Brokers Over $2B in Volume Should Prepare for Mediation
Friday, March 15th, 2024 was a watershed day for the real estate industry in the United States. The National Association of REALTORS® (NAR), who had been negotiating with the plaintiffs in the Sitzer/Burnet Antitrust litigation, announced a proposed settlement that covers the entire real estate industry (including all Realtors, Realtor associations, and Realtor-owned MLSs, all Realtor affiliated brokerages) except for brokerage firms who perform more than $2 billion in transaction volume. The NAR settlement comes on the heels of other settlements, including RE/MAX, Anywhere, and Keller Williams. There are about 94 brokerage firms that transact over $2B per year. In the Sitzer settlement, NAR negotiated a buyout for these large firms at a rate of about $2.5 million per $1 billion in trades. Using this math, Compass would have been subject to $2.25 million multiplied-by 228, since they did $228 billion in transactions. However, Compass was able to negotiate $57.5 million. Compass is making two payments. Compass negotiated their settlement in the Gibson and Umpa cases, which covers all plaintiffs in each of the copycat lawsuits – including those in Sitzer. Let's unpack this. Any firm in the $2B club that has been named in any of the copycat lawsuits may go to the plaintiff's attorney and settle. The settlement in any of the cases covers all cases – including Sitzer. Firms would not be required to pay more than once. The attorneys in the copycat lawsuits have a heightened motivation for settling with any of the brokers in the $2B club. If firms do not settle in any of the copycat cases, the judge will tell the plaintiffs to go collect their check from Sitzer. Those lawyers may not participate in the settlement at all, unless they can cajole brokers in the $2B club to settle with them. The settlement terms may be different. As you know, there are a number of terms that eliminate the offer of compensation from the MLS entirely, among other things. NAR makes payments over four years. Compass makes payments over two years. Compass has different settlement terms. If you are in the $2B club and you have not been named in any litigation, your best bet might be to contact the mediator in Sitzer and negotiate a settlement. You have some time to prepare, but not much. The mediation in Sitzer does not start until the court accepts the settlement. What should you do now? Prepare for mediation. Get your attorneys on it. Pay close attention to the settlements that have already been announced, and do some 5th grade math. How much did they agree to pay per agent, or per seller transaction? Is your business model different? How much can you pay? These data points are all helpful in negotiation. WAV Group is not offering legal advice. We help with information and strategic planning. To view the original article, visit the WAV Group blog.

Best Way to Build Your Brokerage M&A Strategy
Last week, the WAV Group M&A team hosted a webinar for more than 300 brokers as the final episode of our webinar series for our book, Acquiring More Profit. In our final episode, co-author George Slusser and I reviewed the final stage of a merger – "Evaluating Your Results." We welcomed Nicole Rideout Hartwick of Gibson Sotheby's and Matt Rand of Howard Hanna Rand Realty as panelists. Both firms close numerous acquisitions each year. Immediately after the webinar, a number of brokers who have never executed a transaction before reached out to get advice on how to get started. A lot of this information is in the book, but one item that we did not write about is a self valuation. Are You a Buyer or Seller? The first question that a brokerage should answer for themselves is if they are a buyer or seller. Regardless of size, this is always the most important question to explore. We all know that if someone came along with an unbelievable offer, it would be a no-brainer to sell. However, the regularity of unbelievable offers is extremely limited, especially in a low margin business like real estate brokerage. Similarly, if someone wanted to give you their brokerage because they are tired of running it, most firms would accept. This is also an unlikely scenario. The best way to answer this question is to have a valuation done on your business before you initiate conversation with another firm about a merger or acquisition. WAV Group can perform the valuation for you, or you can use the worksheet offered in our Implementation Guide and do it yourself. Either way, you can start out by looking at your own business. You must evaluate the business as if a "third party" absentee owner was involved. Adjustments are made for what expenses they may need to add, or what expenses they would not need to incur. Be honest about the true profitability of your firm, not just what the financial statements might tell you. Would you buy your brokerage today? Would you sell it for the multiple of EBITA ranging from 3X to 6X? Exploring the question of being a buyer or seller of your company is the best way to understand as to whether you are in fact the buyer, and when you might be the seller. Trade Multiples Today, smaller firms are usually trading for 3X to 4X of the trailing 12 months' Adjusted EBITDA, but larger firms with more than $1 billion in transaction volume are likely to see 5X to 6X. These are general numbers that will simply get you into the ballpark of what brokerage firms are trading for. The terms of the deal can move the needle on the multiple in many ways. Like an AVM, these multiples get you close, but your company is worth the exact amount that you are willing to accept from a buyer – driven by many motivations, synergies, opportunities, and culture. Some firms simply fit together very well, producing higher valuations. At other times, the fit is OK, leading to lower valuations. It's like the perfect house vs. an adequate house. Other Getting Started Basics Data helps. Nearly every broker is looking at marketshare data every month. Most firms can use the knowledge about a competitor's commission plans and the local operating costs to estimate how a brokerage is performing. Use those market share reports and your knowledge of the key agents at a competitive firm to define your prospect list. Meet with potential candidates. George Slusser often likes to use the analogy of "It's Just Lunch" to discuss prospecting for M&A trades. Compatibility and culture are the ingredients that make for great transactions – far more impactful than the price paid. Price is what you pay, value is what you receive. In our webinar, Matt Rand shared a story about a merger that took nine years to happen! The important lesson here is that you need to get out and socialize with your competitors, much in the same way you recruit agents. It's a sales pipeline. Some owners do not like the prospecting part of M&A, which is fine. If you are looking to buy or sell, WAV Group can get you started. You need to be prepared to take the meeting, but we can help you get there. Once you get started, keep going. Rinse and repeat. There are 180,000 operating real estate brokerages in America, according to NAR estimates. Lots of fish in the pond. Start casting! To view the original article, visit the WAV Group blog.

Buckle Up, 2024 Is Going to Get Weird
Real estate is no stranger to the out-of-the-ordinary, and 2024 looks like it's going to be a doozy. In some ways, we've found a new "normal": shrinking broker margins, rising costs, inflationary pressure, and scarce seller leads. In others, like interest rates, inventory, and pricing, things feel more uncertain than ever. We're heading for uncharted waters. As the captain of your ship, you can take two different tacks. Which will you choose? Tack #1: The Short Course There's no sense sugarcoating it: business is tough right now. We were spoiled during the pandemic, and the next 12 months are looking a little less rosy. When the wind is out of your sails (and sales are down), you might look to lighten your load. That means ditching the dead weight and tossing things overboard to weather the storm: cutting technology budgets, staff, and overhead costs. Tack #2: The Long Course Don't get me wrong, optimizing expenses is always a good idea. But when it comes at the expense of resilience and future growth, it doesn't do you any favors. Skippers who are on a long course don't jettison everything—they batten down the hatches, rebalance the ship, and look to recoup their costs by making strategic investments. Their goal is to increase opportunities, streamline processes, decrease overall expenses, and improve efficiency over the long term. Which course are you taking? How to plan for a weird year My biggest tip: take the long course! Here are three things you can start doing today to chart out your business for the next year and reach your revenue goals. More opportunities Leads are limited right now. Instead of trying to convert more, work to broaden your funnel. How? Tap into your entire brokerage's sphere of influence. This means investing in top-of-funnel solutions, like social media marketing tools and strategy, where a relatively small investment could start paying returns right away. You can also leverage online ad strategies, with the caveat that a robust social media presence can provide similar exposure for a fraction of the cost. New revenue streams Many brokers have found ways to add new lines to their income statements. These include monetizing their websites, developing strategic partnerships with ancillary service providers like mortgage and title, and dipping into the rental market. We know that the only constant is change, so finding new niches where you can thrive is always a winning strategy. A bigger team Lean times are a great time to grow your team. Sounds counterintuitive? It's simple math: if you can provide support to new agents without dramatically increasing your overhead, they will expand your sphere of influence significantly (and usually at a lower commission tier), meaning better reach, more opportunities, and higher commission income. Full speed ahead With uncertainty on the horizon, don't be dramatic, be pragmatic! Optimize your spending, streamline your business, and set yourself up so that when the wind picks up again, you're ready to sail into the sunset. Tom Demos, Director of Enterprise Sales at Constellation1, helps teams identify opportunities by evaluating their current tech stack, customer journey, and business processes to create strategies that drive value at every level of their business. To view the original article, visit the Constellation1 blog.

Why Small Firms and Tech Companies Should Be the Focus of Brokerage M&A
There are two major trends developing in real estate brokerage mergers and acquisitions (M&A) that are dramatically changing the landscape of where agents hang their license and access technology. Both can provide a small business merger solution for brokerages struggling to meet transaction minimums. The first trend involves larger firms acquiring and merging with smaller firms. The second involves the investment in and acquisition of technology firms that serve the needs of real estate agents and teams. Small Firms Selling to Stop the Bleeding There are fixed costs to operating a brokerage. Just think about the basics. Every business needs to handle accounts receivable, accounts payable, payroll, taxes, office expenses, and more in order to operate. Operating a business forces companies to manage this burden, regardless of the number of agents or volume of transactions. There are 108,000 real estate brokerages in America. When you look at the number of transactions per brokerage and you benchmark the bottom third of firms in any market, you realize that the majority of real estate brokerages are operating at a loss. According to George Slusser, my co-author of the book we published last month, Acquiring (More) Profit, "there is a basic economic principle driving merger activity among small firms." The baseline cost of operations in every brokerage is determined by sales volume. If it takes $30 million in sales volume to cover the fixed costs for a given market and office, and the firm is operating below that threshold, then owners are writing checks to keep the business afloat. "When you combine the production of two brokerages operating at $20 million in sales volume, both of which are losing money, you wind up with a firm doing $40 million, which becomes instantly profitable," says Slusser. This is when a small business merger can make a lot of sense. For now, trade volume in real estate is expected to remain at the current rate for another two to three years. Economists blame the low volume on the extreme rate increases by the Federal Reserve bank, effectively locking consumers into low interest loans that discourage the move-up market. Other influences include higher costs of living, driven by inflation and stagnant wages. The outcome is that brokers who are operating at a loss are facing another four to eight quarters of unprofitability. For those firms, it's time to find a merger partner, whether for a small business merger, a full acquisition, or another type of partnership, so they can move on. Technology Firm Consolidation by Brokerage Compass has achieved one point of differentiation that no other major brokerage can claim. They invested an obscene amount of capital into developing the core technology that is used by Compass agents to service their clients. You can argue all you want about the wisdom of such an investment, or about the quality of the applications. But you cannot dispel the truth that Compass has a proprietary suite of tools for their agents that no other firm has. If you want to use the Compass tech, you need to be a Compass agent. The wisdom of this strategy is not new to real estate. Windermere was among the first firms to set itself apart with technology. If you recall, it was the first major firm to launch map search to consumers at scale, and developed its internal CRM and listing presentation tools. This placed a wall around the technology that required agents to join Windermere or become a franchise to use the technology. A similarly successful but somewhat different model was made popular by Booj. Booj, which stands for "be original or jealous," was a successful technology company that operated under the principle that only one firm in a marketplace would be allowed to offer the technology to their agents. The company was very successful and developed wonderful technology. To the dismay of their brokerage clients, RE/MAX acquired the company. This terminated the exclusiveness of the technology in the marketplace and led to the demise of the products. The sale of Booj to RE/MAX immediately disrupted brokerage firms who were all-in on that technology platform as a differentiator. Their customers felt betrayed, and they learned a deep lesson about partnering with technology providers. The best strategy to create exclusivity when partnering with a technology company is to own the company (potentially through some activity like a small business merger) or to invest enough in the company to offset the disruption caused by an acquisition. It is pretty hard to say how many agents a firm needs to justify owning their own technology. The main denominator is less about the number of agents and more about the income per agent. Keller Williams charges their agents and franchises a technology fee, allowing them to deploy those fees into the development of technology and the training and support. In similarity to Compass, you can argue about the quality of the technology, but there is no argument for the exclusivity of it. If you are not a Keller Williams agent, you can't use it. Regardless, in every brokerage there is a number of agents that justify the firm's investment in owning the core technology that is exclusively provided to their agents. Losses Will Continue to Drive Acquisitions Brokerages on solid financial footing today have a once-in-a-lifetime opportunity for growth. Firms can expand their sales volume through small business mergers by acquiring small firms, and they can can lock in exclusive tools and resources by purchasing and building core technology. You can draw a circle around the top 50 firms in America by transaction volume to target the ones that have the best opportunity in today's market. Historically, real estate brokerages have been more successful at acquiring other firms than acquiring and developing technology, but that is changing. Everything in technology is easier today than it was just five years ago. Databases are cheaper to operate, application development can be done with fewer people, and APIs have smoothed the path to platform development by driving application interoperability. WAV Group exists to help brokerages like yours thrive in challenging markets. If you need help with your acquisition strategy, please contact Victor Lund. If you would like a valuation on your brokerage, please contact George Slusser. If you are struggling with the technology you have today, please reach out to David Gumpper. And if you have a great strategy but are not communicating or marketing it effectively, reach out to Kevin Hawkins or Bondilyn Jolly. To view the original article, visit the WAV Group blog.

