The Profile Of A Successful Brokerage In The Future Of Real Estate
Unlike many retail and other service industries, real estate brokerages have avoided having to make big changes to their business models to meet the needs of their customers and employees. For the most part, residential real estate continues to be sold via real estate offices, skilled brokers and exclusive control of property listings. But, that is changing quickly.
Historically, real estate listing data was closely held by brokers. Then came the multiple listings service (MLS), which centralized the data, followed by internet websites that published the data. So, systematically, brokers have been losing their role as the keeper of the information.
Brokers, however, have remained relevant as advisers to their clients, so despite the listing data being publicly available, the broker continues to play an important role in advising clients, negotiating deals and facilitating transactions.
But it’s becoming a new world for brokerages. Technology, such as artificial intelligence (AI) and the blockchain, is introducing new efficiencies that can change some of the roles of a real estate broker. Real estate agents are increasingly organizing themselves into powerful teams and putting increased demands on brokerages for more services and facilities. And, well-funded startups are appearing with innovative business models (think Amazon or Expedia) that have the potential to challenge legacy brokerages.
This new world of brokerages is already here — but it’s not the end of legacy brokerage firms. Those that will survive the next decade or so will need to understand the necessary shifts in the industry and adapt to them.
While there will always be a role for real estate agents and one-on-one relationships with their clients, the brokerage of the future will be a company that:
• Spends more on technology and research than marketing and payroll combined.
• Deploys AI and sophisticated technology to anticipate and meet the demands of its customers.
• Creates (via AI and technology) a custom experience for each website or app visitor.
• Provides its customers with sophisticated tools that help them identify, locate, assess and purchase properties, aided — but not controlled or managed — by a real estate agent.
• Leverages the blockchain to optimize and secure all interactions and transactions with its clients, employees and partners.
• Understands the mobile nature of our society, and creates innovative and creative ways to market to and engage with a mobile client base.
• Offers different ways to hold real estate listings, such as keeping some as exclusives, sharing others as multiple-brokerage listings and offering certain types of listings via an online shopping cart model of listings.
• Becomes less reliant on physical offices for customer visits, while expanding physical offices as workplaces for its agents and teams.
• Supports and brands its various agent team structures, handling them as “companies within the company,” where the teams are co-branded with the company, rather than sitting under the brand.
As real estate is a high-value transaction, the human service element will never disappear. But, clients will demand to be more in the driver’s seat, while brokerages will spend more of their time studying, predicting and pursuing their clients. The change in brokerage is more of a shift than a revolution, but as with any shift, newer players can sometimes squeeze into the industry and displace the players who have been there for decades. The good news is that all brokerages, new and old, can play in this new space.