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Throughout the pandemic, real estate brokerages have experienced their best years yet with record-breaking agent count, transaction sides, sales volume and revenue generated by ancillary services. Keller Williams has been part of the group to sail through the past two years with a new leadership lineup, major technology upgrades, and the launch of several service segments aimed at keeping its 188,121 agents at the cutting edge.
However, rising mortgage rates, inflation, rock-bottom inventory and war have threatened the industry’s winning streak and forced leadership to drill down on one simple truth: agents can survive — and even thrive — through precarious markets. “Don’t worry too much about what the market is doing,” KW founder Gary Keller said during his two-hour session at the company’s annual conference in February. “In the end, focus on your main activities of finding men and women who want to do business with you. If you can do that, the market will not totally drive your career.”
In his conversation with Inman, KW President Marc King echoed Keller’s beliefs and shared how a brokerage laser-focused on helping real estate agents become their best can never lose — upmarket or not. “If you’re not making the agent your number one priority, you’ve kind of missed the boat,” he said. “I have and will always believe in the real estate agent.”
This interview has been edited for length and clarity.
Inman: Your ICNY session will be focusing on what’s next for brokerages in 2022 and beyond, and with that in mind, I’d like to start our conversation by talking about business models. There’s virtual versus brick and mortar, there’s commissioned agents versus salaried agents, and then there’s the conversation about the ROI of ancillary services as everyone races to create an end-to-end experience. There are examples of success with multiple kinds of models, but what will actually stand the test of time?
Marc King: There’s a lot to unpack there, and I want to make sure that I’ve prefaced this the right way. There are a lot of people that come into and go out of this industry. I’m kind of older and, I hope, wiser, and a lot of the things that you were just discussing are not really new to the industry. For example, in the mid-2000s, I was running a brokerage model and we built a large agent count, and agent counts swell with the market increase and then shrink after there’s a downturn, right? It’s part of the cyclical nature.
So what happens at the brokerage level, or what happened with me anyway, is I got up to a couple of hundred agents and suddenly had this great idea to do joint ventures and marketing services, agreements with mortgage and title and insurance and all those things. So we built a wide horizontal business model, that was all based on the core business unit, which was the real estate brokerage.
The mistake that I made back then, and that I see being made right now, is focusing more on the ancillaries.
If the core business goes away, the ancillaries also go away, as I experienced personally. So I believe in the future, because I believe in the real estate agent, as you hear me say all the time — probably annoyingly so. But we believe the real estate agent is the fiduciary of the transaction — it begins and ends with that professional. It’s the influence of their sphere of influence, the influence of the vendors that they use, or the ancillary services they use.
If you’re not making the agent your number one priority, you’ve kind of missed the boat. At the end of the day, we’re still going to be dealing with normal market economics. What is the value that the consumer puts on the fiduciary service that they get from a real estate agent? What are they willing to pay? Then how do you, on the brokerage level, build a business that’s worth owning within those market dynamics?
If you are willing to do the work, there’s not a model that’s not working in this environment. So everyone looks really smart right now. It’s when the market changes that you see whether or not those models will stand the test of time. That’s why I have so much respect for the Coldwell Bankers and the Century 21s of the world and those people in our space who’ve been around for a really long time. I think there are a lot of emerging players and emerging models right now that are going to have different experiences if the market turns down anything like it did in 2008.
I’d like to touch on what you said about consumers and the value they place on agents. As technology plays an increasing role in the transaction and some proptech companies remove or lessen the need for an agent, how will agents need to change how they market their value? What will be the brokerage’s role in helping them do that?
Agents have to be a fiduciary. [Consumers] have to think about choosing this lifetime partner, if you will, that’s always going to help [them] move in and out of [their] personal residences, help [them] invest in real estate, etc. What we know, thanks to 30 years of data, is even with all the different models, iBuyers and institutional buyers, real estate agents are involved in more transactions today than ever before. So these other things have not disrupted that model.
