Editor’s note: The following is a guest perspective. Inman News is exploring what the next decade may hold for real estate professionals in "2020 Re-Envision: The Future of Real Estate Brokerage," an editorial project that features a survey and related articles. Readers are invited to submit guest essays detailing their vision of the real estate brokerage industry in the year 2020. Send your guest essays to email@example.com — the deadline for entries is Friday, March 12.
By JAY TERISI
Today’s brokers and agents who survive and lead us out of this current mess are going to be those most willing to change. They will share three key attributes: they will be the most competent in their craft, utilize all available technology, and be the most dedicated to customer service.
It seems like that should be the case today, but some, and perhaps a majority, are resistant to change. But pure Darwinism, survival of the fittest, is on the way. And internal and external changes to real estate brokerage offices will be a part of our evolution.
Undoubtedly, these changes will be fundamental. Externally, technology will continue to drive our industry change, and internally, change will be in the form of technology and reduced commissions. Sounds simple, but the transformation to the brokerage of 2020 will be drastic.
New technology will continue to offer buyers and sellers a better online experience. The information from these technologies will also allow the consumer a much more detailed look at and understanding of the entire transaction. With more data becoming available, such as historical sales info, neighborhood info, and mortgage and transaction pricing models, the consumer will be more likely to view agents as the proverbial "walking lockbox."
The providers of these technologies are coming in from every direction: marketing, lead management, consumer information portals, 3-D tech, social media, and most are not real estate companies. They are technology companies who now have access to the real estate consumer that they never had before.
The last 10 years was the incubation and testing mode, and the response was overwhelming. The consumer wants the information. This reinforces the fact that agents today have to be the transaction and negotiation expert to add value to the transaction in order to justify a fair commission.
Another external change will be a shift back to the local and regional broker. The past 10 years saw a massive ramping up of national Web sites that provided information to the consumer (that they wanted) and that they were not getting locally.
This will include both national real estate brokerage Web sites and national providers offering content intended to drive the consumer back to local brokers. That trend is already happening, as Google’s local-search algorithms are responding to consumers’ long-string search terms, for example.
Real estate will still be a local business and when more comprehensive local information is available through tech-savvy local brokers, consumers will use that information instead of national Web sites.
The Internal brokerage changes will be more palpable. The brokerage office 10 years from now (and the industry as a whole) will have far fewer agents, each handling many more transactions. Already, board memberships are falling in most areas. Last time I checked, National Association membership is almost back down to 2004 levels….CONTINUED
This trend will continue. Technology and information will enable it, commission pressure will drive it, and the independent contractor status will begin to evolve into employee status, with transaction bonuses.
In 1975, a $1 million producer won awards and could feed a family. Today, they still get an award and can barely call it a living. These agents will cease to exist; the part-time agent will generally not fit in. Again, you can see the evolution at work today in the growing number of "teams" working within brokers.
There are small groups with large transaction volumes, some with an account manager (lead agent), marketing specialist, transaction coordinator … it sounds like a real corporate structure to me.
The strongest, most technologically advanced companies in each market will eventually control all of the local lead-generation and online platforms for the consumer to engage them. The consumer will have almost all of the information they need to make an educated decision before they speak to an agent. We’re pretty close to that now.
So we, as an industry, will have offices of competent employees guiding many consumers (a book of business) through the process every day, with consistent quality and service expectations. The discussion of who owns and generates the clients for a company will be over. Our industry, like the financial brokerage and insurance industries before us, will finally make our transformation. And this is necessary for our survival.
The inefficiency of our industry has bred a less than stellar reputation (certainly inconsistent) for quality and value. Ask yourself this: In a market of 1 million people, is there any product or service that offers 300 choices of provider (not to mention the 2,800 "customer service staff").
Compare your demographics to the number of entities registered with your board. Or, look at NAR’s average number of transaction sides per agent. In what other industry could you "exist" in completing your intended business transaction once every two months? It is not efficient and will change, due in large part to the free flow of information online.
All "free" markets move to an equilibrium of efficiency based on supply and demand. Our industry has not. Multiple listing service information control and independent-contractor status combine for a setup that is diametrically opposed to what the consumer demands, and consumers will eventually win, as they always do.
This won’t be a conscious effort on the part of the broker to wrest control away from agents and make more money for the firm. This will be Darwinism at work: companies reevaluating and restructuring their models to fit the times. This will be a response to the consumer, as everything is in real estate.
Our goal will still be the same: provide value and guidance through the real estate transaction using our excellent people skills. We will, however, evolve into account managers with standard work schedules and quotas. All in all, it will be part natural selection and part common sense, resulting in a consistent, quality consumer experience while at the same time insuring our existence as and industry.
Jay Teresi is director of new business development for Nothnagle Realtors, which has a headquarters in Rochester, N.Y.
What’s your opinion? Leave your comments below or send a letter to the editor.