Originally presented at the ORRA Broker Summit by Jeremy Conaway. October 10, 2012.

2. 202012 ORRA Chair Stephen Baker

3. Chapter 1.
The Why of Today

4. The American real estate
marketplace, industry and transaction is
currently being impacted by a number of
demographic, generational, economic, techn
ology and informational forces.

5. But even as these forces continue to erode and
invade your business and market spaces there
is another more insidious factor at work out
there. There are individuals and entities from
outside our industry who are aware of its
potential over the next several years and the
possibility, indeed likelihood, that you will
choose not to respond to the trends, directions
and forces that are currently realigning our
industry’s dynamic.

6. While there is adequate evidence to
document the current impact of these forces
no consensus has emerged with respect to
when they will generate sufficient
momentum to force a fundamental change
in the traditional industry.

7. As the monitoring of these forces continues
and the intensity of the conversation
increases it is essential to keep in mind that
it takes 24 - 36 months to introduce and
implement meaningful institutional change

8. What Do We Know Today
• The consumer is in command
• Agents are not transitioning into the new
reality
• Third party Internet firms are gaining ground
• The consumer is being attracted by 3P
• Brokerage profits from commissions are
minimal
• Brokerage values are lowest in years
• There are no buyers for traditional
brokerages

9. Where do we start?
The immediate challenge for the brokerage
community is to learn as much as possible
regarding the forces in play, monitor these
forces in their local marketplace and, at
every opportunity, engage in the discussion
relative to how they are likely to impact the
industry and the marketplace.

10. When do we start …
In other words, we start today!

11. This is a Broker Summit …
• It is not an association meeting
• It is not a United Nation’s meeting
• We are not here to be fair
• Today we are focused on just one thing
• The Success of Your Brokerage
Moving Forward

12. As brokers your primary concerns
should be being able to …
• Be proud of your business and reputation
• Manage your business asset in the right
directions
• Generate a market level profit and ROI
• Present a successful consumer value
proposition
• Sell your brokerage when the time comes
Anything that stands in the way of
these objectives is unacceptable!

13. The elephant in the room

14. The Contemporary Consumer
Chapter 2
Consider the impact of the rising power of
the contemporary consumer.

15. The Contemporary Consumer
The REALTORS® and the consumers of the
Orlando area are playing out a story. What we
don’t know is whether it is a romantic story that
will have a happy ending or a comedy which will
end in a tragedy. What is clear is that they are not
communicating.

16. Tell us a story …
This is Orrie, he is a REALTOR®
This is Connie, she is a consumer

17. A real guy …
Orrie is a high performance agent:
• He has over 25 years experience
• He sells over 5M annually
• He has been trained to be in
control
• He is a time managing machine
• He prides himself in being able to
do ten deals at the same time
• He loves to terrorize his broker

18. The contemporary consumer …
This is Connie
• She is into social media
• This is her first transaction
• She has spend over 100 hours
researching for her purchase
• She considers herself to be in charge
of her transaction
• She has a clear idea what role her
agent should take
• She wants to have a warm and positive
experience

19. Conny Orrie
• Distant • Engaging
• Searching • Warm
• Multi-faceted • Complex

20. Conny
Believes all information is available and free
Expects to be able to validate information & people
Wants to remain anonymous as long as possible

21. Can you tell me
everything about
the home and
area?
I can tell you
how many
homes there
are for sale!

22. Can you help me
find a place to
live?
I can tell you
how many
homes there
are for sale!

23. How long has
this home
been for sale?

24. It has 3
Bedrooms!

25. What is it's
history? Has it
been listed
before?

26. It has 2.5
Bathrooms!

27. Can you show me
how this home's
price compares to
other homes - for
sale, that have sold.
or are just nearby?

28. It has 2300 SQFT!
Call me for more
information

29. Romance
or

30. Comedy?

31. What’s happening out there …
The current market environment is marked by a
growing level of disconnect between the
traditional agent and the contemporary
consumer. Increasingly when Orrie and Connie
get together the sparks fly and we don’t mean
romantic sparks. This situation can not be
allowed to continue.