5 Strategic Areas to Refine for Widespread Brokerage Success in 2023
As real estate returns to a normal market and we have a little more time to respond to an offer, Allen Tate continues our focus on operational effectiveness. Historically, in good times, companies open offices at a fast pace. As the market slows, companies will often close doors. Our goal is to be strategic for success in every market. We strive to get the people, productivity, and professionalism just right. Office Strategy Our network of 70 branch offices in local communities throughout North and South Carolina is a significant differentiator that sets us apart from the competition, helps our agents and provides consistency to the customer. Allen Tate believes that physical locations will continue to be important to sustain our culture and community for years to come. During the past few years, we have focused on "right sizing" our branch offices, with correct design that is welcoming and efficient for both agents and customers. In the past six months, we have attracted many experienced agents to our company who left a more virtual company environment. This tells us that agents still want and need a community culture where they have personal face-to-face interactions with their leaders, peers and customers. A successful real estate company must have a definitive branch office strategy. It's important to understand the market representation of your competition, and understand the space, support, and technology needs of your agents. An essential part of that strategy is an investment in tools and resources that drive transactions. Square footage does not accomplish that goal. Delivering Innovation through Partner Offices In recent years, we have introduced a Partner Office option for our top performing agents. We currently have nine Partner Office locations, with a goal to double that in 2023. We partner with high producers with a minimum closed sales volume of $20 million who desire an office of their own. The agents/teams pay for all business expenses, but have access to Allen Tate technology, recognition, and marketing to assist them in growing their business. This has proved to be a great retention and recruiting solution. The name Partner Office really resonates with high-performing agents. They desire an engaging and comfortable partnership, and they appreciate the transparency. The more we treat them like business partners, the deeper the relationship becomes. This helps us grow our branch network and protect and strengthen our culture. Agent Productivity Our approach to productivity is not to be the biggest army, but the best. Our agents average 15 transactions and $5 million in closed sales volume annually. At the close of 2021, we had 1,600 agents, with only 45 who had not closed a transaction – and they were all new hires in Q4 2021. We have always been focused on discipline to stimulate high agent productivity. We choose agents that believe have great potential, and we are laser-focused on developing them. Agent Retention Retention must be a proactive process. We develop deep partnerships with our agents that become the fabric of a trusting relationship. We have enhanced our compensation plan with features that rewards tenure, and celebrate achievements with an aggressive awards and recognition strategy. Above all, you must love your people. We create a culture to make our large company feel like family. We never lose sight that real estate is a people and relationship business. We all need a pat on the back. Inspiring Branch Leadership An ongoing challenge in our industry is great branch leadership. We need the right people in the right places. As a boy, I remember my father Gary Sr. scrambling the office managers every few years by assigning them to new offices. The impact was significant. At Allen Tate, we are doing two things to help strengthen branch leadership and build future leaders: Leadership development program - Every two years, I spend time over six months with 12 leaders, with a focus on developing leadership skills. By the end of 2023, all of our 55 residential leaders will have completed the program. Emerging leaders program - This is a nine-month program where a class of 27 agents learn to be leaders. We develop close relationships through our monthly meetings, and these agents become more aware of our strategies as a company and how our internal teams support those strategies. Agents in this program gain a heightened perspective and appreciation that will pay dividends in the future. I hope that you are all launching powerfully into 2023. I look forward to gaining some perspectives from your contributions to the Broker Resource Network. We will all get better by working together. Gary Scott is President of Allen Tate Realtors.

What's your exit plan? Here's how to sell your real estate brokerage
For many brokers, selling their real estate brokerage someday for a good price — enough to fund a comfortable retirement — is an aspiration they haven't really considered seriously. Other brokers are building a business for family legacy, or the eventual opportunity to sell a business to create family legacy. Selling a brokerage isn't quite like selling any other type of company or business for a number of reasons, but mostly because it's a people business. When the time comes for you to think about selling yours, you might not know what to expect. Here are 16 steps that you'll have to take before the deal is closed: Get your finances in order Start tracking the value of your firm Document your business processes Develop a strategic plan Perform a SWOT analysis Step away from day-to-day management duties Find one (or more) potentially interested buyers Sign an NDA Due diligence Start negotiating the sale Evaluate cultural compatibility Verify assets Review the letter of intent Sign the purchase agreement Close the sale Announce and celebrate! We'll explain a little bit about what to expect in each step. Step 1: Get your finances in order Any potential buyer is going to want to understand where your brokerage is financially before they start discussing what they might be willing to pay to acquire it, and the same is true for merger opportunities. So the first thing you'll want to do is to gather your profit and loss statements, your tax return documents, and other key financial details that can help you showcase how you've grown the brokerage and what the future trajectory might look like. "So many brokers do a poor job of financial planning and balance sheet building that it is hard to fix when you position the company for sale," says George Slusser, co-author of Acquiring (More) Profit, the definitive guide to real estate mergers and acquisitions. "It is important to formulate what expenditures you apply to the business that an acquirer would not, like an unreasonable car purchase," he adds. "Moreover, many owners underpay themselves for the management function to optimize for tax liabilities. All of this gets reconciled to prepare a brokerage for sale." Step 2: Start tracking the value of your firm Have you ever had a valuation done on your brokerage? Most brokers haven't, especially if they've never seriously considered selling before! But it's a good idea to get a valuation of your firm every year for a number of reasons — not just sales-related. "Knowing the value of your business in current market conditions is beneficial," says Finley Hair, the national director of WAV Group's M&A Advisory division. "However, going through the preparation to sell a real estate brokerage will always be a huge advantage — because you never know when the time is right until it's too late. Be prepared and hire an expert advisor to increase your odds of a better outcome." So if you haven't ever had your business valued, take the documents you collected in step one and share them with a professional who can help you assess how much your business might be worth. (There are also workbooks available that might help you answer the valuation question on your own!) Step 3: Document your business processes This might already be something that you're doing to help support administrative staff orientation or general company organization, but if you've been too small or too ad-hoc up until this point to have focused on business process documentation, now's the perfect time! "Having documented processes is so important in a merger, allowing the two firms to compare and contrast best practices and leverage the strengths of each firm moving forward to generate a better operation," says Victor Lund, co-author of Acquiring (More) Profit. "We spend a lot of time behind the scenes of a transaction doing this work because firms have not taken the time to build well-documented operational processes and policies. If you have, it becomes a valuable asset." You'll want to put together documentation around the following business standards and processes: Organizational charts with roles and responsibilities Agent recruiting, hiring, and onboarding Listing and transaction management Compliance oversight Marketing (both at the agent and brokerage level) Agent training and technologies Ancillary services (property management, mortgage, and so on) Step 4: Develop a strategic plan Perhaps you already have a strategic plan for your company; if so, it's time to revisit it and ask yourself if it still applies. If not, now is the perfect opportunity to start planning ahead and thinking about where you want to go. At this stage of the process, you should have a general idea of how much your real estate brokerage is worth. How are you feeling about that number? If you're hoping to get a better price, what can you do to improve your numbers today? These are considerations for your strategic plan. After all, it might take some time before you find the right buyer, so you might as well set your sights on success in the meantime. The building blocks of planning are straightforward, but using a facilitator to help your team develop a vision, define the current state of the company, and develop the tactics to bridge any gaps can lead to a remarkable and transformational effort. Slusser and Lund outline how strategic plans can support your brokerage sales goals in Acquiring (More) Profit. Step 5: Perform a SWOT analysis This can be done before the strategic plan if you choose, and many companies perform a SWOT analysis as part of their annual strategic planning. If you're not familiar with the concept, SWOT stands for "strengths, weaknesses, opportunities, and threats," and your job is to assess the state of your business in each of these areas. When you're analyzing your company, don't forget about items like your current team's talent and level of competency, your own bandwidth and ability to commit to growth, and other variables that might present assets or challenges when the time comes to make an ownership transition. "Brokers look at market share reports constantly, but rarely do they look at them through the prism of a merger or acquisition," notes Lund. Step 6: Step away from day-to-day management duties Buyers want to find a brokerage that's well-run — but it should operate well without the oversight of one particular human. If the reason why your brokerage is such a success is because you're actively managing it every day, that's not going to help you when the time comes to sell your real estate brokerage, unless you plan to stay on for potentially years continuing to run the company. Download Our ebook: Planning the Perfect Exit You'll need to be able to show any potential buyers that the brokerage will operate just as well without you as it does with you because you built it to last beyond your tenure. So if you haven't already delegated the day-to-day management tasks to a different person at the brokerage, it's time to start working on that. Step 7: Find one (or more) potentially interested buyers After you understand your brokerage's value, have documented your business processes, and are no longer necessary to the daily operations of your brokerage, it's time to start seriously considering who might be the best person (or entity) to purchase the business that you've so carefully built. How do you find a possible buyer? You can look to your competition and consider other local real estate brokerages, or brokerages that aren't local to your area but are actively expanding within the state. Out-of-state buyers can also be an option: Consider where buyers and sellers are moving to or from when they relocate and explore possibilities in those regions. You can also try to find buyers according to niche. If your specialty is luxury homes or waterfront properties, then other brokerages that specialize in the same niche might be interested in acquiring your business. One excellent way to discover new leads on brokerage buyers is to talk to an M&A consultant about options. They work on these deals every day and know who's currently shopping around for a brokerage to buy and who recently passed on an inquiry (and why). "It is rare for a competitor to openly tell you that they would consider a merger, but most business owners will confidentially share their interest with a third party," says Slusser. Everything is for sale if the price is right! Step 8: Sign an NDA An NDA (nondisclosure agreement) is a central part of any M&A deal. It binds all parties to discretion and allows you to freely discuss the intricacies of any pending transaction without feeling worried about the details leaking out to your competition or elsewhere. Both the prospective buyer and you as the seller should be signing an NDA and adhering to its terms. This protects both of you from interference or speculation while you are hashing out the terms and conditions of the contract. Step 9: Due diligence Selling a real estate brokerage is literally a big deal, and so the buyer will expect you to help them with due diligence processes while you are discussing things like the price and the transition plan. This is where all of the work you've already done can come in handy, because you'll need to show: Where your firm stands financially (including tax depreciation and other details) Who your employees are and their salaries and pay rates Benefits (if any) that are provided by the firm to staff Your agent count, commission splits, sales volume, agent fees, and other details Documentation around your office procedures, including any policy manuals or handbooks Details of the technologies and other resources you provide to agents, and the technologies and resources needed to operate the brokerage Any current debt owed or pending legal liabilities Licensing or franchise agreements, or other contracts or exclusivity arrangements Being transparent with the seller about where you currently stand is the best way to help them arrive at a deal that works for everyone. Step 10: Start negotiating the sale When everyone has a more-or-less clear idea of the state of the business and its growth trajectory, it's time to start hashing out the specifics of a sale. Probably the biggest and most important consideration is the price. What seems fair? What's the current business valuation, and what adjustments might you request or offer to that valuation to arrive at a price that works for both the buyer and you as the seller? Another important question to answer surrounds the timeframe of the transition. How long do you want to stick around and help? If you stay on board indefinitely (as a sales agent, for example), then what will your new role and title be? There are many other things to hash out with the buyer during negotiations. If you haven't yet consulted with an M&A expert, this could be the perfect time to ensure you're getting a fair price and that the terms of the deal work for everyone involved. Step 11: Evaluate cultural compatibility This might have been handled already during the due diligence step of the process, but if not, it's an important step that you'll want to tackle before moving forward with the sale. (That said, there's some wiggle room here — you can verify assets before evaluating cultural compatibility, for example. Just make sure you don't skip any steps entirely, even if they're not in this exact order!) Ask yourself, and be honest about the answers: Are there any red flags for what the future might look like for both entities? What can you do today to address them upfront? Step 12: Verify assets Just like in a real estate transaction, the buyer is going to want to verify the brokerage's assets and resources. And you might in turn want to verify that the buyer has the funds you are seeking upfront in order to close the deal! This part should not be too difficult or time-consuming for you if you have followed the previous steps and already have all of your financial and tax information ready at hand. If you need accounting assistance, an M&A consultant likely knows at least one specialist who works on this type of asset verification. Technology used by a brokerage is often neglected in asset verification. "Data is an asset; past customer records are an asset; software licenses may be an asset or a liability," says Lund. "Think about it." Step 13: Review the letter of intent The letter of intent is the document that the buyer presented when they initially expressed interest in purchasing your brokerage. These are preferably not legally binding, but if there were any stipulations or promises made in the letter, now is the time to take another look and address them. There won't be many more opportunities to ensure that everyone is happy with the deal! Step 14: Sign the purchase agreement A purchase agreement is legally binding and declares your intent to sell your business to the buyer you've selected. At this stage in the process, you should be aware of what's in the agreement and what it means for you practically speaking, so your job is to carefully review the document and ensure that everything you've agreed upon to this point is included, and that there are no surprises or misunderstandings lurking in the wings. Step 15: Close the sale Closing the sale and transferring ownership is going to look a bit different for every deal and will depend on whether and how long you as the seller plan to stay on at the brokerage, what the payment plan is, and many other variables. But there will likely be some kind of closing involving a lot of paperwork and an official signing-over of the firm from one hand to another. Step 16: Announce and celebrate! It's the last item on the list, but it's still important — even critical — to carefully consider this step in the process. At this stage, the deal is old news to you and to the buyer, but your staff and agents probably haven't been thinking about your future plans for your brokerage; they're just trying to get through their days! So you want to make the announcement in a way that inspires excitement and renewed energy, not fear and uncertainty. Discuss how to share the news with your fellow dealmakers and come up with a plan that will reveal what you've been up to in a positive, upbeat way. You'll almost certainly want to hold some kind of meeting so that you can have a face-to-face conversation with everyone who works on your business with you and provide a warm introduction and welcome to the buyer. Remember, you have been working on the merger for many months or a year. For the agents and staff, this is day one. After the meeting, consider hosting some kind of party or other celebratory gathering. If this looks more like a merger than an acquisition, then an announcement party can be a wonderful opportunity to introduce the brokerages to each other! Selling your real estate brokerage is a big, complicated deal. It can take months and a lot of research and trust-building before you reach an agreement. Working with an expert throughout the experience can ensure that you don't miss any important steps and are fully prepared to take the final plunge when the time arrives. Connect with WAV Group for a valuation here. To view the original article, visit the WAV Group blog.

