REALTORS: Do Not Go Gentle Into That Good Night
October 26, 2006 |
I noticed that an open letter to Minnesota REALTORS has been making its way around the blogosphere recently. I first saw it on the Inman Blog, and then Greg Swann had something to say about it. It has been talked about in the Charlottesville area, and again in Arizona. I think the reason that the letter is noteworthy because it appears that the Minnesota Association of REALTORS is doing something contrary to what people might expect. Namely, they are telling many REALTORS to get out of the business. Of course, they expect us to believe that isn’t what they are saying; but if you read the letter, it is difficult to come to any other conclusion.
Personally, I don’t like it. I fully recognize that the real estate industry has plenty of issues that need to be addressed. One of the issues, brought up in the Minnesota letter, is the issue of more REALTORS working for fewer sales. I also recognize that one of these issues is the actual structure of the industry, and the fact that REALTORS are independent contractors who are, in many cases, indentured servants who exist at the will and whim of their broker/master. What I don’t like about the letter is that it is claiming that the cure for these problems is simply to thin the heard, separate the wheat from the chaff, etc.
I am willing to bet that the Minnesota Association of REALTORS (MNAR) wasn’t espousing this same opinion two years ago, when every REALTOR was living in the land of milk and honey, real estate prices were soaring, and all was right with the world. Something tells me that back then, their tune was quite different. REALTOR associations all around the country were touting the money to be made in real estate, and imploring people to get their real estate license. I distinctly remember being sent a pin by the National Association of REALTORS that celebrated the association’s one-millionth member. So now we are expected to believe that more members is a bad thing? Look, either it is or it isn’t. The industry cannot be actively recruiting members on one hand, and then telling them to get out of the business on the other. The various associations around the country are partly responsible for the number of REALTORS in the business. The creation of this monster is partly their responsibility. Now, the MNAR is coming to its membership and essentially saying, “Hey, we really wanted your help and your dues payments a few years ago. Now, however, your existence is getting to be a burden on ‘the industry,’ so if you could, it would be better for both of us if you find something else to do.” Which, if you ask me, is pretty messed up.
One of the things that I love most about the real estate industry is that it is a free, open market. In fact, it is one of the truly free-market industries that America still has left. The industry experiences very little government interference, and the barriers to entry are very low. Any market that shares these two characteristics is going to experience high participation and high turnover. This turnover is natural. Believe me, MNAR doesn’t have to tell people to get out of the business, the market is going to force people out of the business, if they simply let the market run its course. If there are those that fear they will be the ones forced out of the business, the solution is simple– compete better. There are no guarantees, but competing will at least give you a chance. It will make you an active participant in your future, which is a good thing. I’m not sure how many times I can say this, but I will say it as many times as is necessary.
It would appear that perhaps the MNAR doesn’t share my view of competition and free markets. The letter from MNAR states the following:
As a “Trade Association” we must defend and look out for the general welfare of the industry. This means helping members understand that it may be time for them to make a career adjustment so as not to harm the structure of the industry for those pursuing it as a career.
The point is reiterated later:
Even if 10 percent of the MLS were non-salespeople, there are still a significant number of members who are not pursuing the business as a business.
My opinion is this– if those people who are “pursuing the business as a business” cannot compete because of those who are pursuing it for some other reason, those are the people that should find a new career. Think about it like this, if Derek Jeter was beaten-out for his starting spot in the Yankees lineup by Joe Schmo who plays church-league softball on the weekends, who would be the one who needs to find a new career?
The MNAR could tell its members that innovation and competition is more important now than ever before, that its members need to work harder to increase their professional aptitude in order to survive and thrive in the current market. Instead, they took the easy way out. It’s always easier to tell people to leave than it is to help them try and stay. Whatever happened to perseverance and adaptation for survival? What ever happened to the idea that it is better to have tried and failed than not to have tried at all? In a way, the letter from MNAR is a sad and pathetic statement on the psyche of real estate professionals.