32. Who is the best agent around here …
Example #1:
Consumers want to know who the best
agents are in terms of production and
neighborhoods. Way too many traditional
brokerages are refusing to be transparent

34. “I want more information …”
Example #2
The contemporary consumer has an
insatiable appetite for very specific
inventory related data. By and large agents
are refusing to provide it

35. What exactly do they want …

36. What about lifestyle information …
Example #3
Today’s consumer wants to talk about lifestyles
and quality of life issues. The vast majority of
agents are only prepared to discuss bedrooms,
baths and prices. This is contributing to the
growing gap between the contemporary
consumer, especially within generation “Y,” and
brokerages.

37. What does lifestyle mean …
• What about the schools
• Where is the nearest decent golf course
• Do airplanes fly over here
• Where can I find organic vegetables
• Where is the nearest synagogue
• Who lives in this neighborhood
• Is this neighborhood “walkable”
• Are there babysitters around here

38. Example #4
Today’s consumer (especially the 40% that
will be forced by circumstances to live in a
rental for the next few years) wants to talk
about issues and options that compare
ownership and rental options. Too many
agents see this discussion as a threat to
home ownership and refuse to engage.

39. Where are they getting it …

40. They want TM …
Example #5
Many contemporary consumers want to enjoy
the benefits of transaction management so that
they can track their transaction. Very few
brokerages in each market offer this service.

41. What’s the big deal with TM …
During this presentation we will make the
case that Transaction Management is the
single most important process in real estate
today. It is and it will be the gateway to the
new brokerage business model

42. KWI does TM …

43. 92% want TM …

44. I need to know now …
Example #6
More and more consumers are asking that
communications with their agent occur using
smart phones, i-Pads and other mobile
devices with messages being delivered now.
Too many agents are responding that they
will call after their regular day is over.

45. Is there a problem …
What’s the problem here?

46. Could it be generational …
Some experts suggest that what is
happening here is that boomer agents
believe that they can control the
marketplace by not accommodating the
unique and well identified expectations and
demands of Generation “Y”

47. Wow! Big difference …

48. Could it be …
Other’s suggest that there a sense within the
brokerage community that its future rests
with the aging agent population rather than
the contemporary consumer?

49. Here are some of the companies that the
contemporary consumers are forming
relationships with. Among other things each
has a strong company directed consumer
experience. Which of these serve as a model
for your brokerage?

50. Who is your customer …

51. How is Orrie doing …
• He wants to be the center of the transaction
• He wants to sell not connect
• He thinks lifestyle is for girls
• He doesn’t want TM to let Connie know he
screwed up
• He hates the idea of agent rating
• He doesn’t believe Connie needs to know
everything.
• He doesn’t believe that real agents do
rentals
• Communication is not his priority
• What in the heck is a consumer experience?

52. What happen to Connie …
Not to worry about Connie, she found what
she was looking for

53. What does the market tell us …
Chapter 3.
What is the Orlando regional real estate market
telling us?
ORRA CEO Michael Kidd

54. By the numbers:
ORRA and Orlando
1 Your Association
2 The Orlando Housing Market

55. Your Association

56. ORRA REALTORS® & Brokers
As of September 2012: Total Membership of 8,686
REALTORS®
6,752 members (77.73%)
Designated REALTORS®
1,934 members
(22.27%)

57. ORRA is a Mega Board
8,686 ORRA members
NAR Board Size Designations
 Mega Board: 7,000+ members
 Large Board: 2,000-6,999 members
 Medium Board: 500-1,999 members
 Small Board: 499 or fewer members

58. ORRA Membership by Type
8,686 members
REALTORS® Designated REALTORS®
 Primary: 6,684  Primary: 1,749
 Secondary: 35  Secondary: 185
 Responsible
Managers: 33
Total 6,752 Total 1,934

59. Years of Membership
Almost 45% of members have belonged to ORRA for less than 5 years
ORRA Membership by Member Duration
31.94%
24.08%
20.78%
15.10%
6.50%
1.59%
Less than 1 2-4 5-9 10-19 20-29 30 or more

