“If I want to still be able to support my family 5 years from now, I can’t ignore the overwhelming evidence that shows that my way of making a living today may not exist 10 years from now.”
A lot of people wonder why I spend so much time creating content (The Acting Realtor podcast, Discover Springford, etc.) and why I don’t spend more time doing things that the average real estate agent does. Things like calling everyone in my contacts list every two weeks asking if they know anyone who is buying or selling. Calling Expired Listing lists. Hounding FSBOs (For Sale By Owners). Knocking on doors and handing out business cards. Buying crappy leads from Zillow and Realtor.com. These practices work, or at least have worked, for years.
AGENTS DON’T THINK 10 STEPS AHEAD BECAUSE IT MEANS TAKING A STEP BACK
The reason is that I am trying to think 5-10 steps ahead of the average real estate agent. That’s why I don’t study, or model myself after, successful real estate agents. Because most of them became successful doing things that worked 10 years ago, before things like AirBnB and Uber were disrupting their respective industries. Many of them will gladly pay $250-$1000/month for some cookie-cutter marketing system or lead generation tool. It’s easier to throw money at trendy platforms that someone else built than actually build something yourself from the ground up.
Instead, I have chosen to study entrepreneurs. People who have built businesses from scratch. Businesses that thrive and seem impervious to the pain of a market downturn. Businesses that create multiple income streams. Businesses with integrated platforms.
That is what I’ve been up to for the last 2 years. Reading, studying, formulating a plan. Has my business boomed during that time? Hardly. In fact, it has probably taken a step back because I have invested so much of my time and energy creating content and learning how to build a business.
THE WRITING ON THE WALL
Ultimately, it’s because I see the writing on the wall. I am not naive enough to think that real estate agents will continue to make money the way they always have. Commission dollars are shrinking because agents are finding it harder and harder to prove their value to clients who can easily search homes online. Opportunities are fewer and fewer as more and more inept people flock to the real estate industry hoping to make a quick buck. And as direct to consumer platforms continue to gain traction, you are fooling yourself if you think the Real Estate industry is not in their cross-hairs. If I want to still be able to support my family 5 years from now, I can’t ignore the overwhelming evidence that shows that my way of making a living today may not exist 10 years from now.
You are probably thinking that I’m an alarmist or that I am preaching a doomsday message but think about it.
THE AGE OF DISRUPTION
Netflix made it possible for people to “cut the cord.” Cable companies are now scattering trying to create new ways to save the Titanic but they are really just rearranging the chairs on the deck while the ship continues to sink. Uber made it possible for passengers to essentially have a personal valet service in the palm of their hand, effectively eliminating the Taxi Cab industry. Amazon crushed Borders and many of its direct competitors, while also successfully expanding and dominating the field across a plethora of industries. These days most people only go to retail stores to window shop so that they can buy the item for less on Amazon on their smartphones before they even leave the store. AirBnB has made it possible for you to rent a home for your vacation directly from the homeowner, without the need of a travel agent or having to pay for an overcrowded hotel.
The next logical step is for real estate transactions to be handled directly between home-buyers and home-sellers, with maybe just a transaction coordinator (either a real person or computer platform) handling the legal documentation for a flat fee.
HOW REAL ESTATE AGENTS ARE FUNDING THEIR OWN DEMISE
Ultimately, the real estate agent will go the way of the Taxi driver/bookstore/travel agent, whether by Zillow or RedFin becoming the Uber/AirBnB of real estate or some other platform disrupting the industry. The sad (and sort of funny) thing is, that most agents pay Zillow and Realtor.com hundreds of dollars a month for leads. The way it works is that you can pay to become the local preferred agent for a given zip code. The perspective home buyer/seller goes on Zillow and is browsing homes in a certain zip code. If you want more information on a specific property, and you don’t specifically request to speak with the listing agent, then the local preferred agent gets your inquiry, and BADABING! A NEW LEAD!
Here’s a price quote I received just out of curiosity.
You see the dollar amounts? You see the column that says MONTHLY PRICE?
So essentially Zillow is taking the leads that are rightfully the listing agents’ and selling them to other agents at a premium. That is how their business is run. You, the front-end user of this platform, don’t know this, so you think you are speaking to someone who actually is working with the property. Because of this system, any agent who decides to pay these astronomical amounts of money a month for garbage leads coming from virtual window shoppers are ultimately funding their own demise. Not only are agents shelling out big $$$, they are wasting time chasing leads that have not been properly qualified or vetted and have no loyalty or established relationship to the agent.
…and people ask me why I don’t follow the models of successful agents.
WHY I STUDY ENTREPRENEURS AND NOT REAL ESTATE AGENTS
Most agents will balk and say, “but all it takes is one deal and it pays for itself.” That is what you have been told by real estate trainers and by Zillow’s market salespeople. But that is not how you run a successful business. If your new customer acquisition cost is the price of one real estate commission check then you are never going to survive. And this is the fundamental reason why I study business owners and operators and not other real estate agents. There is simply no long-term plan for the average real estate agent. It is merely churning and burning through your friends and family for that next “lead.”
So while agents complain about Zillow and RedFin cutting in on their turf, they continue to allow them to dictate the terms. So much so, that they are basically helping to build the business whose main objective is to put the agent out of business. And for those who are really upset about it, instead of finding new ways to innovate and build an integrated business platform, they sign petitions trying to get the government to stop better built businesses from prospering at their expense. If you are going to make your living in the market, then you will most likely die by the market. You can’t spend years benefiting from presenting yourself as the better option among your competitors and then complain when someone/something else comes along that does it better than you.
That is why I am trying to differentiate from the competition so that when the you-know-what hits the fan in the real estate industry, I am not reaching for the baby wipes. When you get right down to it, I would rather spend the money I make on furthering my own reach, than by putting money in the pockets of the shareholders of the company that is trying to make my job obsolete.