ERA - True Trailblazer or Copy Cat?

Recently, RIS Media posted their "cover story." A story about ERA, a relatively new real estate company that has similiar principles as Keller Williams. I won't go into the details of the pandering article, you can read it here. However, I will highlight ERA's points here.

What they're offering:

• to sell you back the leads they generate off their marketing (ala Remax, ZipRealty, Ect)
• borrowed training models (borrowed from tired and old to tried and true)
• online training
• Global Brand Recognition - (it's in 45 countries, but I'm not sure it's recognized)
• Local Marketing Tools - I've not seen this locally.
• TeamERA.com - Online intranet site that puts everything in one place.
• Traditional Commission Structure - 70/30 plus franchise fee
• Some form or recruitng bonus

A quick glance at TeamEra.com reveals a sophmoric flash presentation that tells you that what has become mandatory for the big Real Estate companies (an intranet) is adequate at ERA.

What ERA has assembled is a wedding day for most Realtors, with alot borrowed, something blue and a little bit of something new. However, after the honeymoon, it'll be interesting to see if ERA can KEEP their agents over the years with these lackluster offerrings.

How Brokers Contribute to Agent Success
Three top agents discuss how their brokers help them advance
By Dr. Cliff Baird
SOURCE: RISMEDIA, May 10, 2007-

Here, three successful agents tell how good management factors into their continued success.
Participants:
Dominique Babcock, Keller Williams Realty, SLC, Salt Lake City, Utah: Babcock has a dedicated goal as a Realtor to be successful far beyond the average in closings, repeat business clients, and both professional skills and ethics. "I measure those successes' she says, " by the calculated sacrifices to my family and to myself."

Sean Dionne, Century 21 Results, Sarnia, ON, Canada: Dionne has been in real estate for four years wallowing under a lack of guidance. Under new management and in a new agent-centered environment he has had more transactions in his first 4 months under new leadership than he had in his first 3 years.

Sondra Blackwell, Coldwell Banker Reehl Properties, Inc., Fairhope, Alabama: Blackwell is an associate broker and a consistent top producer with over $8.3 million in sales for 2006 in the number one Coldwell Banker Office in the state of Alabama.

How is your broker helping you to succeed in today's market?
Dominique Babcock: My broker provides classes on a regular basis enabling Realtors to take the next chance. Everything else however, such as leads for buyers or sellers, is agent driven
Sean Dionne: My broker proves to me everyday that, not only does he want to be successful personally, but more importantly he strives to help me and my co- workers be just as successful.
Sondra Blackwell…My broker leads by example with a strong work ethic, great training,encouraging agents and emphasizing the importance of acquiring listings.

What do brokers need to do to lead agents?
DB: They should make tools and resources easily available. They should also be available by phone or in person for various situations based on urgency and need.
SD: They need to prove to agents that they want everyone of the team be successful and would do anything possible to assist that happening.
SB: Agents need to be lead by someone who is a true mentor. It is also important that the Broker have the highest ethical standards.

What tools and resources do Brokers need to offer?
DB: Equipment that works!
SD: Well equipped offices with all the modern technology readily available and target marketing ideas outlined, proven and ready to be worked.
SB: The most important thing that a Broker can do is to provide proper training.

What training should Brokers provide?
DB: A Broker should offer ongoing classes for various levels of agents (from brand new to the seasoned and successful)
SD: This is an easy one. They should train the specifics on how to become successful and simply everything you need to do to become the best of the best… a household name.
SB: Training should include sales skills and language training, contract writing, negotiating, and most importantly…the skill of LISTENING to what the client's wants and needs are.

How should Brokers motivate an agent like you?
DB: Interesting office meetings are the start…Interesting subjects…motivational speakers… warm greetings in passing…good to great office help…playing no "favorites"…host one freeenjoyable dinner a year.
SD: Small incentives, nothing outrageous, just some sort of token of praise and appreciation. This maybe incorporated with some fun yet competitive contests.
SB: Most successful Realtors are motivated from within. But it sure helps to know that my Broker is always in my corner and is always there to help andencourage us agents when business is crazy–like it so often can be.

What Real Estate Company is the Most Searched For?

I'm finding that I like to do this blog thing about our industry. As I am searching for the best keyword to use, I decided to see who is searched for the most. The findings may surprise you.

