by Bob Scullin, CEO, SIOR

We can all picture in our minds Wile E. Coyote, the Looney Tunes cartoon varmint whose hapless life is a never-ending pursuit of The Road Runner. Wile E. has a lot of arguably desirable traits, including his creatively single-minded commitment to realizing his goal of having The Road Runner for dinner (as an entree, not as a guest). But the poor canine always seems to over-pursue his objective. We all laugh as Wile E. chases The Road Runner down the desert trail, runs off the cliff, realizes that he is in mid-air with his legs wheeling at terminal speed, then falls haplessly to the valley floor far below.

It is when Wile E. Coyote lands (miraculously unhurt and unfazed) amidst the tumble weeds on the valley floor that he becomes a metaphor for the essential traits of the Haystack broker. One assumes that Wile E. has learned his lesson and will revise his strategic plan to catch Road Runner the next time around. But that never happens, does it? It is the same situation with the Haystack broker.

Three Types of Brokerage

Basically there are three types of real estate brokerage: Haystack brokerage and Relationship brokerage. Transitional brokerage is a temporary phase which occurs after Haystack brokers, much like Wile E. Coyote, belatedly realize that they need a strategic plan better than what they have been following. Looking for the needle in the haystack didn’t work out as well as planned, so they decide to transition from Haystack brokerage to Relationship brokerage.

The Relationship broker is focused on finding contacts, clients and promoters who generate referral business. The Haystack broker is also focused on finding contacts and clients, but fails to understand the importance of developing promoters to refer business. We will elaborate further in the sections below, but in the meantime we can agree that there is a marked contrast between the Haystack broker and the Relationship broker.

The Haystack broker is just doing a job and focuses on looking for the needle in the haystack, the elusive transaction hiding behind one of the doors stretched all the way to the horizon. Because the broker is just doing a job going from door to door in a constant campaign of cold calling his territory, he fails to understand the need to establish personal relationships with contacts who become promoters.

The Relationship broker concentrates primarily on the warming of relationships with contacts into clients, and clients into promoters. In effect, the career broker is focused on creating a “community” within his territory since community is defined by personal relationships binding together individuals within a given area.

The Turning Point

Let’s concede that it is highly unlikely that during the first pass through a territory that a broker will find immediate opportunities for transactions. Let’s say that the broker concludes that there is no potential within that area. After all, he just cold-called the area and found no immediate deals.

The broker then has to make a critical decision about what to do next. This is the turning point at which the broker has to decide whether to move on to another area, where the grass could be greener and deals more plentiful; or decide whether to stay within the same area despite the fact that his first pass through the area turned up dry.

Let’s say that the broker finally realized that haystacking proved to be a dead end for him in the past, and that he decided to become a Relationship broker. If his objective is to transition away from Haystack Brokerage, why would he move on to another area and keep looking for the needle in the haystack? He is at the fork in the road.

This is when the broker needs to decide whether to stick with Haystack brokerage or transition to Relationship brokerage. The fork in the road requires a conscious or unconscious commitment to one path or the other. One path has already been shown to lead to failure. Taking the other path seems like an obvious choice since the alternative leads to failure.

Nonetheless it is not uncommon that many brokers decide to make “just one more” change of territory. At the fork in the road they decided to stick with Haystack brokerage and continue looking for the needle in the haystack rather than upgrade to Relationship brokerage by becoming a Transition broker.

A broker does not make a direct jump from Haystack brokerage to Relationship brokerage. There is an intermediate and temporary step which we call Transition brokerage. For the first three months of his commitment to switch to Relationship brokerage the broker does the same things that Haystack brokers do. He cold calls for those three months and becomes familiar with the companies located within his territory as well as the decision-makers within each of those companies. Then he returns to his reset point.

The Reset Point

At the start of each three-month period, the Transition broker returns to the point from which he began his first cold calling project (“the reset point”) and begins contacting the same decision-makers all over again. It is at this point that there is an act of faith required because the amount of time invested does not result in immediately tangible benefits.

It is a virtual certainty that, without dumb luck, the broker will not stumble into closable transactions or make any money during his first pass through his territory (otherwise he would just as well choose to remain a Haystack broker). He is rather investing in his future and re-prioritizing his objectives so that he makes even more money in the long run.

In our chapter on Relationship Brokerage we discussed how important it is that Relationship brokers implement the program in a scientific way by accomplishing five distinct objectives in a specific order. The purpose is to make sure that the objectives are achieved, but also that they are achieved in sequential order to make sure that the broker does not become frustrated or disillusioned in accomplishing his new objectives.

If the broker does not get those objectives straight and understand the hierarchy of their importance, then chances are good that he will never reach the fifth objective, which is to make money. We will recap those five objectives below in the order in which they must be pursued.

First it is useful to understand that personal relationships with contacts are what distinguish the Relationship broker from Haystack brokers as well as from his competitors. Once he realizes and internalizes that basic concept he can start to invest the time to make it happen.

Then realizing that cold calls do not accomplish the primary objective of establishing relationships with contacts, the Relationship broker employs only warming calls in an effort to deepen personal relationships with each person he meets.