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One
Big Difference Between Residential
and Commercial Real Estate Brokerage Having
been a commercial real estate trainer
and coach now for nine years, after
having been a commercial real estate
agent for 20 years before this, I've
observed some differences between
residential and commercial brokerage
that I never noticed while practicing as
a commercial agent. This is because
being a coach and trainer gives me a
better perspective when looking at both
industries now, and while there are some
similarities between the two of them,
there are also some big differences,
too. The
biggest difference I've observed is in
the level of professionalism within
these two industries. And let me first
make it clear that I have the highest
regard for full-time top-producing
residential agents. They are true
professionals, and they often utilize
technology and systems in ways that I
really wish commercial brokers would
embrace themselves. But
what perplexes me about the residential
brokerage industry is the number of
agents who are allowed to continue
working for their companies while
producing zero or minimal results. The
industry seems to be a haven for people
who want to feel like they have a
career, when in reality they really
don't. Because success in real estate
brokerage involves more than carrying
around business cards and telling people
you're an agent. In
commercial real estate brokerage these
people would just be fired. But it seems
to be normal practice in many
residential offices to allow agents to
keep their licenses there whether or not
they're closing any transactions. I
can't imagine what it would have been
like throughout my career in commercial
brokerage if I'd had tens of agents
constantly working for my office who
rarely closed any transactions. Allowing
this to happen adds a feeling of dead
weight to an office just by having these
people around. And I'm trying to figure
out why the managers of residential
offices allow this to happen in the
first place. Is it laziness? Do they
feel sorry for these people and feel
it's OK to indulge them in the fantasy
that they actually have a real estate
career? Does this make it easier for the
manager to not go out and recruit solid
agents who will bring in good business
for the company, as long as the company
already has a lot of agents working for
it? Or maybe the manager is just
thinking, "Hey, if some of these
people do close a transaction during the
year that will at least bring some
additional revenue into the
office." And
my feeling regarding that last
possibility mentioned is if you clean
out the dead weight and recruit three
new agents who will really produce some
solid revenue for the office, everyone
else who's productive in the office will
be much better off by just having only
productive people around them. And
in terms of agent productivity on the
residential side of the business, in the
Spring of 2005 I read an article in the
Los Angeles Times where the head of one
of the L.A. area residential real estate
boards was interviewed. Now keep in mind
this was almost two years ago when the
residential real estate market in Los
Angeles was on fire and people were
buying and selling homes at record
levels. So even while business was
proceeding at this record pace, here's
what the head of that local residential
real estate board had to say about the
agents who were its members: "Seventy-five
per cent of our members close between
zero and one transaction a year." And
this was in a market where transactions
were closing at an unprecedented rate! Now
let me segue into a true story about an
experience I had in 2006 while leading a
live commercial agent training seminar.
I was speaking at one of the state real
estate conventions, and what happened to
me was so shocking and stunning that I
decided I needed to write an article
about it. And that article is the one
you're reading right now. And
in mentioning this story to you,
speaking at state real estate
conventions is different than speaking
for commercial real estate brokerage
companies. When speaking for commercial
real estate brokerage companies, the
audience is 100% commercial agents. But
when speaking at state real estate
conventions, despite the fact that my
seminars are designed for commercial
agents, 40-70% of the audience are
people who are residential agents
wanting to learn more about commercial
brokerage. This is because at the state
conventions more than 90% of the people
attending them are residential agents,
and it's very easy for them to walk into
my commercial training because they're
already at the convention. In addition,
many of these residential agents have
become curious about what we do in
commercial real estate, and they want to
learn more about it. But
what happened to me while leading a
seminar at this one convention left me
stunned and with great concern about how
some of these agents may be treating
their clients and prospects... I
was leading a three-hour presentation to
more than 350 agents. And at the end of
my presentation I made a special offer
for a commercial real estate training
product to all the agents in the room.
And in addition I told everyone that if
they bought the product from me on that
day, I'd immediately hand them one of my
one-hour commercial agent audio training
CDs for free. (The main product they
were ordering from me was going to be
shipped to them in the future.) Well
at the end of my presentation there was
a rush to get a hold of the order forms,
fill out the information, and hand the
completed forms back to me. And as I
received the forms back from the people
I then handed them their free audio CD.
