How CORE Can Help Real Estate Brokers Reduce Risks and Ensure Regulatory Compliance

My friend and colleague JP Endres-Fein, who happens to be the incoming President of the New York State Association of REALTORS, is giving a presentation today at the NAR Conference on how Client-Oriented Real Estate can help reduce risks and ensure regulatory compliance.  I am delighted that she’s bringing the CORE concept to a larger stage, particularly by taking an angle that we haven’t really discussed here on the blog.

As a trainer of real estate agents, my main focus on this blog is writing about how CORE can impact an agent’s career by making her better at her job — delivering better service, creating happier clients, and thereby growing her business.  And that’s really important.  But as a broker with about 800 agents, I developed CORE precisely because I wanted my agents to provide a higher quality experience to their clients — not just because I thought it would be good for business, but because I thought it would be good for eliminating the kind of errors that get brokers in trouble. (It’s at this point I should point out that I’m a lawyer, also responsible for my company’s regulatory compliance).

Here’s what’s always bugged me.  A client can walk into one of my offices today and start working with Agent #1, and a different client can walk into another one of my offices later today and start working with Agent #2, and the two clients can have wildly different service experiences.  Why?  It’s the same company.  The agents have access to the same systems, tools, programs — everything my company provides.  But even so, the client will have a different experience because the agents are different. No matter what I do, no matter how great the systems I provide are, I still rely on an agent to deliver them. If the agent is great, then it’ll be fine.  But if the agent does not pay the same level of attention that I would if I were in that living room giving a listing presentation, or in that car taking a buyer on a showing, or in that conference room managing a transaction, then that client might be getting an experience that I would not be happy with.

That’s a business problem, insofar as I really want clients of my firm to have great service experiences.  But it’s also a regulatory compliance issue, because any time two clients are getting a different standard of care, you run into potential problems.  Here’s a perfect illustration: several years ago, we had a fair housing problem that came out of two testers visiting two offices on two different days and getting two different issues.  It happened that the “protected tester,” the one representing a protected class, just happened to start working with an agent who was not as strong as the agent who worked with the control tester.  So what happened? The protected tester had a worse experience, and perceived it to be based on her protected status.  But my argument was that, quite frankly, any two clients getting two different agents on two different days are going to get a different experience.  Sadly, that’s the state of the industry!

But we need to change that.  You can go into any McDonalds in the country and the fries taste the same.  Any Starbucks, the lattes taste the same.  At the Four Seasons, the rooms always have the same level of cleanliness.  So how do those companies, who have employees without nearly the training background and requirements of real estate agents, ensure such consistent customer service.

The answer is this: those companies have systems in place that employees follow which ensure a consistent delivery of service.  THIS is how you cook the fries.  THIS is how you make the coffee.  THIS is how you clean the rooms.  We don’t have that in the real estate industry.

Why?  A couple of reasons:

First, we don’t train for service.  In the industry, training almost always means sales training — how to generate leads.  Even worse, most of those sales techniques are the worst kind of manipulative nonsense, teaching agents how to exploit clients rather than service their needs.  Alternatively, we have real estate industry training on regulatory compliance, which is mostly at the licensing level and doesn’t teach an agent anything about how to do the job properly — just how to stay out of jail.  And then we have “ethics” training, which is great, except that having good ethics doesn’t mean you’re good at your job.  It’s like a restaurant that gets a clean bill of health from the board of inspection — the place might be clean, but it doesn’t mean that the food is any good.

Second, we don’t innovate systems for service.  We put all our thought and energy into creating innovative new ways to generate leads.  Think of it this way: the real estate industry took to the internet 15 years ago, and we’re pretty much still using it the same way we did back then — to generate leads.  Our websites don’t give clients service, they’re just designed to generate inquiries.  Where’s the innovation on how we actually help people buy and sell houses?  And it’s not just technology, because the most impactful innovation in the industry in the last 30 years was the agent-centric compensation model pioneered by Re/Max.  In other words, we spend a lot of energy innovating ways to make more money, or divide up the pie differently.  But we don’t innovate for service.