60. Office Size
More than half of ORRA member offices are one-person firms
ORRA Member Offices by Size
51.68%
32.39%
7.92%
4.06%
1.33% 0.95% 1.66%
1 2-4 5-9 10-24 25-49 50-99 More than
100

61. ORRA Membership by Age
More than 77% of ORRA’s membership is 40 and over
ORRA Membership by Age
28.60%
26.86%
21.48%
18.10%
4.96%
Under 30 30-39 40-49 50-59 60 and over

62. ORRA Membership by Gender
As of September 2012: Total Membership of 8,686
Males: 52.0%
Females: 48.0%

63. Designations
11.4% of members have at least one designation
Top 5 Designations

64. Designations
Top 10 Designations
GRI 757 55.05%
ABR 184 13.38%
CRS 143 10.40%
CIPS 58 4.22%
CRB 29 2.11%
SRES 28 2.04%
CCIM 24 1.75%
AHWD 23 1.67%
E-PRO 20 1.45%
GREEN 20 1.45%

65. ORRA Agent Sales
Agents with One or More Sales in Year
Avg. Total Percent of
Membership Membership
2007 8,039 12,094 66.47%
2008 6,508 10,028 64.46%
2009 7,636 8,773 87.04%
2010 7,935 8,607 92.19%
2011 7,532 8,273 91.04%
YTD 2012 6,661 8,187 81.36%

66. ORRA Agent Home Sales
Percentage of selling agents by number of sales
Sales per agent (2007 – YTD 2012)
48%
50%
40%
39%
45%
40%
33%
35%
30%
20%
25%
20%
11%
15%
7%
10%
2%
5%
0%
1 sale 2-4 sales 5-9 sales 10+ sales
2007 2008 2009 2010 2011 YTD2012

67. The Orlando
Housing Market

68. Orlando Inventory
Orlando inventory decreased 19.16 percent since August 2011
Orlando Inventory
26,313
24,834
21,077
16,361 16,535
10,055
8,128
5,532
3,940
8/04 8/05 8/06 8/07 8/08 8/09 8/10 8/11 8/12

69. Orlando New Listings
Annual number of new listings by price range
Orlando Home Sales (2007 – YTD 2012)
45,000
40,000
29,882
29,381
35,000
21,626
30,000
25,000
20,000
9,654
8,271
7,786
15,000
4,839
10,000
1,752
5,000
0
$1 ‐ $150,000 $150,001 ‐ $250,000 $250,001 ‐ $500,000 $500,001 +
2007 2008 2009 2010 2011 YTD2012

70. Orlando Home Sales
Annual number of total home sales by price range
Orlando Home Sales (2007 – YTD 2012)
30000
25000
20000
10,796
15000
10000
2,215
5000
685
317
219
146
143
22
0
$1 ‐ $150,000 $150,001 ‐ $250,000 $250,001 ‐ $500,000 $500,001 +
2007 2008 2009 2010 2011 YTD2012

71. Orlando Normal Home Sales
Annual number of normal home sales by price range
Orlando Normal Home Sales (2007 – YTD 2012)
10,000
8,137
7,606
9,000
8,000
5,873
7,000
6,000
3,313
5,000
2,700
4,000
2,017
1,785
3,000
2,000
563
1,000
0
$1 ‐ $150,000 $150,001 ‐ $250,000 $250,001 ‐ $500,000 $500,001 +
2007 2008 2009 2010 2011 YTD2012

72. Orlando Distressed Home Sales
Annual number of distressed home sales by price range
Orlando Distressed Home Sales (2007 – YTD 2012)
20,000
18,000
16,000
10,796
14,000
12,000
10,000
8,000
6,000
4,000 2,215
685
317
219
146
143
2,000
22
0
$1 ‐ $150,0001 $150,001 ‐ $250,000 $250,001 ‐ $500,000 $500,001 +
2007 2008 2009 2010 2011 YTD2012

