So How Do You “Go Virtual”?
After finishing my six-part series on the virtual real estate office, I received several letters, one of which I am quoting below:
“Mr. Jones, your information on this topic is phenomenal. I’m in the process of converting to a virtual office brokerage firm. If possible I’d like more information about the virtual office business model: the system that connects all the technology resources that you mentioned and collectively streamlines the daily operations of the business. Or if not, maybe you can point me in the right direction.”
“I’m an aspiring broker in Houston, Texas and I’m interested in building a virtual real estate office. I was wondering if you could give me some specific direction that would assist me in putting in place an operational system, and a specific business model that would allow me to get my business started.
Thank you for your time,
William (last name withheld)”
After an exchange of correspondence with William, I realized that I probably should have included a better conclusion for the series, and hopefully tie it all together for those agents truly interested in going virtual. I’ll be completely honest: I didn’t take this last step because I was afraid that some would feel it was too “salesy” since, after all, my company is in the business of developing and licensing virtual office software for the real estate industry. But since I was asked directly, by two separate agents in one week, I will include my recommendations on how to proceed. If you feel like you are being sold, feel free to “just say no”.
First, please allow me to give you some history before explaining my recommendations. A couple of years ago, as our company was exploding in size and influence, we were asked by a number of brokers and entrepreneurial businessmen to franchise our business model. Given the demand and the excitement of the rapid growth, I allowed myself to be pushed in that direction and so we developed and sold nearly a dozen franchises. All the while, I had a nagging sense in the back of my mind telling me there was a better way. Eventually, the nagging came to the front and center of my mind, and I realized that the direction we were going was wrong for our company.
It finally struck me what was wrong with the franchise model: Having owned 12 franchises in my pre-real estate life, I realized that every franchise I’d looked at, took more from the party than what they brought to it. Until I actually went down that road as a franchiser, I didn’t realize why. Just the regulatory compliance costs of maintaining a franchise system in all 50 states is over quarter of a million dollars a year. Add to that the costs of developing the franchise documents, the systems, and the operations support, and the cost of franchising is staggering. So after finally figuring it out, I spent the best part of a year buying back our franchise licenses.
Now don’t get me wrong, I still want to grow our brand and our unique and very profitable way of doing real estate, but being strapped with an ancient and overhead-laden model was not the way I wanted to go. I wanted to be able to create a win-win-win-win model. I wanted, first and foremost, our real estate customers to benefit by a better real estate brokerage experience. I know that that can only be accomplished by better trained, better motivated, and better paid agents doing the work in the trenches. But for the agent to be better trained, better motivated, and better paid, the broker-owner generally has to make less and do more.
But what if much of the burden and cost to the broker-owner could be lifted, by the power of technology and the help of the corporate office? And what if the barrier of entering broker-ownership could be lowered significantly, allowing many more would-be broker-owners into our business? And if a company figured out a way to make the customer, the agent, and the broker all win, then they surely would lose, right?
I wrestled with this problem for several years, all the time believing that it could be done in a way that would allow everyone to win. And then one day it struck me — the solution was so simple it almost got past me. And what’s funny is that we were already 95% of the way there! We only had to change a few minor things to go this direction. Now I was excited– and our virtual office brokerage model was born!
I once read a book about negotiating (I don’t remember the book or I would share it with you), but in the book it discussed how it was helpful for all the parties of a negotiation to list their needs, as a group, at the outset of negotiations. That’s a great piece of advice, by the way. And putting together a national real estate business is much like a negotiation, so let’s try the same approach. Here are the driving concerns for everyone involved.
The Customer. I believe the customer wants a more focused and more attentive agent. An agent that is competent and professional. For that to happen, the agent needs to be able to spend enough time to do the job properly, and without the frantic stress that so often accompanies agents who spend most of their waking hours drumming up more business. Take that pressure — marketing — off agents, and give them the tools to be better organized, and the customer will be the ultimate winner.
The Agents. Having hired, trained, and worked with thousands of agents, I believe that most of them truly want to do a great job. Most of them are great with customers. Their frustrations revolve around a sense of being all alone. Typically, their priorities in selecting a brokerage are money, image, training, and community. Figure out a way to give them more money, a good image, training, and community and you will attract more agents than you can manage!
The Broker-owners. The broker-owner is often the one caught in the middle. Torn between carrying out the overhead intensive desires of the franchiser and the demands of the agents, while still trying to actually make a profit, most brokers have to continue to practice real estate just to pay the bills. Brokers are looking for less overhead, more profitability, and the pride of building and owning a successful business.
The Franchiser. The franchiser typically wants to grow national market share, build stock holder value, and return on investment. That typically means providing lower cost services (which usually translates into lower value services) and a non-stop focus on franchise sales.
As you can see, many of those are competing needs in our traditional model. But what if you could align those motivations? What if you could create a system that served each of the parties better? I believe it can be done. In fact, I believe we did it. But you be the judge. You tell me. In the next installment, I’ll explain our model in detail and you can decide for yourself.