3 reasons why National Brokerages are losing clout

I've been a Real Estate Agent since 1998. I've been with a handful of National real estate brokerages during that time. Men routinely dressed in shirts and ties, women wore pant suits and everyone wore name tags. Back when I first started my real estate career some of my commission splits were as little as 50/50. High brokerage fees, office fees, and other fees used to be expected across the board. The benefit to hanging your license with a National brokerage was to take advantage of their brand recognition, marketing power, and supposed lead generation ability. Agents could, and still can, sign up for floor-time and field incoming calls to their office from possible clients looking for an agent to work with or simply to ask a question about home buying or seller. It's up to the agent to convert those leads into sales. 

In the time that has passed since I first joined the real estate industry the landscape has drastically changed. The books of listings that agents used to comb through to find properties for their clients have been replaced with local MLS's, on-line portals, and IDX searches. Agents are no longer tied to their offices. Everything is mobile from phones, to email, to portable blue-tooth enabled fax machines that can be run right from your smart phone. Documents can be uploaded and digitally signed in the cloud and emailed while you and your client are still standing in the very home they are offering on. Agents no longer need to rely on their Nationally recognized brokerages to provide the tools that at one time could only be found by going in to their offices. 

 

Changes that affected the Traditional Brokerage model

 

1. Lower Commission Splits

There have been big changes in the real estate brokerage industry but perhaps none as big as lower commission splits. It's not uncommon to see splits range from 95/5 to as low as a few hundred dollars per transaction. When big brokerages compete against eachother for market share and agent loyalty money talks. The more money you put in your agents pockets the happier they will be and the less likely it is that they'll shop around for other brokerages that will give them what they want.

The downside to the lower commission splits being earned by brokerages is that they aren't as willing or able to spend as much money on advertising, marketing, or further education classes for their agents that they once provided routinely. Local Real Estate schools and on-line continuing education courses have taken over the education of agents. Since Designated Brokers who run a national brokerage have taken a large hit to the wallet due to lower commission splits coming to them they aren't as readily willing to spend the amount of time with their agents to properly train, educate, and assist them throughout their transactions. 

 

2. Real Estate agents are becoming their own Brand

We live in an on-line world and the ability for people to market and brand themselves is easier than ever. There are dozens of social media outlets that allow a real estate agent to reach their circle of influence and market to a targeted audience. Agents no longer need the deep pockets of a big National brokerage to advertise on their behalf and generate a recognized brand loyalty. We are becoming our own brand. Each real estate agent has their own unique style, client base, and personality. All of these traits and characteristics can now be used to their advantage like never before. 

Because of the ease and ability to market for ourselves, most real estate agents aren't seeing the value behind being tied to a National brokerage. Personal branding has never been more of a primary motivator than it is today. The expectations of today's customers are much more focused on whether or not the agent they choose will fit in with their own values, lifestyle, and specific needs. There is no more one-size-fits-all, every agent is the same mentality among consumers. 

 

3. Independent Brokerages are on the rise

Independent brokerages are becoming more and more popular among real estate agents. The new era of individuality is a major driving force behind the increase in popularity of independent brokerages. Not only are more agents now taking the necessary steps to become a broker, those same agents are branching out on their own to brave the world of small business ownership. An increasing number of individuals are becoming more willing to roll the dice on being the masters of their own destiny and be in control of their futures completely independent of a National brokerage. They want to show the world and their clients just who they are through their business names, logos, and services.

Other agents are taking notice as well. As agents become brokers they can easily recruit a handful of their colleagues to create a customized, personalized brokerage that can cater to a niche market, or specific group of clients such as a luxury home market, or retirement aged buyers and sellers. 

 

National Brokerages aren't going away

Real estate agents are quickly seeing the value in establishing their own brokerage models under their own name and creating their own brand and image. They are also seeing the added tax savings and strategies in which a small business owner can take advantage. Most importantly more agents are seeing the benefit of controlling their own futures by breaking away from the National brokerages. 

There will always be a place for National brokerages. They are generally still perceived as a safe launching point for new and part-time agents, and there is much to be said about attaching your name with an already recognizable brand. Although the benefits of hanging a license with a National brokerage are quickly fading. As I am one of the many agents who took the step of becoming a broker and small business owner I've been on both sides of the fence. There will always be agents who wish to be associated with a big National brokerage because of the perceived advantages, but there is a rapidly growing sub-set of agents who are branching out on their own to take advantage of the technologically advanced and personalized world we live in. 

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