Beyond Bricks and Mortar
Internet-capable handheld devices are moving typical office functions into the field, allowing real estate professionals to be increasingly less reliant on a brick-and-mortar brokerage office.
Today's real estate office can be any where, a car, a coffee shop or most any location within reach of a signal tower or wi-fi hot spot.
A virtual brokerage office can serve increasingly more purposes. Shifting from paper documents to electronic documents can create greater efficiencies and improve tracking in the transaction process. There is also the simple "green effect" of cutting way down on paper waste and gas usage traveling to and from the office.
The increasing use of Web applications and Web metrics allows brokers and agents to better measure productivity and their bang for the buck in marketing while keeping up with instant updates in property status.
Most Realtors now spend more of their time working out of their homes than going into the office. The old concept of floor time just doesn’t work anymore. Since almost all Agents have their names and phone numbers on their signs, calls from buyers no longer go to the office. This issue was always unfair to the listing Agent, anyway. If they worked to get the listing, they should get the calls. So agents currently work out of their homes, they pay for their web sites, they pay for their advertising, and they pay for their own business cards and a host of other expenses. Why should they pay 20% to 40% to their brokers? It’s a heck of a good question that most brokers really don’t want to think about.
Since you can now conduct office meetings online, scan, and review contracts with a click of a button and, quite honestly, allow the broker to supervise as well or better than trying to run down Agents in the hallway of a brick-and-mortar office. Why do they need a brick-and-mortar office? I see the future agent paying a small fee to a broker for placing a license under a broker’s license and then making one's home their office. One option could be the renting of space when needed. There are virtual office buildings in the Tampa Bay Area where a productive agent can rent space very inexpensively when they need to meet a client or meet at a nearby Starbucks, or your favorite restaurant.
The Traditional Business Model Is Obsolete
So where does this leave the old style brokerage model of bricks and mortar offices? In my opinion, this model makes less and less sense as time goes by. It’s not dead, but in serious need of weight loss which includes the proper diet and massive amounts of exercise. Seriously, how does it need to change? The royalties paid to the corporate office needs to change. I believe that the whole commission structure needs to be revamped as well. I have heard the argument from staunch “big box cool-aide drinkers” that the royalties and fees and commission splits pay for themselves if the agent gets at least one deal from the brokerage that they wouldn’t normally have gotten. Any additional deal is just gravy.
I have experience behind me with a big box broker, and I used to believe and asserted when dealing with push-back on commission plans from agents. “Would you question the splits if our brand delivered enough leads to cover these expenses every year?” That’s a hard question to say ‘yes’ to. But if you think through this assertion and realize what you are getting into, then the assertion begins to have less value. What if a non-big box broker could send you the same amount of leads? Would you still pay more for the brand name? What if you generated so much business on your own that you didn’t have time to work the leads from your broker? Would you still pay more for the brand name? How do you know that you would not have received those leads from a non-big box broker with a well placed internet presence? Why allocate a portion of every transaction to cover royalties? Do you enjoy working for free?
Granted there can be many reasons (but often times they sound like justification or rationalizations) for going with a non-big box broker, and I contend that the broker’s brand means less today than ever before. Small brokers are generating as much or more leads from utilizing web 2.0 tools than many of the large broker brands in local markets all across the country. The real questions you should be asking yourself (and your broker) are… Did the large brand name itself generate business I would not get from a small broker? If so, then does the income from those leads offset the additional fees charged by the big box broker? I simply advise you to consider small brands when shopping for a broker. Often times non-big box broker commission plans are far more attractive and you may not give up any leads handed to you by the broker.
If large brand name broker gives you a bundle of services and leads at a cost to you of X and small broker gives you the same bundle of services and leads for Y (where X is greater than Y), then why pay more for the brand? Do yourself a favor and shop broker services and don’t forget to consider the small local broker.
There are a percentage of Agents that need the interaction at an office, and are willing to pay high commission splits to their Brokerage, but more and more, productive Agents avoid the time drain of the traditional office environment of gossip and donuts and opt for high splits and a virtual alternative.
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