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Teleclass Notes




Ed Krafchow
Prudential CA, NV, & TX


Big Picture Recruiting Strategies
Carol Johnson
Ed Krafchow



Carol Johnson Ed, welcome. I'm thrilled to have you. Ed is calling from the Red Rock Hotel in Las Vegas. He's at the Alliance meeting with all those heavy-hitters in real estate. We'll be talking about big-picture items today.

Ed, you and your business partner, David Cobo, built one of the most respected firms in the country. Give us a brief overview of your company, Prudential California/Nevada/Texas. What was your strategy when you started building that at such a rapid rate?
Ed Krafchow I want to introduce the company by letting you know that its name is actually Mason-McDuffie Real Estate. Founded in 1887, it's the oldest company west of the Rockies. I'm the seventh president since 1887. There are days when I think I've been there every day, but that's another story. In about 1990, which seems like a very long time ago, I was a young general sales manager. My business partner, Dave, and I came to run the company. If you remember California in 1989, it wasn't a fun experience. They were looking for more youthful leadership, if you will. I remember being a very young general sales manager filled with fire and all sorts of vigor. I tell you that to give you some background about me.

I'm what I call semi-educated. I did go to UCLA, but only for two terms, Nixon's and Johnson's. I was there from about 1963 through 1971. I got an AA, a BB, an MA, and most of my doctorate.

During that time, I was able to live through the Wooden dynasty process. If there are any basketball fans on the call, you recognize the name John Wooden of UCLA. The first thing I'd ask you to do if you have time is to look up John Wooden�s pyramid of success, because it's something I've used over the years. It's a very powerful tool.

Wooden had a famous saying: Failure to prepare is preparing to fail. So when Dave and I went into a relationship, we spent a lot of time talking about what we wanted to achieve. We did a lot of preparation and a lot of thinking through what we wanted the company to be, how we were going to make it work, what tools we'd use, and what the picture would be when we finished. I don't know when I did it, Carol, because I did it a couple times, but I went to the Recruiting Network Conference in the early 1990s.
Carol Johnson Yes, because the first one I ever had was in 1990, and I was a little kid, too. I was a sales agent. I didn�t know any brokers. I didn�t know I had some of the most famous people in real estate there because I didn�t know the players. I had the conference from the perspective of an agent. I don�t know if you were at the first one, but I think you were at the second one.
Ed Krafchow I think I was, too. I don�t know if there were any famous people there. There were a couple of notorious people there, but that's another thing. Part of what we determined was sort of a basic�we needed to grow the company. Through the 1990s and especially for the next five years after 1997, the company grew about 20 percent a year. We went from 565 agents in 21 offices to about 5,000 agents in 138 offices.
Carol Johnson In the 1990s, there weren�t very many contemporaries of that size, right?
Ed Krafchow Yes. I like to say that I started the company, and we were 101 in the United States. I remember tracking this on RealTrends. Depending on volume, units, vertical ends, we now rate somewhere between 13 and 8 in the United States. It wasn�t that we were all that brilliant. It was just that a whole bunch of people went out of business since then. The consolidation of the industry and broker failure caused people to either leave the business or consolidate into what�s currently Realogy or other companies.
Carol Johnson Today�s topic is big-picture recruiting strategies. What do you consider to be the big picture today versus when you started your company?
Ed Krafchow I�d begin by recognizing that when we started this business, we understood it was clearly a great competitive field. Agents compete very strongly, and brokers compete. We saw it as a competition. We understood we needed to compete. We�d always had a recruiting edge to the company. Every company has a story, and ours was that we were a recruiting grounds. So I�m going to talk a little bit about that.

In developing a big picture of the company, we really changed the company from being a recruiting company to a learning company. That was a seminal piece. I committed that not only would agents learn, and we�d provide training at every level, but the managers were also going to learn. And guess what? So was the president of the company. I�ve been through a series of seminars. Last year, I spent five days at the Anderson School of Management at UCLA learning mergers and acquisitions all over again�or finding out what I did wrong for 15 years.

