BrokerageIndustry VoicesOpinion

How is the brokerage industry adapting to lower margins, tech?

Real estate brokers are embracing change and adapting

Behind the scenes, there are numerous changes taking place in the brokerage industry. We’ve written about brokers ability to adapt to lower gross margins, how they are building core-related service businesses, automating internal processes and using technologies like Zoom to communicate more frequently with their agents and staff. Each of these are indicators of the brokerage industry changing with the times.

What we also notice is that many of the new entrants into real estate are lower-cost brokerage models. They too are purporting to offer services and technology, at a lower cost than traditional brokerages, to their agents. It’s also apparent that they’re adding core-related services, such as mortgage and title insurance, to boost returns from each transaction. They are appealing to both lower productivity real estate agents and some very high production agents.

Now we see investment capital not only flowing to the traditional brokerage industry but these lower-cost models as well. Firms such as eXp Realty, Fathom Realty, HomeSmart and United Real Estate are attracting significant capital from external sources to grow their networks, as well.

As we reported nearly 15 years ago in a special white paper for the National Association of Realtors, ultimately the industry would move from one of homogeneity to one of segmentation. There will be brokerage models for every kind of agent and team imaginable. And, those choices extend to those who want to own and operate a brokerage firm.

Behind the scenes, we see leading brokerage companies of all models adapting to this environment. Brokers are relying more on low-cost solutions to all of the services they provide to their agents and teams. Critically, a well-known national or local brand name seems to still carry importance to top teams as we learned in a research study a few years ago.

Brokerage firms will have to pick the specialization or market niche in which they choose to compete. At the top of the most important attributes of any brokerage company is the establishment and preservation of a culture that fits them and appeals to the agents and teams looking for the kind of environment they offer. Regardless of the economic model, a broker-owner considers they must first remember that the culture is what will ultimately matter to their future success.

Most Popular Articles

FTC fines Opendoor $62M for deceptive practices HW+

The FTC alleges that Opendoor pitched its services to potential home sellers by saying they could make more money selling to the iBuyer than via the open market. The government says that was untrue.

Aug 01, 2022 By

Latest Articles

Power buyer Ribbon lays off 136 employees HW+

Ribbon said the layoff decisions were based on what qualities the employees could offer the company, including “technical depth, institutional knowledge, domain expertise, strong customer service and qualities of a winning attitude, including collaboration, compassion and craftsmanship.”

Aug 08, 2022 By