Here's the list:

1. Century 21
2. Coldwell Banker
3. ERA (might have been the word "era")
4. Keller Williams
5. Distant C21
6. GMAC popped up next in Relevance

I do not see REMAX there anywhere. However, like REALTOR.com, the name is so recognizeable that they may be generating traffic DIRECTLY to them. I also found it interesting that CENTURY 21 popped up as number one. It backs up their claim, but upon further review, it's my hypothesis that users have a hard time finding them, so they are forced to search. In addtion, much like ERA, I believe they are getting a boost on the sheer fact that it has another meaning, ala 21st Century.

To me the clear cut winner would be Coldwell Banker.

Is your company supporting your business…or are you supporting their business?

As I do more and more research on the different Brokerages it amazes me that no matter how much a company is more cutting edge in their methods, they still are doing business the traditional way. That is, they spend money, AGENT'S money, promoting THEIR brand and generating THEIR own leads ... which in turn are sold back to the agent or given to the top producers.

Let's examine their business model.

Recruit new agents - Take 50% from their sales and hopefully they will become good. If they get big, they will be rewarded with new business opportunities that were generated off of their split. They'll get perks, such as parking spaces, offices and key opportunities.

Worst case scenario, the prospect doesn't pan out and the company gets some free advertising while they were working.

Last time I checked, 100% of my clients wanted to work with me, not my Broker or my brand. When I switch companies, my clients come with me.

So who am I talking about? Let's call some of them out:

• Remax - Still on a traditional split - never caps, or if it does it's coupled with exorbinant "desk" fees. Recently they developed LEADSTREET where they generate leads and sell them back to the agents. They also came out with REMAX University. Sounds very familiar with another University.
• Coldwell Banker - This is a company that is owned by Cedant. In any case, the split is the same traditional one, 70/30 for most agents with no cap in site. All branding must be CB and not the SMITH TEAM.
• C-21 - Again, owned by Cedant. C-21 is becoming the red-headed step child of brokerages. On one page you'll see a recruting ad, proclaiming how successful people will be by joining. On the opposing page, there's an undermining ad of "SAVE OUR COMMISSION" explaing C-21 Flat Fee franchises. To me this is the bottom of the barrel for a company.
• Prudential - Works the traditional system as well. They would love for their agents to buy into their other products and sell them as well. Overall, they view agents as employees.
• ERA, Exit & GMAC - These companies are copying the KW model but getting it all wrong. Instead of actually sharing profits, they dip into agents pockets -- forever. At GMAC, people who recruit you will receive 1 to 2% of your total earning. This does not go levels deep and never caps out. ERA and Exit have similiar reward models.

In some cases, these brokerages will offer lockboxes, signs and other resources. The downside is that all of these items keep you dependent on them and, oh yeah, "would you like some JOHN SMITH with your Coldwell Banker sign?"

So who's not doing this?

• Keller Williams - Doesn't spend a dime on brand building or recruiting. Each agent caps out at a predetermined number, in Atlanta it's 18K. After that it's strictly 100%. This renews itself every year. This also creates equality and quality control. No agent is worth more than the 18K so unethical agents will be "dehired." That's unimaginable when brokerages would hire monkeys if allowed. It's more about YOU the agent. KW spends their money on training agents how to do the business. If you've ever met a KW agent, then you know it's about being professional and having a career worth having.
• Solid Source (Local) - A Per Transaction based company. Their "Christian" foundation makes them an interesting study.
• Flat Fee/100% Companies - They offer no training or support but you keep everything. Typically you can do what you want as well, even as far as creating a sub brand.

This was pretty down and dirty but it should give you some insight. What has your Broker done for you lately? My guess if they aren't teaching you how to fish, their causing you to be dependent on them. If that's the case, ask yourself this, "what happens when the market shifts and it's no long profitable for them to provide these things at this price?" Prices go up, ethics go down and you'll be looking elsewhere.

At the end of the day, when you look at your business, are you supporting YOUR brand of Real Estate or your BROKERS?

Keller Williams Profit Share Model Demystified

In my last post I had a few things wrong. Namely, everything. I recently sat down with Aaron Kaufman the leading recruiter for Keller Willliams and discussed what KW is about in great detail.

Aaron was adamant about not talking about Profit Share. His philosophy is that when he talks with prospective recruits that it's not about the money. After spending time with him I would tend to agree with this, that profit share is the gravy for joining KW and not the reason.