One of the most important parts of thinking through the process is recognizing what you have and deciding how you�ll change. For instance, Mason-McDuffie was a very well-known name. But when we surveyed consumers, they said the company was honest and had tremendous integrity but wasn�t aggressive. So we used the recruiting modality for an aggressive campaign and wanted to get people who were aggressive.

Often brokers have a lot of agents who�ve been there a long time. They already have their book of business. Your image in the community is one of a very stable business, but perhaps not one that�s very aggressive. So recruiting relates to the consumer end of the business and how you want to be seen, along with the other stuff. When I talk about the big picture of recruiting, it doesn�t matter whether you hire agents one at a time, 10 at a time, or you buy a company. It�s all recruiting.

The last piece is what I call a Kaizen process, which is moving the business toward perfection. When I started the recruiting process, I personally recruited every Tuesday night. Now you�re talking about a fairly large company and a position in which you�re not supposed to be doing that sort of stuff. But I needed to perfect the system within the business. I couldn�t know what the systems were unless I did it myself. It�s something I ask managers to do now. It�s something I want people to pay attention to, that if you don�t know your own system, you need to go backward and find out how the system actually works. I discovered several really telling gaps.

That was part of my learning process, listening to other people who could share where their gaps were, what they discovered. So often you go to these conferences, and everybody blows themselves up like a large balloon and tells you how great they are. Very few people will admit that they had a flaw and something wasn�t working for them.
Carol Johnson When I do consulting, often people at the top of the ivory tower can�t believe those system gaps are there. It�s something in the feedback process or whatever. That was very innovative that long ago, and you still maintain that kind of accountability to fill in those gaps. That�s a really big lesson for people. Even though you�re the head of a big company, it�s not beyond you to roll up your sleeves and commit a consistent time to recruit.
Ed Krafchow Right. I have a special rule in my company, which is nobody reports to me. No one�s accountable to me. I get to go wherever I want and talk to anybody I want. I don�t like chains, and that�s one of the problems you get a lot in our industry, that someone�s got a chain, but it�s broken, and you can�t see it. If you talk to the secretary, she�ll tell you what�s broken. So I just wander around the company. Like an office manager, I did a lot of management by walking around, talking to people, and sharing with them what the picture was.
Carol Johnson That�s a good picture into the way you think because your thought processes are unique, and you�ve built quite a stable organization. During the recent boom years, the real estate industry ballooned out to 1.3 million sales associates. What�s your perspective on that growth? Is the army of new agents a blessing or a blight on the industry?
Ed Krafchow I�m glad you asked that question because I�ve got about seven different answers for you. The first thing is that yes, the industry has ballooned to 1.3 million, and you can occasionally go to dinner and not find a real estate agent at the restaurant. A lot of times now when I�m flying on planes, I can hear the guy behind me saying, �And I just got this listing.� So, yes, there are a lot of people in the business, and rightfully so because homeownership is a critical element of wealth-building in this country.

What�s important is to develop standards within your organization. That�s one of the more difficult things to do because there are only three rules to the business: Recruit, train, retain. The question is: who are you retaining?

As I came into the business, Dave and I read a lot of books. One of our favorites is Control Your Destiny or Someone Else Will, which is a telling statement for the real estate business. That�s the story of GE, which uses workout groups. We simply started using workout groups, which are like-kind groups of people. Highly productive agents meet only with highly productive people. They don�t meet with unproductive people. If you have unproductive people, you meet with them. And you have core people, who actually like you and will be around as long as you treat them well.

When you look at the business itself, the question I�d ask today is: how are you managing standards? If you�re not managing standards, you have no standards. This is a classic story. I�ve been a consultant also, and I�ve always found that whoever brings you in the organization is usually the problem. If you�re hired as a consultant, look at the person who�s brought you in, and you�ll find the problem.

I was brought into organizations to ferret out what was going on: why things were working, and why they weren�t. I�d ask, �Do you have a standard?� They�d say, �Absolutely. This is my minimum standard. Agents have to make $30,000 a year, or they can�t be here.� The broker was just making up a number. I�d say, �Great, open up your books. Who�s that person?� The answer would be, �Well, she�s on maternity leave.� I�d ask, �Who's this person?� The broker would say, �I�m not sure.� I�d ask, �Who�s that person?� The answer would be, �That person makes really good coffee.�

At a certain point, you have to understand that your business is connected to your standards. I really don�t care how many millions of agents there are. What I care about is who are the people in my organization, and how productive are they? I ask managers on a yearly basis to fire the bottom 10 percent of their office. If you don�t do that, you�re accumulating people who are unproductive.

