Why Duke Long is Wrong and, Worse, Continues to Support that Horrible CRE Word
I don’t agree with everything, Duke Long, one of our industry’s most popular bloggers, has to say; but I am a regular reader of his ramblings. What I love about Duke Long’s posts is that they generate a reaction, if not a response. Isn’t that what social media is all about – to be social? His blog is worth the read, as Duke does address many factors on his CRE professionals’ minds.
However, I cannot disagree with him more on his latest, baseless tirade on the state of commercial real estate brokerage, “Commercial Real Estate Broker Splits. Stealing from the Rich to Get Rich.”
As those who commented on his blog reflect, there are a variety of platforms that are ideal for every CRE professional in the industry. I would challenge Duke or anyone to show me another industry where the majority of owners of the company (brokerage owners), generally struggle to earn 12-15% on their operations, yet their associated independent contractors (CRE agents) generate easily over 50% profit margins.
Think about it. Every independent contractor, agent, is their own personal CEO, and business owner. Even with a 60% split, most CRE professionals never invest in their personal brokerage business with the exception for a few meal and entertainment dollars. This is sad, but true. When is the last time you developed in your personal brokerage business? The exception of course is that if you are reading my blog, you most likely do recognize the need to do this. The personal profit margins (50%+) of the independent contractor cannot be matched in any business, anywhere.
Duke’s rich getting richer claim is the exception, not the rule. Are there platforms for a portion of the independent contractors to receive greater splits – yes, of course. But be careful what you wish for, without a stable broker/owner (one who is consistently creating a minimum of 15% to their bottom line), an associated agent’s business will be in jeopardy.
And for all those folks who want to lean out the window, aka Albert Finney – ok I am aging myself here – and yell “I am mad as hell and I am not going to take it anymore”. Be careful. The majority of independent contractors who think they can do it better on their own, quickly realize just how expensive it is to run a brokerage practice. Those who are successful in this transition are generally market leaders well before making the transition.
As someone whose company has coached 1,000’s of independent contractors, brokers and studied 100’s of more, the worst thing you can use is the “E-word” – Entitlement. You are not entitled to anything. As one of our greatest business minds of our time, Nido Qubein says “You don’t earn what you want, you earn what you deserve.”
If you want to become more valuable to your broker, Nido would suggest you better increase your value first.
Duke, keep this great material coming, and continue to raise eyebrows. I simply wish you would stop dropping f-bombs. but cheese and crackers, that’s just me.