Tuesday, June 20, 2017


A recent article in Westword summed it up well... with 20,926 active real estate licensees working the Denver metro area and fewer than 7,000 active listings on the market... there are a whole lot of real estate salespeople with skinny dogs.

As a rule, I don't let markets dictate my success or failure.  I worry about what I can control, which is my actions, my hours and my disciplines.  In 23 years I've lived through great markets and bad ones, both in California and Colorado, and I know that long-term success is not defined by markets.  It's defined by relationships.  It's defined by giving the best advice you possibly can to people you care about deeply and then going the extra mile to help them achieve the best possible outcome.  

But there's no denying that what's going on in real estate-crazed Colorado these days has disruptive tendencies.  Did I mention that the Denver MLS hit a 32-year low for inventory in February?  

In straight "raw" numbers, 21,000 active licensees splitting up 7,000 active listings comes out to 0.33 active listings per agent... or about one listing for every three agents.  That would be bad enough.  But we know the real world of real estate doesn't work like that.  

The "80/20" rule made famous by Pareto has proven time and again to be a "90/10" rule in real estate, with 90% of the transaction volume accruing to 10% of the agents.  That would mean the top 2,100 agents in the Denver metro area control about 6,300 listings - or about three active listings per excellent agent.  That's a totally believable extrapolation.

If true, then, that means the other 18,900 active real estate licensees in Denver are clawing it out for the remaining 700 active listings.  

Holy smokes.

I literally get a knot in my stomach every time I drive by a real estate office promoting its "Real Estate School", usually with a freshly printed vinyl banner hanging over the entrance to the building.

Look, I worked in a corporate real estate management setting for many years and I was part of the largest (and fastest growing) Century 21 franchise in North American from 1994-2005.  I helped train hundreds of new hires in a 1,500 agent firm and I'll let you in on a poorly kept secret:  nationally, 50% of new real estate licensees will quit in the first 12 months and three out of four will never renew their license at the end of its first term.

It's the ultimate turnstyle business, and many real estate companies are seemingly happy to collect desk fees and miscellaneous office costs for a few months until one day their beat-down, non-producing newbies slink out the back door and never return.

Because of this, our real estate program was designed to separate the 75% that were going to fail from the 25% that had a chance to produce - and we wanted to make this distinction quickly.  We had a one-month immersion program with highly scripted days (beginning at 8 a.m.) which included 3 to 4 hours of direct prospecting every afternoon.  

We supported our new trainees fully... gave them scripts, told them what to say, coached them through objections and even accompanied them on appointments... and they either did the hard things that were indicators of success, or they didn't.

After three weeks, we knew who profiled for success and who profiled for excuses.  And so 21 days in, you either earned an invitation to continue working with us, or we gave you the business card for the career development department at one of our competitors.

We had the courage to enforce standards, and our company prospered because of it.  

There's another dirty little secret in real estate, and it's that good agents are generally not fond of those who don't produce.  This is a hard, demanding business and there's no room for half-hearted agents or half-hearted efforts.  Agents who fail to perform reflect badly on us all, and so productive agents look at non-productive agents the same way Nolan Arenado might look at sharing the infield with an error-prone, .160 hitting shortstop.  

Dude, you're messing us up.

Even before the great inventory shortage of 2017, huge changes were taking shape in the real estate world.  Technology is empowering the consumer and marginalizing lousy agents.  

The whole reason I have been affiliated with RE/MAX for almost my entire 11-year run in Colorado is because the RE/MAX model demands that agents put their money where their mouths are.  Write a check for $1,500 a month, keep everything you earn.  Simple, straightforward, and serious.  

Is $50 per day a lot to pay for brokerage services?  Maybe.  

But if it means you are surrounded by the industry's top agents, those who believe in their abilities and are willing to spend $50 a day to promote the values of that iconic red, white and blue balloon, I'd say it's worth it. 

I wish this industry had higher standards, and I wish more companies would be honest with people who think they want to get into this business.

A great die-off is coming in the real estate agent world, and now is not the time for HGTV-loving romantics to be getting into the mosh pit.  

I don't mind if you want to try your hand at real estate.  There will always be room for excellent people.  But if you haven't truly counted the cost, if you haven't sought out mentors and top-producers who will tell you the whole story, I wouldn't want you to go through the experience.

In my 23 years as a broker, I have found that real estate is a proving ground, not a playground.

Life is short.  Rejection is hard.  And in this business, only the strong survive.