Point.

      The premise of Realty Point is that the current brokerage
      model is no longer an effective business model and we have introduced our model
      to help successful real estate brokers to own their own brokerage without having
      all of the administrative hassles.

      In the current business climate, a successful real estate
      broker should own and operate an incorporated business, if only for tax
      reasons. The current tax situation in Ontario is otherwise unfair to those
      selling real estate. With only a very slim chance of Bill 69 (Tax Fairness for
      Realtors) passing into law this session, incorporation is the proper route to
      take.

      At this point you have three options: 1) open a boutique
      brokerage; 2) open a franchise; 3) stay where you are and open a sub-brokerage.

      Realty Point provides the necessary office space, the
      administrative staff, and walks a broker through each and every step of the
      RECO process to open their own brokerage. And their brokerage name goes ahead
      of the franchise name, which is unique to us in the industry.

      I don’t see how a real estate broker becoming a brokerage
      owner changes the overall number of practitioners, as you state. I see brokers
      taking a look at their business options and choosing accordingly.

      And I believe that people are more inclined to work with a “business
      owner” rather than a salesperson, and by being the Broker of Record, you
      certainly do set yourself apart in the real estate industry.

      Getting back to my article, change is coming. Not quite
      certain which avenue it will take but the skies are darkening.

      As an industry, real estate professionals need to prove their
      value. I am only offering a few suggestions, and they certainly are not unique
      to my article.

      • “I don’t see how a real estate broker becoming a brokerage
        owner changes the overall number of practitioners, as you state.” Robert your aforesaid quote, isn’t what I stated — you need to read me again. A Managing Broker is accountable to him or herself, in the first instance, a salesperson or Associate Broker is accountable to the Managing Broker, in the first instance. Your business model promotes more individuals as needing to become: Managing Brokers or the Broker of Record, as per your: ” …you need to transform your identity from “salesperson” to “Broker of Record”,…” Robert, I’m reading your brokerage material, you should too!

        Robert, it seems to be that you are obviously trying to sell your Franchise prospects, on the notion that you can raise their status to something that might approximate a more conventional or traditional Managing Broker or Broker of Record, or owner, and thereby increase their fortunes, financially. However, if consumers should choose to deal with one of your Franchisee’s because they believe that such an individual is more or less like an: Albert LePage, are you really comfortable with that?

  10. “Real estate agents force consumers to pay more by causing bidding wars and inferring competing offers.” — quote, as per Robert Lee.
    Robert, I’m confused as to why you think that you know anything of consequence about this industry. You’re not on here citing any relevant industry anecdotes to make any or reinforce any points, you’re just making bizarre accusations that don’t even jibe with basic economics. “Real estate agents force consumers to pay more…” Your aforesaid claim ignores even the principles of basic Agency: a seller having full representation and likewise a buyer having full representation — if the market supports a bidding scenario, so be it. Presumably you would have the seller’s agent structure the sale so that a multiple offer scenario wouldn’t happen and the seller would likely take less, and then get beat up on a home inspection! Real estate agents can’t force consumers to do anything.
    Robert, I get the impression that you’re trying to hold yourself out as some kind of expert regarding the business of organized real estate, yet you haven’t demonstrated to me any functional understanding of the basic cut and thrust of it. You try and substitute irrelevant analogies to other industries that also use technology (which is pretty much everyone) as being somehow insightful as to where this industry may be going, because that seems to be the best you have to offer.
    The quote of yours that I started off this letter with, is a ridiculous statement, and it is made all the more bizarre by mountain sized brush you used to paint it on this industry. One of the first things I was taught in the licensing course was not to use absolute terms when describing a home or property. Your three points that you used to describe what tarnishes organized real estate — in your opinion — are basically unqualified and are not put in any relevant perspective.
    I don’t understand why REM would be indulging you with a guest spot with a letter like this. The manner in which you’ve worded your “aspects of being an agent that tarnishes the profession:” has got to be one of the most pathetic attempts at trying to articulate or communicate criticisms that I’ve ever read.
    Robert, if you’re aware of any REALTOR’s in Ontario that are placing their clients in headlocks or using arm-bars on them, to “force consumers to pay more”, this wouldn’t be considered an education issue — these such activities should be reported to the O.P.P..

      • Robert,

        Usually when someone quotes someone else “in context” it isn’t a problem — it is the opposite scenario that can cloud a discussion.

        Robert, the main difficulty with your writings in my opinion, is that you don’t understand this industry from a practitioners perspective, or experience. However, as you are attached to a licensed brokerage it could imply to the public that you have some special insight. Given the content of your material, I’m having difficulty imagining that your Broker of Record (someone who should have practical industry experience) is reviewing your letters prior to publicly being released.

  11. Robert I agree, I would like to see more mandatory education for realtors offered through the boards or through REIC (such as the FRI designation). The more I think about it, organizations like RAHB, OMREB, and TREB, should require ongoing annual mandatory education. We have too many Realtors who are not current and just hang their licences, then complete one deal every 1 to 2 years….how is this professional or good business with all the changes occuring? Time to raise the bar and cull the herd!

    • Thanks Kelvin.
      Brokerages have a lot of the responsibility here. If a poorly qualified agent can simply move from brokerage to brokerage, staying “employed” without producing or continuing with the training needed to be current with the industry, then the business
      model isn’t sustainable and all the other realtors pay the price.
      This is what is happening now. It has to change.

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