Now I�ll comment on the 1.3 million. In California, I think there�s close to 250,000 of that 1.3 million. At one point in the down market, there were 156,000 agents in California, and within 18 months, there were 96,000. There was this tremendous drop. What�s interesting is that we�re not seeing that same drop. I talked to Joel Singer at the California Association of REALTORS�, and we have a theory on why that�s happening. There are individuals who now own real estate licenses who are buying and selling for themselves. They have no intention of doing anything else. If you have them in your office, you won�t be real productive because they�re not productive. It becomes a question of whether you know who�s in your office. Do you know who�s in your company?

Frankly, if we get blown out to 5 million, I wouldn�t care if I have productive agents in the company. I think it�s a watchword of a business that you can see the per-side dropping. It�s dropped during the last 20 years. Some of that has to do with the high purchase price. But some of it has to do with the decrepitude of the business in that people are less and less productive. These are the challenges of the business.
Carol Johnson I like to say it�s easy to recruit. The hard part is finding people who can list and sell. That�s evidence of that in the ballooning out. Ed talked about productivity. When companies don�t get rid of the bottom 10 percent, they get dead wood that�s holding them back. I�d rather see an office have 10-20 percent of its chairs vacant, ready for someone to come in, than have them full with people and you have to fire someone to make room. A lot of companies like to get all their desks full. But I believe there should be a certain number vacant so that you�re ready to bring in anyone.
Ed Krafchow One thing I went through in the learning process is letting go of judgment. The first part of recruiting is that you�ve got to train managers that they don�t have divination over people. They don�t understand who�ll make it and who won�t. This is an entrepreneurial business. You give a lot of people an opportunity, but you put them in workout groups, and if they don�t work out, you let them go. They�re given a clear opportunity, and it�s not: here�s a desk, here�s a phone, and you�re on your own. It has a lot to do with: I�m willing to support you, but these are things you must do.

I need to add that I came into this industry via being recruited. I�m not an SOB, a son of a broker. I didn�t inherit wealth. I simply started at the bottom and worked my way up.
Carol Johnson Who recruited you, Ed?
Ed Krafchow An office manager.
Carol Johnson Is that manager still with you or retired?
Ed Krafchow He�s with Coldwell Banker. He�s still working in a partnership in a smaller part of the business. He�s a good guy. I tell this story only because it�s entertaining. I met with him. I explained I was going to be part-time. He helped me get my license anyway. I came into the office, brought a schedule, and posted it on his wall. �These are the days I�m working; these are the days I�m not. Don�t call me.� Within about 10 days, I was working 60-70 hours a week. I loved the business, and it took off for me.

I listed about 42 houses my first year in the business, was number two in relocation in the company, and I just really liked it. So you�re looking for people with passion. But you don�t know who they are, and you don�t know what they look like.
Carol Johnson When I entered real estate about the same time, I went in to interview and was told the company was saving a seat for a man. It had all the women it needed. So I went across the way and became the number-one salesperson for that company. When you discover you love it, you love it.

Ed, you have some amazing management talent in your company. Your company is far more advanced than most in finding management. Give us an overview of how you recruit such fabulous people, including Kathy Ollerton, the world-famous trainer who�ll also be at our conference.
Ed Krafchow This has been a learning process for me. I�m always cautious about talking about great expertise. I went through as a general manager and hired a lot of people. I really don�t bother with resumes. I find them useless. I want people who actually have energy, not people who used to have energy. I wouldn�t want tired real estate agents. The funny part about tired real estate agents who want to be managers is that they�re actually taking on a harder job than if they�re tired real estate agents.

