Real estate brokerage and the business of buying and selling real estate is in the midst of extraordinary changes not seen in the last three decades of business as usual. Business models of the past are quickly becoming irrelevant as consumers shift their buying habits. Brokers and agents who learned to become automatons of business, using traditional methods of marketing and sales are suddenly finding themselves on the sidelines. The top producers of yesteryear are learning humility in obscurity.
Thousands of agents who have always been hard workers and earning a good living are feeling like a mouse on a running wheel going faster and faster but not making any progress. Brokers who have stocked their office cubicles with agents and feasted on their 30% to 50% commission share are being stretched to the limit financially and wondering how many more months they can continue to feed the brokerage.
Real estate’s captains of the industry are feeling like there’s been a mutiny, but they don’t know who to accuse. Consumers en masse have taken over the ship and rendered the captain powerless. The real estate industry has entered a new phase–the age of the consumer.
While traditional methods of marketing real estate are fading quickly with the demise of print advertising in newspapers and magazines, technology and the Internet have empowered consumers as buyers and sellers in ways that were never imagined only a few years ago. We need new terminology to explain what has happened, but as soon as we think we have defined the boundaries of new consumer powers, creative tools and processes expand those powers exponentially.
The rules of the real estate industry have been changing so fast that long established players are suddenly finding themselves out of the game. The middlemen of real estate, such as database compainies, database brokers, accounting services, customer service and management companies, public relations companies, advertising agencies, magazine and newspaper advertising departments, real estate franchise services, and franchise brokers are watching their dominance fade.
Replacing these long established powerhouses are consumer-centric tools that change the rules of the game. The best of these new tools are more powerful than traditional methods, far less expensive (many are totally free), and eliminate the need for dependence upon other players. A moderately tech savvy Realtor can build a beautiful website online, create a real estate blog optimized for the search engines, and establish an online professional persona to clients anywhere on the planet. New ways of networking on the Internet have launched hard working agents into the stratosphere of real estate marketing. Syndicating, social networking, and the most powerful real estate online network (ActiveRain) give the individual Realtor marketing power he never had before. Great marketing devices that have only been possible for large corporations and far too expensive for small businesses or individuals are now affordable. Low cost website and blog hosting, low cost storage, audio and video production, database management systems, widgets, gadgets, podcasting, and mobile services are available to a single agent working out of his home.
A single Realtor no longer needs the massive brick and mortar building of his broker who confiscates 50% of his commissions. While large real estate brokerages will still be major players, provided they adapt and learn to bridge the gap from the past to the future, these industry changes have given the individual agent the ability to create their own business model with low overhead and keep 100% of their commissions. Large brokers no longer have the upper hand. A consumer can now connect directly with a Realtor, and no middleman is necessary.
How do I know any of this is true? How do I know these tools really work?
As a Realtor I practice what I preach. A substantial part of my business is coming through these technology tools and the Internet. Last month in a very small community and market (Sequim, Washington), I closed four transactions, which made me the second highest producing agent in the county. This may not sound all that impressive unless you realize that I am a one-man show, keeping 100% of my commissions with extremely low overhead, and competing with large brick and mortar franchises and the agents in those franchises with all the traditional support they are getting at the local level and at the national level. I do zero print advertising. But making all of this happen is not easy. I work from early morning until late at night building my Internet presence deeper and wider.
I love what I do, and I love the independence this new frontier has given me. I love real estate, marketing and sales, and I love writing and technology. I think I’ve found my place in life. The greatest news for the consumer, for buyers and sellers, is that these changes in real estate brokerage redound to their benefit. The consumer is taking back control. I love that idea, and as long as I serve my clients well, it’s a win-win scenario.
Last Updated on July 27, 2012 by Chuck Marunde
I could not have said it any better myself. Gone are the days of brokers taking a large share of the agent’s commission. These days it is wiser to stay lean and mean while running a business and that is hard to do when overhead is high.