But here’s the other really important point. As a proud member of a company that has 200,000 agents, it pains me to talk about the fact that not all agents are created equal. I think inherently we know that. If you break down our industry, we’ve always been an 80/20 industry — 20 percent of the agents make a living doing this and 80 percent are not yet.
There’s a low barrier to entry to get into the industry as an agent, so we have a lot of movement and we have a lot of attrition. If it’s an upmarket more get in, and in the downmarket people get out. But we have to do our best to help that 80 percent move their way into the 20 percent. We’ll be making some announcements in the next 90 days to help agents do that.
We’ve done so many things even in the last year, like setting up the largest real estate school in the industry in such a short time, setting up a nationwide brokerage in such a short period of time, and all the different segment innovations that we’re doing around luxury, commercial, new homes, and sports and entertainment. That is only going to accelerate at Keller Williams, and I believe the value has never been higher for the real estate agent.
Part of helping agents be a good fiduciary is understanding the needs of consumers, which have wildly shifted throughout the pandemic thanks to what we at Inman have dubbed ‘The Great Reshuffling.’ How are you keeping up with consumers’ needs as we continue to navigate the pandemic and other demographic shifts? What role does technology play?
First — affordable housing matters in the future, and we’re looking at solutions for that. Specific to technology, everyone’s trying to find the be-all-end-all. You hear the word “platform” everywhere, too. My question is, “What if everyone’s got it wrong? What if we’re solving the wrong challenge?”
I’m not aware of any single end-to-end platform that solves all challenges for all agent or broker needs, etc. At the end of the day, the agents’ ability to choose — and this goes back to how you think about the agent. If you think of the agent as a functionary, then you can create a technology platform that will get them through a transaction.
If you think of them as a fiduciary, and you want them to have choices and you want them to be professionals because they’re the central part of what makes us all go, then you have to be creating technology that they use, that they like [and] that they can partner with to create an excellent consumer experience. We’re working on delivering that experience through some things that I can’t talk about.
In the next six months or by the end of this year, you’ll hear a lot from us on that front.
I’m excited to see what you come up with. Lastly, I want to focus on people like you — those who are leading brokerages and making the decisions that impact agents’ and consumers’ futures. What’s next for brokerages and how they build their leadership lineups?
As I’ve been quoted before, I believe in having people at the executive level of large real estate companies who’ve had real-world experience. They know what it’s like to be a commission-only salesperson who is sitting at a kitchen table and helping people work through their nerves, their fears and their objections as they go through what’s arguably their most complex transaction.
I realize I’m biased toward the real estate professional because it’s also my background. I think having people at [the executive] level who have run really successful top 100 brokerages in the world and top regional businesses in the world really matters. I’m so proud of this company because we have more of that sales experience in this building than ever before, and a very collaborative group here that trusts each other and leans on each other.
Look at the people we’ve added just recently — Gary and John Keller hired Carl Liebert who’s the former CEO of Home Depot, Auto Nation, 24-Hour Fitness, Circuit City and General Electric. He has all this wealth of knowledge and when someone has operated a company like Home Depot, that knowledge and experience is super accretive to the housing industry. Beyond that, you look at our chief financial officer Stacy Shirley who came from Neiman Marcus and understands the luxury side of things. Our chief legal officer Stacie Herron came from one of the largest property holders in the country and she understands how to protect real estate businesses.
Then look at Stacey Onnen and her understanding of a national brokerage, and what it means to be more virtually based, digitally based and physically enhanced. That’s a big deal. And the list goes on and on.
None of us are content or in a mode where we’re going to want to rest on our success. Every day there are only two things that really matter: How do we help our agents have a great relationship, get one more listing and be able to serve their customers and consumers at the highest level? Number two is how do we help our franchise partners attract one more agent today? If we solve those two things at Keller Williams Realty International, then we’re going to provide the absolute best service and experience for all of our agents and consumers.
