Brokerage

Why growing agent splits can refine a broker’s value for the better

What it will take to thrive in this space long-term
  • Shrinking margins can be viewed as a squeeze on profits, or a progression toward cutting the fat. They incentivize brokers to focus on their value.
  • We need to have a cost/benefit model that allows for more than a license warehouse full of unproductive agents.
  • The brokers who increase their productive agent population during an economic downturn are the ones who have figured out long-term growth.

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Brad Inman’s piece on the breakup of a broker empire hit home.

I may be in the minority of those working in a traditional brand brokerage, but I’ve always felt that growing agent splits are a positive trend for the industry. They reinforce where the greatest value is delivered: agent-to-client relationships.

Cutting the fat

Shrinking margins can be viewed as a squeeze on our profits, or an inevitable progression toward cutting the fat out of old business models. They incentivize brokers to focus on their value proposition.

How much physical space is necessary, and how much is just show?

There are boutique brokers who provide a curated, luxury experience for their clients. Pricey physical space may be a necessity for their performance.

But there are a growing number of consumers who don’t need the real estate experience to be an extended showering of niceties to appease their sense of self-value. They’d prefer a sleek, untethered Amazon-style purchase under the guidance and protection of a trusted adviser.

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What the forward-looking brokerage provides

Of course, we need to have a cost/benefit model that allows for more than a license warehouse full of unproductive agents.

So what does a broker do that empowers an agent, and how does that lead to more sales?

Rows of empty offices with closed doors and shiny name plates are not primary benefits to most agents’ sales production.

Minimal, flexible office space for meetings and appointments suffices. Technological efficiency will not ignore our industry just because we ignore it.

The forward-looking brokerage should supply the infrastructure an agent needs, at a cost where it’s not profitable for the agent to recreate it. Providing benefits at improved economic scale is our reason for existence.

Agent-agnostic branding and culture that consumers instantly recognize are still invaluable.

End-to-end transaction management, liability protection, management knowledge and guidance, education, coordination: Our tools should be the foundation that allows our agents to focus on selling.

Top-down marketing can’t be the bulk of our spend — agents and teams need the flexibility to use their own marketing dollars creatively.

The cyclical experience

I’m clearly biased, but I think the most interesting thing about a lean yet full-featured brokerage platform is the cyclical experience.

In good times, it grows moderately. When the market slumps, experienced brokers sign on in droves. They don’t usually go back.

Watch the brokers who grow their productive agent population when the next unavoidable downturn hits the real estate market. In my opinion, that’s where the long-term broker growth model lies.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth and President-Elect of Seattle King County Realtors. You can find his team at SeattleHomes.com and BellevueHomes.com.