The Production Model
Est. 2002
– B.A.Latocki, Executive
Start smart. If you are starting your own brokerage, this is the model you should build. The old school brick and mortar model is dead. If you own one of those brokerages, you should consider converting to the Production Model.
The Production Model is a hybrid between the old school traditional Broker Model and Virtual Brokers. We have combined the best of both worlds. Our goal was to build a model that gives a Realtor a place to grow from the very beginning of her career, up to the top producing level, and into the mentor/retirement years. A place you can build a full career and always feel at home. It is led by an honest and passionate mission statement:
Mission Statement:
Production Realty is here to serve a Realtor for their entire career. Our model does not attract the part time agent, and assures to the public that all Production Realtors are Top Producers.
Each and every single concept must be implemented to make this model work. None can be skipped. If you want to build a firm with the upmost respect and the ability to weather any storm, this is the model you need to build.
Concept 1: No Dedicated Desk Space
None of our realtors have their own private office, or even their own desk. Our offices are set up using the co-working space concept.
None of our realtors have their own private office, or even their own desk. Our offices are set up using the co-working space concept. We went so far as to even eliminate desks with drawers. This is to keep agents from “camping out” and claiming a desk as their own. Agents do tend to sit at the same locations, but that is okay. As long as they pick up their stuff when they leave. We encourage agents to be mobile friendly. No longer do they need file cabinets full of old files. Each office has several seating arrangements. Conference table, high top cafe style spots, lounge areas, and private conference rooms for those that need some privacy with a client or a delicate phone conversation. This model is a hybrid between virtual offices and traditional brick and mortar. We like that virtual offices are using technology to make the agent as mobile as possible, but we also like the teamwork and camaraderie that comes from agents working together in an office. To eliminate the office is to eliminate that teamwork. The agents still get to know each other and build trust under our model. Yet not promising a private office to the agents gives us the flexibility to grow, expand, and even move locations with ease. It doesn’t disrupt the agents once they get used to the idea of not having a private office or desk. This model also allows an agent the ability to rent an office if they decide to get one. Because its not offered by me, they can rent one anywhere they want. And as long as it makes financial sense to that agent, she can keep renting it. If the day comes that she realizes its a waste of money, she can stop renting that space. The choice is the agents. It takes the decision off of the broker, and places it where it should be. On the agent.
Concept 2: Commission Split Transparency
Every single Realtor is one the same commission tier schedule. We never negotiate a different split. Every single Realtor can see exactly where the other Realtors are at on the commission tier.
Concept 3: No Haters
The Production Model keeps the bad apples out by making sure we hire and fire with the intent to keep the “Haters” out of our firm. We purposely hire team players that work well with others.
Concept 4: The 11% Club
Our goal is that all new agents survive the first two years of being in the business.
If your in the industry for any length of time you will know that most agents don’t survive. The national statistic is that 89% of new realtors are out of the business within 2 years. That’s why we call it the 11% club. If a new agent can make it 2 years in the business, then they have made it to the top 11% of realtors, right? Some business models are all about recruiting as many new agents as they can, make a few bucks off of them, and see how many make it to the 2 year mark. In those models, fewer than 11% survive. In my model, we have a goal of getting every new hire to the 11% club. We do this in a couple ways. During the first year, I ask the new agents to be in the office as much as possible, even if they feel like they have nothing to do. At first they feel out of place, but I tell them to not worry about it and to just observe and learn as much as they can. I have a pretty detailed checklist of things to complete, and for most agents that can take some time. There is a lot of one on one coaching, and hand holding. I tell them not to expect to make much money that first year, but that they are getting a 2 year degree in how to be a realtor without having to pay any tuition, so even if they only make 10 grand that first year, they are better off then paying 30-40k a year for a college degree. The second year is where I let them go free and see if anything stuck. This is when I push them to answer their own questions, make some mistakes, etc. Once the agent hits the 2 year mark, we celebrate and welcome them to the 11% club. By this time they are usually off and running. I rarely have an agent not make it to the 2 year mark. When I do its because they are not willing to learn the game and be coached. If they are not lifelong learners, then they will not fit in well with the Production Model, and they are weeded out pretty quick.
