The other day Rob wrote a post on how Competition in Real Estate is Changing. I don’t think anyone would disagree. And it reminded me of a comment that I can’t find on another post which simply asked “What can brokers even do about it?”. That’s a sincere question worth talking about, from this Recovering Broker’s perspective. And lucky for you, I’ll do it in far fewer words than a typical Notorious post.
As far as competition goes, What can brokers even do about it?
Educate Yourself
This may sound simplistic, but stick with me for a minute. I have been in way too many meetings this past year where I hear brokers and agents refer to iBuyers as house-flippers, confuse Redfin’s 1% listing fee with Redfin Now, often think Redfin is a portal instead of a brokerage, call Zillow the devil, and just seem confused and overwhelmed about everything that is happening around them. I can’t really blame them; there is a lot going on and it’s all changing quickly. But we have to do better.
If there are true iBuyers (Opendoor, OfferPad, Zillow Offers, Redfin Now, Knock) in your market, learn about the process for each of them. Learn about the offer prices, negotiation points, and the experience for sellers and buyers. Is it great? Does it suck? When your agents are sitting across the table from a potential client and they ask about these programs, they need to be ready with real answers.
If there are flat-fee or lower-cost competitors in your market, find out what those experiences are like. If they’re seamless, is there something you can do to deliver flawless execution through your agents? If there are breakpoints, are you exploring them to see how you can do it better? Do the ancillary services flow easily from contract to close and beyond? What do these companies do between transactions? Can you implement something better to help your agents and their clients stay in touch?
Brokers have to understand the dynamics of their local marketplace, and help the agents navigate them with their clients. I know it’s hard because agents are entrepreneurs and likely want to do their own thing. But it’s your job as a broker to have answers for your agents.
You Have to Have Answers
I’m sure by now you’ve seen the video of Alex Rampell, General Partner of Andreessen Horowitz, talking bout how technology is changing consumer behavior in terms of the real estate industry. If you haven’t watched it, spend the 30 minutes. And pay particular attention around 15:00 when he talks about the need to have answers.
When a consumer asks about home staging, or when the best time is to list her home, or what to expect when she prices it below market value, or the best marketing channels, your agents have to have answers. And the answers need to be backed up by data. He mentions staging specifically, and talks about a portfolio company of his that did A/B testing to see if it helps sell a home faster and for more money. You have to test and track the results and be able to relay the outcome to the consumer. You have to rely on actual data when you’re asking the consumer to pay for additional products and services.
Consumers are looking to agents to provide real data and answers to their questions. And if your people don’t provide those answers, they will find someone who will.
Find Arms Dealers
In March I did a presentation at Clareity Workshop called “Want vs Need : Brokerage Edition,” where I said that brokers want silver bullets but they need lead bullets. Brokers are all trying to build The Platform, hoping it will be the silver bullet they need to protect their businesses. But they need lead bullets like AI and machine learning, so they can deliver on consumer expectations. They need arms dealers, aka partners, who have the means to provide data and insights.
Later that month I listened to a brand CEO tell agents to create a lead capture page offering iBuyer services, and to tell anyone who submits a request that their home doesn’t qualify. That is bullshit advice. If you have no intention or ability to have a true iBuyer program, don’t create a janky bait-and-switch offer. Find a real partner in your market instead. Opendoor and Zillow Offers both use partner agents. See what it takes to become a partner in your market. Better yet, see what it takes to be THE partner in your market. That’s true service.
Brokers have to research companies that have the data, products, and services required to do business in our changing environment. I have asked a few companies what they have available to broker partners, and there are things even I didn’t know about (and I do a lot of research on this for clients). They’re available now. And they’re looking for brokerages to work with across the country. Do your due diligence and find arms dealers with the kinds of ammo you need to supplement your current business practices.
We can’t be afraid of the new ways of buying and selling. We have to embrace them because they’re here to stay, and consumers demand the freedom to choose. Fear paralyzes us from finding creative solutions. Fear keeps us stuck in our old ways of thinking. Fear keeps us from doing the work. And that doesn’t serve anyone. Find arms dealers and don’t be afraid to ask for what you need.
Simple, But Not Easy
There is a difference between simple and easy. It is simple to say that you want to remain relevant as a broker. But it’s not easy to make that happen. You may have to look at alternative business models and fee structures so you can attract and retain more productive agents in your area. You have to spend time getting to know new players in the marketplace, and see if there are partnership opportunities. You have to have answers to consumers’ questions backed up by real data, then teach your agents how to provide them in a consumer-first (instead of me-first) way.
I know I’m asking brokers to do hard things. And there are no easy answers to any of it. In the book, The Hard Thing About Hard Things; Building a Business When There Are No Easy Answers, Ben Horowitz comes right out and says that nobody cares that your work is hard; they still expect you to do it. You are going to struggle. You are going to want to quit. You are going to look for the Easy Button. I know because I have sat where you sit in the front seat of the struggle bus.
You have to do the work. But I promise it’s work worth doing.
-SLH
8 thoughts on “Are Brokers Screwed?”
“Brokers have to research companies that have the data, products, and services required to do business in our changing environment”
You just do not see this enough in the industry. Too many realtors DO just think that ‘whatever’ provided as part of an MLSs tech/data offerings is the cat’s ass.
The other side of the is, while there are some truly innovative folks in RE… a large proportion do not really know the basics of ‘data’ if it is not served up in some automated data search system/tool. A reflection of the low educational barrier to become licensed, and the frenzied ‘recruit recruit retain retain’ model of traditonal RE? I dunno.
