The Realtor® of Tomorrow (Oops - that is Today)

On one hand, real estate has always been considered a sales profession, paid by commission. As an independent contractor, a real estate agent needs to move the inventory as quickly as possible, and for as much money as possible, to make a living in this business.  And yet, if an agent is a Realtor®, he must follow a code of ethics which, among other things, requires him to put the needs and interests of his clients ahead of everyone else’s, including and most especially, his own. While staying poised and performing in these two conflicting roles is an incredible balancing act, the overwhelming majority of my fellow agents walk that line everyday and they walk it well. That the vast majority of agents routinely put the needs and interests of their clients before their own is a testament to the industry, but agents are doing so in spite of the commission system, not because of it.

No matter how it’s presented or dressed up, there is an inherent conflict of interest when a real estate professional is expected to act as a fiduciary agent providing objective, unbiased counsel to clients, while at the same time being paid by commission. This unspoken reality, combined with a lack of choices in the real estate services offered and how they can be paid for, is the elephant in the room today.

The real estate industry knows deep down that there's a conflict of interest, but no one wants to acknowledge it and certainly no one wants to talk about it. Now, this doesn't mean that most agents don't do the right thing - most agents do, but if you're constantly put into a position of choosing between ethics and eating, you can't be surprised if eating sometimes wins out. Most importantly, the consumer is not buying it - many just don't believe that agents can provide objective counsel when their being paid contingent on an outcome and since the industry has overwhelmingly not offered any alternatives to commissions, the consumer is more and more going elsewhere for help or going it alone which hurts them because they don’t have representation and advocacy and it hurts us because we don’t have a way of being paid when the situation doesn’t fit neatly into a sales package paid by commission. I also think our unwillingness to offer responsible options is why our industry ranks so low on the trust scale.

Make no mistake: The real estate industry is having an identity crisis because agents are being asked to fill two roles that are in conflict, especially in the mind of the consumer.

Resolving the conflicting role of the agent requires a major paradigm shift in how the industry defines itself. It means a new way of thinking and acting: developing a whole new model in real estate - one of a consultant that provides choices in the services that can be procured and how those services can be paid for.

Secondly, we need to adapt to how the tremendous growth in technology has effected real estate. With the constant hype about what technology CAN do - we rarely talk about what it CANNOT do. The fact is that the growth of technology has not lessened the agent's role but it has definitely changed the value proposition and it most certainly makes the old sales model less and less viable. What today's technology is doing is allowing the consumer to do many functionary (or administrative) tasks that previously could only be done by agents while at the same time, the Internet now gives the consumer access to reams of data, that was previously unavailable. What this means is that the MLS, as the sole place for property information is over. In today's world, as much as agents and their brokers dislike the thought, buyers and sellers, armed with information that they got WITHOUT going through an agent, are finding each other more and more. The agent's traditional role of playing matchmaker, being the provider of information and being paid for their access is no longer relevant and as long as our industry continues to operate and depend on the old model whereby our value is that of providing data, we will continue to fight an uphill battle for control of that data. And this is a battle, that in the age of the Internet that we will lose, in fact, we've lost it already.

However, there is a huge silver lining because what IS relevant is what is getting lost in all the hoopla and that is this: while the Internet can provide information and lots of it, what it can never do is interpret it. The real estate professional's value is no longer in gathering or providing data - technology can do that better, faster and cheaper than any human being. The professional's value today lies in taking the reams of data and making sense of what it means. It's not in providing information but in interpreting it. It's in the fiduciary: guiding, negotiating, and troubleshooting. It's providing judgment, experience, and expertise.

That's what the consulting model is all about and here's the good news, as a consultant it doesn't matter who has access to the data because the value lies not in the data itself but in the interpretation of that data. As a consultant we're no longer paid to provide information but to interpret it and that's something that technology can never do. The bottom line is that the growth of technology offers doom and gloom for our industry if we sit back and let our role be disinter-mediated. However, it offers great opportunities if we use its growth to concentrate on what only we, as professionals, can do.