On Leadership in the Real Estate Industry: ASOIAF Edition

I’ve been asked by the good folks at Inman to give some thought to the question of leadership as part of their efforts to revolutionize leadership in real estate. Seeing as how yours truly does not lack for opinions on a variety of topics, and this one in particular, I thought I would happily oblige them.

First, we need to define the term “leadership” because it’s important to be precise when discussing ideas and philosophies. Because Lord only knows there are as many definitions of “leadership” as there are… you know…. As the old punchline goes, “everybody’s got one.” And there are so many dimensions of “leadership” that it is impossible to pin it down.

So, I’ll define leadership in the same logically fallacious, conclusory fashion as does Jimmy Collins, Retired President of Chick-fil-A for 33 years:

A leader is someone who has followers. If there are no followers, there is no leader. A person may have subordinates, workers, admirers, associates, co-workers, friends, and people who report to him or her, a person may have authority over other people, a person may hold an elective office, and a person may influence a large number of people, but that does not make that person a leader if there are no followers.” [Emphasis added]

The reason I define it this way is to contrast it from positionship, which is rampant everywhere, but particularly in real estate.

My current thinking on leadership in real estate is this:

More than ever, we need courage. The current generation of leaders must be willing and able to ask hard questions and make tough decisions that won’t make them popular, but will result in saving the real estate industry as we know it.

Let’s get into it. Section titles may or may not be taken from George Martin’s A Song of Ice and Fire series.

A Storm of Swords

To start, we must agree that there are critical challenges for the industry staring at the cusp of 2020. If we do not, if you believe that everything is hunky-dory, that the biggest problem in real estate is Zillow, that there are not fundamental problems that will blow up sooner or later in unpredictable ways … well, then we have nothing to talk about.

If “steady as she goes” is good enough, then by all means, let’s have steady as she goes and people who are really good at managing the status quo.

I believe the opposite. I believe there are at least three fundamental problems in real estate that will lead — if left unchecked, if not addressed, if kicked down the road — will blow up and bring about fundamental transformation of the industry with enormous possible negative consequences. They are:

  • Agent Incompetence
  • Lack of Broker Profitability
  • Broken Organized Real Estate

What’s more, the three fundamental problems are interrelated and interdependent.

For example, lack of broker profitability drives headcount-based recruit-and-retain models which leads to broken Association/MLS models based on membership dues from as many people as possible which results in widespread and rampant incompetence by agents who are card-carrying, dues-paying REALTORS, which in turn degrades the REALTOR brand into meaninglessness, and so on and so forth.

Left untreated, these problems will result in the outside world imposing solutions on the industry, whether through technology disruption, government action, or simple changes in consumer behavior. In many cases, those solutions will be for the better; in other cases, however, the cure may very well be worse than the disease.

This situation calls for leadership that is strategic, wise, caring, empathetic, etc. etc. — all of the things that experts and non-experts alike want from their leaders. But above all, leadership today requires courage.

When problems are fundamental, tweaking around the edges ain’t gonna get it done. And you can’t mess with fundamental solutions if you’re deathly afraid of offending this person or that person, or constantly worried about job security.

A Game of Thrones

Game of Thrones book

Given the fundamental problems, there are some secondary problems as well. One of the most significant is the plethora of people practicing positionship and a dearth of people practicing leadership.

What is “positionship”? There are, once again, many definitions, but I like this one from John Maxwell: people follow you because they have to. You’re the CEO, so your subordinates do as you say… but they don’t follow you in any significant sense of the term. You’ve been elected President, so the By-laws grant you certain powers, which you’re not shy about exercising. But you’ve got no followers and once your term is over, you’ll disappear like sea foam into the ocean waves.

In the brokerage world, there are tens of thousands of owner/CEO/brokers and under them, there are even more tens of thousands of mid-level managers who toe the company line, try nothing extraordinary, because they want to keep their jobs, keep their titles, keep their positions. The brokers don’t practice leadership, because they’re beholden to certain top producing agents and keeping them fat and happy is their top priority.

In the MLS and Association world, positionship is the norm rather than the exception. The constant revolving door of “leadership” at local, state, and national levels means a President is here one year, gone the next. The Association Executive or the MLS CEO understands that their job depends on politics and keeping the Board fat and happy, and so take no risks they don’t have to. Why rock the boat?

The power games, the intrigues, the perceived slights and offenses, the desperate need for validation by some unknown crowd of “insiders” who will or won’t nominate you for some position or another… these things are the daily realities of organized real estate in the 21st century.

