The real estate business is dramatically changing.  Real estate offices are closing and agents are hanging up their licenses all over the country.  The traditional bricks-and-mortar real estate brokerage is hemorrhaging, and the headlines lately have been about closures, bankruptcies,  consolidations, and mergers.  As offices close, some agents quit, but the survivors move their licenses to another  ship, a ship that looks just like the last one and often with the exact same name on the bow.

Real Estate Business – Franchises Closing

How is the real estate business changing?  A large franchise office closes it’s doors, no longer able to keep the lights on after more than a year of operating in the red.  The agents are worried sick, not knowing what they will do, until their savior walks in the door.  A broker from a large office across town with the same name offers to take all the agents in with the exact same contract terms:  each agent pays $600 per month and keeps 100% of their commissions.  The agents sigh in relief and quickly sign the new contracts like sheep to the slaughter.

Brokers aren’t generating enough leads for agents, and agents aren’t closing enough transactions to make the brokers a profit anymore.  What brokers need to survive today is a monthly fee from all their agents, and that’s not working for the agents either.  A broker with 60 agents paying $600 per month is making $36,000 a month just for having a building.  Brokers have become landlords with licenses.  This is one of the changes to the real estate business.

Real Estate Business – Consolidations

Three years ago I sat across the desk from a franchise broker who looked at me and said, “Well, we’re feeding the real estate business every month.  You have to do that when times are tough.  But we’ve been through tough times before, and we always come out okay.”  I remember thinking to myself that was a silly thing to say coming from a man who told me he had no business plan, no budget for marketing, and no written vision for the future of his business.  Unfortunately, that same broker just issued a press release that he is permanently closing the doors of his bricks-and-mortar and will be hanging his license with another bricks-and-mortar.  Another consolidation.

The most unfortunate thing about all of this is that the agents who think they are doing what it takes to survive are only re-arranging the deck chairs on the Titanic.  Many of them truly do not know or comprehend how precarious their fate is.  Many of them do have an uncomfortable feeling, and they know something is wrong with their real estate business model.  Just like so many of the passengers on the Titanic near the end who smiled and kept saying, “Don’t worry, everything always works out alright,” traditional agents continue to greet people with a smile and wait for the phone to ring.  But the ship is tilting, and they are at risk.  They just don’t know what to do.

Real Estate Business – Brokerage is Changing

There’s been a huge change in the real estate business but not all agents and brokers recognize what is happening.  Many do not comprehend that they are in the middle of a major earthquake.  Therefore, they continue to do what they always have done.  Underlying all these changes is something very big that traditional brokers are missing.  Just as it is powerful forces that move tectonic plates deep below the earth’s surface, we are experiencing powerful forces causing an earthquake in the real estate world.  As with so much in life, what we see on the surface is merely a symptom of a deeper and much more significant movement that is actually the driving force.  It is this driving force that many brokers and agents have not recognized.

This article is from a segment of Chuck Marunde’s new book, which just came out, the 2nd Edition of The New World of Marketing for Real Estate Agents, which is available directly from the NewWorldofMarketing.com.  The book acknowledged that the real estate business is changing and examines what buyers and sellers and Realtors can do to meet the challenge.

Last Updated on June 17, 2019 by Chuck Marunde