Real estate agents sell houses. I like to say managers sell air. They have to sell a picture, a vision. They have to work with people. In my company, I don�t want deal doctors. I want people who actually have a picture of what they�re doing and know it�s an important picture. They�re building community. They�re building a business. It�s their business. One thing Dave and I were able to do is let go of a lot of control behind that. I want managers and agents to make decisions in location. I don�t want them all saying, �What do I do about this escrow?� Not that I can�t handle it but because I think it debilitates the transaction and the consumer family.
Carol Johnson You told me that when I invited you to speak at our conference on acquisitions and mergers, I said, �What are you going to tell them, Ed?� You said, �I�m going to tell them everything I learned at your first conference we went to.� What was that gem that you learned about acquisitions and mergers then, and has that changed? Would you still value that advice, or has it changed dramatically over those years?
Ed Krafchow That�s a great question. I�m going to give you a gem. As you get older�now I�m 64. It�s 17 years later, Carol�I�ve suddenly lived a good part of my life in real estate. You become jaded about things, and you�re more cautious about numbers and transactions. You�re more formal as the organization gets larger. I actually have a true CFO, you know. Things have happened in the business that are different now, but when I went to the conference, one thing I learned is how many of your competitors do you actually know? How many of you have had lunch with them? Are you such difficult competitors that people won�t talk to you?
Carol Johnson Here�s a good thing for people to do at their next manager�s meeting. Ask your managers to write down the name of three managers in offices that have had three or more deals with your agents. The paper will be blank. Or it might be Betty or Tom or some name like that. They won�t even know the last name. Of course, recruiting during the co-op transaction is the best place to recruit, so they don�t even know who�s had deals with their agents who might be hitting on them, if you will.
Ed Krafchow I appreciate that. What�s important is no matter your size and no matter their size, when you take them to lunch, the one sentence you should use is: Isn�t is time for great organizations like ours to come together? That�s a sentence I�ve used a lot. People are sometimes astounded because they�re so much smaller than we are. But I think it�s valuable no matter what size you are. It�s about bringing organizations together.

But a simple learning lesson is that if you�ve got a commission split with a company that�s more that five percent apart�if they�re keeping 20 percent and you�re keeping 30 percent�it�s called a cultural difference, and you�ll have difficulty pulling those companies together. But it can be done.

I want to go back to your question about recruiting managers. It ultimately comes back to the person who�s running the business who says, �This is what I want. These are the people I want. This is the demographic, the psychographic, who I�m looking for.� My description is, �You�re going to go on a journey with me. This is about professional management, which you�re going to learn.�

What I�ve told managers is that there�s about a five-year learning process to be a good manager. You don�t come in and naturally make yourself one. You have to go through a learning process. My learning was pretty difficult.

One of the reasons I got into recruiting was that they gave me the worst office in the company. I�d been in the business for about 18 months, and they had an office that had collapsed. The broker had left for a RE/MAX down the street and was bleeding the office out. Nobody in the company would take the job, so they gave it to me. I had the number 21 office out of 21 offices. It was a miserable and dilapidated place, and the only people who were staying were too tired to pack their boxes. I had a really major challenge in front of me. I like to say that I went into the business, and when they offered me the job, I wanted to manage in the worst way.
Carol Johnson Ed�s story is similar to a story that Brad Pierson from another Prudential California told. Brad came to our conferences years ago when he was right out of sales at RE/MAX. Then he�d been in the Marines or something and didn�t look old enough to drive. He was so young. He had a beat-up office in the desert in California with cockroaches, no air conditioning, and 13 people, none of whom could list and sell. He said to them with passion in his heart, �If you help me, I�ll help you. I was a top sales person at RE/MAX. I�m going to make you a top person. I�m going to share everything I have. I�m going to out on listing appointments with you. If you help me build this office, I�ll help you.�

He kept taking this core group of people and getting them more and more productive until finally he had an office of more than 200 people. It looks like the Taj Mahal. He�s moved on and started another one. He was our recruiter of the year a number of years ago, and he�s going to be at the conference. Ed�s story reminds me of Brad�s story.
Ed Krafchow The final piece here is that we have four core values in the company�commitment, accountability, personal responsibility, and vision. We built the company out of vision, and I told people I hired that I wanted professional managers. By the way, I went to those professional managers at times and said, �I need you to move from Pleasanton to Rio. I have an opening there, and I need it filled.� That�s unusual. I learned that from Rich Cope who ran Prudential Florida, and then it became Coldwell Banker. He�s a really great, great mentor for a lot of people. You learn that as your organization becomes more solid, you need to ask more and challenge your people more.