73. Days on Market: Normal Home Sales
Annual number of normal home sales by days on market
Normal Home Sales (2007 – YTD 2012)
7,000
5,359
5,335
6,000
5,000
3,446
3,239
2,990
2,888
4,000
2,306
1,864
3,000
1,597
1,194
2,000
982
794
1,000
0
0-30 days 31-60 days 61-90 days 91-120 days 121-180 days 180+ days
2007 2008 2009 2010 2011 YTD2012

74. Days on Market: Distressed Home Sales
Annual number of distressed home sales by days on market
Distressed Home Sales (2007 – YTD 2012)
12,000
10,000
6,309
8,000
6,000
2,094
2,042
4,000
1,293
1,130
971
2,000
170
137
107
102
97
91
0
0-30 days 31-60 days 61-90 days 91-120 days 121-180 days 180+ days
2007 2008 2009 2010 2011 YTD2012

75. Orlando Pending Home Sales
Pending home sales have more than quadrupled since August 2007
Orlando Pending Home Sales
8,945 9,502 9,362
8,237
3,220
2,194
8/07 8/08 8/09 8/10 8/11 8/12

76. Orlando Home Sales by Type
Normal sales made up almost half of all home sales in August
Normal Sales: 48.03% Short Sales: 28.82%
August 2011: 41.04% August 2011: 32.92%
Foreclosures: 23.16%
August 2011: 26.04%

77. Orlando Median Home Prices
Median home prices by sales type
Median Home Prices by Sales Type (2007 – YTD 2012)
300,000
250,000 $240,000
$243,000
200,000 $190,000
$150,762
150,000
$118,000
$95,000
100,000
50,000
0
Overall Normal SS/BO
2007 2008 2009 2010 2011 YTD2012

78. Orlando Average Home Prices
Average home prices by sales type
Average Home Prices by Sales Type (2007 – YTD 2012)
350,000
$298,604 $301,607
300,000
250,000
$212,316
$199,447
200,000
$155,161
150,000
$117,509
100,000
50,000
0
Overall Normal SS/BO
2007 2008 2009 2010 2011 YTD2012

79. For more information, visit
www.orlrealtor.com.
Contact ORRA at orra@orlrealtor.com.

80. Its about time …
Morning Break
(We are back in 15 minutes)

81. Whose on line …
Chapter 4.
The Rapidly Transitioning Real Estate
Internet Space: Brokerage Ally , Business
Distractor or Skillful Competitor?

82. Let’s start by examining how the new breed
of Internet based real estate companies are
doing with the consumer demands and
expectations discussed above.

83. I want to know which agents are good
…
On the subject of agent rating

84. Trulia does agent rating …

85. Yelp does agent rating …

86. Zip Realty does agent rating …

87. Redfin does agent rating …

88. Zillow does agent rating …

89. What about transaction management?

90. What’s the big deal with TM …
During this presentation we will make the
case that Transaction Management is the
single most important process in real estate
today. It is and it will be the gateway to the
new brokerage business model

91. Redfin does TM …

92. KWI does TM …

93. What about advanced inventory information?

94. Remember what they want …

95. NuHabitat has it …

96. NuHabitat has it …

97. Zillow has it …

98. Sawbuck has it …

99. Sawbuck has HomeSnap …

100. Where to get rental info …
On the subject of rental vs. ownership lifestyles

101. Information on the decision …

102. The Zillow breakeven …

103. The Zillow rental app …

104. Trulia Market Watch

105. Where can I live my life …
Lifestyle information

106. Zillow can help …

107. Street Advisor knows the good stuff …

108. Where can we walk …

109. We have to mention Craig’s list …
No discussion of real estate on the Internet
would be complete without an honorable
mention for Craig’s List. In some markets
entire teams are tasked to Craig’s List based
marketing activities. It has become a skill set
of its own.

110. Craig’s list really works …

111. What about Zillow …
Lets take a close look at Zillow

112. I don’t work for Zillow …
This presentation is not about selling Zillow.
It is about helping you, as
brokers, understand the Zillow competitive
model and what it means for your
brokerage.

