202012 ORRA Chair Stephen Baker

Chapter 1.

The Why of Today

The American real estate marketplace, industry and transaction is currently being

impacted by a number of demographic, generational, economic, technology and

informational forces.

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.

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.

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

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

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.

When do we start …

In other words, we start today!

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

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!

The elephant in the room

The Contemporary Consumer

Chapter 2

Consider the impact of the rising power of the contemporary consumer.

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.

Tell us a story …

This is Orrie, he is a REALTOR®

This is Connie, she is a consumer

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

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

Conny Orrie

• Engaging

• Warm

• Complex

• Distant

• Searching

• Multi-faceted

Believes all information is available and free

Expects to be able to validate information & people

Wants to remain anonymous as long as possible

Conny

Can you tell me everything about the home and area?

I can tell you how many homes there are for sale!

Can you help me find a place to live?

I can tell you how many homes there are for sale!

How long has this home been for sale?

It has 3 Bedrooms!

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

It has 2.5 Bathrooms!

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

It has 2300 SQFT! Call me for more information

Romance

or

Comedy?

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.

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

“I want more information …”

Example #2The contemporary consumer has an insatiable appetite for very specific

inventory related data. By and large agents are refusing to provide it

What exactly do they want …

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.

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

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.

Where are they getting it …

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.

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

KWI does TM …

92% want TM …

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.

Is there a problem …

What’s the problem here?

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”

Wow! Big difference …

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?

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?

Who is your customer …

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?

What happen to Connie …

Not to worry about Connie, she found what she was looking for

What does the market tell us …

Chapter 3.What is the Orlando regional real estate market

telling us?

ORRA CEO Michael Kidd

1

2

Your Association

The Orlando Housing Market

By the numbers: ORRA and Orlando

Your Association

REALTORS®6,752 members (77.73%)

Designated REALTORS®

1,934 members (22.27%)

ORRA REALTORS® & BrokersAs of September 2012: Total Membership of 8,686

Mega Board: 7,000+ members

Large Board: 2,000-6,999 members

Medium Board: 500-1,999 members

Small Board: 499 or fewer members

Mega Board: 7,000+ members

Large Board: 2,000-6,999 members

Medium Board: 500-1,999 members

Small Board: 499 or fewer members

NAR Board Size DesignationsNAR Board Size DesignationsNAR Board Size DesignationsNAR Board Size Designations

ORRA is a Mega Board8,686 ORRA members

Primary: 6,684 Secondary: 35 Responsible

Managers: 33

Total 6,752

Primary: 6,684 Secondary: 35 Responsible

Managers: 33

Total 6,752

Primary: 1,749 Secondary: 185

Total 1,934

Primary: 1,749 Secondary: 185

Total 1,934

Designated REALTORS® Designated REALTORS® Designated REALTORS® Designated REALTORS® REALTORS® REALTORS® REALTORS® REALTORS®

ORRA Membership by Type8,686 members

ORRA Membership by Member DurationORRA Membership by Member Duration

Years of MembershipAlmost 45% of members have belonged to ORRA for less than 5 years

Less than 1 2-4 5-9 10-19 20-29 30 or more

20.78%

24.08%

31.94%

15.10%

6.50%

1.59%

ORRA Member Offices by SizeORRA Member Offices by Size

Office SizeMore than half of ORRA member offices are one-person firms

1 2-4 5-9 10-24 25-49 50-99 More than 100

51.68%

32.39%

7.92%4.06%

1.33% 0.95% 1.66%

ORRA Membership by AgeORRA Membership by Age

ORRA Membership by AgeMore than 77% of ORRA’s membership is 40 and over

Under 30 30-39 40-49 50-59 60 and over

4.96%

18.10%

28.60%26.86%

21.48%

Males: 52.0%

Females: 48.0%

ORRA Membership by GenderAs of September 2012: Total Membership of 8,686

Top 5 DesignationsTop 5 DesignationsTop 5 DesignationsTop 5 Designations

Designations11.4% of members have at least one designation

Top 10 DesignationsTop 10 DesignationsTop 10 DesignationsTop 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%

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%

Designations

Agents with One or More Sales in YearAgents with One or More Sales in YearAgents with One or More Sales in YearAgents with One or More Sales in Year

ORRA Agent Sales

Avg. Total Membership

Percent of 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%

Sales per agent (2007 – YTD 2012) Sales per agent (2007 – YTD 2012)

ORRA Agent Home Sales

1 sale 2-4 sales 5-9 sales 10+ sales0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

48%

39%

11%

2%

33%

40%

20%

7%

2007 2008 2009 2010 2011 YTD2012

Percentage of selling agents by number of sales

The OrlandoHousing Market

Orlando InventoryOrlando Inventory

Orlando InventoryOrlando inventory decreased 19.16 percent since August 2011

8/04 8/05 8/06 8/07 8/08 8/09 8/10 8/11 8/12

3,940 5,532

21,077

26,313 24,834

16,361 16,535

10,055 8,128

Orlando Home Sales (2007 – YTD 2012) Orlando Home Sales (2007 – YTD 2012)

Orlando New ListingsAnnual number of new listings by price range

$1 $150,000‐ $150,001 $250,000‐ $250,001 $500,000‐ $500,001 +0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

9,654

29,381

29,882

7,786

21,626

8,271

4,839

1,752

2007 2008 2009 2010 2011 YTD2012

Orlando Home Sales (2007 – YTD 2012) Orlando Home Sales (2007 – YTD 2012)

