The Real Estate Vine by Melissa Riley

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Death of Print by RSS

The death of newspaper is being hastened by RSS, "Really Simple Syndication". It's a very popular way to search the internet for interesting websites and get an automatic feed of all of the new stories/topics that you want to read about. It prioritizes the immense and, quite frankly, overwhelming amount of information and retrieves it for you. Instead of scouring websites for endless, (sometimes boring) hours, all topics you identify are instantly fed to you. Most news sites, and blogs syndicate their content/information as an RSS feed. The icons used are RSS (like the orange box you see on this entry) or XML. You can subscribe to many RSS feeds and it will be mashed up for you in one feed.

None of us wants to wait all day to read a newspaper or wait for a monthly magazine to read about news. As we get busier (and have less time) and become increasingly impatient, RSS feeds will be used more on the internet. It continues to help newspapers become even more obsolete. The decline of print has to do with consumers wanting speed, control over content, interactivity and news on demand (RSS) delivered right to their doorstep (o.k., maybe laptop). So, daily news is no longer current and news (fed through RSS) has become faster and smarter, just like humans.

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Twitter, Twellowhood, and Monitter

I stumbled upon another interesting tool last night via a posting from a fellow realtor on Trulia: Twellowhood. It gives you the ability to do a geographic search of people using Twitter.com. While it has taken me some time to see the value of Twitter to my business, with use of Twellowhood, it might begin to serve some purpose in zeroing in on local news or networking opportunities. There is also a feed site that works with Twitter called Monitter.com. This site enables you to get "tweets" directly from twitter by narrowing down the entries based upon key words that you choose. I think this is an interesting concept, due to the massively overwhelming, and sometimes ridiculous entries on twitter. Being a "micro blogging" site, Twitter allows for no more than 140 characters in any message. Quite frankly, I don't think I will ever be interested in someone's minute-by-minute feeding schedule. If you have ever experienced twitter, it may make you question the statistic that only 5% of the population has some type of mental illness or personality affliction. Anyway, finding value in social networking sites, such as Twitter, through tools such as Twellowhood and Monitter, does interest me. As I experiment with these sites, I will pass along any great business-related ideas. By the way, I had oatmeal this morning.

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The Internet and the Death Rattle of Print Advertising

The phrase death rattle is not a pleasant one, however, it may describe the current state of print advertising, specifically, as it relates to real estate. Print advertising has been the main venue of real estate advertising for many years. For some papers, it accounts for 30% of newspaper ad revenue. Brokers have historically relied upon print to market homes and create a presence for their company in the market. Agents loved print from a promotional standpoint, sellers loved seeing their homes and buyers frequently relied upon it at the early stages of their home search. The most recent National Association of Realtors (NAR) statistics point out the severe decline in readership of print and the expediential growth in the internet. According to the 2007 NAR Profile of Home Buyers and Sellers:

• 84% of recent home buyers used the Internet in their search, up from 80 percent in 2006. Those statistics indicate that of the 84% of buyers who used the Internet, 99% of them found it to be a useful resource.
• Of the 51% of people who look in newspaper ads, about half of them found the ads a useful tool.
• Only 31% of buyers even used them, and of those, only 34% of them found home books to be useful.

At the heart of this evolution are the changing habits of our consumers (buyers and sellers). Our consumers want to see multiple photos, video tours, the latest listing information, mortgage payments for the listing and mapping. They want it to be interactive based upon their profile, lightning fast, global and real time. Print doesn’t accommodate any of those consumer needs.

In meetings with many local newspaper publishers to renegotiate our print advertising contracts, it’s clear that they are either in denial about the value of print or are hoping that brokers will continue to ignore how buyers are searching. They are sheepishly willing to admit their print revenue dollars are declining, and are scrambling for ways to recapture their revenue through on-line venues. In some cases, they don’t even have a web strategy or know how to go about it. In one negotiation, a publisher attempted to entice us with additional print venues, stating the standard line in publishing…”But, your competition is here.”

There was a recent announcement and significant blow to print media when the century-old L.A.Times ceased to print its weekly real estate section. Staffing and production cuts are being made to offset a “continuing slide in advertising revenue”, according to the newspaper.

So, they need us (really our revenue) but haven’t figured out exactly how to provide the value. While they are thinking of how to do that, real estate brokers are smartly adjusting their strategies. The leaders in the industry are tracking their consumer habits, and understand that “marketing” versus “advertising” is necessary. They are quickly establishing aggressive internet strategies and beginning to shift marketing dollars to the web. They also have specific plans in place to reduce print significantly and take control of the change.

