The Mathematics of Value

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Math is FUN-damental!

Why did one straw break the camel's back? Here's the secret: the million other straws underneath it - it's all mathematics.

- Mos Def, Mathematics

A couple of weeks ago, HomeGain released their 2008 Top Performers report.  If you're not a subscriber to HomeGain, chances of you caring about this is fairly slim.

However, I urge you to care and to go over and take a look.  Because there's a very important lesson to be learned here for all companies in the real estate industry.

HomeGain is able to quantify its value to its subscribers:

2008 AgentEvaluator Highlights:

  • HomeGain recognizes 51 of its member real estate agents who have received Top Performer awards based on nationwide, regional and state achievements,
  • Overall, in 2008 HomeGain’s top five Realtors earned an average of $236,918 in gross closed commissions from their HomeGain AgentEvaluator business and an average of 20 closed transactions.
  • We now have a  total of 846 member agents in the AgentEvaluator Silver, Gold and Platinum Clubs based on the following criteria:
    • 229 agents are Silver Club honorees with an excess of $50,000 in gross commissions earned from their HomeGain leads.
    • 271 agents are Gold Club honorees with an excess of $75,000 in gross commissions earned from their HomeGain leads.
    • 346 agents are Platinum Club honorees with an excess of $125,000 in gross commissions earned from their HomeGain leads.
  • The average AgentEvaluator Platinum, Gold or Silver agent earned over $31,348 in gross closed commissions in 2008 and closed an average of 5.5 transactions.

And with that, they are able to get testimonials like this:

Do your agents say this about you?

"My ROI is incredible."

I wonder if Eric Pakulla would say the same about RE/MAX Advantage, his brokerage company, or about RE/MAX itself, his brand.

Desperate Wake-Up Call

While you're chewing on that, consider as well the fact that Brian Boero of 1000Watt recently sent out what he called a "desperate wake-up call for big brokers":

But this is about more than a website. Think again about what Jonathan says above:

“… I know the industry is changing and I didn’t want to be under the umbrella of my old brokerage.  Although I don’t know the model of the future, I know that I need to get out there and try new things…something I couldn’t do in my old situation.“

Big brokers, pay attention: There are thousands of Jonathans out there right now. They’re smart, skilled, and confident. They have no need for the mother’s milk of a desk, of shockingly remedial “training”, of the legal backstopping required by the average recruit.

They are businesspeople. And they are leaving.

Kris did. Jay did. And so did Jonathan.

Brokerage companies are in for a serious brain drain unless they can use their assets in a manner that supports, rather than inhibits, these stars.

What are those assets? Well, at the top of the list – hopefully – is a brand. Not just a recognizable icon, but a marker imbued with some sort of meaning. Most real estate brands have been suffered the whips and scorns of thousand agent glamour shots, but for many companies, there’s something there worth saving.  Save it. How this is done is a long, always complicated process we’re working on with several clients right now.

As the movie Apollo 13 made immortal, "We have a problem, Houston."

Connecting the Dots

As Brian suggests, saving big broker brands (or for that matter, small broker brands) is a long and complicated process.  It is certainly beyond the scope of this blogpost.

However, it occurs to me that Eric Pakulla is more likely to leave RE/MAX Advantage than he is to leave Homegain.  Because the value of Homegain is right there for him to see and experience, in dollars and cents.

Shouldn't a brokerage, who after all, has far more control over the agent's workflow and process be able to provide the exact same report card to every single one of its people?  Shouldn't the value of the brokerage or the brand be mathematically spelled out?

"Because of your association with Company X, you earned $225,790 in 2008."

That's real value, and real clear.

If your company already does this, then kudos -- I'm thinking you have an easier way of retaining your top talent.  If you do not, then why not?  And isn't it high time you start thinking about quantifying the value of your brokerage/brand to your people?

-rsh