Do You Know What Your Brokerage Is Worth?
Why do a brokerage valuation on your business every year? There are so many other tasks occupying your time when you're running a real estate brokerage that finding the time to work on the company instead of at the company is difficult — sometimes impossible. And yet, if you want to reach your full potential as a business-owner, there are certain regular assessments that you simply can't ignore. One of those is a real estate brokerage valuation. How much is your brokerage worth today? Being able to answer that question on the fly can save you time and energy, showcase your own business expertise, and help you plan for the future. In fact, you should be valuing your brokerage every single year. Why do you need to be assessing your company's worth so frequently? There are all kinds of reasons to keep tabs on your brokerage's valuation. Here are eleven of the most compelling. Benchmarking for growth and initiative planning Business and succession planning Accountability for ownership and management Internal transfer or sale of shares Accurate personal net worth statements Annual bank loan requirements Seeking funding Insurance purposes Estate planning Legal reasons You're buying another brokerage or selling yours Let's dig into each in more detail.

Maximizing the Sale of Your Brokerage
As the owner of a real estate brokerage firm, you have invested years of hard work and dedication into building your business. But at some point, you may start to consider selling your company, whether it's to pursue other career goals or to retire comfortably. The question is: when is the best time to sell? The answer is simple, but not always easy to achieve. The best time to sell your brokerage firm is when you are ready, and it is a planned event. By planning your exit strategy, you can ensure that your firm is positioned correctly to convey its value and that you receive maximum value for your business. Timing is critical when it comes to selling your brokerage firm. You want to sell when your firm is in its prime, when it is well-run and profitable, and when buyers are willing to pay a premium for a quality firm. Waiting until your profits are not consistently high enough or until you face unexpected circumstances could result in a lower valuation and fewer interested buyers. To ensure that you are always prepared for the right opportunity to sell your brokerage firm, it's important to make exit strategy evaluation a regular part of your annual business plan. By evaluating your firm's position, value, and potential for growth, you can identify when the time is right to sell and what steps you need to take to maximize your value. At the same time, planning your exit strategy does not mean that you must sell immediately. It simply means that you are preparing for the day when you do decide to sell, and that you are taking steps to increase the value of your firm. This could include hiring and training a strong management team, developing new revenue streams, or improving your marketing and sales strategies. You should always be thinking about your exit strategy. By planning ahead and evaluating your firm's position regularly, you can ensure that you are ready to sell when the time is right. And when that day comes, you can maximize the value of your firm and achieve a successful exit. To learn more about planning the perfect exit from your brokerage, download our new eBook: "Planning The Perfect Exit – Maximizing the Sale of Your Brokerage." This comprehensive guide will provide you the framework to sell your business on your terms. To view the original article, visit the WAV Group blog.

It Was the Best of Times
This weekend, I read articles in Barron's and TheStreet about broken business models in residential real estate. Over the past six months, we have read repeatedly about the second and third rounds of layoffs at many of the real estate and mortgage disruptors. On March 29, 2022, I wrote a piece on course correction that was published by RealTrends. One CEO of a publicly traded company immediately wrote to me: "Excellent ideas. I am sharing with my team." If your business wasn't profitable in 2020 through the first half of 2022, arguably the best of times, what was it you were waiting for to deliver profitability? And, more importantly, what are you doing now? In Compass press releases, they reference shedding another layer of middle management that they say will not impact agents. If you can shed layers of management that will not impact agents, then by default they were not impacting agents while employed – so, why were they there in the first place? Real estate brokerage businesses are simple. Your operating expenses must fit inside your gross margin line – if not, you are not profitable. In addition, the business should experience operating leverage at a certain size. Operating leverage is when each incremental unit contributes a higher level of operating profit. If neither of these principles are present, you do not have a profitable or scalable business. Redfin has exceptional monthly unique visitors and the finest search and display technology in the industry, and yet for 10+ years they have not been profitable. Clearly the consumer, our client, prefers expert local advice over a discounted fee. Why have they not changed their model? Now Redfin may be forced to change. We have plenty of ideas on this topic. Glenn Kelman, CEO of Redfin, was quoted in a recent episode of Barron's Live that we will experience "terrible consolidation." Terrible, why terrible? Industry consolidation has been prevalent since 2016. Look at the growth of Compass, EXP, Fathom, KW, Howard Hanna and others. Even Pacific Union, through 12 acquisitions, grew to be the fifth largest brokerage in the country by sales volume in 2018. In addition, we are experiencing the rise of the "boutique firm" and alternative models like SIDE and Avenue 8. Consolidation is indeed happening. We closed three M&A deals in Q4 2022 and we're active on three additional deals at present. Have you thoroughly examined and considered a course correction for your business? We work with many CEOs on strategically optimizing their businesses for today's markets, creating a vision to thrive through 2026. If your business could benefit from a strategic review, or you're ready to be acquired or be the acquirer, please give us a call. The first conversation is always free and completely confidential. This is Where We Are Now! Mark McLaughlin serves as CEO of McLaughlin Ventures and M&A Advisory at WAV Group. To view the original article, visit the McLaughlin Ventures blog.