113. They got listings …

114. They got rentals …

115. All the rentals …

116. They have agent reviews …

117. They have lots of consumer infor …

118. Zillow television ads …

119. They are recruiting agents …

120. They are providing valuable agent
benefits …

121. Lets try it again, Zillow is recruiting …
Zillow has recruited 25,000 of
Your Agents

122. So what is the big deal …
Do you know what Zillow is doing with your agents?
• They are taking a big piece of the commission
• They are directing your agents to their consumers
• They are setting standards for your agents
• They are establishing a national system of
transaction coaches who will work with your
agents every week
• They are telling your customers that they are
better

123. Most ridiculous of all, your agents who
refuse to cooperate with your efforts to
create systems and consumer experiences
are now blindly following Zillow’s.

124. What does all this mean …
What should be we thinking here?

125. Here is the bottom line …

126. Lets talk about reinvention …
Chapter 5.
Capital redefines Professionalism: The
Brokerage Success Formula Moving Forward

127. The story of the past five years …

128. Reason # 4 …
Because the recession happen to coincide with
social, demographic, and technical
developments. When the going got tough the
traditional business model couldn’t get going.

129. Why traditional business
models don’t create value in the new environment?
• Inability to respond to current social and
demographic circumstances
• Lack of management controls
• Failure to employ metrics and
benchmarking
• Costs of labor
• Lack of accountability
• Failure to be consumer centric

130. How are we coping …

131. What is the basic challenge …
A business model is a method for
creating value. When a model fails to
create value it must be replaced

132. The traditional brokerage business
model is not creating value for …
• Consumers
• Agents
• Owners
• Investors

133. Here is the moment of truth …
It is time to reengineer the
brokerage business model!

134. Don’t take it personally …
• It is a “no fault” situation
• It is a huge opportunity
• Half the challenge is attitude
• You can do this

135. Most importantly …
Most brokers don’t have a choice if they expect
to capitalize on their life’s work

136. Now enters the investor …
• They are with us now (Zillow, Realogy, Trulia)
• The industry is cash poor after 5 years of hardship
• Consider the average age of today’s broker
• Consider the greatly reduced value of today’s
brokerage
• Few agents want to be brokers and fewer yet
have any purchase money
• Selling it to the kids has been less than successful
over the past several years
• The most likely buyers may be from outside the
industry and they will need financing from
investors.

137. What will investors require in order
to provide funding for a brokerage.
• Turn key systems
• Universal accountability
• Effective management control over key
processes
• Agent stability
• Strong consumer connections
• Strong business metrics and benchmarking
• Appropriate market share

138. What to do …
Even if brokerage owners, executives and
managers don’t believe any real change will
occur within the next three years what actions
should they be taking between now and then?

139. What to do?
Even if brokerage owners, executives and
managers don’t believe any real change will
occur within the next three years what actions
should they be taking between now and then?

140. Get started on this …

141. Just do one of these …

142. Each of you has done this before …

143. Here is how to get started …
• Create your unique customer experience
• Create standards for each experience
component
• Create a system for each component
• Assign responsibility for each component
• Create an atmosphere of universal
accountability
• Set up overview and monitoring
• Incorporate metrics and benchmarking

144. This is what will be necessary …
• Profitability must be the central focus
• Management must be in control of every
aspect of the business
• Experience and personalities will not have
value equal to systems and effective
management
• The firm’s consumer experience must be
defined and implemented across the board
• Metrics and benchmarking must be
implemented and transparent

145. This is no time to go solo …
This is a time to think about
collaboration, cooperation and competition.
Remember, your new competitor is probably
not sitting in this room today. Think about
this.

146. The other side of the story …
As your brokerage community searches
around the industry for friends and allies it
may be surprised to discover that those that
it thought it could depend on may not be
there. Most franchisors are not in a position
to assist with the development of new
solutions. They are either without sufficient
funding, imagination or they have
committed to global development.

147. Your REALTOR® association wants to be part
of your solution. It has the resources, the
staff and the guts to get you there.
Give it some thought