If I've heard that once in the past few weeks, I've heard it 50 times. So let me expound on what this is all about by telling you a little story.
While sitting in the Tampa airport, waiting on a return flight to Nashville, I pulled out my laptop and like all good business people logged onto my email to see what had happened over the past couple of days. What I read would change my life forever. No, it wasn't a religious message, it was a recent edition of a news service that I subscribe to which contained an article entitled "Is the End in Sight for Brick and Mortar Companies?" (http://allisonjamesrealtors.blogspot.com/2008_01_27_archive.html). Hold that thought, I'll come back to it.
As everyone knows, our industry has been in the throes of some dramatic changes over the past few years; changes which seem to be picking up speed, driven by the rapidly changing wave of new technology. Leading the charge among all technologies is the internet. Most businesses are now heavily dependent on internet based operating systems and so are consumers. Recent statistics say that 87% of consumers use the internet to do their house shopping. That means that 87 out of every 100 consumers are finding the homes they want to see on the internet then handing a print out to their agent with the instructions "show me these homes!"
What does that do to the agent? It means that the real estate professional is no longer the sole disseminator of information for the consumer. It also means that the real estate agent is no longer dependent on the broker (or the company) to bring him business; he is instead dependent upon his own, internet based marketing programs. Google anything to do with real estate and 10 agent websites will pop up before a single company website. Society is changing too, we live in a society where people want what they want, when they want it, and they don't want any more than they want. The consumer is forcing an "unbundling" of the real estate services by the agent as he attempts to outmaneuver the client and still bring value to the table.
I'll give you an example. What if there was a restaurant which ran hundreds of ads saying they had the best burger in town? Lots of color pictures with the juices just dripping down - really looked good, made your mouth water every time you saw it! Then imagine walking into that restaurant with a real taste for a good burger on your mind. Upon being seated at your table and handed a menu, you open it to see all the 57-11 different ways these guys make burgers. But...there's a catch: every burger comes with a salad bar, large baked potato plus dessert, none of which are optional, its just part of the deal. "But wait" you say, "I don't want those, I just want the burger I saw in the ad!" To add aggravation to angst, the prices were higher than you wanted to pay. They have to be to cover the cost of that fancy salad bar and the other stuff. But you didn't want all that, you just wanted the burger and maybe a few fries. Would that be a frustrating experience for you?
Now, relate all that back to real estate. The consumer just wants the juicy burger (or in this case their home sold) without having to pay for all that other stuff they aren't using and don't want. Yet the agents continue to force it on them because that is the mindset of our industry.
Bottom line is that the agent must increase his flexibility to meet the consumer's changing expectations. The side consequence of this is that in struggling to maintain his value to the consumer, the agent exerts downward pressure on the traditional commission structure. Some folks still want the full service menu and are willing to pay for it (plenty of people love a salad bar with their burger) while others feel they have done a lot of the work and want the agent to take care of the other aspects they lack expertise for, while recognizing their efforts in the form of reduced agent compensation - buying only what they need.
Under the traditional broker split model, the flexibility that allows the agent to meet this challenge simply does not exist. Every time an agent modifies his compensation model, he impacts his broker's business structure. The traditional brokerage business model fails in allowing agents the flexibility to respond to consumer demands. Therefore, the traditional brokerage business model is (like Humpty Dumpty) broken, and cannot be put back together again.
Now, go back to the article I mentioned at the beginning. If you have read it, by now you are beginning to put together the pieces of the puzzle. All of the moving parts of this industry were heavy on my mind when I came across this article and introduced myself to Allison James Estates and Homes. The concept is simply really, it's a national network of elite professionals, tied together by a single broker for each state. I am the broker of record for the entire state. Agents anywhere in Tennessee can bring their license here and receive 100% of their commission for a low monthly fee. Now, suddenly, it's not the broker's decision anymore how the agent prices and packages his services. The agent is in charge and has the ultimate flexibility to address the needs of his particular market in any manner the market demands (so long as he operates in an honest and legal manner). It's a true win-win-win for the broker, the agent and the consumer.
We are very proud to be part of The New Solution in Real Estate! I am confident that we ARE the future of real estate.
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