Concept 5: No Promises
We don’t promise any marketing, subscriptions, or technology to the agents. This allows us to invest in what we want, when we want.
We try very hard to not promise the agents any products or subscriptions that cost the company time or money. We have a marketing budget, but we can be fluid with it. If you are trying to purchase a product and hope all your agents use it, you are missing the boat. At best you might get 20% to use it. Then when it is time to get rid of the product, you now have 20% of your agents upset that you took it away. When we see something that looks like a slam dunk, we present it to the team and let them decide if it is a product they want to invest in. We may even push something pretty hard, but again, not to the point that we force every agent to pay for it either by purchasing it for all agents, or passing along a “technology fee”.
Our marketing budget is spent on what we decide, and we can change it at any time. If we decide to do some marketing this month, and not next month, the agents are fine with it because the one time we did it, it was like a bonus, not an ongoing promise that they now feel like they deserve. This is how we can stay up with technology. It makes absolutely no sense to me to invest in a new technology, promise it to all the agents, knowing that it will one day be outdated and we will have to pull the plug on it. Now if I can get 20% of the agents to invest in that same technology because they believe in it enough to actually spend their own dollars on it? That is so different. If they are buying it, they may actually use it. And if it works for them, the other agents can get on board.
If an agent feels like a tool will help them make more money, why would they not pay for it? Plus once they decide, and it’s key that THEY decide it is not worth the money, they can cancel it. It puts the power in the hands of the agent, and puts them in control of their career. As it should be. All agents are different, not one single agent I have ever met is the same as another, right? Why would we ever try to make them all the same? This concept serves both the agent and the client because very little marketing dollars are wasted for very long. It is spent on what works today.
Concept 6: Don’t Borrow Money
The Production Model is very lean, and able to weather any storm. Our debt free concept means that we don’t borrow money. Not from banks, investors, family, or friends. It keeps a brokerage able to think and grow with freedom.
Production Realty was started with $200 in a checking account. I already owned the building that we started in, so that was a blessing. I had bought it before the market crashed back when you could get a mortgage for anything. When the market crashed, I learn a lot of painful lessons, but I also learned of a guy named Dave Ramsey. He would call those lessons my “stupid tax”. So my business has been built on all cash. I don’t have any investors to answer to, and my overhead is low. I pay myself market rate rent so in the event I need to move to a bigger or smaller location, I can do that without effecting the company bottom line. I am dedicated to this concept, and we have never borrowed money. The only exception to that rule is that I have bought a couple buildings on short term 5 year land contracts. This way the buildings are paid off fast, and then I own my office real estate. I think there is something cool about a real estate office owning their building, not just being a tenant. I’m okay with being a tenant, but if possible, owning is great if you can get the right deal.
Concept: Jack Of All Trades, Master of None
Concept: Is it good for the Client, Agent, and Brokerage?
Before we decide to offer a product or service, it has to pass this test. Is it what’s best for the Client? If so, then is it what’s best for the Agent? And last, is it beneficial to the Brokerage?
Most models just look at if its beneficial to the brokerage and leave the Agent and Client out of the equation. I understand, there is big money in offering title services and mortgages services, but be honest, is it what’s best for the client? Only if you have no other good options in your town I suppose.
Concept: Give Back
We have been blessed with a career that not only affords us the flexible schedule to donate our time, but it can also benefit our career. If we waste it, then that is a shame. All of our agents give back to the community we work in.
The Production Model was invented starting in 2002. I worked for a traditional brick and mortar franchised real estate model from 2002 until it closed in 2009. I took everything I liked, and everything I hated about that business model and started Production Realty in 2009. Over the years, these concepts really set us apart from the rest of the industry and in 2018 we decided to tell our story so that other brokers could learn how to build what we have built.
Ben Latocki
Executive Director
Production Realty