However, this is the internet and people want to know. So here goes the profit share model again:

Let's Say Bob sells a $1,000,000 home and nets a $30,000 commission. For the sake of being easy, lets also say Bob is on a 70/30 split with KW (keep in mind that it caps out at $18K - so he's half way to capping). So he's giving $9,000 to the market center. Now let's say after all is said and done for the month that the Market center that Bob is in makes a $40,000 profit out of a GROSS of $90K. Now that (the $40K profit) gets split up between the owner and the agents (yes, the agents!). Now you take the $20K and you take Bob's contribution (10% of the overall gross), you'll get $2,000. Now for the fun part.

Now, using our previously incorrect post as an example, John (Bob's recruiter) would receive a whopping $1,000.

Levels 1 thru 7 are as follow: 1. 50% 2.10% 3. & 4. 5% 5. 7.5% 6. 10% 7.12.5%

Now that I've posted this I hope you see how valuable this system is. The genius is that if your with KW you're paying out the 18K to the market center to use all the resources. It's a bonus that you'd get anything back. As you'll see in upcoming posts, that this system will actually promote equality and comraderie.

It's becoming more obvious that the jaded opinions I had of KW were false and that beneath each "business" idea that seems to take away from the agent, it's actually another tool to be harnessed by a savvy business person.

Next Time: The Pyramid Scheme of Keller Williams!

Keller Williams Profit Share Model -

I recently discovered the inner workings of the profit share model that KW implements that makes it incredibly transparent. It doesn't take away from the company, but to me, personally, it eliminates it as a reason to join. Basically, it goes from the Steak to the Gravy.

Here's how it works:

Let's say, my name is BOB and JOHN recruits me. Also lets say my split and cap for the market center is $15,000. What was the big AHA for me is that after this $15K is paid, BOB is no longer sending profit share to JOHN. In a really easy math scenario, if John gets 100% of the money, he would only get $15K. Now that may seem like an obvious thing, but they way they present it to you will make more money in a more profitable Market Center. Now I'm guessing that if you have a market center that is not profitable, they dip more heavily into the $15K each agent pays.

Just for information, let's see how the chain works as well:

JOHN recruited
BOB recruited
SUSAN recruited
STEVE recruited
BETTY recruited
JUAN recruited
TANISHA 7th Level

So JOHN will get X% from BOB & TANISHA, 1/2X% from JUAN & SUSAN & 1/4X% from STEVE & BETTY.

X is determined by your % of profitability to the Market Center and I suppose how profitable your Center was.

Previously, I had assumed that other profit sources directly tied to agent actions such as MLS fees (that get redistributed) would have added to the profit share. Instead, it's directly tied and only tied to the $15K.

It's a bit disapointing that it's not deeper than that, but again, KW has so many great things that people will join for, so getting a little back is perfect. In the end, the profit share model ends up being another MLM if it has stand on its own merits.

Win/Win or No Deal - Keller Williams Realty

Keller Williams is now one of the fastest growing brokerages around. In many market places, KW is becoming so popular that it runs into the same pitfalls of the other large brokerages, and that's the problem of how to differientiate each agent from the next. Albeit, that's more a problem for the agent and not the brokerage itself but it's definitely a testament to their success.

Keller Williams is about making money. Most KW "market centers" as they are called or offices are run by lazer beam focused profit makers. They preach the "word" (Also, known as the Millionaire Real Estate Book) to every agent and focus on helping the top 20% succeed while offerring help to the bottom 80% in the form of training and classes.

KW training is unparalleled. They take from the world's best trainers and coaches, put it through the KW marketing machine and then spit it back out to any KW agent willing to take it in. It's about systems and succeeding.

KW's business models are one that is a mix of contemporary and traditional. They take a percentage of each sale up to a certain amount (roughly 20K) every year and in turn give the agent an incentive for recruiting, known as profit share. Keller Williams was one of the first to implement this now common system of rewards for recruiting. It works very similiar to a MLM. In theory, you could recruit 10 agents that could pay for your "company dollar" and allow you to do KW completely 100% commission side.

KW has a unique culture and atmosphere. It's truly the only brokerage that I've ever worked with or been a part of that emphasizes team work and helping others. It's the one place where your competitor will say, "here's how I'm kicking your tail in your neighborhood."

There are some drawbacks to joining KW but they are the same ones found in Remax, Coldwell and the like. Ultimately, if you're going with a franchise you can kiss doing creative builder relationships, unique co-ops, and LLCs good by.

To sum up my usual unhelpful ramblings.

PRO

• Profit Share
• Training is number 1
• Atmosphere
• Assistance
• Ethics

CONS

• Commission Splits
• Everyone is joining, dilluting the "elite-ness"
• Same pitfalls as large franchises