I posted the following question this past week in the NAR (National Association of REALTORS®) Facebook group:
"What is the one main issue confronting our industry that has you the most concerned?"
The responses ran the full gamut from the lack of affordable housing and inventory, to the evils of Zillow. But what became readily apparent and almost palpable was the sentiment that many people within the rank and file of our industry are living in fear - fear of change, fear of disruption, fear of disintermediation, fear of emerging technology and new models.
And, as human nature would dictate, people are desperate to put a name and face to their fears. They need a tangible target to vent their concerns and frustrations. Hence, companies like Zillow and Redfin unjustly bear the brunt of their anxieties, worries, and angst.
In a world plagued with fake news, the amount of false, misleading information surrounding both companies is equally staggering.
Zillow is constantly accused of 'stealing' listing data and secretly planning to launch their own real estate brokerage. On the contrary, the listing data feeds are authorized by the respective brokerages themselves who hold those listings. And, since agents and brokers comprise the majority of Zillow's revenue stream, why would they do anything to adversely affect and upset their primary customers?
Redfin, a real estate brokerage, bears the unfortunate constant barrage of criticism on social media by other licensed agents and brokers. Labels such as 'lazy' 'inept' or 'poorly-trained' are constantly thrown around, along with more harsh terms like 'whores.' Founded in 2004, the company went public in 2017, closed the first day of trading at $21.72, giving it a market capitalization of $1.73 billion dollars.
As we move forward, into the future of our industry, I believe there will be three market segments for brokers and agents:
1) The Luxury Market
2) The 'Discount' Market
3) The Middle Market
The Luxury Market: The Luxury Market will be relatively unaffected by any changes or disruptions. Agents and brokers who understand this segment and effectively cater to its demands will continue to enjoy growth and success.
The Discount Market: Understand, that when I use the term 'discount,' I am not referring to your grandfather's discount brokerages - the ones that would pop up sporadically during a fast market, effectively attracting bottom-feeders, then, once the market softened, disappear as quickly as they came. While some of these operations still surface from time to time, the 'discount' market I am referring to here is significantly different. These are well-funded, tech-savvy companies, full of really smart people, laser-focused on understanding consumer demands and effectively satisfying those demands. While many of these start-ups will not survive, a good number of them will. They will gain traction and enjoy significant market share, most notably on the listing side. And they most definitely will not disappear when there is a market downturn.
The Middle Market: The Middle Market is comprised of everyone else that is left. This is the segment that will be the most adversely affected by change and disruption in the days ahead. This will be especially true for the more traditional 'brick & mortar' brokerages who rely heavily upon agent/broker 'caps' and commission splits to fund operational overhead.
In order to survive and thrive in the middle, brokerages will have to creatively adapt, and foundationally change the way they do business. They will need to determine efficient ways to empower their agents and brokers to remain competitive and profitable. Virtual brokerages will become a more popular and prevalent option, especially those who offer low, transactional-based fees, as opposed to caps or splits, yet still provide their agents and brokers full support services, technology, tools, and training.
While the future is always filled with uncertainty, it is also always full of exciting opportunities for those willing to embrace change.
What are you doing now to anticipate and prepare for the coming changes to our industry?