To make matters worse, MNAR gives its member a list of reasons that people need to get out of the business:
Glenn Dorfman, Chief Operating Officer of the Minnesota Association of REALTORS® put together the following piece to help illustrate the industries current dilemma: Regardless of the agents who are making money, there are four absolutes:
- There are too many agents in the business chasing a declining number of deals which has two implications (a) compensation dilution for many real estate professionals (b) the public face of real estate professionals is not near the best it could be if brokers terminated non-productive agents now – keeping them will have a negative impact on the dollar value the public will put on our services as homes sit on the market longer
- There are no examples in the history of business where productivity went down during times of economic downturn (a) every business that survives economic downturns reduces employment when sales shrink (we have yet to do this).
- As gross compensation to brokers declines, they will be forced to squeeze agents (if they do not shed the dead weight soon).
- Finally and significantly, the wealth effects of housing that REALTORS® help create employed an enormous number of high paid employees (tradesman, cement, lumber, landscaping, furniture, etc., etc….) will, in reverse drag the economy into recession despite the current protestations of the industry and others.
Allow me to address these points one at a time:
- How many is too many? What is the threshold for the acceptable number of agents in the market? Eliminating non-productive agents is the decision of the broker. The broker is at least partially responsible for their lack of productivity, so the consequences are on them. Agents who are not productive, by definition, don’t really have a negative impact on the public face of the industry, since they obviously aren’t out in the public. If they were, they would be productive. These are the aforementioned people who will be forced out by the market.
- This is a pretty bold assertion that seems difficult to prove. That aside, reduction in the workforce isn’t a guarantee of success. Just ask Ford and GM. Both of those corporations are cutting jobs and getting their butts kicked.
- How nice of MNAR to tell broker members what they are going to do before they have even done it. Perhaps brokers will instead try to help their agents innovate and compete in the marketplace and . . .oh never mind, I already covered that.
- The grammar in this one is so convoluted that I’m not really sure how to approach it. I think what they mean is that the real estate boom expanded the job market and now that the boom is over, many people in industries ancillary to real estate will find themselves out of a job. This may or may not come to fruition, but either way, I fail to see how reducing the number of agents is going to help construction workers keep their jobs.
All four of these points are dubious, and far from being “absolutes.” If I were on the fence, I hardly think that they would convince me to leave the industry. I know that the letter explicitly states that MNAR is not telling REALTORS to quit the industry, but the rest of the letter seems to be to the contrary.
If I were a REALTOR in Minnesota, then my attitude would be to tell MNAR to stick it. If they think they are going to scare me out of the business, they are wrong. If they think they are going to guilt me out of the business, they are wrong. And if they think they are going to fool me out of the business, the joke is on them.
As for me, I use as my inspiration the words of one of my favorite poets, Dylan Thomas.
But hey, that’s just me– and I don’t live in Minnesota.
[tags] real estate, realtor, charlottesville, real estate agent, minnesota, dylan thomas, NAR [/tags]
Comments
14 Responses to “REALTORS: Do Not Go Gentle Into That Good Night”
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Disclaimer
My name is Daniel Rothamel. I am a licensed real estate agent in the Commonwealth of Virginia and a member of the National Association of REALTORS. As such, I adhere to a strict code of ethics and all laws with regard to equal housing, which is reflected in the content of this blog. My broker is Strong Team REALTORS, 86 Joshua Lane, Palmyra, VA 22963; (434) 589-5800. My VA Real Estate License number is 0225 077325. All of the opinions in this blog are mine, unless otherwise noted.
Regarding the MNAR point 4 - I think they truely believe that the worst case senario for the housing bubble bursting - namely a full blown recession lasting many years will happen.
I’m still undecided if it’s gutsy honest piece on their part, or someone just locked themselves in a room with nothing to read but the Housing Panic Blog.