7 Easy Tips for Making Your Brokerage Recession-Proof in 2022
The beginning of Q4 2022 has been one of the most uncertain in recent memory for real estate professionals. The Federal Reserve hiked interest rates again on November 2 and signaled that it would do so again if inflation remained out of control. The current rate for a 30-year fixed mortgage is just over 7%, a rate we haven't seen since before the housing bubble in the early 2000s. Inflation remains at a stubborn 8.2%. Sellers are spooked, buyers are tired, and your team is caught in the middle. Your brokerage is likely experiencing a slowdown after a pandemic-fueled buying frenzy. But if the past two years have taught us anything, it's that real estate professionals are adaptive and resilient. There are lots of ways to take advantage of slower times to not just survive, but thrive—and come out on the other side stronger. Let's take a look at seven of them. 1. Branch into new segments or markets Downturns affect every segment of the market differently. The market your brokerage typically serves may be slowing down, but is the same true in neighboring areas or at other price points? You can also consider ways to generate new leads. Hiring is slowing in some areas, but many employers are still hiring as job growth remains strong. Some analysts are also talking about an "affordability migration," where workers in more expensive areas look to move to cheaper ones. This means many workers, particularly in knowledge sectors, may be moving, and relo (or relocation) leads could be a great new source of business for your brokerage. Another market that is stronger than ever is rentals, given that houses are still expensive and scarce, despite high interest rates. So, in addition to relocation referrals, you might drum up leads by helping renters locate apartments, condos, and other kinds of rentals. The same local expertise that makes your team perfect for homebuyers is ideal for helping renters find housing, too. Could relo leads be the biggest source of business your brokerage is missing out on? Learn more about relo leads in our dedicated relocation blog post. 2. Keep your online presence and digital marketing strong When the market slows down, the last thing your brokerage should do is disappear. Leads will be scarcer, so every single one counts. Staying present and active on social and other digital channels will ensure that they can find you. The best (and some might say the worst) thing about social media is that it's everywhere, and it's largely free. With a little effort and consistency, you can build an amazing brand online, both for your brokerage as a whole and for each of your individual agents. This is true of busy periods and slow ones. A slowdown might be the perfect time to implement social publishing at your brokerage. With the right social media tools, you can leverage the best of automation, AI, and lead capture to market all your listings and leverage the power of your collective spheres of influence to stay top of mind all year round. 3. Respond to leads fast The precious leads you do receive will not stick around for long. According to the Harvard Business Review, the average lead response time across industries is 42 hours. HBR found that responding within an hour of receiving a query made it seven times more likely to qualify that lead. One study that is frequently cited online says that 78% of leads go with the first person to respond. We don't know if that's true, but we do know that the speed and the quality of an initial response go a long way to convince a lead to work with you—because that's how we all feel when we're shopping for goods or services. The right real estate CRM will help your team respond to leads fast. If you don't have a CRM yet, or if your CRM is falling down on the job, this slower time is the perfect opportunity to assess your CRM needs and find the right solution for you. 4. Give your current clients the royal treatment Let's not forget that referrals are still one of the best sources of real estate leads! Even if your team is having a hard time finding the right listings and closing deals for your existing clients, make sure they feel taken care of. Be extra responsive, help them price their property appropriately or expand their criteria just enough to find that hidden gem, and negotiate the very best deal for them, even when market conditions might favor the other side of the transaction. 5. Check in on your warmest "cold" leads If times are tough at your brokerage, chances are they are tough for a lot of your prospects, too. Gas is expensive, interest rates are soaring, and the holiday season is right around the corner. The holidays are a notoriously low-inventory period (who wants to move between Thanksgiving and the new year?), but they're also the perfect opportunity to reach out to old leads for no reason at all other than to wish them well. It's far easier to keep leads warm than it is to revive cold ones, but when leads are scarce, you've got to start somewhere. Search your CRM and filter out leads from the past year that stopped engaging with your nurture campaigns or otherwise never went anywhere—then reach out. Remember, it can take some real estate leads up to 24 months to incubate, so keep at it. 6. Give back. Your community will remember. You might also consider occupying your extra time by volunteering in your community, hosting a food drive, organizing a neighborhood cleanup, volunteering at a soup kitchen, and more. Not only is it a great way to give back, it's also a great way to get your team's name out there. It's truly a win-win for everyone! 7. Take advantage of the slower pace to make some much-needed business updates Running a brokerage is tough work! Sometimes you have to put essential work off until "later" because you're too busy, and then a year passes without any meaningful changes. If things feel slow around your office, it might be the perfect time to: Update your website with a brand-new look and feel Enhance your website's search engine optimization (SEO) Optimize your back office accounting and commission accounting Tackle that other project you keep putting off! If you're not sure where a little investment might have the biggest investment, we can help. Learn about a FREE tech stack audit and sign up for one today! To view the original article, visit the Constellation1 blog.

Homeowners Under Management Is the Future of Procuring Cause
At conferences, relative strangers have interesting conversations. At breakfast one morning, we encountered a great agent from Santa Monica. She subtly revealed to me that she had no problem paying one-third of her commission to Zillow for procuring cause referral. "Seventy percent of something is better than 100% of nothing," she stated. She is thinking of changing brokerages. Today, she is aligned with a franchise that pulls 6% off the top, a ransom that she says "delivers nothing to my business." What she is really saying is that her franchise brokerage is not helping with procuring cause – something that she finds to be more valuable than anything else she gets from her broker. The Two-Sided Coin We have seen many brokerages focus on technology as a key value proposition for agents recently. What we have learned is that technology is important to agents. They need sharp tools to cut through the competition and serve the client better. Generally speaking, the normal amount that a brokerage lays out for agent technology ranges between $75 per month and $150 per month. One of the fastest growing brokerage firms in America is Side – they provide a brandless brokerage experience. Side is technology, plus deal management. The agent becomes the brand – but Side is not really helping with procuring cause. The other side of that coin is Zillow (plus a few cohorts like Realtor.com, OjO, etc.) hasl adopted the role of lead generation, incubation, and referral. They do the heavy lifting that creates procuring cause. That is worth 33% of an agent's commission and they do not need to offer any technology or deal management. If you are flipping the coin, which side of the coin are you going to call? Imagine a Path Forward I am convinced that it would be a small step for Zillow to hire agents under their brokerage license. In fact, I think that they should. Given their experience with transaction management and the tools they have available, it would be an incredibly small step. Today, I imagine that Zillow's brand in housing is as big and strong as any brokerage brand. The real estate agent might know that the Zestimate is often significantly inaccurate – but consumers don't care. Like horseshoes, it's close enough. They warm up the consumer, develop procuring cause, and get a payday beyond the brokerage income. We have seen this brokerage model in action. It's called Redfin. I really do not understand why that company – with all of their success online – has not taken a higher rank in the markets they serve. In every way, they are a near-perfect twin of what Zillow would look like as a brokerage. So maybe Redfin is the case study that prevents Zillow from taking that next small step? Redfin is doing a great job developing business for their agents. The office manager is the missing part of the formula for Redfin. Over the years of working with America's largest and most successful brokerages, we learned that office managers are the key to winning and losing in brokerage. They are the culture carriers. If you get the culture of your company right, everything falls into place. So I guess that Redfin might want to consider a configuration for office managers. Beyond the office manager, we presume Redfin is not doing a great job maintaining customers for life. Guaranteed they know exactly how many consumers are repeat buyers, but it's wondered how much they know about a customer who uses Redfin.com – but chooses not to use their company or their agents in a transaction. It's an interesting puzzle. They have nailed consumer engagement and lead generation, but something else is missing. Traditional Brokers Need to Focus on Lead Generation For years, firms like Howard Hanna dominated consumer search in their area. Zillow has surpassed them in some markets today, but the success of their consumer website generates a phenomenal amount of business for their agents. It always gets under my skin when anyone throws a stone at Howard Hanna Real Estate Services (HHRES). These internet experts may not see all of the ingredients that they believe brokers should have, but they are missing the point. HHRES generates tons of business because it ties a trusted brand, with a community of well-known agents operating for generations, with a search experience that is perfectly fine. They drive traffic to the website through tens of thousands of yard signs, radio ads, billboards, newspaper advertising, even a takeover of airport signage in some key cities. Howard Hanna is not alone. Many of The Realty Alliance and Broker Resource Network firms have unlocked this old thinking. If you bring customers to agents, agents are happy to pay you a referral fee in the same way that Zillow or their cohorts do. The unfair advantage of a brokerage is that they can spend more than any agent or team for lead generation, and conversion rates are better for companies than they are for individuals. Customer for Life Real estate agents want technology and need technology, but what they want more than that is customers. Many brokerages that champion the effort to deliver leads to agents fall down when it comes to helping with homeownership. The sale closes and the broker and the agent ghost the client. Don't count drip marketing as relationship maintenance. The master of helping with homeownership is Jacksonville-based Watson Realty. They have business units focused on residential, commercial, new home, mortgage, title, insurance, and property management. They also have businesses focused on electrical work, plumbing, HVAC, and other maintenance and homeownership support. It took them many years to develop all of that, and it works. Watson has never been a chest-pounding company. They just keep their eyes laser-focused on ensuring that their managers are supporting their agents, and that they are wrapping the customer with the warm blanket of homeownership support. If you are a homeowner, a home buyer, a home seller, a renter, a business owner, or a builder, call Watson. Watson has a full-service business that is pretty hard to compete with, and might be delivering the best consumer experience in America. If you want to recruit and retain agents and turn a profit in real estate as a broker – own the consumer. Know great service providers in landscaping, plumbing, electrical, roofing, HVAC, etc. in your marketplace? Why not talk to them about adopting your brokerage brand? Find an economic arrangement with the best ones. Imagine service trucks rolling through neighborhoods with your brand – helping consumers keep their home in good shape. Adopt products like Milestones and give them to your clients so they can order these services simply. Get out there in the community and win on the street with hand-to-hand combat; your business will prevail. Be a good neighbor. When you think about touchpoints, imagine a handshake, not a hit on your website. Avoid the Race to the Bottom There will always be companies offering discounts to consumers and high commission splits to agents. It's a business model that manages to the bottom. But if you want to build an enduring company, aim for the top. Set your sights on offering full-service with reasonable margins serving a wide range of shelter services. Zillow is setting its sights on the share of agent wallets. Obviously, that is a pretty big opportunity as they are among the most valued companies in the shelter business. In some ways, brokers think that way, too. That is the genesis of the agent/broker commission split. But if you want to really surge forward in your thinking, think about the share of the consumer wallet. When you have a customer, what are all of the things that you can do to offer competitive services in homeownership? That is the big idea of the future of real estate. If you change the way you see the future, it will profoundly impact how you view your business today, and the decisions you make today. "The main reason why companies fail is that they missed the future," said Larry Page. The full quote reads, "Lots of companies don't succeed over time. What do they fundamentally do wrong? They usually miss the future." From our perspective, the future is homeowners under management. Define that in your business and you are bound to succeed. Every human interaction with homeowners is a sensor that informs the consumer of your commitment to serving them, and the affirmation that they entrust you with the roof over their head. To view the original article, visit the WAV Group blog.

Success Is a Decision
We have plenty of fog and noise in the housing and mortgage markets. Over the past two weeks, I have consumed research from John Burns Real Estate Consulting, Zelman & Associates and MBS Highway. One perspective repeated by Barry Habib of MBA Highway is "success is a decision." So true! We have the choice to wrap ourselves in the fog and noise in the housing markets, inflation and possible recession, or we can use the current state as an opportunity for a new vision and growth. My listening posts around the United States suggest the resale housing markets are nowhere near the gloom and doom reported in the national media. A few data points: Resales are expected in the 5.4 million range this year – very respectable when compared to our historically best years, albeit short of record-breaking years like 2021. Mortgage originations in 2022 are expected to be $2.4 trillion, the third best performance in 16 years. If you have already reviewed and performed the course corrections as outlined in my March 29th writing, now is the opportunity to plan your growth! We have a new brokerage client planning to grow from 2021 sales volume of $2 billion to $4 billion by year-end 2024. Another new client in the marketing/business development business is focused on revenue growth from $18 million in 2021 to $100 million by year end 2024. Strategic planning starts with a vision. Vision is then shared, refined, and embraced by a leadership team. The shared vision is so powerful as it creates focus, and it is not distracted by fog or noise. Source: Barry Habib presentation 7-15-2022 By way of example, when growing Pacific Union from $2 billion in sales volume in 2009 to $20 billion in 2021, our team did not constrain our vision by our finances. We always took the position that if vision was solid, financing it would not be our most significant challenge. Over the next 18 months, we will see the good will become great! Those slowed by the fog and the noise may lose market share. Now is your opportunity for growth. Success is a decision! Mark McLaughlin serves as CEO of McLaughlin Ventures and M&A Advisory at WAV Group.

