During every downturn or recession, the thin veneer over disruptor brokerages that claim to be revolutionizing our industry is pulled back, and we are reminded of the unvarnished truth about our profession:
Real estate agents work for free until our clients achieve their goals.
Because of this, many experimental real estate models simply cannot carry the overhead through the inevitable up-and-down cycles, even when billions have been invested to prop them up. Time and again, the evidence shows a gross underestimation of the inherent challenges in scaling the uniquely personal real estate sales model.
This work-for-pay model is further complicated by the difficulty in defining the true work of a real estate agent. On a purely technical level, agents help clients search, buy and sell homes. They negotiate, assist with obtaining a mortgage, inspecting the property and ensuring the product is sound.
Beyond that, defining the work of an agent becomes more elusive, because agents guide clients through some of the largest and most meaningful financial transactions of their lives. These transactions have meaning because they encompass a client’s identity and intersect all aspects of their life.
Finding the right home defines how one lives, works, raises children and plans for the future. Selling one’s home is a transition that often represents consequential change, some for the better and some not.
The very best agents deeply understand these nuanced dynamics. Their experience handling the most intimate details of a client’s life, managing aspirations and fears has taught them to be empathetic listeners, trusted advisors and pragmatic problem solvers.
These skills make it difficult to say that real estate agents merely help clients search, buy and sell property.
This part of the business — call it heart or human connection — is what has stymied the venture-backed investors in their endless attempts to inject themselves into the equation. Perhaps their failure stems from this relational heart of real estate which seems unwilling to be extinguished by an app or an all-in-one technology platform.
Now, with COVID-19 in our midst, it has never been more important to strengthen connection and for brokerage leadership to take a progressive position in order to lead their agents through the pandemic and into the future.
Brokerages with an intent to survive will need to make difficult and strategic decisions to come out on the other side of the shelter-in-place orders positioned for success. Modest-sized real estate firms may have the advantage with their ability to make swift and meaningful adjustments to overhead. A lighter footprint and financial load, coupled with intimate relationships with landlords, vendors and stakeholders who are more likely to collaborate on temporary expense relief will tilt the scales favorably.
Successful real estate leaders will be those who exceptionally allocate resources to balance both human and financial capital through near-term rough waters and onward to a sustainable and profitable future.
Like mom jeans and a good shag carpet, everything that’s old can be new again. As we exit this pandemic-induced recession, expect the traditional brokerage model to persevere, further enhanced by technology to support the work of the agent and improve client experience.