Follow the Agents?
The traditional brokerage model is under pressure. There are two camps emerging that will likely shape the real estate industry over the next ten years: the high powered brokerage and the entrepreneurial boutique teams. Who will prevail and how should agents, brokers, and technology providers adapt?
And then there were…two?
Just over a decade ago, Zillow was born and changed consumer search habits forever. While initial fears that traditional brokerages and agents would be displaced by this technology, this decidedly has not happened. The shift in power from MLS’s to consumer portals had started, and another shift appears to be taking shape in the industry now.
“Tech-savvy agents able to deploy state-of-the-art tools…will replace the traditional brokerage firm over the next decade “— Robert Reffkin, Compass
High powered technology-enabled firms such as Compass, Realogy, and others are putting traditional brokerages on notice: we’re coming for your best agents and pairing them with a full end-to-end platform. Incumbents @Properties and Keller Williams already feature proprietary technology tools so this begs the question: What happens to the remainder of agents and firms?
Where to go as an agent?
Agents appear to have two choices: join the Compass’s of the world or invest in technology to keep at par with them. While on the surface joining the large broker seems like the path of least resistance, many boutique teams are able to meaningfully differentiate themselves by going super local, carving out a niche, and dropping any negative connotations associated with the ‘big box’ broker. Small doesn’t mean worse, especially with powerful technology.
Where to go as a technology developer?
Technology developers generally had three routes into a customer: direct to agents, through the managing broker, or to the firm. These channels are reduced now to agent or firm.
There’s no clear answer here. Building technology that an @Properties will acquire or license is a route for applications that are firm wide, enable inter-firm communication, document management, scheduling, etc. However, high powered tech brokerages are more likely to develop proprietary software.
Therefore, selling to the agents is appealing. The gap technology providers can fill is the one that exists between the mega brokers and boutique firms. The challenge is of course that each firm operates differently, has different legacy technologies, and budgets. Startups in this space are best served working closely with customers throughout development to truly understand the problems that the technology aims to solve. This is the approach we’re taking at Homebloq.
Beyond the obvious, startups need to think about scalability. What’s the market size building for small teams and boutique brokerages? A third option is partnerships with MLSs, a la Homesnap. Through integrating Homesnap into an MLS-provided tool, Homesnap is available at no direct cost to agents for adoption. A challenge here is getting consumers onboard with the app.
Who is likely to benefit the most?
Top and tech savvy agents will benefit the most in the next 10 years.
Top agents will be the most likely to be whisked away by Compass and join the elite of tech-savvy brokers. Similarly, agents who do not but continue to focus on developing relationships with clients and leveraging technology that supports that part of the process will likely reap the most benefits.
The bar is being continually set higher for client service by Millennials who expect answers faster, data freely, and services cheaper. Boring drip campaigns, expensive zipcode acquisition with low lead conversion, and low-ROI marketing are not going to cut it any longer. Consumers are smarter these days and in a world of Facebooks and Pinterests, the ability to be mobile, on one platform, and where the client can see the agent providing value will be the penultimate tool. At Homebloq our goal is to make agents look awesome, and that ultimately benefits their clients.
Agents in general should garner benefits passively as well. Realogy is pivoting to focus on agents, and Keller Williams is well known for being a truly agent-centric firm. A rising tide lifts all boats.
Who gets left out?
Change is hard. Those who don’t adapt will die. Brokerages and agents who turn a blind eye to technology and ignore customer behaviors and trends will likely fall by the wayside, deeper into the 80% who contribute, at best, 20% of the output.
And, what’s worse — their clients will suffer as a result. The magnitude is undetermined, but in aggressive markets, agents that can respond more quickly to clients, better organize client searches, get clients into tours faster, connect with sellers, and simply provide more value will outperform.
What might the future hold?
Ultimately, the landscape will be, or at least should be, crafted by the end consumers: home buyers and sellers. It is no surprise to say it’s debatable if these end-consumers have been the beneficiaries of fair practices historically. The inability to easily and cheaply access listings and relatively stable commission fees (not to mention shady agreements between brokers, agents, mortgage bankers on the shared-expense side) can be viewed as disadvantages to consumers. This appears to be changing.
Technology focused on quantity over quality and one-sided platforms need to go. Hyper local and relevant content, alongside client and agent facing platform businesses will drive change into the future. Technology in this space needs to facilitate both offline and online experiences, because no mater what many in Silicon Valley think, the agent isn’t going away.
What about the MLS? MLS’s need to comply with RESO standards and up their game. Companies such as WolfNet, CoreLogic, ListHub, Broker Public Portal, and (the recently defunct) RPR’s AMP project are trying to provide technology developers with a single-source MLS. This is a big topic for another day, but suffice to say for now, MLS’s need to focus on convergence from business models to data schema.
In The End…
At Homebloq, we’re developing software to help agents manage their clients, the modern way in the modern world we’ve chosen to follow the agents.