Orlando Home SalesAnnual number of total home sales by price range

$1 $150,000‐ $150,001 $250,000‐ $250,001 $500,000‐ $500,001 +0

5000

10000

15000

20000

25000

30000

219

317

146 22

10,796

2,215 685

143

2007 2008 2009 2010 2011 YTD2012

Orlando Normal Home Sales (2007 – YTD 2012) Orlando Normal Home Sales (2007 – YTD 2012)

Orlando Normal Home SalesAnnual number of normal home sales by price range

$1 $150,000‐ $150,001 $250,000‐ $250,001 $500,000‐ $500,001 +0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2,700

8,137

7,606

1,785

5,873

3,313 2,017

563

2007 2008 2009 2010 2011 YTD2012

Orlando Distressed Home Sales (2007 – YTD 2012) Orlando Distressed Home Sales (2007 – YTD 2012)

Orlando Distressed Home SalesAnnual number of distressed home sales by price range

$1 $150,0001‐ $150,001 $250,000‐ $250,001 $500,000‐ $500,001 +0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

219

317

146 22

10,796

2,215 685

143

2007 2008 2009 2010 2011 YTD2012

Normal Home Sales (2007 – YTD 2012) Normal Home Sales (2007 – YTD 2012)

Days on Market: Normal Home SalesAnnual number of normal home sales by days on market

0-30 days 31-60 days 61-90 days 91-120 days 121-180 days 180+ days0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

5,359

3,446 2,888 2,306

3,239

2,990

5,335

1,864 1,194 794

982

1,597

2007 2008 2009 2010 2011 YTD2012

Distressed Home Sales (2007 – YTD 2012) Distressed Home Sales (2007 – YTD 2012)

Days on Market: Distressed Home SalesAnnual number of distressed home sales by days on market

0-30 days 31-60 days 61-90 days 91-120 days 121-180 days 180+ days0

2,000

4,000

6,000

8,000

10,000

12,000

170

137

102 97

107 91

6,309

2,042

1,293

971

1,130

2,094

2007 2008 2009 2010 2011 YTD2012

Orlando Pending Home SalesOrlando Pending Home Sales

Orlando Pending Home SalesPending home sales have more than quadrupled since August 2007

8/07 8/08 8/09 8/10 8/11 8/12

2,194 3,220

8,237 8,945

9,502 9,362

Short Sales: 28.82%August 2011: 32.92%

Normal Sales: 48.03%August 2011: 41.04%

Foreclosures: 23.16%August 2011: 26.04%

Orlando Home Sales by TypeNormal sales made up almost half of all home sales in August

Median Home Prices by Sales Type (2007 – YTD 2012) Median Home Prices by Sales Type (2007 – YTD 2012)

Orlando Median Home PricesMedian home prices by sales type

Overall Normal SS/BO0

50,000

100,000

150,000

200,000

250,000

300,000

$240,000 $243,000

$190,000

$118,000

$150,762

$95,000

2007 2008 2009 2010 2011 YTD2012

Average Home Prices by Sales Type (2007 – YTD 2012) Average Home Prices by Sales Type (2007 – YTD 2012)

Orlando Average Home PricesAverage home prices by sales type

Overall Normal SS/BO0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

$298,604 $301,607

$212,316

$155,161

$199,447

$117,509

2007 2008 2009 2010 2011 YTD2012

For more information, visit www.orlrealtor.com.

Contact ORRA at orra@orlrealtor.com.

Its about time …

Morning Break(We are back in 15 minutes)

Whose on line …

Chapter 4.The Rapidly Transitioning Real Estate

Internet Space: Brokerage Ally , Business Distractor or Skillful Competitor?

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.

I want to know which agents are good …

On the subject of agent rating

Trulia does agent rating …

Yelp does agent rating …

Zip Realty does agent rating …

Redfin does agent rating …

Zillow does agent rating …

What about transaction management?

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

Redfin does TM …

KWI does TM …

What about advanced inventory information?

Remember what they want …

NuHabitat has it …

NuHabitat has it …

Zillow has it …

Sawbuck has it …

Sawbuck has HomeSnap …

Where to get rental info …

On the subject of rental vs. ownership lifestyles

Information on the decision …

The Zillow breakeven …

The Zillow rental app …

Trulia Market Watch

Where can I live my life …

Lifestyle information

Zillow can help …

Street Advisor knows the good stuff …

Where can we walk …

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.

Craig’s list really works …

What about Zillow …

Lets take a close look at Zillow

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.

They got listings …

They got rentals …

All the rentals …

They have agent reviews …

They have lots of consumer infor …

Zillow television ads …

They are recruiting agents …

They are providing valuable agent benefits …

Lets try it again, Zillow is recruiting …

Zillow has recruited 25,000 of

Your Agents

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

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.

What does all this mean …

What should be we thinking here?

Here is the bottom line …

Lets talk about reinvention …

Chapter 5.Capital redefines Professionalism: The

Brokerage Success Formula Moving Forward

The story of the past five years …

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.

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

How are we coping …

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

The traditional brokerage business model is not creating value for …

• Consumers

• Agents

• Owners

• Investors

Here is the moment of truth …

It is time to reengineer the brokerage business model!

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

Most importantly …

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

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.

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

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?

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?

Get started on this …

Just do one of these …

Each of you has done this before …

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

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

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.

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.

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