Jay Thompson is a former brokerage owner who spent the past six years working for Zillow Group. He retired in August 2018 but can’t seem to leave the real estate industry behind. His weekly Inman column publishes every Wednesday.
This past week was full of brokerage, portal and earnings news. There was a change in CEO at Zillow, and the company made the top of several other news feeds.
Considering my former position at Zillow, you might be expecting a comprehensive treatise of all things Zillow, but I’ve done that elsewhere, and I’m not going to rehash.
Suffice it to say that I think Rich Barton and Spencer Rascoff are two of the “top five” business minds on the planet.
For what it’s worth, they are also two of the better humans on the planet as well. The bottom line is don’t count either of them out.
In case you missed it, there were a couple more important stories that also surfaced this week.
Well, there were more than a couple, but there were two articles specifically that got me thinking, and both were earnings-related articles. After all, we are deep into earnings season now — that fun time for investors of all flavors to see how companies are doing by way of their quarterly earnings reports.
You can learn a lot about a company by reading its quarterly report. You can learn a lot by reading balance sheets too, but that’s a skill that seems lost on many in the real estate space, which is rather odd considering that every agent is, in effect, an entrepreneur and a small-business owner.
One would think such a group would be more savvy about fundamental concepts pertaining to running a business. Things like reading balance sheets, building short- and long-term business plans, tracking ROI, etc. But that’s a topic for a different week.
So the two earnings-related articles that caught my eye were:
- Realogy stock craters to all-time low after missing guidance
- Purplebricks in turmoil: Shares plummet, CEOs out
Words in headlines like, “craters,” “plummet” and “turmoil” are perhaps attention-grabbing tactics, but let’s put that aside.
What these two articles present and contrast is the very old, established, parts of the business, Realogy, and the new, “disruptive” upstarts, Purplebricks, are both facing some issues.
That one is established, traditional, old — whatever term you prefer — and one is new, disruptive, different — and both are facing similar issues is quite telling.
Real estate isn’t easy
One thing this tells us is that brokering real estate isn’t an easy thing to do. Margins are razor-thin, commissions are subject to downward pressure, brokerages have to spend more money today than they did yesterday, and agents are demanding higher splits while expecting more services and shiny objects from their brokerages.
It’s rough out there, no question about it. But hey, if this was easy, everyone and their mother would have a real estate sales license. Even the barista at your favorite coffee shop would occasionally blurt out, “Hey, I sell real estate!” If it was easy, you’d be losing past clients because, “Well, my cousin’s hair dresser just got licensed, and she needs a break so we used her.”
Regardless of the masses entering (and leaving) the industry, this isn’t easy work. OK, it’s not back-breaking manual labor like digging ditches or laying railroad track, but there is one thing those manual labor jobs (and most W-2 employee-based positions) offer that real estate sales does not — a regular paycheck.
You see, the real estate agent wakes up every day unemployed. Have nothing in escrow? Then you’re not getting paid any time soon. Put one in escrow today, and you get paid in a month, hopefully.
If you don’t have a pool of buyers and sellers you are working with, you’ve got no hope of getting something in escrow, hence you have no hope of ever getting paid.
Being an independent contractor on a 100 percent commission income is not easy, by any stretch of the imagination. It’s hard work. You’ve got to constantly prospect and grow your database.
While you’re constantly prospecting, you also have to hold transactions together with bailing wire and duct tape, hope the clients don’t whack their debt-to-income ratios before closing, keep the lender on track and much more — all while doing it with a smile and providing an outstanding customer service experience.
Nothing to it, right?
Let’s end the ignorance
I’ll admit it, as I read through the commentary here and elsewhere about the CEO news out of Zillow Group HQ in sunny Seattle, I got more than a little frustrated.
It was the personal attacks on the people, not the business that bothered me. Meanwhile, people blasted away on Purplebricks, ostensibly because (gasp!) they are “discount brokers.” In something that now sadly seems commonplace, yet another big-box brokerage CEO blasted a competing brokerage.
The whining, complaining, blasting and attacking continues. Seems like it just ramps up and gets worse over time, doesn’t it?
Sure, people like me can write posts like, “Learn from those you loathe; A call for civility in real estate,” or “Can’t we all just get along? Let’s stop trash-talking” — and it feels like no one is listening.
Why is this? Why does this industry continue to wail away on people they have never met? Why the need to attack anything that isn’t done how you do it? Why all the trash-talking rhetoric?
I have no idea why it’s taken me so long to come to what now seems like a stunningly obvious conclusion.
This industry launches into attack mode for two primary reasons:
- Fear
- Misunderstanding
Perhaps it starts with that missing business acumen — like the inability to read a balance sheet. I think that stems from real estate being a second (or third) career for most, and those business-running basics just aren’t taught in the class hours needed to get a real estate license.
Perhaps the fear is manifested by that awful fact that you really do wake up every day unemployed.
Then the misunderstanding kicks in. The fear, I get. It’s real. But honestly, there is no excuse for misunderstanding, you can learn what you don’t know. You should learn what you don’t know. Your business needs you to know, and your clients deserve for you to know.
The biggest problem with misunderstanding is that it generates more fear. Now you’re locked in this spiraling mass of fear and misunderstanding that just feed off each other in a vicious cycle.
So this week’s plea to you isn’t to stop the hating, the bashing and the personal attacks.
This week’s plea is for you to continuously learn, to hone your craft, to get information from the source. It’s a big, scary world out there, and waking up unemployed sucks. But if you can teach yourself some things about how this industry works, then perhaps we can take a little of the misunderstanding out of the equation.
And that, hopefully, should result in less fear, which means more business for you and a better experience for your clients.
Jay Thompson is a real estate veteran and retiree in Seattle, as well as the mastermind behind Now Pondering. Follow him on Facebook or Instagram. He holds an active Arizona broker’s license with eXp Realty.