I am seeing the larger brokerages closing some offices in Connecticut though.
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As a member of MAR all I can say is that right now I am kind of embarrased, by the way can you spare a dime? and do you know where I might find a job?
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LOL
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I was hoping to see some great commentary on this from the real estate community. I am not, nor have I ever been a Realtor. I’ve never even played one on T.V. That said, it doesn’t take a rocket scientist to read between the lines of this stuff. Trade associations are in the business of recruiting and retaining members. I found it interesting how the article played from both sides of the net. It seemed to say, don’t quit paying your dues, just get out of the way of the important members of our club. Am I missing something in the message?
Free markets will eventually cull the herd of the weakest. If that means the cattleman’s association takes a hit as result, so be it. Someone will still get the beef to market. And it will be the cowboys & cowgirls that deserved it the most that end up winning. (that is about the goofiest analogy I have ever written and I was about to delete until I decided to take the walk of shame and leave it in)
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[...] Bonnie Erickson has thoughts on the call for underperforming Minnesota Realtors to have a glass of Kool-Ade, as does Daniel Rothamel. [...]
[...] No, not that triangle, this triangle. It would appear that the fine people at Brick and Garden Real Estate share my affection for Dylan Thomas. So much so, that they linked to the Zebra on their blog. [...]
[...] Daniel calls foul on the MNAR. Are there too many agents? Who should tell those who are damaging the profession? [...]
It sounds like the people who wrote this letter for MAR are the ones who need to find a new career path — if you can’t stand the heat, get out of the kitchen.
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Hmmm. I’ve decided how I feel. The MAR are basically correct in their assessment - there are too many realtors for the amount of transactions.
However - this letter should have come with an offer for a FULL REFUND of realtor dues/MLS fees/education expenses paid to MAR for the last year for anyone wanting to bail on the industry.
It’s just plain evil to take peoples money and get them into a profession, and then politely suggest they get lost.
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As a member of MNAR, I read the letter from Galler and immediately said “YES!”
His letter was meant to be a hard and honest look at the dynamics in our market today. 99% of the time the association is positive and outward looking. This is the only piece I’ve seen that not only explains the marketplace realities but also guides Realtors to reflect on their priorities and direction.
This market has been tough for me to adapt to but once I made a specific plan for how I was going to succeed (kill old fashion farm mailings and go hard into online lead generation) and implemented it, things have changed nicely.
It takes a certain character to be so self-reflective and I applaud my association’s honesty.
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MNAR just released a second article. It is worth a read:
http://mnrealtor.hhpubs.com/lp_11032006/index.html
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Aaron,
Thanks for the heads-up on this new letter. Rest assured that I will be commenting on this one as well. Thanks again!
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[...] The MNAR’s first letter asking some Realtors whether they would be better served in other careers generated quality discussion, on both sides. That they have perilously crawled so far out on a limb to question whether some members are harming their profession more than helping is laudable. That they have, in their new letter, (backtracked a little bit) placed the focus on Brokers is fantastic. Were I a member of the public, learning about this effort would give me more confidence in Realtors. The MNAR is placing the greater good ahead of garnering more member dues. For that they should be commended. [...]
I applaud MAR’s gutsy, straightforward, honest assessment of the real estate profession (we are NOT and industry!).
If more associations and real estate managers viewed real estate as MAR does, perhaps we wouldn’t be considered as commodities to be obtained at the lowest possible fee.
I have posted several times on http://www.BoiseBlog.com about what needs to be changed in our profession.
We have a revolving-door business model with low barriers to entry.
Anyone with a pulse can become a real estate agent.
Then we wonder why we can’t get no respect from the public.
If we want to be regarded as professionals, we need to BE skilled professionals and not make it possible for everyone and their cat to have a real estate license.
As one indication of the number of licensees, law enforcement officers in some states are now asking drivers for their real estate license during traffic stops.
Seems not everyone HAS a driver’s license
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