Your Tech Provider Was Just Sold, Now What?
Businesses and houses have one thing in common -- they are all for sale at the right price. Every year companies are sold, and with each sale comes some uncertainty. More often than not, trust is the leading factor in making a decision to purchase services from a technology company and the ultimate sale of a company erodes that trust in a variety of ways. This article will discuss some of the fears along with multiple solutions. Fears Exclusivity One of the most popular broker website platforms used by large independent brokers across America was booj. A key feature of the booj agreement with the broker was exclusivity. No competitive broker in the market would be able to license booj. Given that technology has a look and feel, along with features that make them unique and compelling, this exclusivity component of booj provided value to the broker for recruiting, retention, and branding. When booj was acquired by RE/MAX, brokers on the booj system had a decision to make. Turns out most chose to leave the booj platform. Independence Dotloop was among the innovators moving transaction management from Web 1.0 to Web 2.0. The offering was beautiful UI—fast, easy to use and affordable. Brokers and franchises were quick to adopt the platform on the merits of these benefits. When Dotloop was sold to Zillow, that independence went away, replaced by fears that Zillow would access the transaction data. Now that Zillow has become a brokerage, that has added fuel to the building fear. Zillow provides assurances in their agreement that they will not use, access, or repurpose the data outside of providing the service – but some people to not trust their independence. On the other side of independence is Delta Media Group, a leading brokerage platform provider. The company is owned by Mike Minard, who puts a clause in their license agreement that says that "they will remain independent." Delta Media has turned this concern about independence into a selling feature. Too Big to Fight One of the fears that has become more valid recently is the notion that a technology provider is too big to fight. When brokers or MLSs have more ability to pay lawyers to dispute contract disagreements, they have leverage. Most technology firms would rather support their customer than get into a lawsuit against them. This has been changing as multi-billion dollar corporations and holding companies are delivering real estate technology. For example, Stone Point Capital owns the leading technology providers in a number of real estate segments today – forms, transaction management, MLS, CMA, and broker back office. This has created a fear that Stone Point is too big to fight if they violate a contract term. Some brokers and MLSs are steering clear because of this concern. What's the Long-Range Plan? Another fear is the unknown. Brokers and MLSs typically voice this concern by seeing it as a problem with the long-range plan. Brokers and MLSs have seen companies change their strategy and they do not always like the change. A key example of this is Zillow and Realtor.com becoming brokers. Becoming a broker is justified as a way for brokers and agents to pay for advertising at the closing table (with a 33% referral fee). Today, brokers are operating under the fear that Zillow will begin to recruit their own fleet of agents and compete with other brokers in the market. Brokers and MLSs will long remember every CEO at Zillow on stage promising that they would never become a broker. Oops. Marketplaces A new concern that has emerged over the past few years is the fear of marketplaces. I am not sure if the "Amazon-ification" of real estate technology is a real term or not, but that helps describe the fear. What happens when your technology vendor starts to market and sell products and services inside of their software that happen to conflict with the broker or MLS? When brokers or MLSs license services, they want to control what products or services are offered on the platform. Solutions There are several solutions that have become popular with brokers and MLS that mitigate these fears. Change of Control Provisions Undoubtedly, every agreement that comes from a technology company will have templated text that allows the contract to be assignable in the event of a sale. If you want to mitigate your contract being reassigned, do not agree to that provision. You can amend this section of the agreement to have the right to cancel if the company is sold. Spend some time working with your legal advisors to craft this language and use it in all your agreements. Become an Owner There have been several recent examples of this. Howard Hanna Real Estate Services and Long & Foster Real Estate became owners of Moxi. Similarly, a group of MLSs became owners of Remine. Operate Parallel and Redundant Systems Software systems fail and those failures may have a significant impact to your business. It may be troubling when a software provider is sold, but it is far more troubling when the software is not available. Imagine not being able to process transactions or pay commissions, or your website and email are offline. These things happen every day in business. Having more than one solution running in parallel not only allows your people to have a choice of software, but if something really goes wrong, you have a redundant system in place. To view the original article, visit the WAV Group blog.

The Children Are the (Technological) Future
I believe that we are in a unique period of time in business. Recently, we have been spending a lot of time in Web3 projects. It has been a steep learning curve. We do Web 2.0 projects with ease. Web3 is a completely different development game. The architecture and business practices are completely different. Not to mention, the way that brands and customers interact is also significantly different. Companies are going to need to consider dramatic changes or face the consequences of losing their customers. If you were like me, you were in shock when Facebook changed their name to Meta. They spent $300 million for the name. Do you know why? Because Facebook knows that they were the leading company in Web 2.0, but Web 2.0 is on its way out and Web3 and the metaverse is going to replace it. If that is not a signal to you as a business owner, you are at risk. Your business needs a Web3 strategy NOW. A good place to start is on Discord. It's like a combination between Facebook Groups and Slack. Truthfully, it's better than both. It started out as a way for gamers to chat outside of the game. Now it is the cornerstone of group communications on Web3. Most business owners aged 50 and up have not really adopted to Facebook Groups or Slack very well. This is what leads me to the title of this post, The Children Are the Future. My 19-year-old daughter is home at the moment from Syracuse University. She has been sitting in our Web3 meetings. What is clear to me when meeting with senior executives in marketing and communications projects for NFT drops, is that most seasoned execs are clueless about this new genre of marketing. My kid in college is fluent in the conversation and probably has stronger skills than VPs of the brands we are talking to. Marketing in a Web3 world is all about trends and influencers. There are kids managing brands online that have tens or hundreds of thousands of subscribers—more than major brands. Case in point: Compass has 10k subscribers on YouTube. SparklesLund has 26k followers and she is not famous. Kids understand content. They are creators. They know what is dope and what is bullshit (my Gary Vee moment). I come from a family with an apprentice mentality. You learn from your elders. That is the change today. The elders do not know anything about what is happening online. The elders need to learn from the children. You need young digital natives in your marketing and communications departments. The good news is that you have time. The process of moving to a decentralized economy will be a decades-long road. I would expect real estate technology companies to start building communities for their customers. Real estate brokers and agents will acclimate as a new way to build relationships with key vendors, access support, and learn best practices from other resources. I look forward to the potential day when a company like eXp allows customers to connect to their website via their Metamask to work with an agent. It's time to grab your board and drop into the WAVes of change. To view the original article, visit the WAV Group blog.

5 Secrets for Futureproofing Your Brokerage in 2021
The real estate market is hotter than ever, which has caused some unique challenges for both brokerages and agents from coast to coast. Historically low inventory and record-high demand mean a dozen offers are the norm and some houses are selling for way over asking. This is stressful for everyone, especially buyers, their agents, and the brokerages that support them. As part of a recent RISMedia panel moderated by real estate coach Cleve Gaddis, panelists Shawna Alt, President of First Weber, Inc. a brokerage with 70 offices and 1,400 agents in Wisconsin and Upper Michigan, Will Grewal, Founder and CEO of HomeStack, a white-label real estate app developer based in Los Angeles, and Kim Koraca, Vice President of Marketing at Constellation1, talked about current market trends in a post-pandemic landscape and five of their top tips for succeeding in this challenging market and beyond. Read on to learn what these thought leaders from the brokerage, tech, and vendor spaces say is driving success this year and how brokerages and their teams can seize the opportunities that are right in front of them. 1. Focus on the customer experience Global consulting firm Accenture recently called customer experience one of the top trends to watch. As it rightly points out, "to remain relevant and compete in today's ever-changing world, customer experience strategies need to be top of mind for every stakeholder in your business." What does that mean for brokerages? "Our customers are our agents," said Shawna. "They have the needs we have to meet." When First Weber made this their core focus, they solidified their business and the rest of the pieces fell into place. Cleve observed that when brokerages take care of agents' needs and provide impeccable support, they actually have time to add value for consumers, their end customers. This chain of high-value support is what will keep agents engaged and leads flowing—even when times are tough. 2. Create the right culture As Shawna pointed out during the panel, "culture is everything," and she wasn't referring to ping-pong tables and espresso machines. The building blocks of any corporate culture, the what, why, and how of what you do, must be the roadmap for every business decision. First Weber's culture centers around helping their agents build their business. If something they're doing isn't helping their agents, they think about what they need to change so that it does. Instilling the right culture has a huge impact on business, and First Weber attributes its remarkably high retention rate in large part to the way it supports its agents in everything they do. Will added that an empowering culture is ultimately what gets team members to walk through the door in the morning and win the day. Culture can't be seen, but it can be felt, and it boils down to creating an environment in which team members can thrive and, ultimately, provide the best service to customers, be they internal or external. 3. Hone in on lifestyle If pandemic was the buzzword that defined 2020, the buzzword defining the real estate sector today is lifestyle for both agents and consumers. Why? The pandemic has forced many people to put their lives into perspective, and the (possibly permanent) transition to remote work has opened up a world of possibilities. As Kim pointed out, consumers used to be guided by their needs ("I need a 4-bedroom house for my growing family in this neighborhood with this school and a doable commute to work"). Now, they can be guided by their wants and buy in markets with the amenities they want or where they can get more bang for their buck. This has created a shift towards lifestyle brokerages, or brokerages that put their clients' lifestyles first. And it isn't just buyer lifestyles that have taken the front seat. For a brokerage like First Weber, their agent-centric model means operating from a position of understanding their agents' lifestyles, too, and helping them find their unique definition of success. The result is an individualized roadmap for reaching their goals and tailored support along the way, resulting in higher satisfaction, better retention, and better performance. 4. Use the right tools If it seems like there's a new tool for everything these days, you're right! Brokerages and agents alike need to create the perfect suite of tools to take low-value tasks off their plates, from digital marketing and lead gen to sales enablement and streamlining the transaction process from start to finish. Consumer expectations are also changing at the speed of light. The rise of mobile means that buyers and sellers expect near-instant reactivity and answers from their agents, and agents need the support to make that possible. Trends like customized mobile push notifications, real-time listing syncs and chat features, and virtual open houses are all gaining a firmer foothold in the industry. Will observed that some agents are still sending their leads to third-party sites or apps to search for properties because they might not even know that these platforms are pulling out all the stops to steal those leads away, while brokerages are unaware that there are alternatives like customized apps that can help them improve the customer experience and their brokerage marketing at the same time. Tech tools are an investment, but one that generates a massive return. The companies that make the investment soonest will see the biggest returns, while those that wait until the last minute will be playing catchup for years. 5. Find the right partners Will put it perfectly during the panel, citing an expression his dad used to say: "You can go quick by yourself, or you can go far with others." Today, partnerships mean everything, and when there's mutual alignment, you can go farther faster. The partnership paradigm works at every level of the organization. Brokerages and agents should see each other as mutual partners who, by helping each other, help consumers buy and sell homes. In the same vein, brokerages should seek out meaningful and productive partnerships with their vendors, for example, a company like HomeStack. In turn, real estate tech vendors need partners on their team to make their products the best they can be, like robust data services from the data experts at Constellation1. The result is an entire partnership ecosystem with mutually beneficial relationships driving value every step of the way. "Constellation1 has been an excellent partner," Shawna said. "They customize their services to First Weber the same way we customize our services to our agents." Futureproof your brokerage No one knows what the future holds, but brokerages must prepare by working towards resilient business models that keep them at the top of their markets. Following these five tips will help brokerages and agents create their own markets as time goes on so they can weather even the most challenging periods. Many thanks to RISMedia for hosting this engaging panel and to Cleve Gaddis for moderating. If you're interested in learning more about these trends and how Constellation1 can help, get in touch with us today. Watch the session here. To view the original article, visit the Constellation1 blog.

WATCH: Creating an M&A Brokerage Strategy
WAV Group held a well-attended webinar last week on how to acquire real estate firms and creating a successful mergers and acquisition strategy. The panelists included: Larry Rideout, Chairman of Gibson Sotheby's International Realty Victor Lund, Founding Partner, WAV Group George Slusser, Partner, WAV Group M&A Advisory Division We shared ideas and helpful tips on all areas of the acquisition process. We focused on the four Cs critical to any potential acquisition: Culture, Competency, Cost and Commitment. Victor stressed the importance of evaluating the platform of the candidate as well as your own. He offered a few of the pitfalls to avoid, along with advice on reviewing agreements and choosing best in class services. Larry was a wealth of practical knowledge, offering his insights based on his firm's significant growth through M&A. He explained his strategy, his process and some areas to both concentrate on and avoid. The importance of cultural compatibility was stressed throughout the session. If you are at all interested in M&A, or improving your success rate, please view this recorded webinar, Grow in 2021 with Successful Acquisitions: If we can assist on any M&A Advisory needs including a valuation, selling your company, or buy side advice please reach out to us at [email protected]. To view the original article, visit the WAV Group blog.

