As some of the commenters on my original thread have already surmised, Aybaf is not a real company. It is a thought experiment that came about as the result of my hours-long conversation with an executive at one of the top web real estate companies. My first thought was to call this new concept Trillow, but thought that would be too obvious.
The initial question that Mr. Executive (who wishes to remain anonymous for a variety of reasons) and I were tossing back and forth was this:
“Suppose this Trillow were to launch a virtual brokerage, backed up with all of the tools and resources currently available. How does a traditional big broker or big brand compete?”
Hence, Aybaf (All You Brokers Are F***ed).
I do thank many of you for your thoughtful comments, and apologize for misleading you. It was for a good cause.
Analyzing the Threat
Contra some of the commenters, I do believe that a Trillow Virtual Brokerage would take an enormous bite out of numerous brokerages as they are today.
I have on good authority that the vast majority of agents are more than happy to pay for actionable leads, as long as they are paying upon close. Most people are much happier with a “pay-per-transaction” model than they are with any other, whether pay-per-click, or pay-per-lead, or pay-per-impression. 15% is not too high for a broker to charge for “house leads” because I know of several that are doing it, and their agents aren’t complaining — they’re happy.
Mr. Executive and I looked at the “desk fees” of a completely virtual brokerage, and they are negligible. $19.95 a month easily covers the cost of a data center (which Aybaf would need to have in any event) and some of the software involved. Liability insurance was the biggest line item, but at about 15,000 agents (about a tenth of what the NRT has today), that cost is easily covered. Plus, transaction analytics coupled to risk management systems means you can continually prune the ones who pop up as a high-risk.
Finally, liability and screening are much less of an issue when you go after the experienced top producers who are already on 90/10 type of splits, already have their own operation setup, and already are disenchanted with the services they are receiving from their brokerage (or brand). Sperry Van Ness has done this successfully in commercial real estate, an industry where big brand matters far more than it does in residential real estate. They don’t need to “manage” their agents, because their agents are proven self-starters who “manage” themselves and their staff just fine, thank you.
2 million unique visitors a month is about the average between Trulia, Zillow, and HomeGain. 15,000 actionable leads is less than 1% conversion rate from that traffic.
This can absolutely happen. Do not think it can’t.
So the question for brokerages and brands is, “How will you compete?”
Institutional Disadvantage
What Aybaf points to is the significant institutional disadvantage that brokerages and brands have in today’s real estate industry. As Kris Berg points out, the old economies of scale do not work anymore:
It seems like only yesterday that I needed a company brand for credibility. I needed the resources of a big company, both the fixtures and the systems, because there was an economy of scale which I couldn’t touch on my own. Today, I can work from anywhere. I don’t need the desk and computer bank and copiers; I have my own. I don’t need the listing feeds; I can place my listings any place my broker might, and in doing so all roads lead back to me. I don’t need the brand; I long ago branded myself. Group print advertising rates which used to be a huge benefit of associating with the 1000 pound gorilla are now an antiquated concept. [Emphasis added.]
So the current brokerages of all stripes are stuck with the costs of operating an institution that generates economies of scale that don’t matter anymore to the experienced, producing agents.
I spoke with the Director of Technology for a very large brokerage operation who told me flat out that the facilities costs for his offices are crushing their P&L and balance sheets. The annual rent for 15,000 sq. ft. of office space no longer makes any sense when 80% of agents are working from home, or better yet, working from their local Starbucks using mobile communications and laptops more powerful than the computer that sent Armstrong to the moon.
Plus, as any organization grows in size, there is inevitable overhead from bureaucracy. Jay Thompson may be able to hand-route leads to his small team of agents, but once the agent count gets to a couple of hundred, and the lead count gets to hundreds a day, he’s going to be spending all of his time hand-routing leads. So someone (human or machine) has to do that work for a large operation.
In my analysis, part of the institutional disadvantage that many brokers face today is the result of investment decisions made during the Roarin’ 00’s when real estate started to bubble. I touched on this topic at some length on this post on OnBlog. When you’ve spent years investing three-and-a-half times as much on dead-tree advertising instead of on your web operations, while the new generation of real estate players were investing 100% into the most powerful marketing and communications medium since television, you are going to end up with an institutional disadvantage.
Why? Because technology improves productivity; dead-tree advertising has never, does not, and will never improve productivity.