Third, we put too much on the agent. We can’t really blame the agents for their inability to handle the myriad responsibilities we put on them.  I have written before about the problems associated with thinking of real estate agents as salespeople, but the upshot is that real estate agents have two big jobs: (1) generate new clients, and (2) service those clients.  And both jobs require a lot of work and specialization.  Most industries don’t put such a burden on salespeople — rather, they break up the sales and service roles. Just look at the mortgage industry: you have one group of specialists to generate business (loan officers) and another to service the client’s needs (loan processors). Different skills, different needs, different people.  If we want the agents to do a better job servicing clients, we either need to take away their lead generation responsibilities or make their jobs easier by giving them help on both selling and servicing their clients.

So what do we need to do?  At my company, we’ve taken a three-pronged approach to trying to solve the “inconsistency” problem with our client service. It comes down to this:

1.  Train for Service

We need to help agents become better at their jobs.  They need better skills, they need better knowledge. We’ve created a whole series of classes built around the idea of competency — how to be better at helping clients buy and sell homes.

2.  Forge a direct relationship with clients. 

Where possible, we have tried to create a direct connection between the company and its clients. It’s amazing to me that so many brokers (including me) have such little interaction with the clients of the firm.  So what we’ve tried to do is automate systems that can generate communication between the company and the client, so that we know that the client is getting the information that we want her to have.  For example, rather than relying on an agent to run an activity report, we’ve automated it for Monday morning delivery each week. Not only does this make the agent’s job easier, but it ensures that the job actually gets done.  Similarly, we’ve written a whole series of “Orientation” pieces for clients that ensure they have been educated about the selling and buying process, rather than relying on the agents to explain it themselves. We’re not trying to eliminate the agent from the process — far from it! — but we are trying to reduce their burden by taking a more active and direct role in servicing that client’s needs.

3. Make agents jobs easier by creating systems to help them deliver better service.

Finally, we believe that we can systematize much of what agents do by using checklists that automate many of their jobs.  We call the checklists “Project Plans,” which are designed for every major step that an agent has to take to service a client: listing intake, buyer representation, transaction management, etc.  The idea is based on concepts that we came across in Atul Gawande’s great book The Checklist Manifesto, which we reviewed here.  The basic idea is simple: using checklists is a great way to ensure consistent execution.  You can identify best practices, articulate them into a plan, and then create an enforcement mechanism to ensure that agents follow it EVERY time, so that every client gets the same level of consistent service.  Honestly, this is still very much a work in progress, but we’re a lot further along than we were when we first introduced them several years ago.


Basically, the whole point of CORE is to create consistently good service, and as such it does have the intended benefit of reducing regulatory and litigation risk for brokers:

  • Better-trained agents make fewer mistakes, which generates happier clients with better results.
  • The checklists reduce the cognitive burden on agents, allowing them to focus on more important things.
  • The checklists reduce errors that could lead to liabilities (i.e., if the checklist requires the agent to check the taxes, you’ll always get the taxes right or at least have a documented attempt of who gave you the wrong information).
  • By making service more consistent, you eliminate potential fair housing problems based on disparate treatment of different clients.
  • And direct broker-client communications reduces the risk of agents miscommunicating compliance information.

If you would like to find out more about what we do at Better Homes and Gardens Rand Realty, or would like some copies of our checklists or other materials, just let me know.


Rules for CORE Agents #26: Buildings Built Without Blueprints Fall Down a Lot

You wouldn’t want to hire a surgeon who was just “winging it” when he performed your operation.  You wouldn’t feel safe with a pilot who chucked his flight plan out the window and literally decided to fly your plane by the seat of his pants.  You wouldn’t be comfortable moving into an apartment building whose contractors decided they didn’t need any fancy-schmancy blueprints.

Why? Because when it comes to important things like cutting into a human body, flying heavy hunks of metal in the air, and erecting towering mountains of concrete, we recognize the value of having a structured plan to follow.  Whatever you call them – checklists, project plans, blueprints – these types of formal organizational structure save lives by ensuring attention to detail, consistency of execution, and codification of best practices.