Black History Month: A Time to Recognize Those Left Out of History, and to Address Recurring Issues, like Fair Housing
If these inventions are part of your life, you have experienced black history: The first home security system: Marie Van Brittan Brown The traffic light: Garrett Morgan The chemical synthesis of medicine from plants: Percy Lavon Julian Incandescent light bulbs: Lewis Howard Latimer Three of nine patents for the IBM personal computer: Mark Dean Of course, there are many more. And in real estate, there have been those in history who broke barriers and built opportunity within the industry.

4 Must-Haves to Scale Your Real Estate Business
It's an incredibly trying time right now. Most real estate business owners are used to being at the center of chaos with phones ringing at all hours of the day and time constantly escaping. It's certainly possible to see growth and success, but it's not a sustainable situation to scale that potential. As your company grows to meet demand, so does the demand on your time. Scaling your real estate business successfully means putting the necessary pieces in place to step back, and work on your business instead of in it. Here are the four most critical components: 1. Get the Right Systems to Scale Real Estate Success Goals are great, but success is built on systems. Scaling means putting strong systems in place to streamline.everything. Business systems and processes must be put in place to ensure that daily tasks are as efficient and productive as possible. Undoubtedly you are already running your business with certain systems in place (lead generation, team processes, etc.). But any attempt to scale your real estate business should coincide with business systems that can scale with you. Take inventory of your current systems, and note what needs to improve. Compile a checklist for every task that is easily duplicated and an efficient map for how the task should be completed every time. With the right systems in place, employees will be able to replicate success on a daily basis, and the process will organically grow with your business. 2. Automate and Outsource the Busywork In order to scale, you have to make sure you have the resources to support that strategic growth and the systems you've identified. Where are the roadblocks, bottlenecks, and inefficiencies? They're usually in places where business owners or agents are relying too much on manual work. It wastes time and potential. Processes are slowed and no one is focusing on their most dollar-productive activity. With the right technology and support services, you can make your job exponentially easier. Automating your busywork is critical to scaling your real estate business. Do a little research and find out which programs or software could benefit your company. A predictive CRM with automated marketing that's integrated with your website means your prospects can easily be worked for you. They're put on effective drip campaigns and e-Alerts to keep them engaged without any manual follow-up. To scale successfully, you should also consider outsourcing any non-essential tasks. Hiring expert teams to assist with digital marketing, lead follow-up, etc. allows you to be more prepared for the influx of work that will inevitably coincide with a larger business, and frees up time to focus on the things you're passionate about (and that actually drive you forward). Remember to always conduct regular audits of the technology you are currently using and determine what can be improved. At the same time, make sure it works in congruence with the business systems you have in place. 3. Lock Down Your Lead Generation You have to make sure you have the right lead generation tools and strategies in place, and that you are optimizing your spend and resources for the biggest ROI. That means understanding (with crystal clear data) where your leads are coming from. Note which channels you need to lean into, and where to focus your business efforts to make sure your pipeline is future-proof. It also means diversification. Good marketing is meeting your prospects where they are. Do you have the digital tools to take advantage of social media? Are you offering virtual options for showings and tours while so much of the country is staying close to home? Making sure you're casting a wide (but strategic) net ensures you can continue to find opportunity through any market disruptions. 4. Surround Yourself with a Success Network Partnership is power. If you want to scale your real estate business successfully, you need the right people and partners around you. Your team and your business relationships are among your most critical assets. As your business scales, you have to be just as strategic about who you add to your team as the technology and systems you put into place. You want team members who buy into your values, your business goals. You need independent thinkers who can make decisions without creating bottlenecks for the business owner's approval (and you need to let them!). Find technology partners that help you learn, grow, and collaborate with like-minded professionals you can teach and support you. Attend real estate conferences, join social media groups and networking forums. Coaching has been a gamechanger for so many too. They offer strategic guidance to help set your goals, and support and accountability to make sure they're met. Scaling your real estate business successfully will not come by luck or accident. It can seem like a lot to take on, but you're building the solid foundation for careful, strategic and sustainable growth. Assess your needs and systems, and surround yourself with the tools and team to take you higher. Watch this product tour to learn how BoomTown can become your partner in success. To view the original article, visit the BoomTown blog.

Why Large Firms Are Growing While Small Firms Face Uncertain Futures: 5 Strategies for Success
While a friend of mine was attending Steve Murray's M&A webinar, he sent me a screenshot showing that small firm valuations are dropping. If you do not know of Steve Murray, I recommend familiarizing yourself with his work. He operates Real Trends, a business consulting firm he founded to focus on valuations, mergers, and acquisitions. Steve knows his stuff when it comes to trend recognition. He is right. Small firms are dying.

eXp Realty Introduces Telemedicine Plan for eXp Agents
eXp Realty announced it is offering a telemedicine plan for all U.S. eXp Realty agents as part of eXp Agent Healthcare and in partnership with Clearwater Benefits. Telemedicine subscriptions are typically only available through employer and group insurance plans, but this solution provides no-copay access to virtual primary care to all U.S. eXp agents and their families for the lowest monthly rate on the market. Agents do not have to hold health insurance through eXp Agent Healthcare to enroll in the plan.

Brokers Have Three Choices for Handling iBuyer Objections
Brokers who are ignoring iBuyer are making a big mistake. If iBuyers exist in your market, it's time to develop a strategy today. Do not let your opinion of the longterm viability of the iBuyer discourage your actions. Agents and brokers need to be ready to discuss this option with their sellers today.

Realogy Announces Strategic Organizational Changes
Realogy Holdings Corp. announced strategic organizational changes designed to accelerate growth for all agents and franchisees affiliated with its seven well-known brands. Planned moves include the integration of the Coldwell Banker affiliate network and company-owned brokerage, the formation of a new Expansion Brands portfolio comprised of the Better Homes and Gardens Real Estate and ERA brands as well as the Climb brokerage operations and the creation of a new Product and Innovation Group to serve both franchise and Realogy-owned businesses.

Making My Company Better for Customer Experiences
One of the most talked about themes in our industry today is how to improve the customer experience (CX). This discussion is both healthy and necessary to grow your business for today and tomorrow. One area that has a tremendous impact on improving the customer experience, but hasn't really been part of the CX narrative, is employee engagement.

Preach to the Converted
The real estate industry has been led astray by advertising portals. Today, there seems to be a shift happening in syndication strategy, MLS strategy, advertising strategy, and CRM strategy that puts brokers and agents back on course--and it's about time. Let me share this perspective with you. To follow this perspective, you need to consider these three statements: Just about every home ever traded in America has been with the help of a Realtor or two. The National Association of REALTORS® reports a market share of over 90 percent. Over 80 percent of all transactions are with a repeat or referral customer of a Realtor. The no. 1 reason why a customer does not use the same Realtor is their Realtor did not stay in touch. (I think that the no. 2 reason is that their Realtor retired.) Strategically, the very first dollar invested in supporting your business should be spent fixing the leak of repeat and referral customers lost due to a failure to stay in touch. Somehow, that focus on customers is not happening in our industry today, hence the claim that the real estate industry has been led astray. I blame the advertising portals for this. They have done an excellent job of selling agents on how to drive online leads so convincingly that agents forgot to spend money on maintaining the business relationships with their current customers. I am not suggesting that investing in online lead generation is bad, but you are a fool if you invest more in that than you do on supporting 80 percent of your existing business. Take care of the relationships with current customers first, invest in new customers second. I remember my first conversation with Jed Carlson of Adwerx. His company started out helping music bands connect with their fans—websites, newsletters, social media, pimp your Myspace page, whatever. He knew then, as he knows today, that the social capital, er, "relationship" between a band and their fans is everything. If a fan downloads your song, likes your Facebook page, goes to your concert, or sees your video, you want to make them a fan for life. His company specializes in advertising to your customer base. When Jed told me that he was bringing this sauce to real estate to help agents and brokers stay connected to their clients, I knew that he would be successful immediately. The real estate industry has been out there spending their entire wallet on trying to find new customers or taking customers away from someone else, and doing little to shore up the relationship with their existing customers. The Shift A shift is visible in our industry as brokerages and agents come out of the proverbial fog. Adwerx is growing remarkably because they help brokers and agents stay in touch with their fans (Facebook custom audience advertising). This consumer-agent connection is what companies selling Facebook Boost Ads are missing. CRMs such as Commissions Inc, Inside Real Estate, Contactually, Boomtown, and IXACT Contact are experiencing widespread adoption because they organize the customer record for agents to prevent them from losing addresses, phone numbers, and email addresses. Syndication is viewed through the lens of the Fair Display Guidelines, whereby an online listing is treated as a yard sign. Only the listing broker and agent are displayed. MLSs are being recognized for their value in this regard, leading the way with data licensing agreements that follow better principles. The Broker Public Portal with Homesnap is a perfect example of this improvement, although there are several others. The takeaway is simple: preach first to the converted. Make sure that you are staying connected to your existing customers first. Worry about new customers after you have done that job to your satisfaction. To view the original article, visit the WAV Group blog.

Ready Player One: How the New Hybrid Virtual Brokerage Can Help You Compete
It's only been in the last few years that virtual brokerages have popped up, and they're a hot topic within the industry. Without a physical location, virtual brokerages have significantly lower overhead costs and can scale their business with relative ease--two big reasons why they're growing in popularity. But there's no reason why a traditional brokerage can't become a "virtual hybrid" brokerage, with roots firmly planted in the physical world, but expanding operations quickly and nimbly by adding virtual offices to support their growing business.

Adjusting Your 2019 Budget with Economic Data
It is that time of year again when budgeting for next year takes hold of your company. There were a few economic indicators released by First American and by the National Association of REALTORS that provide some very interesting economic truths that need to be factored into your forecasts – especially when they are factored together. Our advice to brokers and to the technology companies that serve them is to cut fixed costs by 15 percent.

Brokers Need to Shift Strategy Immediately
The October financial numbers have come in and it is not pretty. Many brokers experienced their worst GCI numbers of the year in October. The market is frozen--low inventory and low transaction volume. Smart brokers are hunkering down for a cold winter.

Disruptors Are Really Only Innovators and Motivators
If you have not seen the 2007 film, A Hero Ain't Nothing But a Sandwich, don't bother. It's a pretty depressing story about a young boy who gets hooked on heroin. But I love the title. It takes a word like hero, with its multiple meanings, and twists it into something profound. One of most important impressions that I got from the RISMedia CEO Summit last week is that the meaning of disruptors can be twisted around too.