So let’s come back to 2009. Numerous large brokerages have thousands upon thousands of agents, but the smart, productive ones have figured out long ago that the broker isn’t providing enough value to them. They’ve gone out on their own, followed gurus telling them to brand themselves, and to leverage social media to build their own following, and realized, “Hey, I can make more money doing this myself, with cheap or free technology tools!”
Result: the big brokerages are inefficient, behind in productivity, saddled with costs from the old economies of scale days, burdened with masses of unproductive, unprofessional agents who continually degrade the firm’s brand, and are watching their consumers transfer their loyalty to either Big Web or individual agents.
I Ain’t No Chicken Little McNugget
Enough with the doomsaying and the sky-is-rapidly-descending talk. As regular readers of this blog know, I am a believer in Big Brokerage as the future of real estate:
Robnecks hold that Big Brokers are not dinosaurs doomed to extinction as much as they are sleeping giants. Some will never wake up, and end up being devoured by the Swarm; but those who do wake up have established business models, established brand, established infrastructure, and most importantly, have the resources to invest in to technology.
It is not too late for brokerages and brands to turn things around. Decades upon decades of success have built a cushion for Big Brokerages. But it’s getting there, and the clock is ticking, and the forces of Kristiandom are not resting. You cannot survive eating into the brand endowment that your predecessors have built up; you’ve got to start replenishing it.
The key lessons that Big Brokerage must learn in order to turn things around are these:
- Technology gives an institution the ability to control the consumer relationship.
- Institutional advantage is built on productivity and brand.
- You reap what you sow.
The full discussion of these is probably going to have to wait for another 9-million word post, but let’s briefly touch on these.
Consider Home Depot. As a homeowner, I have a relationship with Home Depot, not with the contractors who show up to install the windows I bought there. If I need to have new doors, I’ll go to Home Depot, and never even think about the independent contractor who shows up to install the doors.
For a services business, technology gives you the ability to know consumers, to relate to consumers directly, to build feedback loops with consumers, and to drive the entire consumer relationship cycle. Look at Amazon.com and what it has accomplished — though they are in retail, so caveat lector.
Rather than outsourcing your consumer relationship efforts to your agents, you need to take ownership of that effort, and be responsible for it. That will certainly mean more than software; it will mean reforming your customer relationship process, customer service philosophy, and perhaps finding resources to handle service. It is critical to your future survival.
Productivity and brand — these two thing dictate institutional advantage.
Productivity simply means more units per unit of labor — more sides, more revenues, per agent/employee. Every single piece of technology you implement must improve productivity or it’s a waste of money. Enhanced productivity leads to increased profitability which leads to cost-structure advantages.
In today’s economy, this means finding new economies of scale. The old “group discounts on dead-tree advertising” isn’t cutting it. Listen to your best agents, watch the industry, and understand where the new economies of scale are. They will be, I’m guessing, in areas of CRM, content generation and management, and web-based productivity tools.
Keeping in mind that your brand is in the hands of your worst agent, consider how that changes the way you would approach recruiting, training, discipline, and brand enforcement.
In concert, these two things yield lasting institutional advantage. At least until things change again, and you have to adapt or die again.
Finally, and you know this already, you reap what you sow. Continue to invest in print over web on a 3:1 ratio, and you will reap the rewards of that. Continue to ignore your brand equity in favor of short-term revenues from “more bodies, more desk fees” and you will reap the rewards of that.
Renouncing Aybaf
At the end of the day, I renounce Aybaf. For much the same reason that Keith from the comments mentions:
Brokerage is not about being cheap, or about providing web leads, it is about oversight and policy.
Where he says “oversight and policy”, I hear “total consumer experience”. A broker who understands not only the past of the industry but the future as well, will be a major force for positive change. They will drive customer benefit, while enforcing discipline required to build true brand equity.
Aybaf (or any model like it) may make a ton of money, and may be the low-cost solution for a variety of independents. It may even win the overall war, as has happened in the travel industry for example. But it cannot, in my view, help to improve the industry as a whole.
Renunciation, of course, is not the same thing as denial. Aybaf can happen. Trillow can happen. And that fact should raise the original question for those responsible for brokerage companies and real estate brands today:
How will you compete?