For managers who are on the phone today, in my organization I want to challenge you to get better, to understand that the one thing I�ve always told everybody is that we�re actually not in the real estate business. We�re in the human resource business. If you can�t find human resources, develop it and retain it. Either that or you�re in the real estate business because you�re going to be holding open houses. That�s the business I�m in. I�ve always challenged managers to be very good at this.

It�s a very difficult and challenging profession. When you say I�ve got gifted people, I really do believe that, and I think they care a lot about the people that we�re in relationship to. It�s a relationship business. I haven�t moved away from that. That sometimes is maddening when I look at all the technology that�s been thrown at this industry trying to conform it, and yet it�s still a relationships business.
Carol Johnson When you were at that first conference all those years ago, I had Barb Schwarz as a speaker. Barb now has that big organization staging houses. But you�d hired Barb as a consultant to do some HR work with your group, and the two of you did an impromptu thing together at the conference and had everybody in tears. Do you remember what that was? It was some kind of a ribbon you had.
Ed Krafchow Right. There are four core values in the company�commitment, accountability, personal responsibility, and vision. There are 30 values we hold. One of them is acknowledgement. There was a survey of about 186,000 employees throughout the United States, and it asked what was most important to those employees. Everybody would think salary, vacations, or health care are most important. No, the number-one thing was that they got acknowledged in their work.

That was something Barbara and I co-aligned around. We wanted to make sure people were acknowledged. I want to make sure my managers are acknowledged. I want to assure that my managers are acknowledging.

By the way, anybody can leave any of your offices and, within a day or so, get 100 percent commission. Why do they stay? One reason is that they like the acknowledgement, and they like the community. They find what they�re doing with you relevant and important. We�ve focused in on the acknowledgement process; how to acknowledge people.

Acknowledgement doesn�t have to be a giant trophy. It does have to be personal. It has to be designed in a way that notices the individual and that person�s accomplishments. If you really want to upset someone, talk about the four listings that were taken last year and forget someone. Agents came into my office crying if I ever dropped someone out or didn�t acknowledge them. This one value is very critical and important.

One of our other values is fun. If you�re not having fun doing this, you probably need to look at something else because it�s fun and funny. I used to tell experienced agents when I was bringing in new agents: New agents are fun, and they�re funny. You get a lot of comedy going on.
Carol Johnson My middle son went into real estate for a very short time when he got out of college. He took one of those little basketball things that you put on a wastebasket and kept it in his briefcase because he didn�t want to put it on until he sort of scoped out the thing. There was an upstairs office and a downstairs office. I didn�t like downstairs. I was a top producer. I was upstairs. I thought he should be up with me, and the manager said, �Oh, no, no. He needs to be away from his mother, and he�ll fit in with the downstairs crowd much better.�

So Darrin kept the thing in his briefcase. Then one day all the drawers opened up, and there was a squirt gun fight going on. She knew the rowdies were down there, and they were doing stuff we upstairs didn�t know was going on. He got along with those people so well. They did have fun, and there are different ways of expressing it in different offices.

Let me ask you this. At Prudential, you�ve used technology very creatively. You�ve been an innovator in that. You were one of the first to develop an online agent service you call your Webtop technology. Tell us about Webtop and how you use it to recruit and retain agents.
Ed Krafchow At one point in my life, I did write code, so I have some knowledge of technology. For those of you who know anything, I wrote in Clipper, which makes me somewhere back in the Pleistocene age. I didn�t even know what a GUI interface was at the time. There was no such thing. When ProComPlus was created, which was where you could make somebody else�s computer run while you were typing, I thought we�d reached the zenith stage. I had no idea. This was before AOL or anything.