What You Need to Know about Transaction Fee Brokerage
In partnership with RE Technology, WAV Group facilitated a webinar with seasoned real estate executive, Rick Haase, about transaction fee brokerage. Haase is one of the few brokers in America who operated both a traditional brokerage and a transaction fee brokerage at the same time. There are really two sides to the coin between traditional split commission fee brokerage and total transaction fee brokerage. It is pretty easy to imagine the recruiting and retention strategy of transaction fee brokerages. The agent gets 100 percent of the commission. That is a pretty strong strategy. But what Haase brings to light is that traditional split commission fee brokerages have many compelling attractions that allow them to be equally as powerful in recruiting and retention. In this webinar, Haase brings forth information about the front-line battle between these two business models, articulates the merits and challenges of each, and highlights strategies that help brokers to understand how to navigate through to success. Please enjoy this video:  

Defend Your Brokerage Fortress: The Solution to Margin Compression
As we all know too well, there's a feeling of impending doom when it comes to the future of dollars retained by the brokerage. Brokerage margin compression has been accelerating in the past few years especially, but no one seems to be discussing legit ways to battle it. And last I checked, hope is not a strategy. Here's what the retained company dollar average for brokerages across the nation looks like over the past several years, according to the Gathering of Eagles event:

Broker's Corner: When to Grow Your Business Through Acquisition
There are tons of milestones a broker will experience when trying to grow a real estate business. They'll hire their first employees, land their first big clients, and maybe even attract investors. One of the biggest — yet least discussed — landmark events a real estate exec may experience as they grow is making their first acquisition: either by acquiring another brokerage or by purchasing another real estate related company. The start of any acquisition process is recognizing that an opportunity for acquisition exists. From there, it can be a long and complicated process, involving many moving parts (especially if there are many companies involved). However, one of the keys to succeeding at an acquisition is ensuring that it's done at the right time. Here are some keys to ensuring your brokerage is ready to acquire another company.

5 Essential Skills for Real Estate Entrepreneurs
Do you consider yourself "just another real estate agent or broker," or do you see yourself as a real estate entrepreneur? By our definition, a real estate entrepreneur has that quintessential "entrepreneurial spirit"—the drive and desire to pursue their vision, an openness to innovation and new approaches, and the commitment to pursuing the education and skills needed to smash plateaus and continuing growing. Not every real estate professional sees themselves as as a business owner or entrepreneur. If you identify as a real estate entrepreneur, then you'll likely find the following list of skills an essential part of your entrepreneurial toolkit.

Low Risk, High Return Growth Strategies for Real Estate Teams
For large brokerages, cash and power drive growth. But for the single Realtor or small team, the improvement road can be rocky if you lack funds, knowledge, resources, and opportunities. You want to exploit strategies that will yield a high return with low risk and preferably with a marginal investment of time and money. Here are some simple growth strategies you should be implementing now.  

5 Strategies for an EPIC 2017
We all know that resolutions are nice in theory, but only 8 percent actually achieve them. In fact, within the first week, 25 percent have already given up! Why? Because we don't fully grasp that we have to change our entire way of thinking to adapt to this new desired reality – which is incredibly challenging to do. So why are we leaving the change we want to see in our business and our lives to something so ineffective? Strategies will win in 2017. Let's implement strategies–now–for an epic 2017. If you want to lose weight, don't just say you're going to lose weight. Come up with 50 recipes to choose from, weekly grocery lists, and block off time on Sunday nights for making lunches. If you want to learn a new skill – great, sign up for the course now, pay for the entire year, and set time in your calendar to practice. And if you know that being obsessive with your sphere, your network of key relationships, is core to your business, get the processes and tools in place now, so Jan. 2 is all about execution. Don't waste another second of your remaining time on earth on an intention. To get you started, here are five specific strategies – recipes you can implement today. We at Contactually have given a webinar to thousands of folks with about 18 strategies in total, but these are the key ones you should focus on as we enter a new year.

To Zap or Not to Zap?
That is the question for many brokers today who are part of the Realogy® Franchise Group. This group includes brokers who may be a member of any number of franchises spanning Century 21, Better Homes and Gardens, Sotheby's, Coldwell Banker, ERA, and some others. As WAV Group detailed in this case study of BH&G Metro Brokers in Atlanta – the ZapLabs platform is excellent – combining an effective mix of agent website, CRM, lead management and other vital agent business tools. But the question to Zap or not to Zap is really not a question about technology at all. It is a question about strategy. Consider the Cost of Change Franchise technology solutions come in three business models – free, freemium, or premium. Sometimes the vendor is external, like Zillow, Smarter Agent, Market Leader, or DotLoop. Sometimes the vendor is internal, like Zap or LeadRouter. If the vendor is contracting directly with your brokerage and not through the franchise, there would be no cost of change. The cost of change comes when the franchise makes a choice to continue or discontinue a product. It is also the cost that you may have of migrating from your current solution to Zap. Are the customers and agents portable? Example: Smarter Agent Realogy just notified some or all of their franchises that they are sunsetting the relationship with Smarter Agent for their mobile app. It will be replaced by the Zap App. Both apps are excellent. There are a number of unanswered questions about what happens with the agent apps. More details to follow on this. Do not panic if you are using Smarter Agent today, but understand that changes are happening. Consider the cost of change that is related to the legacy customers who are using the app. Agents have been giving out that app for years to their customers. Brokers have made it the cornerstone of their mobile strategy. How will they port the customers from Smarter Agent and get them to download the new app? Will the saved searches and favorites be transferred? Who will retrain everyone? Who will rewrite all of the recruiting and marketing materials? Consider that there may be a day when you reverse your decision to Zap. What contractual assurances do you have that your firm won't switch away in the future and keep the data exclusively? Realogy has made Zap the hub of the technology strategy for all of their brands, and they will continue to develop around it.

Is Real Estate Still in a Slump?
After the crash in the housing market, real estate was hit by the worst recession in our nation's history. Frankly, brokers took a beating and operated at a loss for a number of years. Since the low point, things have been steadily been improving. There was a lot of speculation that the foreclosure volume in the hardest hit markets were clogging up the supply side. As we turned the corner, these distressed properties were slowly released into the marketplace and they were mostly absorbed. There was a two to three year heyday for brokers and agents who specialized in REO properties. Looking at the production of many of the REO specialists, that business has largely fallen back to normalized levels. CoreLogic reports that the volume of "underwater" mortgages has been on a steep decline and is also returning to normal levels. That is pretty good news. It allows homeowners to trade homes without taking a loss. However, this is not opening up inventory levels for most areas of the nation. For many, inventory is still very low and that is having an impact on pricing. Home values have seen double digit increases, as supply has been so limited. That is expected to flatten out this year, largely because of affordability. Wages have not increased in line with housing values. The biggest slump we see in the market is driven by expansion. The demand for homes is outgrowing supply by double digits in many areas like the San Francisco Bay area. People cannot find housing and there is not enough new inventory being built. Pacific Union held a housing summit in November 2015 that looked at the three year forecast for housing in the Bay Area – this was my chief takeaway. See more here.

3 Drivers of Economic Growth
Sometimes business owners fail to understand or focus on the basic elements of growing a business. As a consulting firm, we have a distance from the business that allows us to see things that business operators often miss. The funny thing is that we miss them in our own business. I remember talking to my Uncle Albert about this as a kid. He owned a house painting business that was very successful. It afforded him the opportunity to live on Plain Street in historic Lewiston, NY. It is a charming street of grand, three-story homes with pillared center entrances. Because it is located in the historic district of town, each home was painted white. The only whimsy was the color of the trim. Most homes along the street choose the stately color of black for the trim. My uncle painted every home on the block except his own. Economic growth in your business is driven by the same three factors that drive the economic growth of our nation. Regardless of your enterprise, this does not change. Capital, Labor, and Productivity are the three primary economic drivers of growth. Capital Strategically, capital is a hard one to manage. Our government runs at a capital deficit of somewhere over $18 trillion dollars. The United Kingdom has about $2.2 trillion in debt. Zillow has $520 million in cash and $230 million in debt with a negative profit margin of 23%. My businesses have zero debt. I must be doing something wrong. Right? Do MLSs or associations of REALTORS® carry debt? Probably not. Or, if they do, it’s on a building where they have a favorable debt-to-equity ratio. Do brokerages carry debt? Some do, others don’t. Interest rates in America are at their historic lows. Using leverage, businesses have a rare economic opportunity to grow tremendously. Having a good capital strategy will allow you to fuel growth in your business.

Does Your Brand Have a Strategic Plan?
If you are reading this, you are somewhere in the real estate ecosystem – either part of an MLS, a REALTOR® Association, a large brokerage, or a technology firm that serves one of those personas. We work with some of these personas on strategy, we work with some on story, we work with all of them on state. Strategy, Story, and State are business terms that are bantered around a lot. Saying the words has no meaning unless you are able to contextualize them within your own business. That process of contextualization is work that needs to be done by businesses every year. Most companies have some process for strategic planning. If they have a great marketing leader, they are telling their story well, and if their management team is on their game, they are operating in a way that optimizes around the state of the business environment that they face. If you need fresh problem solving ideas in any of these areas, you can call WAV Group to help you fix it. We have the benefit of working with some great brands in our industry. Great brands lead to great problems. We call brands 'great' because they trigger something emotional in our hearts and trigger confidence in our minds. The ability to trigger emotions and confidence are earned. They can be earned organically over time, or they can be crafted intentionally. So we ask our clients two questions: What does your brand mean to the people you serve? What is your brand strategy for 2016?

1000watt Nails Large Broker IDX Strategy
1000watt Consulting wrote a post this week that is a must read. View it here. Brian Boero's point is clear: "If you are a large firm with more than 10% market share – ditch IDX." Reasons to Act This Way Compromised presentation of properties Raft of local competitors drafting on your listings Paper brokers leverage your data with impunity Relatively small number of leads that agents will probably drop the ball on. I am not going to recant the entire article. Please go and read it. But I do want to reinforce one point and add another. Reinforcement – We studied response time to IDX leads. Fifty percent of inquiries get no response, and those that do respond usually do a bad job. Here is a whole white paper on the research. It's real. New Point – Consider an IDX/VOW combination website. When a broker opts out of IDX, they cannot display other broker listings except when the consumer registers! Once a consumer registers, your broker website becomes more of a buyer client servicing platform. Not only can you display all of the IDX listings, but you can display 100 percent of all information in the MLS other than confidential fields like commission and agent-to-agent comments.

Forward Looking Technology
2015 and 2016 will be years of incredible change in real estate technology. For too long, the real estate industry evolved in an eggshell whereby data, applications, and presentation layers were composite to one another behind most fragile and isolated shell walls. Today, we see systems that separate these three components of the technology to maximize the usefulness of this information to the industry and the consumers it serves. We Got You "We got you" is a statement that can have two meanings when a technology provider speaks it. It can take on the meaning of "we screwed you" or it can take on the meaning of "we have your back." As the needs of MLSs or real estate brokers or agents evolve, it is important that the vendors of services are evolving with or ahead of their clients. If you vendor is not evolving at the pace of the industry, you are screwed. If the vendor is staying ahead of you, they have your back. WAV Group is seeing the division of "We Got You" play out across our client group in pretty significant ways. We saw quite a bit of it between 2010 and 2014 as the industry struggled to adapt to the mobile revolution. Many technology providers ducked their chins and excused themselves with contract babble or "we are working on that." Others were out ahead of their customers with ready-to-go applications that met or exceeded the need for mobile, well before the adoption curve grew exponentially.

Am I a Seller?
Last month, we discussed exit strategies. It resonated with so many people that we decided to follow up with additional actionable information. Today, we're addressing things a seller should be concerned about. I'll discuss the buyer's perspective at a later date. Selling a business can be a very emotional time for a broker/owner. You've poured your heart, soul, and lots of cash into your business. You've been through some great times and some really rough times. How do you know you are ready to move on to your next phase in your career and/or life? A few things potential sellers should consider: Are you still excited about going to work every day? Are you doing the things necessary to be competitive in the future? If you are not, are you willing and able to do so? Are you ready to slow down or do something else? Do you know how much your business is worth? If so, is that enough for you to retire or do you have other assets? If you are a selling broker, how much more money might you be making if you did not have to worry about running a business and all the time that takes?

