AgentGenius Contributors And Readers Conclude That The Conventional Real Estate Business Model Is Flawed
July 2, 2008
Over at Agentgenius there has been some discussion lately about the rumor that Buyside Realty has gone out of business. The thought that this was reality brought cheers from the AG faithful.
As you peruse the article and comments you realize that the prospect of Buyside going out of business was taken by some to underscore the belief that Buyside’s failure was “predictable” and expected because their business model was flawed.
In fact one commenter proffered an opinion that Buyside’s failure was direct proof that the business model did not work.
Bob Wilson, of McConnin & Company Realty in San Diego, California stated that Buyside’s failure “has more to do with the death of the business model than the business”.
Many tended to agree with Wilson, Eric Blackwell, an agent with ReMax in Louisville, Kentucky said he “certainly does not have a problem with anyone smiling that their business model triumphed over an alternative.”
Hmmm….so I wondered. If that logic is correct, then what about the ongoing and continuing failure of hundreds of thousands of agents and brokers using the conventional real estate business model.
Surely if Buyside’s failure can be seen as an indication of a flawed business model, then of course that rationale should be applied throughout the real estate industry. So I am left to wonder what the numbers look like in comparison.
How many alternative business model real estate firms have gone out of business this year relative to how many conventional real estate offices have met their untimely demise. The NAR does not seem to publish those numbers.
However I think even the most ardent NAR supporter would have to stipulate to the fact that the proportion of failed real estate agents and brokerages is heavily tilted in favor of the large pile of carnage and waste on the conventional business model side rather than on the alternative real estate business model side of the aisle. In fact the numbers can’t even be close.
Top Producing Realtor, Russell Shaw said “The number of individual agents going out of business will be in the hundreds of thousands. And that is a death roll you have been announcing from the time you arrived. I don’t dispute it. Well over half of all agents either sell nothing or so little as to make them completely non-viable. About a third - in any given year, even in “good times” - sell nothing.
So I wonder as we approach the 4th of July holiday weekend if a few cold ones will be hoisted trumpeting the farewell of Buyside Realty. But while you’re at it…..
Raise a toast for the newest casualty to meet their real estate maker.
It has been announced that Prudential California Realty is closing its main office in San Rafael, California, along with 2 of its satellite offices.
The Pleasanton, California-based real estate company will however open a triage center and keep its Sausalito, California office open, and some agents will operate from there - at least temporarily.
The company announced that with the slowdown in home sales, it has decided to exit the business in these areas.
“Rather than holding on to these offices and waiting for them to turn around, we decided to leave,” said Cathy Harrington, director of marketing.
Funny thing that when the “fit hits the shan” that it’s the marketing people who have to come out and face the music.
But wait..it gets better. It seems that Prudential is not alone in the recent rush to chuck it all.
Prudential is but one of several real estate companies that have closed or consolidated in the area. In May, Avalar Real Estate closed its Novato, California office and Coldwell Banker closed its office there as well.
Guess those two old guys on the paintings didn’t see that coming!
So as in the fall of Buyside Realty, this must be a clear statement that the conventional real estate business model doesn’t work anymore…right?
Levi Swift, president of the area Realtors association, said the slowdown in sales is due to the credit crunch and failure of the subprime market.
“The subprime market has come home to roost with a vengeance,” Swift said. He called the current situation a constriction of the industry that is forcing out agents who are new or dabble in the business part time. Swift said many of the agents who have gotten real estate licenses in recent years were taking advantage of a booming market.
“I would call them opportunistic real estate licensees,” Swift said. I’d call them something else..but that’s another post altogether.
Oh, so it’s the subprime crisis and opportunistic part-timers and newbies who didn’t know what they were doing that has caused this problem. Silly me for trying to use the rationale that was pronounced on Agentgenius. I thought that what was good for the goose would be great for the gander.
So let me get this straight so as not to confuse any of our readers.
Buyside goes out of business, presumably, and it’s because their business model was flawed. However Prudential and hundreds of thousands of other agents who utilized a conventional real estate business model are going out of business because of the subprime crisis and because newbies did not know what they were doing.
Ok, no problem, now I understand clearly. I was obviously being obtuse. Shame on me.
Maybe that’s why I am not an agent genius.
[...] started the show today with some real estate news and a blog post by Barry C titled, “AgentGenius Contributors And Readers Conclude That The Conventional Real Estate Business Model Is Fl…“. Barry C expounds on his thoughts from the post and explains in detail why the current real [...]