Tough Talk on High Tech

February 1, 1996

Editor's note: Recently, TR Inc. pulled together some of the industry's biggest players to discuss the future of real estate brokerage and of the real estate industry itself. Participating in the discussion were Maria Bunting of Windermere Services, Mary Frances Burleson of Ebby Halliday, REALTORS®, Bob Pittman of Century 21, Dick Schlott of ERA Real Estate, and George Smith of HER, REALTORS®.

This is the second installment in a two-part report of the discussion. The first installment appeared in the January 1996 edition of TR Inc.

How will technology affect the way brokers do business?

Schlott: Mary mentioned that real estate is a high-touch business. My question is, how do we manage if this industry is going to virtual offices, where we'll have a 1,600-square-foot office and 60 salespeople who work out of their homes? How are we going to touch salespeople?

Burleson: We'll send all our salespeople E-mail. And we'll find other ways to communicate. My concern is that that's not going to satisfy the issue.

Schlott: If we provide quality services, salespeople will become very dependent on those services and will stay with us. But things are going to be different from what they've been in the past. And we're going to have a different type of salesperson, because, if the virtual office becomes a reality, you're not going to know salespeople in the same manner.

Pittman: The other issue is how do you track productivity, push it up, and allow salespeople to get needed information quicker and more efficiently?

Burleson: We computerize and set up more systems, and we spend more money for those systems.

Schlott: And that challenges the profit margin. Again, it's a delicate balance.

Smith: That's a problem for brokers of our size because we have to come out with technology. But I'm not convinced those systems are selling or listing more houses. We've got a fancy computer system, but there are shortcomings. We had to turn to a supplier of services, but there are only two or three of them out there, and we're not sure we're with the right company. And my computer guys say, "George, we're still not home on this. We have another $200,000--$300,000 to go." And they told me that when we had spent $300,000. Now we're at $700,000.

Schlott: What you said is critical. We have to come up with systems. It's not that we want to. There's a difference. And it's deadly for a company your size to lay out $700,000, because I'll guarantee you that when you get to the $1 million mark, they're going to tell you it's going to cost more and take more time.

That brings up another issue. Let's just say we're capable today of delivering the perfect computer system throughout the entire industry. Is the industry ready for it? No. How do we train people so that they use the system and know what to extract from it? How do we manage the system? Therein lies the problem.

Bunting: And how do we train them without getting them so immersed in the system they forget to sell their houses?

Pittman: We have to go back to ground zero. We have to make that user interface as simple as a video game system.

Smith: We've got a sophisticated phone system in our office, and our people know that, if you pick up the receiver and hit seven numbers, somebody might answer. But they don't know about so many of the little features.

There's a midsize company in Portland, Ore., whose broker told me that when he implemented technology, he overlooked the cost of educating his salespeople. His system works, and he's got 10 people who really love it but about 450 people who don't understand it. Now he has to go back and train them, and that's part of the cost, too.

Schlott: The funny part is that you have to have these systems because salespeople hear that somebody else has them. Yet when they get these systems, salespeople are like children who get presents at Christmas but then play with their old toys.

Smith: It's part of the recruiting and retention game. You've got to have technology, or you'll never keep your good salespeople because they think someone else will get something better across the street. It's insidious.

Pittman: The other issue with technology is that in six months you have to be ahead of where you are today because your competitor will be where you are now. The only way technology works as a competitive tool is if you're willing to always be six months ahead of everybody else.

Burleson: Wayne Gretzky always skates where the puck is going to be.

Pittman: Exactly.

What should brokers be doing right now to meet today's challenges?

Smith: I still like Ronald Reagan's statement "Let's just shut down the government and see if anybody misses it." We're in a state of change, and that change is costly. So with every decision, you should ask, What would happen if we did this differently or not at all? You'd be surprised at the answers.

Schlott: It's important to simply accept the fact that there's change. A lot of people are fighting it. And it's not just a paradigm change. We're going through a huge transition from an old, traditional business that hasn't changed since the MLS was invented. To me, the industry is opening up like a flower, and there's going to be a lot of opportunity for a lot of people to be very successful. Don't fight the opportunity. Look to it.

Burleson: We also have to ask ourselves, Where do I want to be? Where do I fit in? Where am I going to find information, and how can I open up my mind to it? Because our staff and salespeople expect us to be way ahead, know more, and be very concerned and caring.

Pittman: There's a great definition of insanity: doing the same thing over and over again and expecting different results. That comes to mind here. This industry must do things differently. And you can't change by slow evolution. You have to make major changes.

One of the dangers of this business is that you're so close to it you see imperceptible change as major change, and you can't conceive of the kind of radical change you need to exploit what's happening in the marketplace for the benefit of your own business.

What should small companies be doing to deal with today's issues?

Pittman: The solution for small and large companies is the same---growth.

Burleson: Mentoring groups would help a lot. Most brokers hate to tell somebody they don't know how to do something. But one reason to come to meetings like the NATIONAL ASSOCIATION OF REALTORS®' annual convention is to network with other brokers and ask questions. You've got to just finally admit that you don't know the answers.

Smith: And in the end, some small, independent brokers might have to consider the end. Or they might have to join a franchise or combine with two or three other small brokers to get a little bit bigger and become niche marketers. Niche marketing still has a place in this world.

Burleson: There are also some brokers who've realized they were better at listing and selling and gone back to that. It's not a demotion to go back to sales. Brokers should ask themselves, When was I my happiest? I've asked people that, and they've come in and resigned or said they want to be salespeople again.

Schlott: One measurement to add is, Where will you be in the year 2000? When you ask that of people who own a company, a lot of them have no clue.

Bunting: Or what must you do to be where you want to be in the year 2000?

Schlott: If you don't see yourself doing something that's different from and better than what you're doing now, it's time for you to look at the alternatives while you have them. Somewhere between now and 2000, you'll lose those options.

Pittman: You have to do a five- or 10-year plan and ask, What's going to level off? Where am I layering in growth? Where am I planting my seeds? You need to start planning now because not everything has instant results. You may need to plant a seed that's going to begin to pay off in two or three years.

Burleson: Some brokers don't have a year or two to make it. If they don't do something to change within the next 12 months, they don't have the luxury you're talking about.

Pittman: I'm talking about the most successful brokers. The most dangerous situation to be in is to be successful because you say, "I've found the Holy Grail, and things are going well." That ought to be the time you start planting seeds to sustain your growth. The person who's in an emergency situation is more apt to make that kind of change than someone who's doing very well.

freelance writer

G.M. Filisko is a Chicago area freelance and former editor for REALTOR® Magazine. 

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