Lack of 'Make Sense' Business Models In Real Estate and Mortgage Still a Cause for Concern | The XBroker Mortgage Real Estate Marketing Technology

Lack of ‘Make Sense’ Business Models In Real Estate and Mortgage Still a Cause for Concern

February 15th, 2008 Categories: Mortgage News, Real Estate News, Real Estate Technology, XBanker, alternative real estate commission models

When the real estate and mortgage industries realize their traditional business models are now broken, the world will be a better place for all.

Words of advice: Pay more attention to the Loss side of a P&L and the right side of the balance sheet. Too much attention toward generating more revenue and not enough consideration to stopping the internal bleeding is the core of the overall problem…akin to emptying the water from a boat with a hole in the bottom using a (small) bucket.

This problem’s solution is routed in the fact that most professionals within these communities are not astute at running a business. A testament to this statement lies in that many RE and MoPro’s operate as ’sole proprietors’ (or submit as W-2 employee’s) when they should choose a corporate structure more in tune to maximizing income via benefits afforded other corporate structures. Just because one can sell doesn’t mean one can run a business.

The 6% real estate commission model is a horrid example of sound business practice. Economists routinely wonder aloud how this model has stood the test of time (answer: The omnipotent NAR ether/kool-aid). The commission ’split’ model commonly found in the mortgage broker industry (coupled with serious lack of disclosure issues), is far less discussed in open forums, yet just as fundamentally challenged.

It’s evidently apparent what happens in the down part of what are cyclical marketplaces…a mass exodus from the small business world, and thats not good.

I’d like to explore alternative business models that could work for both real estate and mortgage professionals by laying out some succinct recommendations and strategies for 2008, going forward…

I’ll be recruiting some seasoned experience from the world of business to opine via future posts regarding this topic. One of them is an XBanker