-rsh
20 thoughts on “On Institutional Advantage, or Renouncing Aybaf”
I have to disagree with your statement that, “Big Brokerage is the future of real estate”
Agents now a days don’t need an office to work from, don’t need to hang their license at a “brand name company” and for the most part don’t need someone to hold their hand through a transaction.
Most agents that will succeed in the future will have a pretty strong Internet presence which will allow them to build a pretty big team of agents. The only thing they will need from their broker is a place to hang their license. For example, I have a strong Internet presence and we generate over 90% of all our business from the Internet, so really all I care about is a place to hang my license and in actuality, my broker benefits because I am building their brand through my web presence.
So for agents that don’t have a web presence, what do they want for the most part? I have never done a national survey but I have interviewed hundreds of agents in Las Vegas over the last few years and “receiving leads” was usually # 1 or # 2 on what they wanted from their real estate brokerage.
So, if a real estate brokerage was giving out leads on a split to their agents, I believe that would be an incentive for an agent to hang their license with that particular real estate brokerage, but here is the problem I see from a “big brand brokerage”.
Let’s use Century 21 as an example. They have way too many franchises to offer enough leads and most local brokerages have no Internet presence what so ever, so with this example I don’t see how the “big brands are the future of real estate” if most agents want leads?
If you ask me, the real estate brokerages that go after the real estate agents that hold top positions in the search engines for competitive search phrases would be a smart move! As these agents offer true value as they can provide a massive amount of “Branding”!
I have to disagree with your statement that, “Big Brokerage is the future of real estate”
Agents now a days don’t need an office to work from, don’t need to hang their license at a “brand name company” and for the most part don’t need someone to hold their hand through a transaction.
Most agents that will succeed in the future will have a pretty strong Internet presence which will allow them to build a pretty big team of agents. The only thing they will need from their broker is a place to hang their license. For example, I have a strong Internet presence and we generate over 90% of all our business from the Internet, so really all I care about is a place to hang my license and in actuality, my broker benefits because I am building their brand through my web presence.
So for agents that don’t have a web presence, what do they want for the most part? I have never done a national survey but I have interviewed hundreds of agents in Las Vegas over the last few years and “receiving leads” was usually # 1 or # 2 on what they wanted from their real estate brokerage.
So, if a real estate brokerage was giving out leads on a split to their agents, I believe that would be an incentive for an agent to hang their license with that particular real estate brokerage, but here is the problem I see from a “big brand brokerage”.
Let’s use Century 21 as an example. They have way too many franchises to offer enough leads and most local brokerages have no Internet presence what so ever, so with this example I don’t see how the “big brands are the future of real estate” if most agents want leads?
If you ask me, the real estate brokerages that go after the real estate agents that hold top positions in the search engines for competitive search phrases would be a smart move! As these agents offer true value as they can provide a massive amount of “Branding”!
Aybaf. Very clever, Mr. Notorious. I confess to skimming over the earlier reference thinking it was yet another memo I didn’t get.
This is one of your more spot-on posts on the subject yet. Onboard Realty and Infomatics has a rather nice ring to it, but the idea sounds a little like Redfin on steroids, and I have yet to see global domination in their cards. There is a DNA element missing — the one who sits at your kitchen table on Sunday night, who knows your home down to the studs because they watched it being framed, and who you know knows your neighborhood because you regularly bump into them in the produce section. This is what the consumer who thirsts for knowledge down to the neighborhood level ultimately cares about, not signs in Time Square or first-response “voices” on some online information buffet. And I say “ultimately,” because ultimately is where the agent comes in. The rest is just the pre-game show.
There is far too much in your ten thousand word post to digest on a Sunday night let alone address in a short comment. However, that soon infamous “your brand is in the hands of your worst agent” line still thumps me upside the noggin. Easy to accomplish when you are a dozen or ten-dozen strong. Start talking in scientific notation, and you have thrown down one scary gauntlet. Fun rhetoric, but hard to implement.
And to complete my string of incomplete sentences, at some point this discussion becomes just too much academia. In the real world where I reside, there will always be big and small, indies and giant corporate blobs, and it will be up to the agent to decide where they best fit in. As I said at Inman, I have no doubt that we will move into the future as one big, diverse, disfunctional family.