One thing I saw clearly was that technology, like it or not, is going to conform our business. It�s going to be in our business, and we need to learn how to deal with it. I�ll tell you a quick story. I forced all the managers to go on AOL at one point. This was very early on, before we even brought the Webtop to market. I�d clip articles, e-mail them out, and say, �Please read this and tell me what you think.� One time I forgot to add the attachment. Four managers wrote back and said they couldn�t find the article, and six wrote back saying, �Great article.� That told me a lot.

We decided to do something unusual. We decided to build proprietary technology that was community driven. It was going to be about the agents, for the agents, with the agents. It�s been both exhilarating and challenging. We all know that there�s a certain level of internecine warfare in our industry between broker and agent, so initially when we brought this out to management, it had client management portals, it had ways of seeing who�d been looking at your listings. It had all sorts of stuff.

The agents went through terrific backups. One of the backups was that they refused to put their own clients in there because they thought I was going to call the clients or if they left that I was going to use the information. We kept coaching and helping people, and finally we got a significant number of people who downloaded all their information.

It was simply a management tool, and it was your own personal secretary, if you will, along with driving leads to people. Several years ago, we�d opened up something called an agent service center. When we get Internet leads, we try to turn them to phone calls because phone calls are more real. They�re more substantive, and then we can turn them over to agents.

The agent service center was ramping up, and I said, �Why don�t we just ask agents if they have extra clients? We�ll scrub them down for them and see if anybody�s real and send them back to agents for free.� They said, �No one will do that. They won�t give you their clients.� We sent out the e-mail and were absolutely inundated. People had 150 people in their client management center, and they had no idea whether these people had bought homes, where they were, what they�d done because they had simply accumulated a bunch of people. We were overrun with it.

So all of us are in a learning curve, including agents. They�re going through a process of learning how to adapt and adopt real estate. As they do that, they become more efficient and capable, and they consumers� expectations. The unfortunate part is that the consumers� arching is faster than the agents� arching. Ten years ago, if you got back to clients within one day, that was really high customer service. Today that�s not even adequate. Maybe people want a response within 15 minutes. The problems we�re having have a lot to do with expectations from the consumer side of the business and how the consumer sees or understands the industry.

The last piece I�ll add is that I talk a lot to agents, finding out their experience. Often, the concern is that the business is slipping away to other people where information lies, how information is used, and that sometimes their clients have more information than they feel they do. That�s been the loss of proprietary information that has now moved to ubiquitous information. That has happened over a 10-year period. I�d just like you to look back and notice that.

Frankly, the way I sold real estate was to put the client in the car, put the MLS book between us, and they picked out the house they said they weren�t interested in in the first place.

So we have some really unique situations. Change and evolution are the name of the game now. For me, I have to be dedicated to a couple of things. One is I�m here to drive leads to my agents. That�s part of my job, and if I can�t get leads for my agents, they�ll go someplace where they can get leads. That�s almost a full-time job. We do have a CIO, a call center, a help desk, and other things.

Second, I�m here to help my agents. What�s funny is that the call center gets calls like, how do I sync my Blackberry with my laptop? Normally, call centers are supposed to there to explain how you use the Webtop. No, you need to answer the first question. You need to help people.

Fundamentally, it�s made our lives at certain moments much more difficult. If I ever do retire, which I�m not planning to do any time soon, ladies and gentlemen, I plan to take my Blackberry down to the ocean and throw it as far as I can. But I�m not planning to retire. Therefore, the Blackberry is still essential.
Carol Johnson When you were talking about taking all those leads, when I was an agent, I used to gather up other people and say, �Hey, I�m having a paper drive tonight. Come in the office and we�ll all go through our leads and give them to each other because I�m embarrassed to call these people. I haven�t called them in so long.�

Everybody had those, and it eased your conscience. Then I�d try to get new agents who didn�t have any business because they�d work on it harder. I'd have a paper drive, and I�d get a referral fee. Almost every time I had a paper drive, I�d get two or three referral fees that if I�d left them in my prospect book, I�d have had nothing. One hundred percent of nothing isn�t as good as 20 percent of something.
Ed Krafchow Yes. You know, I hired Scott Kucirek, one of the founders of Zip Realty. This is the kind of thing where you talk to competitors. Very few people would talk to Zip when it opened. I met with him and found out what he was doing. This was based on getting his MBA at Cal-Berkley. At one point, we were actually going to exchange databases because we thought the same people who were on the Zip database were the same people on the Prudential California database. If we compared databases, we�d discover we all had the same clients.
Carol Johnson I invited him to one of our conferences when he had only two or three market centers open. He left Zip to come to you, but you�re really mentoring him on things he couldn�t get at Berkley.

