I was on my way to a meeting yesterday and got into an in-depth discussion with some of my colleagues with regards to the changing face of Real Estate Brokerages, and what I think may happen over the next few years.
Consumers are demanding more and more from our agents and in turn; our agents are demanding more and more from our Brokerages. Gone are the days that the Brokerages will be recruiting firms while observing the “status quo” by simply ensuring REALTORS® trade within the mandated guidelines.
I believe Brokerages will become (or some will argue – return to) marketing powerhouses while continuing to do all the things Brokerages do today. The marketing processes and techniques in the industry are vastly different from one Real Estate Professional to another. I strongly believe the Brokerages in the future that grow will be those that can help their REALTORS® with lead-generation and marketing; in other words, help their people be more successful.
Some of you are probably thinking that this is common sense, that of course Brokerages grow because they add value to the REALTOR® – But I will argue that’s not the case. Brokerages grow today because of misplaced value propositions; they are more interested in growing the numbers through recruiting, than growing through retention. What this has caused is a Brokerage Industry that is very focused on cost cutting; trying to recruit the next agent with the lowest fee structure possible.
The problem with this model is you breed a very low level of loyalty to the brand; and instead the REALTOR® is forced to brand themselves and figure out how to best market themselves and their clients listings on their own. This also has breed a boom in DIY (Do it Yourself) Brokerages, where the REALTOR® gets their Brokers License and decides to open their own small company to just do it on their own and pay even lower fees.
Well, a shift has already started. I believe this shift will result in Brokerages becoming the marketing and technological powerhouses and thru this shift, a more consistent service will be offered to the consumer. I also believe this shift will result in a narrowing of the Mid-sized Brokerage market.
Mid-Sized Brokerages will either adapt to become large Brokerages, or they will lose their mid-sized status to become small Brokerages. I was once told that “if you don’t like change, you will like irrelevance even less”; and I believe the writing is on the wall for Brokerages to look at themselves internally and start that change.
Interestingly enough, on my ride in this morning I received my electronic copy of REM Magazine; and guess what the feature article was – an article by Bill Hubbard with the caption of “The pendulum is swinging back”. I guess I’m not the only one that feels this way.