What really worries me and what I really hope comes out of this conversation is the realization that our industry needs a wholesale realignment of thinking. Our “industry” is only as good as our worst agent and, be it big brokerage or small, unless we get our collective act together and demand minimum standards, unless we have the courage to self-police and walk the walk rather than sell concepts in search of the next “deal,” we are all in deep doo-doo.
Thank you for continuing this discussion. It is an important one.
Aybaf. Very clever, Mr. Notorious. I confess to skimming over the earlier reference thinking it was yet another memo I didn’t get.
This is one of your more spot-on posts on the subject yet. Onboard Realty and Infomatics has a rather nice ring to it, but the idea sounds a little like Redfin on steroids, and I have yet to see global domination in their cards. There is a DNA element missing — the one who sits at your kitchen table on Sunday night, who knows your home down to the studs because they watched it being framed, and who you know knows your neighborhood because you regularly bump into them in the produce section. This is what the consumer who thirsts for knowledge down to the neighborhood level ultimately cares about, not signs in Time Square or first-response “voices” on some online information buffet. And I say “ultimately,” because ultimately is where the agent comes in. The rest is just the pre-game show.
There is far too much in your ten thousand word post to digest on a Sunday night let alone address in a short comment. However, that soon infamous “your brand is in the hands of your worst agent” line still thumps me upside the noggin. Easy to accomplish when you are a dozen or ten-dozen strong. Start talking in scientific notation, and you have thrown down one scary gauntlet. Fun rhetoric, but hard to implement.
And to complete my string of incomplete sentences, at some point this discussion becomes just too much academia. In the real world where I reside, there will always be big and small, indies and giant corporate blobs, and it will be up to the agent to decide where they best fit in. As I said at Inman, I have no doubt that we will move into the future as one big, diverse, disfunctional family.
What really worries me and what I really hope comes out of this conversation is the realization that our industry needs a wholesale realignment of thinking. Our “industry” is only as good as our worst agent and, be it big brokerage or small, unless we get our collective act together and demand minimum standards, unless we have the courage to self-police and walk the walk rather than sell concepts in search of the next “deal,” we are all in deep doo-doo.
Thank you for continuing this discussion. It is an important one.
Rob
Setting up a brokerage is not easy, nor is maintaining one.
I don’t have profit statistics for new brokerages Redfin or better home and gardens but we know they are admirably facing challenges as new and innovative brokerage companies.
We know that IAC’s brokerage realestate.com is not yet profitable, and they went precisely the route you advocate of converting from a lead generation model to a brokerage one-the thought, just take all that traffic and those leads and give them to your own brokers who will convert them and the money pours in.
Its not that simple.
It may work out one day but realestate.com is not yet there.
Or check out brokerage Zip Realty-a formidable traffic getting entity-according to hitwise Zip realty gets more traffic than Trulia. While they are growing,innovating and generally doing a great job, according to public filings they are not yet profitable after five years.
As to trulia and zillow – are they profitable in their current forms?
Would traffic to a White House Zestimate convert into a transaction? How about Dueling Digs traffic?
This type of traffic may please an advertiser but not a realtor looking to close business.
Assuming Trulia and Zillow are not profitable and don’t have tens of millions of dollars lying around, they can correct me if the assumptions are incorrect, where would the money come to convert to a brokerage?
Its a hard sell to an investor of VC to ask for more money to convert an unprofitable entity towards another model where the comparables are not making money.
I think Trulia and Zillow are pursuing a traffic acquistion strategy that may one day serve them well.
Converting to a brokerage would be far more costly then the money they have already raised and even if they did raise the money their success would not be preordained.
Indeed its a moot point. In today’s economic climate, there is little chance that any entity could raise the tens of millions required to start a new online brokerage.
Rob
Setting up a brokerage is not easy, nor is maintaining one.
I don’t have profit statistics for new brokerages Redfin or better home and gardens but we know they are admirably facing challenges as new and innovative brokerage companies.
We know that IAC’s brokerage realestate.com is not yet profitable, and they went precisely the route you advocate of converting from a lead generation model to a brokerage one-the thought, just take all that traffic and those leads and give them to your own brokers who will convert them and the money pours in.
Its not that simple.
It may work out one day but realestate.com is not yet there.
Or check out brokerage Zip Realty-a formidable traffic getting entity-according to hitwise Zip realty gets more traffic than Trulia. While they are growing,innovating and generally doing a great job, according to public filings they are not yet profitable after five years.
