What Is Your Exit Strategy?
Form alliance with up-and-comers to cushion your retirement
By Marlin Cone
Feb. 20, 2007-When you made the decision to get into the real estate business, did you consider how you were going to get out of the real estate business? Did you consider that all the work you would be doing to build your identity, i.e., your "brand," and your contacts, i.e., your sphere of influence (SOI), might be of value in the future?
This article might appear to be directed only to those agents who have been in the business for several years-but, it is not. It is also directed to the younger, less experienced agents and to the brokers managing both.
For more experienced senior agents, do you think the reputation you have built in the marketplace (i.e., your branding) and the database you have developed for your SOI would help someone else (i.e., another younger, less experienced agent) add value to their business? What do other agents you know do as they move towards the end of their real estate career? Do they just turn the key and walk away from all the value they have created with their hard work, advertising, marketing and networking? Or, do they bring younger people into the business with them, train them and then sell their "book of business" to them?
You are overlooking a huge opportunity to establish a nice retirement "annuity" for yourself if you are not positioning yourself and your business for an exit whereby another active agent can take over when you are ready to move into the next stage of your life. And, you are depriving some anxious younger, less experienced agent the opportunity to leverage what you have already created at a much lower cost than they could develop the same "book" of business the conventional way. It is very expensive, as you know, to establish branding and to acquire a database which you can legitimately call your SOI.
The average age of NAR members in 2004 was 55, then dropped to 52 in 2005 because of an influx of younger people into the business who believed they could be millionaires by just putting a sign in the yard and then waiting for the phone to ring. But the average age shot up to 57 by the end of 2006, and why? My bet is that the "adjusting" market during 2006 was more than many of the "newbies" could handle financially and/or emotionally-and that there was a significant exodus of younger agents from the business. The statistics don't lie.
I think this situation creates a dilemma for the real estate business. The largest group of buyers of homes these days is Generation "X" and "Y"-those in their 20s and 30s who were raised with computers and cell phones. So if the average age of the largest group of home buyers is 35 and the average age of NAR members is now 57, do you think there might be a generation gap here? There's a gap on how these two groups embrace, address and utilize technology; there's a gap in how these two groups choose to conduct their business and live their lives.
My suggestion for you is that you proceed now to forge a strategic alliance of some type with a younger, less experienced agent with whom you have solid compatability in an approach which will be "win/win" for you and that agent. You can have comfort that you have not just thrown away all the value of the business you have developed over the years and that the younger, less experienced agent can jump start their business to a much higher level in a very short time frame. And, you can give that younger, less experienced agent a wealth of experience which they would be paying a lot of money to acquire through many of the real estate training organizations over a much longer period of time.
For the younger, less experienced agents, having worked out a purchase arrangement like the one above will help see you through the market adjustments that we've been experiencing the last several months. Such an arrangement will also help you take your business to a higher level where you can begin to realize more economies of scale. It will also position you to take advantage of the upswings in the market instead of leaving the business and watching a new group of agents enter the market and take advantage of the upswings.
And, brokers, isn't it in the best interest of the stability and longevity of your company to proactively "broker" strategic alliances between the senior, more experienced agents who might be wanting to define their exit from real estate, with the younger, less experienced agents? Are you doing something about this, or are you just sitting on the sidelines watching the game play out in front of you? You should be the "coach" orchestrating the way the game is being played and have a positive impact on all three parties: the senior, experienced agent, the younger, inexperienced agent and your company.
In future articles I will be addressing different types of arrangements which have worked well for others who took the "bull by the horns" and moved forward with action on this situation in a way which has yielded the desired "win/win/win" scenario. I hope you get inspired to do something for your business before it is too late.
By Marlin Cone
Feb. 20, 2007-When you made the decision to get into the real estate business, did you consider how you were going to get out of the real estate business? Did you consider that all the work you would be doing to build your identity, i.e., your "brand," and your contacts, i.e., your sphere of influence (SOI), might be of value in the future?
This article might appear to be directed only to those agents who have been in the business for several years-but, it is not. It is also directed to the younger, less experienced agents and to the brokers managing both.
For more experienced senior agents, do you think the reputation you have built in the marketplace (i.e., your branding) and the database you have developed for your SOI would help someone else (i.e., another younger, less experienced agent) add value to their business? What do other agents you know do as they move towards the end of their real estate career? Do they just turn the key and walk away from all the value they have created with their hard work, advertising, marketing and networking? Or, do they bring younger people into the business with them, train them and then sell their "book of business" to them?
You are overlooking a huge opportunity to establish a nice retirement "annuity" for yourself if you are not positioning yourself and your business for an exit whereby another active agent can take over when you are ready to move into the next stage of your life. And, you are depriving some anxious younger, less experienced agent the opportunity to leverage what you have already created at a much lower cost than they could develop the same "book" of business the conventional way. It is very expensive, as you know, to establish branding and to acquire a database which you can legitimately call your SOI.
The average age of NAR members in 2004 was 55, then dropped to 52 in 2005 because of an influx of younger people into the business who believed they could be millionaires by just putting a sign in the yard and then waiting for the phone to ring. But the average age shot up to 57 by the end of 2006, and why? My bet is that the "adjusting" market during 2006 was more than many of the "newbies" could handle financially and/or emotionally-and that there was a significant exodus of younger agents from the business. The statistics don't lie.
I think this situation creates a dilemma for the real estate business. The largest group of buyers of homes these days is Generation "X" and "Y"-those in their 20s and 30s who were raised with computers and cell phones. So if the average age of the largest group of home buyers is 35 and the average age of NAR members is now 57, do you think there might be a generation gap here? There's a gap on how these two groups embrace, address and utilize technology; there's a gap in how these two groups choose to conduct their business and live their lives.
My suggestion for you is that you proceed now to forge a strategic alliance of some type with a younger, less experienced agent with whom you have solid compatability in an approach which will be "win/win" for you and that agent. You can have comfort that you have not just thrown away all the value of the business you have developed over the years and that the younger, less experienced agent can jump start their business to a much higher level in a very short time frame. And, you can give that younger, less experienced agent a wealth of experience which they would be paying a lot of money to acquire through many of the real estate training organizations over a much longer period of time.
For the younger, less experienced agents, having worked out a purchase arrangement like the one above will help see you through the market adjustments that we've been experiencing the last several months. Such an arrangement will also help you take your business to a higher level where you can begin to realize more economies of scale. It will also position you to take advantage of the upswings in the market instead of leaving the business and watching a new group of agents enter the market and take advantage of the upswings.
And, brokers, isn't it in the best interest of the stability and longevity of your company to proactively "broker" strategic alliances between the senior, more experienced agents who might be wanting to define their exit from real estate, with the younger, less experienced agents? Are you doing something about this, or are you just sitting on the sidelines watching the game play out in front of you? You should be the "coach" orchestrating the way the game is being played and have a positive impact on all three parties: the senior, experienced agent, the younger, inexperienced agent and your company.
In future articles I will be addressing different types of arrangements which have worked well for others who took the "bull by the horns" and moved forward with action on this situation in a way which has yielded the desired "win/win/win" scenario. I hope you get inspired to do something for your business before it is too late.
Labels: Real Estate
posted by New Jersey Real Estate at 11:24 AM
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