• What you were told is a hybrid really isn't a hybrid.
  • Many are confusing innovation with the industry's negative connotation surrounding hybrid brokerage.
  • Innovation motivates and empowers agents and brokerages to better serve clients.

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A hybrid is formed from two or more different elements. Although a hybrid is different, being different doesn’t make something a hybrid, as is the case with hybrid brokerages.

In real estate, the term “hybrid” has become synonymous with brokerages using new business models, compensation structures or marketing strategies.

Use of the term hybrid has developed a negative connotation. Hybrid is new. New is unproven. This has lead to the opinion of many in real estate that traditional brokerages are a consumer’s safest bet. That leaves little room for the acceptance of innovation.

Traditional brokerages were hybrids

A true hybrid exists because an entrepreneur identified an opportunity and addressed it by combining what works with a new idea. Again, simply being different doesn’t fit the definition of a hybrid. In a business sense, a hybrid should take the best of what’s being done and combine that with new ideas.

Traditional brokerages began the same way. An entrepreneur identified the inconvenience involved in finding or selling a home and offered a more convenient way for consumers to do both. The first brokerage opened its doors, and listing books were placed on the counter for all to see.

Over the years, that business model was tweaked and changed leading to the scores of models we find today. Re/Max, Keller Williams, Century 21 and Coldwell Banker all have as many differences as similarities, yet they are considered traditional brokerages.

It could be argued that the only similarity is the use of brick-and-mortar. Does this mean the actual definition of a hybrid brokerage is simply the lack of a brokerage building?

Innovation leads, tradition follows

It pays to be first. Anyone using someone else’s new ideas as research and development is playing catch up. An innovative business model comes from a desire to improve things.

The innovator has scrutinized the original business model to identify new opportunity. Those playing catch-up can quickly find themselves negotiating barriers or just calling foul while watching the future recede into the distance.

Don’t confuse hybrid with discount

Real estate agents who responded to a 2015 Inman survey said hybrid brokerages put downward pressure on commissions and force traditional agents to do more than their fair share of work in a transaction.

Respondents shared this was one reason agents commonly discriminate against hybrid brokerages. These responses show how the hybrid label is misused. Discounted commissions might be new and different, but they aren’t necessarily hybrid, and you certainly can’t label all hybrids as discount brokerages.

Respondents in this survey showed a mindset prevalent in real estate. However, the innovative ideas that are negatively labeled hybrid are far too varied to be generalized as discount brokerages.

A brokerage whose model is founded on convenience and client experience probably doesn’t fall into a discount category. Convenience comes with a price tag. So, although some so-called hybrids might be upsetting the industry with discounted commissions for lower levels of service, there are innovators who support and earn full commission by offering the highest levels of expertise and service possible.

Innovation is good

Concentrating solely on commission causes many to lose sight of the fact that remarkable service, innovative ideas and expertise are excellent tools when competing against anyone. Any initial value perceived by a seller in discounted commissions for discounted services will quickly disappear as time on the market and expenditures for mortgage, taxes and maintenance increase.

Lost opportunity and delays in getting on with the next phase of life are equally costly. Innovative business models that survive on value versus discounts are far more likely to succeed with both sellers and buyers.

In truth, it’s not the discount hybrid that’s causing decreased revenue and increased effort, it’s a lack of innovative processes and marketing strategies to educate the consumer and combat the perceived value in discount services.

Innovation is good for all

New competition within an industry results in the players working smarter and harder. When this happens, consumers win. This truth is evident in the same 2015 Inman survey in which about 35 percent of traditional agents admitted hybrid brokerages will push them to provide a higher level of service while 46 percent said competition from hybrid brokerages will spur agents to adopt innovative technology.

Being a true hybrid isn’t a negative. Unfortunately, there seems to be a concerted effort within the real estate industry to erroneously brand innovative ideas with a negative connotation. Innovation is great.

It offers more choices and better service for consumers while providing greater opportunity and growth for agents and brokerages willing to embrace new ideas that keep them on the leading edge of positive change in our industry.

John Sims is the director of development for Lake Homes Realty. Connect with him on LinkedIn or with Lake Homes on Facebook.

Email John Sims.