Who doesn’t want a good real estate broker today? Granted, there are some who hire the first real estate broker who answers the phone without a single question or any due diligence, but by and large, buyers and sellers today are smart and know the importance of finding a good real estate broker.  But what many consumers may not realize is that there are several different business models to choose from.  The type of business model you choose determines how you as a client will be treated and represented.

Real Estate Broker Business Model No. 1

First, we have what I call the “Traditional Bricks-and-Mortar Brokerage.”  In this model we have a traditional real estate broker who operates with a business model that is on life support.  This brokerage depends on a 20 year old model, which consists fundamentally of a central bricks-and-mortar office, newspaper advertising, open houses, and has a very limited bridge to the new world of marketing.  The business is top heavy and has far too much overhead from years past. Many agents (not all) in this older model list homes and put them in the MLS and do very little beyond that, hoping other agents sell their listings. Many of these agents are not very good at maintaining a good line of communications with their clients. (I can’t tell you how many clients have complained about this kind of practice.) Many agents in this outdated model do not know how to market to buyers in the new world of technology and the Internet. (Read also Traditional Brokerages on Precipice of Disaster and Sequim Real Estate Agents Leaving Business.)

Real Estate Broker Business Model No. 2

Second, we have what I call the “Machine or Systems Brokerage.”  I met with a very sharp top producer recently in the Tacoma area, and we enjoyed a three hour conversation about our businesses.  During the three hours I mentioned several times how I take care of my clients, how all my clients are at the center of the Universe for me, and everything I do is a result of asking the question, “What is in my client’s best interest?”

During the entire three hours not once did this very sharp real estate broker use the word “client.”  He didn’t say anything about how well his clients’ needs are met or his clients’ concerns.  Not once. Instead, he must have mentioned the word “systems” a dozen times.  He spoke of lead generation, lead conversion, and systems that generate income.  He personally never even talks to clients, although he is the team leader.  Instead, responsibility is delegated to several people throughout a transaction until the closing. What he described will make him a millionaire most likely, but it also sounded like a cold calculated machine.  That is the “systems” approach.

Real Estate Broker Business Model No. 3

Third, we have a new business model today.  This is the real estate broker who has bridged the gap from the old to the new.  This real estate broker values principles from traditional real estate practice that still work, and values like honesty, integrity, loyalty, and hard work.  But he doesn’t hesitate to throw outdated and impractical marketing overboard.  This real estate broker believes strongly that real estate education, experience, competence, and professionalism are all absolutes. But this business model also values technologies, the Internet, and systems that do help clients.  But the client must always be at the center of this business model, at the center of all the technologies, at the center of the processes, and every single client deserves the best communications.  While this business model values and uses lead generation and lead conversion concepts, and while it uses systems, all of these revolve around the clients’ best interests, not the other way around. This last business model is my business model.  It is what I live and breath every day for my clients.

The “Traditional Bricks-and-Mortar Brokerage” is slowly dying with many closing their doors around the country.  Those agents primarily are hanging on to their referral network, which is growing older and shrinking.  The top producer in the “Machine or Systems Brokerage” will make a good living, but it is a cold and impersonal approach to relationships and business.

The wave of the future is the kind of personal and professional service that puts clients at the center of the Universe, giving them the highest professional services with knowledge and wisdom, and which uses technologies and systems to serve the clients. This is the best of all worlds for clients today. This is the kind of real estate broker I would encourage buyers and sellers to seek out and hire.

Last Updated on December 31, 2012 by Chuck Marunde