Evolution of Brokerages

Key Highlight

• Agent and brokerage segmentation growing
• 2021 RealTrends brokerage rankings seeing more low-cost, fee-based and/or flat-fee models

Prediction of Industry Segmentation Becoming Realized

In the 2014 book titled Gamechangers: The Unfounded Fears and Future Prosperity of the Residential Real Estate Industry, Steve Murray, Lon Welch and Lorne Wallace foresaw a segmented industry.

What does a segmented real estate industry look like?

• An industry where some agents/brokerages will become facilitators or transaction processors…

– An industry where some agents/brokerages will become counselors will create value via their knowledge, experience and outstanding market insight…

– And an industry where some agents/brokerages will do the majority of the business.

Steve Murray, one of the above authors, advisor to RealTrends and industry expert, said, “…the trend we spotted here is coming to pass…brokerage firms in the middle of the market are disappearing while low-cost brokerage models are increasing in size and numbers, high-end firms appear to be holding their own – the undifferentiated middle is under enormous stress.”

Rising Brokerages

Low-cost, flat-fee or fee-based firms such as United Real Estate and JP and Associates are chipping away at mid-level brokerages’ market share.

Transactional platforms make it easier for brokerages and agents to simply facilitate transactions.    Likewise, brokerages and agents who function as counselors or advisors to clients soliciting their sophisticated experience, knowledge and market insights can be much more productive and financially successful.

Brokerage Evolution

Murray said, “What we’re seeing now is…high tech, high-marketing, high-touch, high-value brokerage companies as counselors.  They build strong relationships with their agents and management teams and they provide a lot of support services (to and for their agents).

Brokerages as 80/20 Models

Brokerages that see their agents as their clients…brokerages that are agent-centric such as eXp Realty and Samson Properties…brokerages that “take care” of their agents with great incentives to help them grow and great tools/services that help them become better…are becoming ubiquitous.  80/20 models are increasing their market share.

80/20 brokerage models are not for agents who just want a broker to cover legal and regulatory requirements.  These agents do not want to pay more for more services and greater value…they just want to transact business.

But, for agents who do want core services such as game-changing technology, top-of-the-line training and coaching services and tons of incentives, 80/20 model brokerages are the way to go.

Thanks to RealTrends and MarketWatch.

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