Brokerage

Is traditional brokerage model obsolete? Part 1

Defining and comparing new and old-school ways of doing business

Takeaways:

  • Realty Point is an example of a new brokerage model that provides the resources that allow a one-person brokerage or small team to operate as efficiently as a fully staffed brokerage.
  • The question of whether the traditional brokerage model is obsolete hinges on how profitable the brokerage is and if there’s a better way.
  • The traditional brokerage relies on a large contingent of agents and brokers to bring in business; each agent and broker works alone with little interaction with their brokerage.

I want to introduce you to my new model of brokerage, which includes co-working spaces with shared resources, administrative staff, and office equipment and furnishings.

It’s a Realty Point brokerage. Realty Point provides the resources that allow a one-person brokerage or small team to operate as efficiently as a fully staffed brokerage.

Beginners start with an operation that handles the brokerage registration paperwork required to open a brokerage and provides office space for the brokerage in five Greater Toronto, Canada, locations.

It has the administrative staff to handle the phone calls, transaction paperwork and general office duties. I have made sure that Realty Point franchisees benefit with a low-cost entry point that virtually eliminates the added burden of administering a brokerage.

And the benefits go far beyond even these expense and time-saving services.

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Real estate sales professionals in Toronto are showing a lot of interest in this new model of brokerage. With four franchisees and five office locations, Realty Point is growing fast since its founding last year.

Discussing traditional vs. new brokerage models

With my experience on the table, I spoke at Inman Connect San Francisco in August. I appeared on a discussion panel that questioned “Is the traditional brokerage model obsolete?”

This discussion was moderated by Bernice Ross, and with me on the panel was Fafie Moore, broker and owner of Realty Executives of Nevada, and Penny Nathan, broker at Ascent Real Estate.

See full biographies of the panel here.

Left to right: Bernice Ross, Penny Nathan, James Hussaini and Fafie Moore.

Left to right: Bernice Ross, Penny Nathan, James Hussaini and Fafie Moore.

The panel’s discussion looked at the traditional brokerage model and the new brokerage model that is emerging. What follows is a summary of my thoughts on brokerage models.

Maintaining profitability

The question of whether the traditional brokerage model is obsolete hinges on how profitable the brokerage is and if there’s a better way to ensure profitability by staying with the existing model or applying a new one.

Traditional brokerage model

The traditional brokerage, for the most part, relies on a large contingent of agents and brokers to bring in business.

Each agent and broker works alone (for the most part) with little interaction with their brokerage.

Communication comes in the forms of basic marketing materials, training (if offered), deal transaction help and transaction related activities that are required to be completed by the brokerage and broker of record.

Within this model, each agent and broker handles his or her own marketing, networking, lead generation and sales.

New brokerage model

The new evolving model of brokerage relies on the team-based model of agents and brokers working within their team unit to achieve the desired results — sales.

Within the team-based model, specialists are created to handle specific duties within the team to achieve optimum results.

Each team member takes charge of their specialty to the benefit of the entire group. This model allows for a greater reach for marketing, networking, lead generation and sales.

The argument that traditional brokerages are obsolete:

  • Without adapting to the times, technology and consumer-driven expectations, the traditional brokerage will fail. By adapting to a team-based brokerage model, a brokerage will be profitable due to the determination for the success of each member of the brokerage.

The argument against traditional brokerages being obsolete:

  • The only cause for failure is the lack of vision leading to a lack of profitability. Independent agents or brokers have been the cornerstone of the real estate business and will continue to be so, provided the vision of the brokerage owner continues to be an effective business person.
  • A brokerage that can maintain a culture that benefits the agents and brokers will always be lucrative because of the determination toward success that drives the business.

There are similarities in both traditional and new brokerage models, on the face of things. But the differences, which at first glance may seem slight, bring about a wholesale change that will affect the basics of real estate sales for years to come.

Tomorrow, we will continue the discussion comparing the traditional versus new brokerage models with regards to recruiting, challengers and competition, and setup and operations, in “Is the traditional brokerage model obsolete? Part 2.”

James Hussaini is the founder and president of Realty Point.

Email James Hussaini.