Real Estate 2.0: Revenge of the MBAs?

The national avarage pay for a real estate agent is somewhere around $50,000.00. Hardly competitive with the six and seven figure salaries and bonuses paid to those who have taken the time and effort to procure an MBA or some other advanced degree in perhaps marketing or technology.

But it’s still not easy to dismiss Marlow Harris, of Seattle’s 360Digest, who feels like a lot of these Web 2.0 companies are really just attempts by MBAs and the like to take money from the pockets of agents:

There are so many new real estate sites out there now. Some have ties to brokerages, such as Blue Roof and Redfin. Others are disconnected to any actual real estate sales, but serve as portal sites to sell advertising, such as Zillow and Trulia. Others are "skimmer" sites, that try to sell leads to real estate agents, such as HouseValues, Homegain and RealEstate.com.

Most of these new businesses are not started by real estate brokers or anyone actively involved in real estate. Or if they are, the founder/brokers are soon fired, asked to leave or bought out. Most of the founders and CEO’s are business school graduates, software engineers, venture capitalists or have backgrounds in high-tech. They had nothing to do with real estate and chances are don’t now either. They could just as soon be selling widgets as real estate, and the ads or leads they sell could be for cars or computers, just as easily as they are for real estate. Again, it doesn’t matter to them.

Taking a quick look at these companies information, 100% of them were founded by men, and, by looking at their mastheads and "about" pages, most are run by men.

And isn’t it funny that, according to the National Association of Realtors, a majority of residential real estate agents are women.

A lot of these women have entered the workforce after their children are grown. They are people-people, not strategists, not computer programmers, not business school grads. They are attracted to the business for a variety of reasons but if you ask them, a lot will say they like to "help people".

So, I can just see these Real Estate 2.0 guys sitting around a table talking… "We went to Harvard Business School and are only making $XXK a year and these real estate agents just went to some public university or even worse, a community college, and are making just as much as we are! And most of them are the same age as my Mom! Let’s use our superior intellect and design a better website and skim their customers off the top and then sell their clients back to them, for a price!"

Are these business school and IT grads going to schlep around from house to house in the evening and on Saturdays and Sundays, in the rain, perhaps with the Buyers kids in tow, week after week, month after month, searching for a dream home? No. But real estate agents do it, and those business school grads and real estate repackagers and website designers and computer programmers want a cut of the agents labor.

She’s certainly 100% correct that the residential real estate transaction is a very personal one that requires the people skills that many only wish they could possess (witness the masses who enter and leave the buisness within six months… like a revolving door). Aside from the knowledge, experience, and negotiating abilities, to name a few, gauging personalities, being a good listener, having compassion for a buyer or seller’s best interest, and all the while maintaining a professional, business perspective of the transaction are values that an excellent real estate agent bring to a transaction. There will always be a want and a need for this type of service.

I also have some knowledge about those "Harvard grads" that Marlow alludes to. I don’t think too many people out there have "realtor envy," but I have encountered some very bitter people in my 15 years who resent my success. About a dozen years ago, I was hired by a female (important because Marlow eludes to most or all of these "types" being men) Harvard graduate with the concept of finally bringing a much needed MLS to New York City (we still have none). She had zero real estate experience and viewed real estate as one of many simple commodities to be bought and sold.

I was hired to develop the entire listings database. To make a long story short, a dozen years later, she continues to fight the powers that resist change. I have moved on to develop a more traditional real estate business. Since that time, she has asked me to meet with several of her new employees as a consultant. Each of these employees had the same excitement and hunger in their eyes as I first did to make this project a success. The difference was that I had real estate experience and could see the pitfalls and obstacles from a completely different perspective. I got out and eventually so did they but not until after they spent considerable amounts of time trying to fit a square peg into a round hole.

I guess what I’m saying here is that I agree with Marlow as anyone who reads TrueGotham knows: the real estate profession is not going away. It is indeed changing by leaps and bounds and I happen to think that many of these tech savvy young men and women are bringing some wonderfully useful tools to our industry. This industry can get a lot more effecient with the appropriate use of technology. Those who choose to add these tools to there tool box will enjoy continued success. Those who resist should start considering another profession.