Real Estate Brokerage Is Changing to a Virtual Brokerage Model

Real estate office buildings are closing from coast to coast. Real estate agents are hanging up their licenses in every state. The traditional bricks-and-mortar real estate brokerage is certainly hemorrhaging, and all that will keep this archaic business model alive is consolidations. As offices near, some agents quit, but the survivors move their licenses to another sinking ship, a ship that seems similar to the last one and frequently with the same name on the bow.

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 the large bricks-and-mortar anywhere with the same franchise offers to take all the agents in with the same contract terms: each agent pays $600 per month and keeps 100% of their commissions. The agents sigh in relief and rapidly sign the new contracts like sheep to the slaughter.

Because the broker can’t generate enough potential clients for the agents, and since the agents aren’t selling enough to help make the broker enough cash on commission splits, any type of split wouldn’t make sense for the broker today. highfield road A sharp broker will charge each agent a monthly cost. He laughs all the way to the lender, because with 60 agents paying $600 monthly, he’s making $36,000 a month just for living.

3 years ago I sat over the desk from a franchise broker who looked at me and said, “Well, we’re feeding the business every month. You need to do that whenever times are tough. But we’ve been through a down economy before, and we always turn out okay.” I remember thinking to myself that was a silly thing to state coming from a man who told me he previously no business plan, no budget for marketing, and no written vision for the future of his business. However, that same broker simply just issued a press release he is permanently closing the doors of his bricks-and-mortar and will be hanging his license with another bricks-and-mortar. Another consolidation.

This broker is only jumping in one sinking ship to 1 that hasn’t sunk yet. The new ship has a lot of leaks, and it may take a while for folks on the Titanic to wake up. Bricks-and-mortar property brokerages that stubbornly refuse to bridge the gap to a completely new business model will die a gradual and painful death. It’s a very important factor for brokers to ride their very own ship down, but it is quite another thing altogether for those brokers to sell tickets to realtors with promises they can’t keep.

Probably the most unfortunate thing about all of this is that the agents who think they’re doing what must be done to survive are just re-arranging the deck chair on the Titanic. Most of them truly have no idea or comprehend how precarious their fate is certainly. Most of them do have an uncomfortable feeling, plus they know something is wrong with their business model. Exactly like so lots of the passengers on the Titanic close to the conclusion who smiled and kept saying, “Don’t worry, everything always works out alright,” traditional agents continue to greet people who have a smile and await the phone to ring. However the ship is tilting, and they are at risk. They just have no idea what to do.

This is the great issue of being stuck. It is the classic inability to think outside of oneself. Traditional brokers and agents who have operated within a traditional brokerage model for many years battle to think in entirely new methods. What makes this especially problematic for so many is their irritation with technology and the Internet. Some simply won’t learn the technologies. I understand of a top producer who refuses to adapt, and he sincerely believes he can delegate lots of the responsibilities to his assistant. Very few assistants are going to spend night and day learning and adapting for a boss, and when they do and abandon someday, where does that leave the agent? Even successfully delegating leaves considerable issues in bridging the gap, which I will share later.

There’s been a huge change, however, not all agents and brokers recognize what’s happening. Most usually do not comprehend that they are in the middle of a significant earthquake. Therefore, they continue steadily to do what they always have done. Underlying each one of these changes is something very major that traditional agents are missing. Just as it is powerful forces that transfer tectonic plates deep below the earth’s surface, we are experiencing powerful forces resulting in an earthquake in the real estate world. Much like so much in lifestyle, what we see on the surface is merely a symptom of a deeper plus much more significant movement that is actually the driving force. It is this driving force that many brokers and agents have not recognized.

Here is the first tectonic force that is at the root of most these changes effecting the real estate industry: a change in consumer behavior. Granted, it is a huge change in consumer habit. It’s so big with hence many implications, a lot of people don’t comprehend it.

The full description of the changes in consumer behavior will be quite long, but this is a brief summary in the context of the true estate business. Consumers are no longer ready to be sold with obnoxious advertising and marketing and told what to buy and when to get it. Consumers are sick and tired of interruption advertising and marketing, of billboards, of ruthless salesmen, of telemarketing, and of misrepresentations and boldfaced lies. Consumers have had it with specialized conflicts of interest. They’re sick and tired of only getting partial information where to base their most important decisions. Buyers want and demand freedom to control their own destiny. They don’t like being controlled. They don’t like being manipulated.

The next tectonic force effecting such spectacular changes in the true estate industry is powerful in its own right, but also works as a catalyst for the improvements in consumer behavior.

The catalyst which has empowered consumers and is forcing these alterations which are the death knell of classic real estate brokerage is… advances in technology.

The traditional brokerage business model has been totally unequipped to deal with these tectonic shifts. The impact of the true estate recession has accelerated this process to be sure, but only in time. Had it not been because of this recession, the impact of the changes in consumer behavior could have taken longer, however the impact would ultimately be the exact same. The recession has acted like a diversion, however, distracting real estate agents from the real cause of their doom.

I’m reminded of the newspaper salesman who attempted to sell me expensive print advertising lately. I consult him, “Why would I advertise in the newspaper when it hasn’t sold some of my real estate listings previously year or so? Help me out. Why must i advertise in your document?” His reply while soft-spoken and polite, was basically of the same mindset as many real estate agents today, “Well, you don’t desire to be left out whenever your competition is advertising, do you?” In response to my blank stare, he pleaded, “When business is slow, it’s not the time to avoid advertising. It’s the time to advertise more than ever!” That’s when I possibly could no longer incorporate myself, and I broke out laughing. We used that collection in sales 30 years back. Are they even now using that line? Yes, they are.

Apparently, that kind of sales page still works with many real estate agents and brokers, because like flies bouncing off the plate cup windows in a futile effort to flee from bondage, many agents remain doing what they admit fails very well anymore. Whatever we were doing that has been not working before should be done twice as fast today. If the ship you’re on is sinking, stop wasting time about your business and jump on another ship just like the last one. Such behavior is certainly insanity and a ticket to disappointment.

More real estate brokers have filed for bankruptcy safeguard in past times two years than at any time in U.S. Record. And the earthquake has not ended as many bricks-and-mortar agents will be on the verge of closing their doorways soon.

It’s the early adopters of home based business models and new technologies who’ll be the millionaire real estate agents in the a long time. Because time is definitely truncated with the accelerating rate of the growth of technology and the use of the Internet, those that pause too long to think about doing something will be left so far behind, they could never catch up. Think of a space ship entering warp speed. Those who missed the flight will see themselves light ages behind their colleagues. This is one way it’ll be for traditional realtors who insist upon staying behind.
There is an answer, also it means embracing technology, new marketing methods, new tools to attain clients, and mastering the web as a powerful medium.

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