From a big-picture perspective, you�ve invested a lot of time and money in that Webtop as an early adapter. Now you�re very vocal about some of the off-the-shelf or other technology, such as Zillow or other products for getting leads. What�s your take on that?
Ed Krafchow I do sit on the Google advisory board. I do work with Zillow. The best coaching I can give any broker is to be fairly agnostic in the face of people who have an awful lot of money and are looking at the industry. I�m not saying these are great people. I�m not saying they�re bad people, but I�ve made a decision to be fairly agnostic. We have an API that�s applied to our listings from Zillow. We use a Google base. We do all sorts of things, and the whole intention it to get my agents customers. That�s my job, and if I don�t get that job done, someone will do it better than I. How do you retain? You retain by acknowledging, developing, keeping people, and noticing what the market looks like.
Carol Johnson Just think of these people who are listening. Every time they Google, they can say they know somebody who sits on its advisory board. That�s awesome. There are other REALTORS� too, right? Who else real estate-wise is on there with you?
Ed Krafchow There are a bunch of people. Some Realty Executives, some Prudential folks. I�m sure Coldwell Banker will be there eventually. I�ll tell you a quick story because it applies to Google. I have a real estate agent in Pleasanton, and I asked him how things were going. He said he was holding an open house. The California market�s off significantly. It went down about 18 months ago, and we�re starting to flatten and recover, but it�s been a pretty significant slide off.

So he was holding this open house, and the neighbors came across the street and said, �You can�t hold the open house for this price because you�ll ruin the prices in the neighborhood.� He took them outside on the walkway and said, �Look up in the sky.� He said, �There�s a satellite up there right now taking a picture of this house, and it�s going to be on Zillow. There�s nobody coming in this house to look at it at the price it is.�

Agents have a way of seeing what we don�t. In other words, yeah, it�s great that it�s on Zillow, but where�s the real selling price? The real experience at an open house is that this house isn�t getting any traffic. It doesn�t matter what Zillow says it�s worth. It�s not worth that, because I know it, because that�s a market price, what a willing buyer and a willing seller would agree on.

Those things will continue to go on for quite a while. There�ll be a lot of shared information that consumers will have, but I still think we�ll have a critical part in the transaction of real estate.
Carol Johnson You�re hosting a workshop for marketing business to the Hispanic market. Could you tell us briefly your passion about that?
Ed Krafchow About three years ago, I read demographic studies, and J.P. Morgan Chase has predicted that the next expansion of the real estate market�the market is contracting currently�will be with immigrants using English as a second language. I�d like all of you to hold onto that and ask: Are you multicultural, or are you a single culture? In California, it�s a critical issue, and I believe many brokers will miss this market if they don�t pay attention. The second part is, I opened a Hispanic call center and found incredibly bad real estate practices taking place among that population, very disturbing things taking place.

I�m in a fortunate position. I don�t necessarily have to work for a living. I decided to dedicate part of my time to that community to help build a knowledge base. So I�ve been working with people like Stewart Title, and that�s a very good multicultural firm, and others to help build a base of knowledge. We�ve done that through something called Palacio, a home services magazine aimed at the Hispanic public.

I don�t want to get into politics. This is a simple statement. REALTORS� are there to be colorblind and to fulfill the American dream, and I really don�t care whether someone speaks Spanish or English. But you need to provide service to clients in a way they understand it as service. The magazine is, interestingly enough, in Spanglish because we discovered that�s the most adaptive part of the business. In other words, you can have it strictly in English. That doesn�t work. Strictly in Spanish also can be a challenge. But part English, part Spanish seems to work really well, and people are able to deduce what they need.