But it was after I returned home with
the order forms that the unexpected then
hit me... Forty
per cent of the residential agents who
turned in their completed forms gave me
fraudulent or incomplete credit card
information, in an attempt to walk away
with the free CD and never, ever have to
pay for anything. And when following-up
with these people by phone they weren't
taking our calls and they weren't
returning our messages about this
either. But when we finally began
leaving messages with the term
"credit card fraud" mentioned
in them, our phone calls were then
returned and in many cases the
legitimate credit card numbers were then
given to us. But some of the agents both
refused to give us their real credit
card numbers, and refused to return the
bonus CD they had walked away with from
the event. In
addition, when everyone was filling out
their order forms for the product at the
event, one woman approached me and said,
"I purchased this product on your
Web site last week. Had I known you were
going to be giving away the bonus CD for
free I would have waited and purchased
the product today instead. Will you
still give me the bonus CD today since I
purchased the product from you last
week?" And
I responded by saying, "Yes, I'll
give you the bonus CD," and I
handed it to her right then and there.
But when I returned home I discovered
that she had never, ever purchased any
products from me before. As
you can imagine, I never expected
anything like this to happen with
residential agents in such big numbers.
And let's just say it's convinced me to
never make an offer like this available
again to residential agents whenever
they're attending one of my commercial
agent seminars. I
don't think anything like this would
have ever happened with full-time,
successful residential agents. But with
markets transitioning all over the
country right now, there's a huge number
of residential agents wanting to learn
more about selling and leasing
commercial properties. It's become a
national real estate phenomenon, and
residential real estate organizations
are now looking for ways to meet the
demand for this commercial training. My
own feeling is that a lot of these
agents who are interested in commercial
brokerage are probably not, for the most
part, making much money in residential
brokerage. Why would someone who's
making great money selling homes decide
to throw it all out the window and begin
all over again selling and leasing
commercial real estate? I think many of
these residential agents who are
thinking they want to get into
commercial real estate are having a
tough time in their own residential
business, and they're thinking the grass
may be greener on the commercial side. But
in my opinion nobody, whether they're a
commercial real estate agent or a
residential one, has any business doing
a transaction in the other specialty
without working together with an agent
who's an expert in that arena.
Especially if the agent crossing over
into the unfamiliar specialty has never
closed a transaction in that arena
before. And
as commercial agents, most of us would
never, ever take a listing on a single
family home. We recognize this is not an
area we have expertise in, and we know
our clients would be better served
working with an expert who specializes
in selling homes. And at the same time
as commercial agents we sometimes get
calls from residential agents inquiring
about our listings. And they're trying
to represent their clients and prospects
in an arena that they have no
background, training, or expertise in.
But if our job as real estate agents is
to protect our clients' interests at all
times, no agent, be they a residential
or commercial one, should be crossing
over into the other arena for the first
time without another agent who's an
expert in that arena working along with
them. And
with respect to those 40% of the
residential agents who gave me
fraudulent and incomplete credit card
information just to walk away with the
bonus CD...I'm really concerned that
agents like these are out there trying
to represent people in real estate
transactions. If they'd do what they did
to me just to get that CD, imagine what
they'll do to receive thousands to tens
of thousands of dollars or more in
commissions on their real estate
transactions. I'm
guessing that the agents who gave me the
inaccurate credit card information are
people who are struggling in residential
real estate sales. And if these same
people were working for a commercial
real estate brokerage company, they
probably would have been fired a long
time ago. Keeping a lot of unproductive
agents around in any brokerage office
saps energy from everyone else, and this
will affect people's productivity. You'd
never see a professional basketball team
have 40-50 horrendous players practicing
with them and suiting-up on the
sidelines for all of their home games,
even if these players would do it for
free. But I'm guessing, similar to the
residential agents who rarely close any
transactions, that if pro basketball
teams allowed this, many of these same
40-50 players would walk around telling
everyone that they're professional
basketball players. In
professional basketball as in
professional real estate brokerage, the
best interests of everyone including the
profession itself are served when the
people who can't or won't perform their
job are fired and told to move on with
their lives. In both situations it's
important for everyone to learn that
there's more to having a bona fide
career than just wearing a uniform or
walking around with a business card.
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