A Message from President Mike Theo: Know What Can Kill You


 Mike Theo  |    July 06, 2015
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One of the earliest seminars I ever attended on association management was held in Georgia nearly 30 years ago. The keynote speaker stood on stage for a long time after the welcoming applause ended, without saying a word. After the dramatic pause, he opened with these words: ‚ÄúKnow what can kill you.‚ÄĚ That was his message ‚ÄĒ his cardinal rule in association management ‚ÄĒ know what can kill you and/or your organization.

I’ve since been to many, many association management conferences and events, but the advice of that first speaker at my first seminar has stuck with me all these years. Knowing what can kill you means identifying threats to an organization or business enterprise. Identifying threats is a fundamental part of any strategic planning or strategic positioning exercise and should be top-of-mind to association and business executives every day. 

Thinking about threats to the real estate industry and the REALTOR¬ģ organization is the focus of a comprehensive new strategic study by the National Association of REALTORS¬ģ (NAR) in its recently released ‚ÄúD.A.N.G.E.R. Report.‚ÄĚ The acronym stands for ‚ÄúDefinitive Analysis of Negative Game Changers Emerging in Real Estate,‚ÄĚ and the report identifies dangerous potential developments that may affect the real estate industry over the next several years. The 160-page report identifies 50 of the most significant threats, risks and ‚Äúblack swans‚ÄĚ facing our industry today. The threats are presented as dangers impacting five segments of our industry: agents, brokers, NAR, state and local associations, and MLSs ‚ÄĒ and are the result of in-depth interviews with over 70 of the industry‚Äôs leading CEOs and thought leaders as well as over 7,500 brokers and agents from across the nation.¬†

So what were some of the biggest ‚Äúblack swan‚ÄĚ threats?

Agents: The biggest dangers impacting agents include: marginal-quality agents threatens the credibility of the industry; powerful forces exerting significant downward pressure on commissions; agent teams threaten the survival of brokerages; IRS reclassifying agents from independent contractors to employees; mortgage-backed securities as a method of financing is discontinued as too risky; concentration of residential ownership to large investors commoditizes residential real estate; a few very efficient and effective agents secure disproportionate market share; tech companies learn to conduct transactions without the need for agents.

Brokers: The biggest dangers impacting brokers include: a tsunami of government regulations vastly increases compliance costs; ‚Äúpaper brokerages‚ÄĚ proliferate overnight; brokers lose control of data; a well-established consumer brand enters the market and creates a new multi-billion brokerage; brokers undercut by outsiders offering the same support and services; technology costs exceed brokers‚Äô ability to remain competitive; FSBO develops into a do-it-yourself model; sales tax on commissions threatens margins and broker/agent relations; portals leverage lead gen dominance.

NAR: For NAR, the biggest dangers include: decision-making structure becomes a hindrance; the three-tier organizational structure becomes a liability and source of national, state and local conflicts; alternative voices and huge ad budgets challenge NAR‚Äôs position as industry spokesperson; insufficient ‚Äúnew blood‚ÄĚ and shortage of leadership talent; the quality/quantity challenge; REALTOR¬ģ brand loses its desirability and power.

State and local associations: For state and local associations, dangers include: local board resistance to consolidation; leaders who are not in unison with a fast-paced world; too many uninformed decisions by leaders who don’t understand their obligations and responsibilities; playing to the lowest common denominator, thus defying efforts to strengthen organized real estate; unwieldy governance structures limiting timely and effective responses to complex challenges; reluctance of business leaders to engage in important association work/issues; loss of MLS ownership, control and/or revenues; with aging association executives, innovation declines; changing the old guard; disconnect between dues and the delivery of relevant programs, products and services. 

MLSs: Dangers impacting MLSs include: entry of large non-industry companies to listing services business; murky vision of what a post-REALTOR¬ģ-owned MLS might look like; creation of a national MLS; current pre-Internet local MLS model is dated and consolidation is a logical step; large patent troll attack causing economic and innovative instability; cyber security breaches and resulting disruptions; off-MLS (‚Äúpocket‚ÄĚ) listings escalate; friction escalates between association/MLS-owned consumer-facing websites; MLS process at risk of becoming obsolete.¬†

I encourage every REALTOR¬ģ to read this D.A.N.G.E.R. Report. You will certainly have your own feelings about each danger as well as the likelihood of the threat materializing. Each threat is given a ‚ÄúDanger Index‚ÄĚ score based on the author‚Äôs assessment of the probability, timing and impact of the individual threat. At the end of the report, every reader is encouraged to give their own Danger Score and compare it to the author‚Äôs. The WRA will be doing this by reviewing our existing strategic plan in light of the ‚Äúblack swans‚ÄĚ in this report. The exercise will get you and the WRA thinking about the future ‚ÄĒ and that, after all, was the intent.¬†

It‚Äôs often easier to identify threats than it is to design and execute responses or solutions. The report doesn‚Äôt offer answers but rather leaves it up to the reader ‚ÄĒ each of us as individuals, businesses and associations ‚ÄĒ to seek the opportunities that threats always present. It‚Äôs good to know what can kill you, but it‚Äôs better to know how to use that threat to your advantage.¬†

View the report at www.DANGERReport.com or www.realtor.org/DANGERReport.

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