2. Paradigms are a belief system – the way we view different aspects of the world in which we live and operate. Our paradigms shape the way we do business and make decisions. Paradigms are usually difficult to change, and often times restrict our ability to see coming trends and embrace new market innovations. 2 Paradigms
3. 3 Typical Paradigm Shifts Horse & buggy The Automobile Trains Airplanes Radio Television Paradigm shifts continue today Paper Books Digital Books Videos Online Rentals Real Estate Franchising, 100%, Revenue Sharing
4. Visionary Courageous Risk-Takers Thick-Skinned Leaders A Bit Crazy? Are You an Agent FOR Change or a Victim OF Change? 4 Traits That Define the Paradigm Shifters
5. The real estate industry has been evolving for more than four decades, seeking to find a “better way”. But in the past few years the pace has accelerated significantly as the challenges presented by current market conditions expose the shortcomings of the existing business models. 5
6. The time has come to shift business paradigms and move the industry into its next age - operationally, structurally and professionally. 6
7. “Real estate has never experienced such a ‘perfect storm’ of events and factors, which have combined to force wrenching, dramatic changes upon a staid industry not accustomed to dealing with such seismic shifts.” - Michael McClure, CEO, Professional One Source: Swanepoel Trends Report 2010 7 The Perfect Storm
8. Until the 1960’s the real estate industry remained largely unchanged – relatively small brokerages with a few agents focused on a particular segment of a larger market. Then came… 8
39. Not really ”building a business, just “doing” business – income stops when personal production stops
40. Offices are closing because agents are leaving for other industries due to a reduction in income 17 Challenges for today and into the future
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42. Agent Retention – Agents are continually enticed to join other companies with higher commission splits or lower desk fees creating huge agent turnover
43. Brokers lose quality agents that open their own brokerage business - thus training their competition
46. Most industry leaders agree that the current real estate business models are broken and no longer work for either brokers or agents. 19
47. What are the experts saying? “I don’t think a pure brokerage play as a business strategy is a viable play in this economy or going forward.” — Ron Peltier – President & CEO, HomeServices of America Source: Swanepoel Trends Report 2010 20
48. What are the experts saying? “In cases where their franchising is faltering, the culprit is most often that the models of the real estate company are not suited for these times.” — Byron Ellington – Chief Products Officer, Keller Williams Realty Source: Swanepoel Trends Report 2010 21
49. What are the experts saying? “[We are seeing a] decline in the number of ‘big box’ real estate office operations, which simply cannot survive given the high overhead levels typically associated with such large operations.” — Michael McClure – CEO, Professional One Source: Swanepoel Trends Report 2010 22
50. “Brokers need to change their business model NOW.” — Sherry Chris – Better Homes & Gardens Real Estate Source: Swanepoel Trends Report 2010 23 What are the experts saying?
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52. The real estate business model continues to evolve – constantly searching for a way to deal with the realities of today’s market and the challenges of tomorrow
59. Many franchisees and agents now question the value of the brand name – which most feel is the only real value they’re receiving from their affiliation with the franchise25 How have the traditional real estate franchises reacted to the challenges?
60. Are these the solutions - the proper and necessary paradigm shifts that will lead the evolution of the industry into its next age? Is there a business model that will address the challenges? 26
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62. 100% models struggle with changes in market conditions – cyclical nature of the business