An example of this is the over the top industry buzz regarding Remine, in the last year or so.
Remine is a more predatory, (in my impression) than revolutionary data product when tied to an MLS. The majority of the data points that they are overcharging members $ for are readily available and free, through existing data tools within their MLS, or even free through county records. In my state, I know that I get pretty much the same data (except for social media profile info) that fuels the local MLS offering of Remine… except I get it all for free, from the state. It just comes in the form of 1000’s of XML’s weekly, and not a ‘monkey-see-monkey-do’ user interface.
It’s one of the reasons I REFUSE to consider ever joining the local Northstar MLS. They have nothing to offer me, that I cannot already get for free.
The “whatever” mentality is a sad reality. A majority will keep doing what they’re doing, and hope that their nightmares don’t come true.
I know a lot of MLSs (seriously) that would LOVE to offer better technology and services, but their hands are tied because they’d get lynched if they raised dues. But there are certainly plenty that will offer the bare minimum, and call it a Member Benefit. And I think we can all agree that the current MLS software is sub-par at best.
I would not want to throw too much shade on ‘all’ MLSs. I think there are some great MLSs out there, Miami for one (Miami RE!) that make an honest attempt at providing a plethora of tools to members, with great training and support. I worked for a data vendor that partners with them, among others. Miami stands out in my mind just because of their approach. They offer not just Matrix, but Rapattoni as well. They are really quick to try something new from other vendors as well.
Matrix 360 is worrisome, as Corelogic is trying to combine too much all together in one, pushing out other options, as if they have learned nothing from https://www.ftc.gov/news-events/press-releases/2014/03/ftc-puts-conditions-corelogic-incs-proposed-acquisition-dataquick .
But hey, Keller making the public announcement to not use tech vendors really set the mood for ‘competition’ moving forward. It’s no wonder data fueled start up’s have decided it’s okay to eat a realtors lunch.
“Brokers have to research companies that have the data, products, and services required to do business”
From working for a data vendor in FL, the truth in this is, most FL MLSs have a GREAT starting point with the tools they already pay for, if they just knew how to use them. OR how to use the data once they have downloaded it, and how they can import it into other systems for targeting. And that’s key, today. If you can’t ‘search’ the way you want while you are ‘in’ the data tool… download the data, and rearrange it the way you need to. In many FL MLSs realtors have access to a tool that exports bulk search results that are comparable to the bulk offerings in a granular form that others are getting from an API from Corelogic or First American….. After working for a vendor that close to 110k realtors in FL have had access to for 25 years….. and after talking to the sheer amount of brokers/agents that to this day… had no idea it existed, even after being licensed for a decade or more, there is a larger problem.
There is a well known fact in business. “Presence is powerful.” And I am speaking about presence in terms of doing business with the consumer.
So what about presence? Well I know this much for certain. It takes a lot to get it and much less to lose it. Screw up with the consumer and you will lose it. Refuse to change and you are sure to lose it. Sit back and do nothing when challenged and you deserve to lose it.
The residential brokerage industry is NO different than another industry. It has some degree of presence in 5 million or so transactions now involving 10 million consumers. This happens pretty much each year, but it is not certain to happen every year. Or for that fact, for any amount of time into the future.
So time too wake up all you brokers out there.
You need to figure this out and brokers need to secure more control of the pathetic consumer experience being delivered by 1.3 some odd random Realtors today. It is failing. If the broker’s do not do this, then someone else will. And if that happens then the brokerage companies will be present at far, far less kitchen and closing tables.
Now it gets interesting.
Those are the facts, there is the challenge and there is the good and the bad of the potential.
The article is waay too long resulting in my wondering, “What is this about”? All I got from it was these outfits list for ONE percent. Something is missing – Where are funds for buyer agent commission? This should have covered the topic with 250-500 words. So, what is the big deal that brokers should be quivering?
The 1% listing fee is just ONE thing that some brokers are facing. Redfin has employee agents, so they are paid by the company. There is still cooperating compensation for the Buyers’ Agent. How many listings does a brokerage need to lose to a lower cost competitor before they see the need to match the price? With brokerage profit margins at 3% average across the country, anything that threatens the top line is something that have to be concerned with.
The big deal for brokers is how do they compete with true iBuyers, different pricing models, and institutions coming into the real estate space. They need to have answers for consumers. They have to meet the wants and needs of future consumers. They have to have a broader service offering.
Most brokerages simply don’t have the financial resources to offer project management and pay for upfront costs for sellers to freshen up their homes before putting them on the market – but a handful do, and they’re crushing the competition.
The residential real estate needs a root canal.The problem is that many are scared to go to the dentist cause it hurts and cost lots of money and keep delaying it, until the pain beat them.That is exactly what will happen in the residential real estate.The other problem is, the average consumer is not educated enough to ask the right questions.Many real estate agents are ignorant and have no clue to answer simple questions.The brokers are not in a business of educating their agents to raise their value. They are in a business to sell real estate and make money, lots of money.So the main question is, where do we start to clean the mess.Well, the fish always stinks from its head.The NAR is the main problem. This organization will put many real estate agents out of business if not soon, for sure in the future. This industry is still acting behind the curtains with ZERO transparency.This industry was built on this business model and is refusing to change or to accept new business models.The change will come and it will be very painful and will hurt so much that those who sit on the top, will bang their heads against the wall.
Zillow has stated they are having a hard time selling the homes they purchased via the ibuy program – so not sure this is so wonderful?
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