As to trulia and zillow – are they profitable in their current forms?
Would traffic to a White House Zestimate convert into a transaction? How about Dueling Digs traffic?
This type of traffic may please an advertiser but not a realtor looking to close business.
Assuming Trulia and Zillow are not profitable and don’t have tens of millions of dollars lying around, they can correct me if the assumptions are incorrect, where would the money come to convert to a brokerage?
Its a hard sell to an investor of VC to ask for more money to convert an unprofitable entity towards another model where the comparables are not making money.
I think Trulia and Zillow are pursuing a traffic acquistion strategy that may one day serve them well.
Converting to a brokerage would be far more costly then the money they have already raised and even if they did raise the money their success would not be preordained.
Indeed its a moot point. In today’s economic climate, there is little chance that any entity could raise the tens of millions required to start a new online brokerage.
Great analysis of the challenges – but more importantly – the opportunities available to ‘traditional’ real estate, Rob. (I think of this as ‘the company’ of all sizes, not just Big Brokers).
As Kris so aptly points out, there will always be big and small, but regardless of size, those who deliver that ‘wow’ customer experience with character, competence, convenience, and connectivity (both technological and personal) will prevail.
I don’t believe we are entering (actually already in) the Age of the Agent, or the Age of the Brokerage, but rather, the Age of the Consumer. And in thinking “outside in,” what makes sense for them? Will it be easier to identify one of a finite number of brands that becomes known for that great experience because it takes on quality control (which is only possible when it has the leverage of delivering leads and other great value), or picking through thousands of small agent shops to find the really good ones? And will that consumer see value in having a company advocate involved to monitor the process and make sure he/she is happy with his/her associate, versus dealing solely with the practitioner if an uncomfortable complaint needs to be lodged?
I think great agents like Kris who go it alone will have plenty of business in their model, because of scale, but looking at the bigger picture, I really believe companies (not defined as one or two agent teams) have a great opportunity if they adopt some of the best Aybaf concepts to hone performance, while remembering that trusted relationships got them here.
Great analysis of the challenges – but more importantly – the opportunities available to ‘traditional’ real estate, Rob. (I think of this as ‘the company’ of all sizes, not just Big Brokers).
As Kris so aptly points out, there will always be big and small, but regardless of size, those who deliver that ‘wow’ customer experience with character, competence, convenience, and connectivity (both technological and personal) will prevail.
I don’t believe we are entering (actually already in) the Age of the Agent, or the Age of the Brokerage, but rather, the Age of the Consumer. And in thinking “outside in,” what makes sense for them? Will it be easier to identify one of a finite number of brands that becomes known for that great experience because it takes on quality control (which is only possible when it has the leverage of delivering leads and other great value), or picking through thousands of small agent shops to find the really good ones? And will that consumer see value in having a company advocate involved to monitor the process and make sure he/she is happy with his/her associate, versus dealing solely with the practitioner if an uncomfortable complaint needs to be lodged?
I think great agents like Kris who go it alone will have plenty of business in their model, because of scale, but looking at the bigger picture, I really believe companies (not defined as one or two agent teams) have a great opportunity if they adopt some of the best Aybaf concepts to hone performance, while remembering that trusted relationships got them here.
@Louis –
Great points, all of them, Louis — I wouldn’t have expected any less from you. 🙂
Having said that, here’s what I wonder: Did the folks at Benchmark Capital really think that Zillow was going to make scads of cash doing just advertising? The only way that works out is if you end up taking the lead-dog position in the vertical search space.
And for what it’s worth, I’m suggesting that the IAC and Trulia and Zillow and all these guys — including HomeGain, incidentally — are not yet setup to do virtual brokerage. But to get setup that way doesn’t take millions of VC dollars; it takes fairly minor additions and bizdev deals. The big dollar capital expenditures have already been made.
Getting brokerage licenses is certainly no barrier. Recruiting agents is a big deal, but not rocket science and very much in-line with how various companies try to recruit agents to be advertisers.
I suppose one way to look at it is, if you’re a VC and you’ve sunk $50m into some real estate website, do you just write it off? Or do you maybe strongly suggest that said real estate website look at virtual brokerage as a monetization model given the weakness of brokers and major brands to compete effectively?