Unfortunately, real estate agents rarely have these types of standardized procedures for running their business.  They make it up as they go along.  They wing it.  They constantly reinvent the wheel. They come into the office with a half-hearted “to do” list and good intentions, but are immediately thrown off course by a phone call, an email, or just their own tendency to avoid difficult tasks.

But if it’s good enough for pilots, doctors, and builders, it should be good enough for us.  Let’s say, for example, that you just took a listing.  Once you sign that contract, you have a bunch of tasks that you have to complete: input the property data into MLS, take pictures, write descriptions, check the accuracy of the taxes, order a sign, set up an open house, and so on.  You might have 25 or 30 discrete items that you have to complete.  More importantly, they are the SAME 25 or 30 discrete items every time.

So why don’t we have a detailed “project plan” that codifies the best practices for putting a listing on the market? Figure out what has to be done, put it on the list, and then take out that list every time you need it.  Think about all the ways that would help you: (1) saving you all the time and energy you spend trying to remember what you need to do next; (2) encouraging attention to detail by focusing your attention on each discrete task; (3) creating consistency of execution, because you would be doing the same thing every time.  Most importantly, of course, a project plan codifying proven best practices would ensure a high level of performance for your clients.

And if you can do it for listings, you can do it for every other common project in your business: facilitating a transaction, taking out a buyer, making an offer, even planning your productive day.  The more structured you are, the more organized your are, and the more organized you are, the more productive you’ll be.


This post is part of a series of what I call the “36-1/2 Rules for Client-Oriented Real Estate Agents,” a collection of short takes on the CORE concept that I’ve developed over the years of discussing and teaching the system.  We’ll count up to the 36th rule over the next few months, and then the 1/2 rule.  You can get the full list of rules by clicking on the “36-1/2 Rules for CORE Agents” category on the blog – scroll from the bottom if you want to read them in order.

Book Review: Atul Gawande’s The Checklist Manifesto: How to Get Things Right — Achieving Operational Excellence in the Real Estate Industry

Atul Gawande’s The Checklist Manifesto is a  powerful book, one of the best and simplest articulations of how to achieve operational excellence that I have ever read.  Gawande’s message is simple: the world has become increasingly complex, and we need to actively create systems and processes that will simplify the tasks that we have to complete in our everyday lives.  His deceptively modest proposal: use a checklist.

Now, I know that seems almost stupid and simplistic at first glance.  We’re all familiar with checklists, and generally associate them with rote tasks, not with complicated procedures.  And we resist the idea that our professional performance could be improved by something so jejune as a checklist, almost as if a checklist would trivialize the important work we do.

As Gawande points out, though, that’s exactly the way a bunch of doctors felt the first time that a hospital administration tried to incorporate a checklist into one of the most common of medical functions — putting in a central line.  He recounts how a critical care specialist at Johns Hopkins Hospital devised a checklist to try to avoid incidences of infenctions in the placing of a central line.  Doctors all knew the basic steps for central lines: (1) wash hands with soap; (2) clean the patient’s skin for the placement; (3) put sterile drapes over the patient, (4) put on a mask, hat, sterile gown, and gloves; and (5) put a sterile line over the insertion site after placing the line.  Gawande called these steps “no-brainers,” the type of things that doctors know they are supposed to.  But the hospital found that in one third of cases, doctors were skipping at least one of the steps.

So the hospital initiated a simple checklist procedure to ensure that all the steps were taken.   Since the doctors were resistant to the intrusion, nurses were enlisted to ensure compliance with the checklist.  What were the results?  According to Gawande, they “were so dramatic that [the administrators] weren’t sure whether to believe them.”  The ten-day line infenction rate went from 11% to 0%.  Over a fifteen month period, the administrators projected that the checklist had prevented 43 infections and 8 deaths, saving over $2 million in hospital costs.

