On August 26, Rob Hahn, Founder of the blog, Notorious R.O.B, asked for some answers to his post “Some Questions About KWRI’s Virtual Brokerage.” I’m happy to oblige.
As a Market Center owner (Operating Principal) and one of the many architects of Keller Williams (KW) Expansion, I am committed to ensuring KWRI’s virtual brokerages are a win-win for both Market Centers and Expansion business owners. I will preface my responses by reminding everyone, that KW’s virtual brokerage model is still under construction. I don’t have any definite answers, nor does KWRI. What we do know is that the real estate industry is shifting and KWRI’s virtual brokerage will simply be another option for our Expansion business owners. In the following response, I will do my best to offer some insight on Rob’s questions and always welcome more discussion. You can reach me directly at email@example.com.
Who Actually Owns This Virtual Brokerage?
It’s been implied that KWRI will own the KWRI virtual brokerage. Not the Expansionists. Not franchise owners.
Who Does Oversight?
This one is a little more complex, as KWRI is still working out the details.
First and foremost, the KWRI virtual brokerage will have a principal broker in each state. In addition, I think each Expansion business owner who plugs into the KWRI virtual brokerage could have their own managing broker. This might look a bit different depending on the size of the state. For example, in little ole’ Vermont, we may have one principal broker for the KWRI virtual brokerage and one managing broker that some number of Expansion businesses share. In larger or more complex states, we may have one principal broker, with each Expansion business working with their own managing broker to offer additional oversight and layers of protection for the brokerage, agents, and most importantly, the consumer.
It’s also important to note that the millions of dollars being invested into KWRI’s technology is already providing additional oversight with up to the minute data and reporting, real-time purchase and sale information, and daily compliance checks. The larger the team (by agent and transaction count) the more oversight and compliance needed, which often calls for a full-time specialist overseeing compliance and reviewing documentation. I would think an Expansion business owner would gladly make that hire. Not only will the KWRI virtual brokerages have a principal broker, in most cases, there could be a managing broker and compliance oversight as well. More oversight, not less.
Why Is This Good for Current Franchise Owners Again?
I think the biggest thing we need to clear up here, is that while KWRI virtual brokerages will take on the liability and oversight for the Expansion business owners, it is not being established as a competitor of Market Centers, nor will the virtual brokerages be profit centers.
The catalyst for the creation of KWRI virtual brokerages was for large Expansion business owners to be able to conduct business seamlessly and grow. The KWRI virtual brokerage caps (while perhaps smaller than what Market Centers are accustomed to), will be paid to the Market Center, not the virtual brokerage. Expansion business owners may pay a small fee to the virtual brokerage for their oversight, but they will still be paying company dollar to their local Market Center for utilizing all of the systems, models, training, and technology that KW Market Centers provide. Together, KWRI virtual brokerages and KW Market Centers retain KW market share.
Next Step in the Evolution of Real Estate
I also want to provide some clarity on teams vs Expansion businesses.
Adam says that inside a Market Center you may have 200-300 agents, with 15 large teams with 20 team members each. So is he saying that Market Centers will now only “house” these Elite Agent Teams, collect nothing in the way of commissions splits, but get paid for the use of the physical space, and a platform to build off of?
Teams are here to stay in our industry, we know this. However, almost all teams are not Expansion teams/businesses, therefore those non-expansion teams will not have access to or need to use the KWRI virtual brokerage. If there end up being 40-50 teams in a Market Center, perhaps 5-15 of them could be Expansion businesses, the rest being local teams who have chosen not to expand. Some agents will join an Expansion business for their next opportunity, but the vast majority will definitely remain as single agent businesses. Agents will continue to do what is best for them, their career, and their business. KWRI virtual brokerages for Expansion business owners is simply another option.
Just as Keller Williams championed teams in the 90’s for those who wanted to build a sales business they are now championing Expansion for those who want to take their sales business to multiple locations. This isn’t new. KW started teaching and supporting Expansion almost seven years ago. The Virtual part was suggested almost three years ago by Ben Kinney and KW has been watching to see if it was necessary. It seems like it might be, thus they reopened the conversation.
As is typical of KW, they will ask lots of questions, engage lots of dialogues and feedback before moving forward. The culture of this company is alive and well. The real estate industry is under a serious restructure that is about to change the way consumers, vendors, business owners, and agents have “done” real estate. Keller Williams created Expansion over seven years ago. The real estate industry, and now the world at large, is ready for the next evolution in real estate. It’s our duty to our Market Center owners, our agents, Expansion business owners, and consumers to step up and deliver. Virtual brokerages are one solution to closing the gap.