Who knows… since as I said, I do renounce the whole approach. But I think it’s going a step too far to suggest the model can never happen.
-rsh
@Louis –
Great points, all of them, Louis — I wouldn’t have expected any less from you. 🙂
Having said that, here’s what I wonder: Did the folks at Benchmark Capital really think that Zillow was going to make scads of cash doing just advertising? The only way that works out is if you end up taking the lead-dog position in the vertical search space.
And for what it’s worth, I’m suggesting that the IAC and Trulia and Zillow and all these guys — including HomeGain, incidentally — are not yet setup to do virtual brokerage. But to get setup that way doesn’t take millions of VC dollars; it takes fairly minor additions and bizdev deals. The big dollar capital expenditures have already been made.
Getting brokerage licenses is certainly no barrier. Recruiting agents is a big deal, but not rocket science and very much in-line with how various companies try to recruit agents to be advertisers.
I suppose one way to look at it is, if you’re a VC and you’ve sunk $50m into some real estate website, do you just write it off? Or do you maybe strongly suggest that said real estate website look at virtual brokerage as a monetization model given the weakness of brokers and major brands to compete effectively?
Who knows… since as I said, I do renounce the whole approach. But I think it’s going a step too far to suggest the model can never happen.
-rsh
Everyone talks about “agents now a days” but Agents now a days are still the over 50 crowd and they are hesitant to move towards this model. My company tried to insitute a full virtual model charging the agent $195 a month and then a small Transaction fee. We thought recruiting would be a “NO BRAINER” and we had professional recruiters working the phones but success was limited. Agents didn’t want to move their shingle even if they could save 10k+ a year in fees for doing the same amount or less work. It’s much harder than you might think to recruit people away from their estabilshed business and Brand. Agents still don’t believe in internet leads and the old saying will stay true 20% of the agents do 80% of the busines.
Everyone talks about “agents now a days” but Agents now a days are still the over 50 crowd and they are hesitant to move towards this model. My company tried to insitute a full virtual model charging the agent $195 a month and then a small Transaction fee. We thought recruiting would be a “NO BRAINER” and we had professional recruiters working the phones but success was limited. Agents didn’t want to move their shingle even if they could save 10k+ a year in fees for doing the same amount or less work. It’s much harder than you might think to recruit people away from their estabilshed business and Brand. Agents still don’t believe in internet leads and the old saying will stay true 20% of the agents do 80% of the busines.
With a number of my friends having weighed in on this very important topic, I respect you all, and I can’t remain silent.
1. As Pam points out, the consumer is in control, they have access to all of the information, the role of the agent has shifted to that of trusted adviser, negotiator, the human element of the transaction that is not going to disappear.
2. The shift will take place with the stabilization and upturn of the real estate market (18 to 24 months from now) where the new generation of 1st time buyers will begin to kick in. These are what I call the Echo Boomers – the 73 million 18 to 34 year old’s who will drive our industry for the next 30 years. This group is almost as large as the 78 million Baby Boomers, and we all know the buying power of this group.
3. These new consumers have grown up with technology, are very comfortable on line, and will utilize the power of the internet to their fullest
advantage. Those of us who figure it out will effectively capture this group’s interest on line and hand over to human beings (agents) to do what they do best. Yes there will be fees involved.
4. I see the future as either go big or go boutique. Kris is boutique, it works for her and will continue to work, she will use technology partners effectively. Those who choose to go big will partner with a brand that offers them the tools, technology, and leadership they are looking for. That is how we (BHGRE)plan to compete. We will all pay for sophisticated lead generation, and we have yet to see what that will look like in the end.
5. Smart brokers are getting rid of excess bricks and mortar as quickly as they can. The current average of 100 sq ft per agent needs to drop to 10. This is dramatic, but it is happening now right across the country. Don’t think that brokers are sitting around waiting for the market to change.
6. Finally there are too many agents – the number needs to drop… any broker who is employing part time agents, please stop now! Your perceived short term gain will hurt you in the end.
I see the future as a hybrid – it is going to be very interesting…
With a number of my friends having weighed in on this very important topic, I respect you all, and I can’t remain silent.
1. As Pam points out, the consumer is in control, they have access to all of the information, the role of the agent has shifted to that of trusted adviser, negotiator, the human element of the transaction that is not going to disappear.