This was not an isolated result.  After the success at Johns Hopkins, Gawande recounts how hospitals in Michigan initiated a project to use a central-line checklist in intensive care units (ICUs) in hospitals throughout the state.  Here are the results:

Within the first three months of the project, the central line infection rate in Michigan’s ICUs decreased by 66%.  Most ICUs . . . cut their quarterly infection rate to zero.  Michigan’s infenction rates fell so low that its average ICU outperformed 90% of ICUs nationwide.  In the …. first eighteen months, the hospitals saved an estimated $175 million in costs and more than fifteen hundred lives.  The successes have been sustained for several years now — all because of a stupid little checklist.

These are among the powerful illustrations of the effect of checklists on operational performance included in The Checklist Manifesto.  In addition to the medical field, Gawande shows how pilots use checklists to ensure safe operation of aircraft (including an engaging description of how checklists impacted the famous “Sully Sullenberger” flight that landed in the Hudson River in 2009).  And he demonstrates how hedge fund investors use versions of the checklists to protect against making poor investments, including one vivid illustration of an investor turning down an opportunity when a checklist item turned up that the company’s owners had been divesting their personal holdings.

So how does this impact the real estate industry?  I think that our industry could learn a lot from The Checklist Manifesto about operational excellence.  The role of the real estate agent is significantly task driven, but those tasks can sometimes be overwhelming.  Just getting a listing on the market can require dozens of discrete operations: taking pictures, uploading pictures, writing descriptions, checking paperwork, ordering signs, inputting property data, double-checking taxes, etc.  We need to do these things every single time, but rarely do we see a company articulate a simple checklist to ensure that every listing gets that quality service.  The same holds for the far more complicated but necessary task of maintaining ongoing listings, when agents tend to get lost in the frenzy of daily activity and neglect the day-to-day communication and updating responsibilities they have to existing clients, leading to poor client experiences.

For the last year, my company has been working on identifying the “best practices” in the industry — the practices that ensure a quality client experience for both buyers and sellers,  with the idea of coordinating those practices into a series of checklists and a comprehensive  “Project Plans” that cover particular aspects of the real estate transaction.  The goals is to provide with a set of plans that can guide them through the transaction.  The point is not to limit them — people can always do more than is on the plan.  Neither is the point to demean their professionalism– it’s not that we think they’re NOT doing some of these things, but we believe that in a given case they might not be doing ALL of these things because of the overwhelming complexity of the entire task.

Most importantly, we think that these kinds of checklists make a job easier, by simplifying our lives.  Just like computers, we have only a certain amount of “RAM” in our heads.  Computers gain efficiency if they can move information from “RAM” to hard drive memory.  Similarly, most of us become more efficient if we don’t have to store tasks in our memory, but can reduce them to a hard copy that we can refer to anytime we need them.  An agent with a 30-item checklist for getting a listing on the market is going to be more efficient than an agent who has to remember all 30 tasks and whether she’s already done them.  (And it’s definitely more efficient for the agent sitting at the desk next door, who keeps getting a tap on the shoulder asking, “hey, what am I supposed to do next?”)

Finally, real estate professionals should recognize that if checklists can improve execution and performance in life-and-death situations involving surgery and airline flight, and in million or billion-dollar financial investing decisions, then they certainly can be used in the much less urgent field of real estate.  A real estate agent who feels that checklists are “beneath” her should be at least a little chagrined that pilots and doctors are using them to great effect.

Essentially, I think that The Checklist Manifesto should be required reading for real estate professionals; indeed, I would recommend the book for anyone who cares about achieving operational excellence in his or her field.  If you need proof, I’ve already purchased 50 copies of the book at my company’s expense for distribution to our management team, and have saved others as gifts for colleagues in the industry.  It’s a great book.  You should read it.

If you’re interested in some other information about the book, here are some links:

Atul Gawande’s home page for The Checklist Manifesto

144 Reviews (average 4.5 stars out of 5) on Amazon.

Steven Levitt, the author of Freakonomics

Malcolm Gladwell, author of The Tipping Point, Blink and Outlier.

New York Times review

Washington Post review.

Interview in Time Magazine.

Gawande interviewed on the Daily Show with Jon Stewart.

The Safe Surgery Checklist illustrated in a terrific clip from NBC’s ER.