Like anything else, it’s a process and things will evolve with time. In this case, the evolution is happening rapidly and the prognosis is not good for print. Our consumers are demanding more interactive ways to get involved in the real estate process. If newspapers don’t adjust to the change they will go the same way of travel agents. Remember them?

Melissa Riley is a VP of Operations at Prudential CT Realty and a 26-year veteran of the real estate industry. She can be reached at http://www.melissariley.com or http://www.thefairfieldvine.com

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Agents for Sale!

Real estate companies have been offering potential recruits hefty packages to come on board. Reliable sources are saying that sign on bonuses range from $5000 to $250,000. Yes, that is ¼ of one million dollars, to entice agents to consider their company. They are also offering high, fixed (and unearned splits) for 2-3 years. The same package can also include 30,000 pieces of direct mail, up to $1500/month for assistant payment, building out space, and logo development incorrectly referred to as “branding”. In return for these hefty packages, they are requiring agents to place liens against their personal property and signing 2-3 year contracts stating that the agent will return all of the money should they decide to leave prior to the expiration of their contract. We are also hearing that they are trying to move contracts to 3-5 years to ensure you stay there and they can get past their break even point for revenue. Signing a contract to stay, turns your wonderful “independent contractor” status to “indentured servitude”. This flies in the face of why you probably entered this business. They are not offering these packages because they like you or they think they can grow your business. They are offering these to build instant market share. They just want you to keep doing what you have been doing for years without them.

Companies that lure agents with these incredible packages either don’t have a lot to offer or they don’t believe they have a lot to offer. From a broader perspective, I wouldn’t affiliate with a company that is giving away their equity (and financial stability), through inflated splits, high sign on bonuses, and other big perks. The average agent commission split for financially-healthy real estate company is 65%. The remaining 35% is a gross, not net, number for profit. From the 35% “profit” comes mortgages on the office buildings, technology, insurance, staff, supplies, advertising, marketing, telephones, light, heat, power, maps, yard signs…you get my point. The margins on profit are slim and getting slimmer as the cost of doing business continues to increase. In a "normal market", if a company is left with a few percentage points of profit, how can they offer these over-inflated packages? This is how: They find other small, yet significant ways to charge their current agent base. Adding these small fees helps them offset the huge losses they are taking on the recruiting front. Once you agree to the package, you then become one of the people that gets thrown into the bucket and gets charged these fees.

Promising that you will make a lot of money and not have to do any hard work is impossible. They lull you into a false sense of security which is serious business for you. It ultimately affects your business and livelihood. Here some things to consider when being courted by a company:

• Why would any real estate company feel compelled to offer such packages to get agents to make a transition?
• Why would the owner of the company give away the equity in the company to you…equity that has taken years to build? What’s in it for them?
• What value, other than the package, do they have for you on a day-to-day basis?
• What support do they have in place for you to service your clients? (Remember them?)
• What business development coaching do they offer you to help you grow your business?
• If they made you promises, are they ALL in writing?
• What happens if you get there the first week and don’t like the environment? What happens if you want to leave? Do you owe them the bonus? Do you owe them anything else? Are you now bound for many years?
• How do they help you reach your goals?
• Is the Manager someone who is going to help you grow your business? What systems do they already have in place?
• Have you been allowed to "bond" with the Manager of the office or are you being courted by their corporate people who you will never see again and haven't sold real estate for decades, if ever.
• What other fees have they not disclosed to you that would help them balance out your package?
• How fair is it to offer a package to you coming in when the agents that have been there for many years are held to the split schedule, roll backs and agent expenses? The shoe will be on the other foot soon with agents coming in behind you.
• What is the office environment like with the unfair system? Do you think it is happy? Do you think it's a trusting environment? Not likely if unfair and hefty packages are being offered to those coming in. Don’t expect any team support from your fellow agents. They all will know why and how you came on board. 
• What happens when your contract expires? Do they allow you to renegotiate? Not likely to the extent that you could when you were just a glimmer in their eye. You have now priced yourself out of the market, because no logical-thinking company would continue to give away their company equity. Companies need to balance profit so they can reinvest in their company and stay financially sound. They are counting on your fear of making another transition and hoping you stay well beyond your heavily-bonused contract time, when they can actually make money from you.

Think through any outlandish offer you may get. It may be the latest “gimmick” or "slight of hand" from that company. Recruiting is getting more aggressive and outrageous, but it’s the time to take a step back and make sound, long-term business decisions for your growth. Don’t get “taken” by promise to make a lot of money and build your ego. Your long-term vision should include a solid business plan with the tools, guidance and support of a fair company that values your clients.

Melissa Riley is a VP of Operations at Prudential CT Realty, CT's largest and most successful real estate company. She can be reached at http://www.melissariley.com or http://www.thefairfieldvine.com