February 11th, 2009

The Mathematics of Value

By Robert Hahn - VP, Marketing

Math is FUN-damental!

Why did one straw break the camel’s back? Here’s the secret:
the million other straws underneath it – it’s all mathematics.

- Mos Def, Mathematics

A couple of weeks ago, HomeGain released their 2008 Top Performers report.  If you’re not a subscriber to HomeGain, chances of you caring about this is fairly slim.

However, I urge you to care and to go over and take a look.  Because there’s a very important lesson to be learned here for all companies in the real estate industry.

HomeGain is able to quantify its value to its subscribers:

2008 AgentEvaluator Highlights:

• HomeGain recognizes 51 of its member real estate agents who have received Top Performer awards based on nationwide, regional and state achievements,
• Overall, in 2008 HomeGain’s top five Realtors earned an average of $236,918 in gross closed commissions from their HomeGain AgentEvaluator business and an average of 20 closed transactions.
• We now have a  total of 846 member agents in the AgentEvaluator Silver, Gold and Platinum Clubs based on the following criteria:
  • 229 agents are Silver Club honorees with an excess of $50,000 in gross commissions earned from their HomeGain leads.
  • 271 agents are Gold Club honorees with an excess of $75,000 in gross commissions earned from their HomeGain leads.
  • 346 agents are Platinum Club honorees with an excess of $125,000 in gross commissions earned from their HomeGain leads.
• The average AgentEvaluator Platinum, Gold or Silver agent earned over $31,348 in gross closed commissions in 2008 and closed an average of 5.5 transactions.

And with that, they are able to get testimonials like this:

Do your agents say this about you?

“My ROI is incredible.”

I wonder if Eric Pakulla would say the same about RE/MAX Advantage, his brokerage company, or about RE/MAX itself, his brand.

Desperate Wake-Up Call

While you’re chewing on that, consider as well the fact that Brian Boero of 1000Watt recently sent out what he called a “desperate wake-up call for big brokers“:

But this is about more than a website. Think again about what Jonathan says above:

“… I know the industry is changing and I didn’t want to be under the umbrella of my old brokerage.  Although I don’t know the model of the future, I know that I need to get out there and try new things…something I couldn’t do in my old situation.“

Big brokers, pay attention: There are thousands of Jonathans out there right now. They’re smart, skilled, and confident. They have no need for the mother’s milk of a desk, of shockingly remedial “training”, of the legal backstopping required by the average recruit.

They are businesspeople. And they are leaving.

Kris did. Jay did. And so did Jonathan.

Brokerage companies are in for a serious brain drain unless they can use their assets in a manner that supports, rather than inhibits, these stars.

What are those assets? Well, at the top of the list – hopefully – is a brand. Not just a recognizable icon, but a marker imbued with some sort of meaning. Most real estate brands have been suffered the whips and scorns of thousand agent glamour shots, but for many companies, there’s something there worth saving.  Save it. How this is done is a long, always complicated process we’re working on with several clients right now.

As the movie Apollo 13 made immortal, “We have a problem, Houston.”

Connecting the Dots

As Brian suggests, saving big broker brands (or for that matter, small broker brands) is a long and complicated process.  It is certainly beyond the scope of this blogpost.

However, it occurs to me that Eric Pakulla is more likely to leave RE/MAX Advantage than he is to leave Homegain.  Because the value of Homegain is right there for him to see and experience, in dollars and cents.

Shouldn’t a brokerage, who after all, has far more control over the agent’s workflow and process be able to provide the exact same report card to every single one of its people?  Shouldn’t the value of the brokerage or the brand be mathematically spelled out?

“Because of your association with Company X, you earned $225,790 in 2008.”

That’s real value, and real clear.

If your company already does this, then kudos — I’m thinking you have an easier way of retaining your top talent.  If you do not, then why not?  And isn’t it high time you start thinking about quantifying the value of your brokerage/brand to your people?

-rsh

Tags: brian boero, brokerage, HomeGain, value.

November 26th, 2008

The Amazon opportunity

By Peter Goldey, CKO & CIO

The big kids on the block are starting to play in the sandbox.

Amazon has been doing an amazing job at forwarding the “platform as service” model.  Storage – check.  Application hosting – check.  Reporting – check.  Bandwidth – check.  Development tools – check.

And their latest foray – their publication of public census data and labor statistics. “The connection to real estate is clear” says Brian Boero of 1000Watt Consulting.

Data – check

Valuable content – ??  perhaps.

Let’s take what Amazon has done and take a closer look:  they have taken information that is already available – at no cost – to the public and consolidated it in one place.

Value = consolidation.  If you want raw public data, have at it.

Value does not = actionable content.  If you want clean, standardized, accurate and current content organized the way you need it…this isn’t it.

Sure, we get a little defensive when people come play in our sandbox.  But this is nothing new.  Savvy developers and clients of ours have known all along that you can download raw census data from census.gov and raw employment data at bls.gov.   Heck, we even tell folks to go there and check it out.  We love it when clients perform due diligence at that level.

Yes – that’s right – we’ll point you to free resources that cover (at least some) of the same topics we do.

Crazy?  We don’t think so.

Why?  Because nothing highlights the value of what Onboard does better than looking at raw sources.  Try some of this with the free content:

• what are this year’s statistics?  (oh yeah, this census stuff is OLD)
• but i want information at the neighborhood level?  heck I’ll settle for zip codes and cities (well, you can have it for MSA’s and counties only much of the time)
• these numbers can’t be right…who do I call? (good luck on that one)
• how can I analyze how school performance, population growth, employment and home sale prices relate? (call Onboard i guess…)

If free, un-audited, un-normalized, non-standardized, generally out of data information were the best that could be done then Onboard wouldn’t exist.  There’s a reason why CNN and US News come to us for statistics.   There’s a reason why real estate industry giants Move.com, all the Realogy brands and scores of brokers, portals, and analytics shops come to us:  Onboard does data right. We turn raw information into content.  We look at all the data anomalies and sort fact from fiction.  We use advanced statistics and data modeling to create current year statistics, identify and handle outliers, provide information at every conceivable geography level, and normalize content across literally thousands of sources.   And we have deep partnerships and relationships with those sources giving us direct access to support and information when we need it.

Best of all, we’re experts at integrating all of that with what you do – be it listings, analysis, community pages, foreclosures…you name it and we’re working with it.  We know how to deliver it, how to support it, and will clearly state what the limitations of any content set are.

So, if you think you’d rather focus your time building your business, working with clients, marketing your products, and focusing on what differentiates your business – give us a call today.

Or maybe we’ll here from you in a few months when frustration sets in….

Tags: 1000watt Consulting, amazon putting data in the cloud, brian boero, census data, data, public data, Real Estate.