“To see what is in front of one’s nose needs a constant struggle.” – George Orwell

At a recent Inman conference, an innovative indie broker was musing about shrinking broker margins. He recommended that company owners leverage their agent relationships as distribution channels for technology companies to provide and sell software and services.

The sell-through strategy is a fresh version of the classic broker and franchise affiliate model or the lender and title company joint marketing programs.

An opportunity, yes, but this model has proven to be limited because no true marketplace exists to create a flywheel of economic activity.

But an alternative has entered the picture — expansion teams (ETs) — a new platform for independent contractors (agents) to get business, akin to Airbnb and Uber. They represent a marketplace that taps the power of agents without the liability and the cost of the old broker model.

Like all successful technology platforms, they offer leads, systems and technology, which is what made Uber, Airbnb and smaller companies like TaskRabbit and food delivery service Seamless successful.

With light overhead, limited liability, and no need for physical space, their margins are higher. Ambitious and smart ETs represent a new generation of real estate companies that are poised for high volume growth.

Like a transportation company that owns zero cars

Real estate renaissance man Ben Kinney is at the forefront of the ET movement with teams spread across eight states and 11 locations with the technology, systems and training to serve them. He has more than 100 applications for new teams.

Ben Kinney

Based in rural Washington state outside Seattle, Kinney has built or acquired three software companies (Brivity, Kwkly and most recently Blueroof360) that provide virtual lead capture, prospect management and conversion, and agent training and branding.

The secret sauce: He is not the broker of record; rather, the local Keller Williams market centers carry the broker license, allowing Kinney to fly under the legal radar as do Uber and Airbnb.

Dubbed Blossor, it is a search engine to capture leads, which are passed onto agents affiliated with other brokers.

He says, “to be cliche, Uber is the largest transportation company in the world and they own no cars. I believe that a real estate company can be built so large and sell more homes than any other brokerage while actually having no agents,” even though agents are used in every one of his home sales.

Kinney added: “These agents work at someone else’s brokerage using someone else’s overhead and liability yet providing a platform for us to build a company 10 times more profitable than a Compass or a Redfin.”

The often understated Kinney ended his comments with, “I don’t sound too cocky, do I?”

‘Transforming economies’

ETs have figured out how to acquire customers far away from where they are based and monetize those leads by empowering distant teams with tech, training and systems.

Just as the sharing economy tech companies use simple apps to connect drivers, renters, riders and owners, ETs connect homebuying and selling prospects with agents across town, across the state, across the nation and even around the globe.

Office space is not required because ETs are completely virtual. Plus, they leverage industry legacy systems like legally vetted independent contractor status and a referral fee revenue model. These are important underpinnings to Uber’s success.

And like other companies that make up the sharing economy, ETs have unbounded opportunity because they have the capacity to scale.

In their 2016 book Matchmakers: The New Economics of Multisided Platforms, economists David S. Evans and Richard Schmalensee wrote that these types of platforms are “transforming economies” around the world, “making life easier and better for people,” according to a description in the New York Times Sunday Magazine.

Advertising platforms like Zillow and realtor.com have morphed how agents advertise, but direct services platforms have no traction in real estate, which is why ETs are a bright spot on the horizon.

Unlike ad platforms, they offer more hands-on recruitment, systems and training and are paid on success — closings.

ETs represent a new middle man in an already-overcrowded field of people clamoring for a piece of the real estate transaction. How they sort out their value in the changing real estate landscape is unclear.

Theoretically, all brokers could position themselves as a platform company, but their relationship with some of their agents is too intimate and they are saddled with expensive overhead like office space and contingent liability that curbs their ability to expand.

Shaking the shackles of those traditions is not easy. Plus, many do not have the technology chops to bite on the ET opportunity.

Even so, expansion teams could be the emerging superpowers of real estate.

Email Brad Inman

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