That�s what I�m doing and I�m doing a workshop right before Carol�s conference on how to get into the Hispanic stream of business, penetrate that business, and understand it better. I�ll have Dr. Oscar Gonzalez there, who�s a true expert in that field, giving his knowledge about what to do. I doubt there�s a person on this phone who shouldn�t be paying attention to this market right now.
Carol Johnson I�m so flattered. Ed contacted me and said he wanted to get this message out, and my conference is a great spot to be. He�s just been fabulous. I�m totally honored to have you do that at our venue. Thank you so much. If you could give our members one piece of advice on recruiting and retention, what would that be?
Ed Krafchow It�s all about community and relationship. Look at your community. Are you building a worthwhile community? Are you involved in that community? Do you give back to the community? And the relationships you build can be for a lifetime. Our industry is very focused on how disloyal people are when, in fact, people are very loyal. A lot of people will stay with you in spite of you. I know that�s true for myself.

Questions & Answers

Question

Ed, I want to congratulate you on a very good presentation. You covered many, many points I�m sure those of us who�ve been doing this for a long time certainly can relate to. On the emerging markets, we�re finding in Maryland that from a technically competent standpoint, that�s a very difficult and rising problem. The magazine you mentioned, is that Palacio?
Ed Krafchow Palacio.
Carol Johnson Yes, Palacio is just debuting. It�s Ed�s magazine.
Ed Krafchow I�m in business with another individual. People need to experience the home services business because it�s not just a matter of buying a home. It�s a matter of getting title, getting a mortgage, but even then it�s a matter of getting a home warranty and insurance. It�s knowing who the OB/GYN is in that area who wants to do business with you. It�s really a homeownership experience.
Guest That gets back to what you were saying earlier about being involved in the community and everything the community has to offer. What homeowners need�first-time buyers, people new to the country�is an overall perspective of what America is in a nutshell.
Carol Johnson Ed�s taking his many years of expertise in all these fields and putting his heart into this as a give-back to the industry. Can we find that information on your Web site, Ed, as to the magazine link?
Ed Krafchow You can go to www.Palacio.com. We just published our first magazine. It�s a brand-new baby
Question You mentioned earlier that you believe we�re in the human resource side of the business. Our company believes that as well. I�m curious as to what your company might do a little differently than other traditional real estate companies in its HR practices in regards to recruiting and hiring individuals?
Ed Krafchow We�ll continue to look at how to align the purpose of the organization with agency and independent contractor status, and that�s a trick because now you�ve got all these divergent models so people can actually get a salary, they can get 100 percent, so why would they stay with you?

One thing we�ll be rolling out, for instance, is a 401(k) program for our real estate agents. That�s been a lot of work. When you talk about an HR development, one of the things is a lot of people require a lot of education. So one thing we�ve done a lot of is this training process.

We didn�t cover Kathy Ollerton today. Kathy�s my wife, but she�s also an outstanding trainer, and she�s developed a lot of training inside the company that�s more about human experience than selling real estate. We know that people have to be productive on all sides of their life. They can�t simply be selling real estate. They have to have a balanced life, but they also need to understand how human relationships work. That work has been very dedicated to people. I�ve been very fortunate. I�ve had people who�ve left the company call me and thank me for the experience of being in the company. That�s very important to me. I want the experience to be a valuable one. That�s our focus on human resources.
Carol Johnson Many companies don�t have a fully developed human resource plan or any order to how they do human resources. I think it�s essential. We�re going to focus a lot on that at the conference because we have the author of Hire Hotdogs, Fire Baloney, Don Paullin. We interviewed him in January. Maria, who just asked the question, Ed, and Kathy Ollerton will be there to talk to you. You�ll have breakfast, lunch, and dinner with them for three days. I'm really excited. I know it sounds like a big commercial, but I've put my heart into this. I hope many of you will be there.

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Carol Johnson is President of The Recruiting Network and Publisher of The Recruiting Pipeline web site, the real estate industry's leading source for strategic recruiting resources. She is the author of The Recruiting Revolution in Real Estate and a leading authority on recruiting systems, products and services. Her monthly Teleclasses attract some of the most influential brokers and recruiters in the industry. Her coaching has increased individual manager�s recruited volume with astounding results. For information on Carol Johnson's coaching and consulting programs call: 847-524-8487.PD