2. The shift will take place with the stabilization and upturn of the real estate market (18 to 24 months from now) where the new generation of 1st time buyers will begin to kick in. These are what I call the Echo Boomers – the 73 million 18 to 34 year old’s who will drive our industry for the next 30 years. This group is almost as large as the 78 million Baby Boomers, and we all know the buying power of this group.
3. These new consumers have grown up with technology, are very comfortable on line, and will utilize the power of the internet to their fullest
advantage. Those of us who figure it out will effectively capture this group’s interest on line and hand over to human beings (agents) to do what they do best. Yes there will be fees involved.
4. I see the future as either go big or go boutique. Kris is boutique, it works for her and will continue to work, she will use technology partners effectively. Those who choose to go big will partner with a brand that offers them the tools, technology, and leadership they are looking for. That is how we (BHGRE)plan to compete. We will all pay for sophisticated lead generation, and we have yet to see what that will look like in the end.
5. Smart brokers are getting rid of excess bricks and mortar as quickly as they can. The current average of 100 sq ft per agent needs to drop to 10. This is dramatic, but it is happening now right across the country. Don’t think that brokers are sitting around waiting for the market to change.
6. Finally there are too many agents – the number needs to drop… any broker who is employing part time agents, please stop now! Your perceived short term gain will hurt you in the end.
I see the future as a hybrid – it is going to be very interesting…
Thanks Sherry
What I think is important, is an understanding of real estate, which is what the traffic aggregators lack.
What BHG brings for agents is an understanding of real estate, customer service, agent behavior in a new consumer centric model. BHG is far more likely to succeed as a brokerage than companies who are skilled at driving visitors to their web sites and try to make the transition to a brokerage.
In some respects getting visitors is a commodity. The brokerage brand is built on far more than just raw visitors.
Thanks Sherry
What I think is important, is an understanding of real estate, which is what the traffic aggregators lack.
What BHG brings for agents is an understanding of real estate, customer service, agent behavior in a new consumer centric model. BHG is far more likely to succeed as a brokerage than companies who are skilled at driving visitors to their web sites and try to make the transition to a brokerage.
In some respects getting visitors is a commodity. The brokerage brand is built on far more than just raw visitors.
@Pam –
Thank you for the insights, Pam. I think something that’s motivating me quite a bit is how even in the Internet Age, the so-called Age of the Consumer, brand loyalty is stronger than ever. If anything, as offerings proliferate thanks to the power of the Web, I feel that consumers are desperate to find a trusted brand for various aspects of their lives.
Just look at how consumers look at Apple.
The counter-intuitive thought I have is that as information simply explodes, and access to info becomes commonplace, consumers will turn more and more to trusted brands to help them make sense of all that info.
Great independents like Kris can’t ever be eliminated, in any business. Even in CPG’s, you’re going to find the niche companies offering unique, specialty products to certain segments. But neither do independents drive wholesale industry change — at least, not without becoming one of the Big Boys in the process.
I think some of the current generation, and certainly many of the next generation, of leaders in Big Real Estate will drive the sort of change that the industry needs. Like Sherry says, go big or go boutique.
But boutiques don’t change the world. Big does.
-rsh
PS: Now, if you get a large number of boutiques together, then you’ve got The Swarm, and they can change the world….
@Pam –
Thank you for the insights, Pam. I think something that’s motivating me quite a bit is how even in the Internet Age, the so-called Age of the Consumer, brand loyalty is stronger than ever. If anything, as offerings proliferate thanks to the power of the Web, I feel that consumers are desperate to find a trusted brand for various aspects of their lives.
Just look at how consumers look at Apple.
The counter-intuitive thought I have is that as information simply explodes, and access to info becomes commonplace, consumers will turn more and more to trusted brands to help them make sense of all that info.
Great independents like Kris can’t ever be eliminated, in any business. Even in CPG’s, you’re going to find the niche companies offering unique, specialty products to certain segments. But neither do independents drive wholesale industry change — at least, not without becoming one of the Big Boys in the process.
I think some of the current generation, and certainly many of the next generation, of leaders in Big Real Estate will drive the sort of change that the industry needs. Like Sherry says, go big or go boutique.
But boutiques don’t change the world. Big does.
-rsh
PS: Now, if you get a large number of boutiques together, then you’ve got The Swarm, and they can change the world….
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