Allre Causes Brokers To ReThink Strategy
The FSBO dam just sprouted another leak, and brokers better pay attention. If you have not heard about Allre, you better watch the video below right now. It is collaboration between banks like Prime Lending, Home Insurance providers, home warranty companies, and even a lock box vendor to facilitate FSBO sales. The fee to the consumer is ZERO – nothing. There are no brokerage services at all, so they completely surpass all RESPA regulations. It is 100% FSBO. The only thing that will sit between Allre and success is venture capital. If they attract enough venture capital to attract the consumer, traditional brokerage is going to hit a wall. WAV Group is a strategy company. To remain competitive, businesses need to act in ways that allow them to survive in a fast changing market place. In the case of Allre, they are only launching in San Diego. Perhaps the industry at large does not need to hit the panic button yet. However, you probably need to pay close attention. I know that we will. San Diego is a high value market place. According to Zillow, the average home price in San Diego is $492,000. As a side bar, I did a Google search for "the average home price in San Diego and the only broker who had the information was ZipRealty – an article from 2012; Trulia Voices had a question about home building; and the best first search result was Zillow. Where are all of the Brokers, Associations, and MLS answers? Why The Business Will Work Everyone talks about the 6% commission rate – but my research shows that the number is closer to 5% split two ways in San Diego – about $24,000 – exactly the number that Allre CEO talks about in her pitch. It makes San Diego a ripe candidate for this style of opportunity pursuit. That is enough incentive for FSBO buyers and seller to take a risk and sample the service. I would not be surprised to see a similar service pop up in San Jose, Santa Barbara, Ventura, San Francisco, and other high-end real estate markets in California. If you average sales price is below $200,000, the incentive for FSBOs to save money is less attractive.

Sometimes Profitability is NOT as Important as Market Share
Of course, the ultimate goal of any business is to create profitability for its owners, shareholders and stockholders. Without profitability, the business will cease to exist. To quote Kenny Rogers, sometimes you need to know when to hold up and when to fold up, though. There are times when a company is in a significant competitive situation where it needs to go into the market guns a-blazing and grab as much market share and mind share as it can. In the market we're in right now, some might think the worst is over. They may think it's time to start "milking" the business trying to extract as much profitability as they can. WRONG Answer! I have lived this dream myself, so I would like to give all business owners and leaders a piece of advice learned in the School of Hard Knocks. If your market share is not growing then it is actually declining, even if your market share is significant. If you're not getting better you're actually getting worse, because there are others that are getting better around you. Business marketplaces are not static. There is always someone gaining and someone losing. If you're "stable" that means you're actually losing because there's someone else that is growing. Here are some signs that you're falling into the profitability over market share trap. You fundamentally believe that it's okay to have stable market share and don't consistently chase growth Customer service is left up to each individual agent or customer support manager – you're not measuring the company's customer satisfaction scores on a regular basis because the customer "isn't equipped to provide educated feedback about what we do" You've decided to spend LESS on customer-facing programs because your market share is stable and strong You're decided to invest LESS in training or technology because you have invested heavily in the past couple of years The core focus of the company is to find to make your internal processes more efficient

How to Overcome a Slow Market with Resourcefulness
If anything put fear back into the real estate industry lately, it was the sluggish first quarter performance. There are few valid explanations for it. Inventory is at a reasonable level and interest rates are low. People should be buying homes like they did last year. Rather than trying to figure it out, it is time to apply a healthy dose of resourcefulness to your business. The best way to do that is audit your expenses and your people. A Typical Story There are times when WAV Group finds significant problems in a business that management did not see. But that is rare. Most of our clients know the problem, but they lack the gumption to fix it. We interview directors and management as part of our strategic planning process. After about three or four calls, every other call begins to sound the same. Everyone knows what is in disrepair. The same thing happens with our customer satisfaction research. After the first day of the survey going live, little changes. The numbers just grow in support of identifying the company's strengths and weaknesses. We do research, build consensus, develop action plans, and assign those action plans to individuals. The action plan becomes the key ingredient for making a company resource efficient. Audit Every year, WAV Group tackles this task with brokerages and MLSs. You would be amazed at what we find. Accounting departments are very good at paying bills for stuff that a business is no longer using. Now that the tax season is over, it is a fine time to take a close look at your budget and your business plan to make some critical decisions that will tune your business for success. It is also a good idea to create a calendar for contract renewals. You will want to provide yourself with a 120-160 day window if you are going to shop or replace a vendor. Regularly, we see firms wait until the last minute and making a change becomes unreasonable. Oh, and make sure that you make contract modifications for favorable terms on agreements that you do renew.

6 Steps for Growing Your Real Estate Brokerage
Like most businesses in the real estate industry, brokerages must grow at a rate in sync with or even ahead of the communities they serve in order to prosper and profit. In today's market, it's prudent to take advantage and expand now while real estate values are still on the rebound. Here are six steps I've encountered in my real estate career that have helped keep brokerages alive and well: 1) Embrace Calculated Risks: If you want to grow your business, you must be prepared to take calculated risks. Growth is change, after all. Change always entails risk. If you have a brokerage, you've already accepted risk. If this makes you nervous, think about the larger risk of stagnation. 2) Study Up: Doing your homework will help you be confident in taking those calculated risks. Subscribe to top real estate social media channels, news feeds and email newsletters from groups such as the local Chamber of Commerce. Pay attention to the hyperlocal, local and national industry news and statistics, with an eye out for profitable business opportunities. 3) Incentivize Your People: I knew a broker who hung a wall-sized map in his office. In blue, he highlighted municipalities where he commonly sold homes. In green, he highlighted where he wanted to expand. In red, he circled neighborhoods where his agents rarely ventured. If someone sold a house in a red zone, he bought lunch for the office. It was sandwiches, nothing fancy. But his agents worked hard to be the one everyone thanked for lunch.

Brokers Should Audit Their MLS
2014 may well be the year of the broker, or as they are referred to in MLS speak, the year of the Participant. If your MLS has adopted the National Association of REALTORS® template for MLS Rules and Regulations, you will find that brokers are Participants and agents are Subscribers. As a Participant in the MLS, you accept responsibility to adhere to MLS rules and regulations. The MLS does a pretty good job of enforcing those rules. But who among you is making sure that the MLS is not running afoul? WAV Group MLS clients are traditionally the largest MLSs in the nation. If the MLS has a member count of less than 2000, it is unlikely that WAV Group has ever facilitated a strategic plan for your MLS. From this perspective, WAV Group has learned that large MLSs rarely run afoul of staying current. The place to spend time auditing your MLS is the small MLS. These MLSs are unlikely to attend NAR's National or Mid-year meetings where MLS policy evolves. They rely on NAR emails to stay current. Moreover, the MLS board of directors is also unlikely to stay current with MLS policy, which erodes their appreciation and ability to make informed policy decisions. Beyond NAR, there is also the Council of MLS or CMLS. This is the industry trade group for MLS executives that has regular meetings to discuss best practices of operating an MLS. Ask your MLS if they attend these meetings. The goal of this post is not to pick on small MLSs. The reality is that they do not have the resources to participate in all of these things. Where WAV Group discovers small MLSs that have fallen behind is when we audit large brokers for rules compliance. Large brokers proactively engage in an audit each year to make sure that all of their systems are in compliance with local rules and regulations. This process is as much a vendor audit as it is a broker audit. MLSs often change rules and the broker or vendor miss the memo on the rules change. Alternatively, the NAR rules change and the MLS does not revise their rules to keep current. Either way, the broker is out of compliance, and is liable for fines and other disciplinary action.

Brokers Losing Agent SEO Battle to Portals
Years ago, when consumers searched for keywords like City Name + Real Estate, an actual real estate broker would appear in the search results. Those days are long gone for most cities in America. Unless a broker has invested richly in the goal to appear on page one, Zillow, Trulia, realtor.com®, and Homes.com dominate. With the advent of mobile search and the consumer awareness of long tail search, the goal of SEO strategies by portals expanded to include property address. Again, four or five years ago, if you searched for a property by address, and that property was for sale, you would normally see a variety of broker websites with property detail pages appear in search. Today, Zillow, Trulia, realtor.com® and Homes.com dominate the long tail SEO for property address search in most markets. Brokers align themselves with the portals in various ways, including premium advertising products to redirect that consumer back to the brokerage. When you look at the traffic to broker websites today – and how consumers use them – beyond property search, the most popular area of the website is the agent directory and agent detail pages. Property pages dominate, but the agent pages are a clear second place. From there, any other content on the site, including blog content, is less material. Brokers are about to lose the search battle for agent name, and soon, broker name.

8 Secrets Every Real Estate Agent Needs to Know for a Successful 2014
This post comes to us from the HomeFinder.com blog: Real estate sales tend to slow down around the holidays, but if your goal is to increase your brokerage's profitability in 2014, the end of the year is vital to your team's success. Set the scene for a prosperous 2014, by encouraging your agents to incorporate the tips below into their year-end business goals. 1.) Resist hibernation: As we enter the months of November and December, real estate agents often go into hibernation, says Christopher Fox (Director of Agent Growth, RE/MAX First). Avoid this! This goes back to the basics of sales – every real estate agent needs a sales funnel of clients either looking to buy or sell their home. Focus on prospecting clients to refill your funnel to start 2014 on a high note. 2.) Build a reliable network: Make a goal to create at least six new business relationships in different industries (ex: mortgage broker, professional stager, professional mover, real estate attorney) to give and receive referrals, says Kristine Wyatt (Broker Associate, Smart Click Realty). Surrounding yourself with a strong network will drastically improve your reach, and will also allow you to pay it forward. 3.) Master the art of time blocking: Regardless of the stage of your career, time blocking is essential to grow your business. Fox advises to allocate a certain time of day – every day – to complete the tasks that are key to growing your business, like prospecting, returning calls, or building your social media networks.

Why are MLSs surprised?
WAV Group has been purposefully quiet during the storm of enlightenment whereby the industry pundits that recognize the role of the real estate broker in our industry. In truth, the leading MLSs in America are perfectly cognizant of the role and needs of brokers in real estate. Frankly, many of The Realty Alliance brokers own MLSs or are standing members of the Board of Directors. Even in the absence of having a broker owned MLS or having broker led governance in your MLS, there is plenty that you can do that involves the broker in your MLS strategic planning. Every WAV Group facilitated strategic planning session segments brokers of all sizes to measure their satisfaction with MLS service and opinion on MLS policy. MLS 'participants' are the first customer of the MLS. Subscribers to the MLS are the welcome guests of the Participants. If you are not a Participant focused MLS, make that a strategic goal for 2014. In strategic planning, every MLS should have a positioning statement for each of its customers. You should clearly know what you do for brokers. Complete this sentence: For brokers, MLS name is the only MLS that ____________________ for brokers. Reasons to believe this are 1) ___________________ 2) ____________________ 3)_____________________ The positioning statement for broker participants should be harvested from broker research. Broker research means that you need to know your brokers, by name! You should know where their offices are. You should know their technology partners that are powered by MLS data. As the MLS, you play a pivotal part in making sure that data gets to their systems.

What Every Broker Should Do Series – Set Production Standards
Today's real estate business is undergoing major changes as it transforms itself from the old way of doing things into something more modern and digital in nature. How business is conducted will continue to evolve but one thing will never change – a brokerage is in business to be profitable. Profitability begins with having sales associates and ownership understand that the associates have been hired for one main reason – their potential revenue stream. One way to ensure that the associate generates enough production to cover their costs of being there, as well as provides the company with a reasonable profit, is to establish minimum production standards. An effective minimum production standards program must be: Reasonable and achievable Trackable Supportive to the associate Consistently enforced