SAN FRANCISCO — Giving agents the tools to manage customer relationships and transactions on the go allows brokerages to cut overhead spent on office space and support staff — even if they have no desire to replace their brick-and-mortar digs entirely for "virtual" office space.
"I don’t think we’re a traditional brick-and-mortar (brokerage), or virtual," said Gurtej Sodhi, chief information officer and vice president of Crye-Leike Real Estate Services. "We don’t like to be classified (as either) — we like to be classified as a company that will be successful."
He said Memphis-based Crye Leike is aiming to trim the office space per agent to 100 to 125 square feet, using 1,800-square-foot to 2,000-square-foot offices that offer a mix of shared space for agents willing to work in a collaborative environment and private offices for high producers.
Kevin Levent, president and CEO of Better Homes and Gardens Real Estate Metro Brokers, said the Atlanta-based brokerage is taking a similar approach, offering agents the ability to walk into any number of satellite offices to pick up marketing supplies or use communal space.
Access is controlled by biometric locks — agents log in and out using their fingerprints — and there are nearly 100 cameras monitoring the brokerage’s offices.
Although Levent thinks square feet per unit closed may be the best way to gauge office space requirements, he offered 30 square feet per agent as the benchmark Metro Brokers is shooting for using the more common standard.
"I say stack ’em high and wide, and when they start complaining, get rid of those," he said. "You’ve got to contain the square footage."
That 30-square-feet-per-agent figure doesn’t include private offices Metro Brokers rents to agents, for the brokerage’s cost plus expenses like utilities.
"I used to stay 80 to 90 percent full on that," Levent said of the private offices. "Now I’m probably 40 percent full because of the economy."
If agents are paying $250 a month for a private office, "they start thinking, ‘Wow, is it really worth it?,’ " he said. "They don’t store files there anymore — they’re probably not in them 10 percent of the time."
Providing agents with communication tools is the key to making them mobile, Levent said. Metro Brokers employs a call center that directs messages to agents’ cell phones, and documents are accessible from anywhere using Microsoft Exchange and Google Docs.
"The best thing we did was (move) to Google," said Eric Bryn, vice president of digital innovation for Chicago-based Baird & Warner Real Estate.
Bryn said the timing of that decision was good, as the "tectonic plates" of Google’s mobile, social, and Web-based services have aligned into a unified communications vehicle that allows the brokerage to focus on the contact management piece of the equation.
Google Apps is Baird & Warner’s primary platform, and Bryn is currently developing a middle layer to provide a unified platform that combines cloud and hosted services.
Before getting started, Bryn said he spent three months interviewing 200 agents to assess their needs.
The goal: to create a technology platform based on "rock solid" customer relationship management and social networking tools that can help agents do two or three more deals a year.
The shift from providing services to brokers that are internally hosted to Web-based "software as a service" (SaaS) does raise data security and ownership issues, said Jennifer Baumann, an attorney with DLA Piper U.S. LLP.
Brokerages should pay attention to the terms offered by vendors, and make sure that if they want to switch providers they’ll be able to do so. It’s also important to consider whether SaaS providers’ offerings will interface with other platforms, and whether the brokerage will stay with a provider for the long term, she suggested.
"Sometimes the providers don’t want to work together," Baumann said. "APIs (application program interfaces) that talked to each other five years ago (may) no longer talk to each other."
Agreements between brokers and agents will also determine what data agents will or won’t be able to take with them when they leave.
"One advantage to having a dedicated platform within your company (is) generally, if (data) was created while they were with the company, it stays with the company," Baumann said.
While some agents might object to not having their own office, many will come around if brokers can demonstrate that the mobile tools they are gaining will help them be more productive, and produce cost savings that also improve the agents’ bottom line.
"Until we showed what was in it for them, we didn’t have any agent buy in," Sodhi said. When the company was able to show how reducing office expenses allowed for greater investments in technology and marketing services, "that was received a lot better."
"It’s not just (reducing brick and mortar), but (support staff) you don’t need on your payroll," Levent said. "I run each of my offices with just one staff member. You’re agents will be very happy. They’ll see what you’re doing for them."
"It’s not a change in culture, because it’s been headed that way for years," Levent said. "When the broker is giving up company dollars (to agents), they have to be reining in expenses."
While even large, established brokerages are downsizing their office space, some startups are taking the concept even further.
For Matt Beall, principal broker of Hawaii Life Real Estate Services LLC, going virtual was a matter of necessity. Most of the company’s clients live off of the island, and agents are scattered around the island chain and often separated by water.
Glenn Sanford, founder and CEO of Seattle-based "smart brokerage" eXp Realty LLC, said that after starting his company in 2007 he was quickly forced to close two offices and go to a skeleton staff the following year.
"We looked at the economy and housing market, and we knew it was going to suck for awhile," Sanford said. Knowing that "there wouldn’t be as many commissions out there, and that agents would be looking for higher splits, we looked at technologies that would allow our costs to get as close to zero as they could get."
Sanford said eXp employs "virtual" offices in the truest sense of the word. Managers, agents and transaction staff conduct meetings online from home offices, entering a virtual setting that’s "like playing a video game," he said.
Eliminating physical offices and associated support staff has helped make eXp profitable and facilitated its rapid expansion. The company is currently doing business in 15 states, a number Sanford said will soon grow to 17 or 18.