One of the biggest trends we’ve seen nationwide over the past 5 years in real estate is the albeit slow, but very sure dwindling of market share from the nationwide companies.
Why is this? A decrease in brand awareness of the companies, an increase in brand awareness of the individual agents, and an increase in the utilization of tech to level the playing fields by the independent Realtors.
The successful agents are out there everyday branding and marketing themselves. They produce killer websites that answer the three questions buyers care most about: How’s the market? What’s my home worth? And what homes are for sale? They are keen on what to do without their broker telling them. They are out farming, niching, and just getting business to come to them in general. They are building the brand of “me.”
As more and more agents have done this over the past 10 years, the brand of the
big brokerage has been diminished so far that the average consumer can’t even remember for which company their last agent worked. These buyers have no brand loyalty and are heading to websites like Trulia and Zillow to get information on listings instead of a brokerage.
Agents are also realizing that clients don’t need to be shown an office anymore. In fact Gen X and Y buyers want to get things done right there on the spot without wasting time. If they don’t have to go into an office, they don’t want to.
As this occurs more and more agents will begin to realize that the 25-50% or more splits they give to their broker are wasted. These agents will go to work for brokers that pay much higher percentages with no fees that don’t tell them how to operate.
Let’s look at other items that have popped up causing backlashes by agents against big companies:
- Lack of true support
- No commission flexibility
- Few high tech tools introduced (Tools seem to be well behind the “cutting edge”)
- Transaction / Broker Admin Fees ($225 or more fees for each closing)
- Trend to start charging agents 6% franchise fees
- Increased Errors and Omissions Insurance rates (Anecdotal evidence of $100 or more raises in fees this year)
The independent Realtor is actually the first phase to the coming change in real estate. Take a look in your markets, do you not see big name brokers leaving their companies to form their own enterprises? Why wouldn’t they? They can do business their way, make their own decisions and keep a larger piece of the pie. Even small agents can leave to create their own entities. They don’t need a big name, just a plan of attack to get business other than waiting for the phone to ring.
Think about the past 10 years, technology has gotten better and cheaper for agents. Websites that used to cost $10s of thousands of dollars now cost a fraction. A smartphone can keep them in front of their email at all times. CRM systems can be used to keep databases of prospects and clients and predictively market to them thus yielding more transactions. Tribus affiliates all have access to these resources, do you see nationwide brokerages with transaction management systems? CRMs? Websites for all agents with IDX?
Ironically who do you see with the best technology? In many cases the tech savvy independents! Why? They don’t have a bureaucratic structure to go through when launching a new product. Using freelancers or working with companies like ours they can take a concept to reality in days and weeks instead of years.
As an example, we’ve been told that a large broker spent $10m or more developing a product to hand leads off to agents nationwide. A very similar system was developed by Tribus at the same time, at a cost of less than 0.001% of that and can easily scale to add 100s of thousands of agents nationwide. Technology has turned into the great equalizer. It’s really depleted the last items that the big brands had going for them, and they have let most of it slip away. With their massive budgets why weren’t they creating iPhone applications (instead of iPhone websites)? CRM systems using SalesForce? Drip Email Campaigns using MadMimi?
While Tribus is working to roll out the next big change to real estate (we’ll be announcing it soon), they are still worried about a communications system that does more than just email. We offer for only a small fee, more technology, resources, and support than any big broker. An agent can start their own company and keep all their commission, concentrate on selling and recruiting and not need to worry about anything else.
So what does a big broker provide to an independent contractor agent that an independent can’t?
And assuming the above is true, that buyers don’t care about brand just about finding a house, and sellers don’t care about brand, they just want to receive the best support in marketing the property, how does a big brand stay relevant?
The way we see that happening is through extreme training, web leads, and salary based agents.
As a side note, we’d like to point out that big brands can still exist well with independents. Look at the financial services industry. There are big name players like Goldman, and then there is the independent guy down the street. What we see is agents starting at the big brands in a salary based job, and after a period of time going out on their own to form their own enterprise. But it’s going to take a push by the big brands to move to a W2 based system with accountability.