Yet, there are leaders — men and women that others follow without having to, simply because they inspire and educate in some way. If the industry is lucky, those few leaders will also get the position, which gives them the power to do something about pressing issues. If we’re not, the leaders get overlooked and silenced by those interested in the position and the power for their own sake.

A Clash of Kings

What then do we need from our leaders? It is courage above all, right now, at this time.

The fundamental problems facing the industry require fundamental solutions. That means destroying that which does not work any longer. That means questioning where we’re headed and why. That means upsetting the comfortable arrangements that have profited so many for so long. Naturally, those who depend on the status quo for their jobs, their positions, and their status will not simply let things go. It doesn’t work that way.

We need people who are comfortable in their own skin, who do not need positions to give them followers, who do not need the approval of others for their self-esteem, and who do not rely on the status quo for their livelihoods. Then we need them to step up, with courage (which does not mean the absence of fear) to change what must be changed, to destroy what must be destroyed, and to build what must be built.

We might call such people kings and queens arising. They will assuredly clash with the old guard of kings and queens. The latter will have power, money, influence, positions, titles, and even companies. But the former will have truth and reality on their side, if they would only speak the truth and act on the reality of today instead of the faded illusions of the past.

This has to be done. There will be conflict, and it will be unpleasant, no doubt. But it must happen if we’re to have a chance.

Otherwise…

A Feast for Crows

The future looks grim for the real estate industry. The following is merely a list of things that we already know about. God only knows what else is being cooked up in some garage in Silicon Valley or in some backroom in some state capitol somewhere that we have no idea about at all.

  • DOJ and FTC hearing to review the state of competition in real estate, with a particular focus on how real estate data is used or not used.
  • New models of buying/selling homes from Opendoor to Offerpad to Knock
  • New brokerage models from Redfin to Purplebricks to pay-you-to-list-your-home (you read that right)
  • The end to self-regulation of the industry (already happened in British Columbia, Canada)
  • The continual rise of private listing networks
  • Challenges to independent contractor status of real estate agents
  • Challenges to licensing for real estate brokers and agents
  • Questions on whether commission sharing is desirable for consumers or not
  • Greater difficulty in keeping banks out of real estate

Some of the changes that will be forced on us from the outside may be positive overall. But many won’t be, and once we have lost control, well, we have lost control. None of us can predict what that looks like, except that it will be exponentially more difficult to regain control once lost than it is to fix what’s broken while we have some control.

A Dream of Spring

So at this time in the industry’s history, what is needed above all are leaders who have the courage to ask hard questions and make tough decisions.

Several years back, Stefan Swanepoel wrote a book called Surviving Your Serengeti. I reviewed it in 2011, and in that book review, I wrote:

The natural cynic, like yours truly, might have fun with some of the lessons. For example, the Wildebeest embodies Endurance, and Stefan spends quite a few pages pointing out that the Wildebeest’s journey is fraught with peril, with no guarantees of survival, but exults in the fact that the Wildebeest overcame all of those dangers to become the most populous animal on the Serengeti. I couldn’t help but think, however, that the species as a whole may endure, but individual Wildebeests get eaten. Thousands of them.

If the real estate industry is to survive, the leaders will have to make decisions that result in thousands of casualties. Companies will go bankrupt. People will lose their jobs. Whole organizations may fail, and even whole sub-industries disappear. But the herd, the real estate industry as we know it, will survive.

Those are tough decisions for tough men and women.

These leaders may be in positions of power already. Or they might be on the outside looking in. But they will all have followers and few will have comfortable words of calm and peace and everything’s gonna be all right. Because our time, the challenges confronting us, do not lend themselves easily to messages of peace and comfort and go along to get along. It will take far more than positionship, which can be taken away by a Board of Directors, by a committee, by some institution or another, to get the industry from here to there.

We can only hope to see these leaders emerge and start to lead.

Because the alternative to hard questions, tough decisions, and choices that nobody wants to make is a happy-faced, comfortable, bump-free ride into irrelevance and extinction.

Could such leaders emerge in this social-media-addled, popularity-above-all, politically correct and socially divided Instagram world of ours? I don’t know the answer, but hoping for their emergence and ultimate triumph, I dream of spring. I dream of a springtime of a newly revitalized real estate industry that fulfills its patriotic duty and civic responsibility as laid out for us over a hundred years ago by our forefathers, cares for and serves consumers as they deserve, and elevates the industry to something beyond ordinary commerce.

Come what may, that’s a dream worth having.

-rsh

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9 Comments

Join the discussion and state your opinion. Some comments may be held in moderation. I try to get to them as soon as possible, but may be traveling or unable to approve comments immediately. I do not censor comments, but reserve the right to remove anything that looks like spam, trolling, or just outright inappropriate.

  1. YES! I’d love to write something incredibly intelligent but all I can think is Yes! Yes! Yes!

  2. Winter is coming. Arise the courageous ones amongst us. Rally the troops. We must unite against the common enemy. For together we stand, divided we fall.

    Once more a superbly written, insightful and inspiring piece Rob. Well done.

    The thing is, our true enemy is within. The coming winter is of our own doing. To prevail, we must face the truth – it was us who created the beast in the first place.

    You identify three fundamental problems with our industry. Three fronts we must fight to overcome. Agreed, these are indeed big problems. Although, I suggest not our biggest. It’s the view of those we serve that matters most. 1. Low consumer trust (our negative reputation) and 2. Poor Value (excessively high fees) – are what we must fix. Of course, fixing those also two requires us to address your three.

    But. Before we go any further. Have we considered that all five are merely symptoms of a deeper problem? By only focusing on the symptoms we may be fighting on the wrong fronts. Surely we must first identify, then strike at the cause? Cut the head of the snake so to speak.

    Therefore the all-important question becomes:

    What is the root cause – the “original sin” as Joe Rand puts it – that has created these symptoms/outcomes?

    This is the part that takes courage. This is the part the masses in our industry do not want to hear. Cannot face. Because it points to the heart of our religion. The core of our belief system. The very foundation upon which our industry has been built…

    The commission-only business model.

  3. Well done Rob!! An excellent report on the state of our industry and a path to fixing it. Thank you Rob! I couldn’t find anything I could disagree with and you know I tried.

  4. Agent Incompetence
    Lack of Broker Profitability
    Broken Organized Real Estate

    Yep… that about sums it up Rob. Hope all’s well!

  5. Put me in Coach, I can do this!

  6. I would argue that every industry is fraught with the exact same issues, not just real estate:

    • Incompetence — call centers, anyone?
    • Lack of Profitability — just ask every retailer that was considered a titan only a few years ago how they feel about profitability. And even Elon Musk’s efforts have not turned a profit.
    • Broken Organization — Been to a healthcare provider recently?

    Incompetence, lack of profitability and broken organizations are a constant. These issues have been a part of the business landscape as long as there has been business. And they will continue to be so long after we are all gone.

    So while agree with your analysis about real estate’s problems, they are not unique problems.

    But in my mind, here is a huge issue that no one seems to be talking about — the PUBLIC is equally as culpable in our problems as we are.

    Think about it, the public enables agent incompetence by having a complete lack of understanding of the process — as well as what seems like an willingness to truly figure it out. So often, I see the public completely oblivious to the way the process works and/or their choice of agent is absolutely the wrong one for what they are trying to accomplish.

    As long as the public doesn’t know how to judge our abilities, bad agents will be a part of our industry.

    And as long as they seem unwilling to invest any time in figuring it out, then they are as responsible for their own dissatisfaction as we are.

    Example — Did you catch the Rocket Mortgage Super Bowl ad? When the LO was explaining mortgage insurance, the borrowers cut him off and elected to simply push a button on their phone rather than learn about the loan process.

    I think that is a huge issue and I have no clue how to solve it. The pressure to become better is largely non-existent when it isn’t valued.

    So we continue to try to win the race to the bottom.

    Homebuilders have fought this for years — the only thing that the pubic truly understands is price. You can talk all you want to about about green building techniques, responsible harvesting of wood products, energy efficiency, quality materials, warranties, etc. And yet every market’s largest home builder is the one who builds the biggest home for the cheapest price.

    So until the public commits to understanding what makes a good agent, we aren’t incentivized to become better, either. And that is the sad truth.

    Are there other issues? Sure there are.

    • Dodd Frank is terrible legislation for brokerage.
    • Education for agents is largely based on real estate law and principles but it is totally quiet to business practices.
    • The ability to start any company now is waaaaay too simple. For less than $1,000, you can have a logo, business license and a really nice website. And for a pittance, you can run a really targeted online advertising campaign to reach a very specific audience — but have no back office operation whatsoever. And that, too, is an issue.

    But I do believe that market forces, like they always do, will force the right changes on our industry. Will RE look the same in 5 years? For some us it will. For others, not so much.

  7. Thanks! Next part will be published tomorrow ?

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