CEO of Scout Realty; focused on clients, not commissions.
Disruptive technology has impacted the business of real estate significantly. However, not all customers are ready for a full VR experience when choosing something as financially significant and personal as their home. I believe that there will always be a need for and value from agents, but how does that traditional role function within the modern brokerage? The short answer is that it doesn’t.
Your future is not meant to be an extension of your past. It takes courage to risk, sacrifice and disrupt your own business to better serve the customer. But I’ve built my firm on the belief that client-centric brokerages are the future of the residential real estate industry, and I can tell you that this mindset shift is worth it.
This means creating a business environment where the client’s best interest is at the center of every conversation. Whoever can create maximum value for the client will win market share and thrive during this massive shift. Without a move toward a client-centric model, legacy real estate agents and brokerages risk becoming irrelevant.
Five Keys To Staying Relevant In Your Real Estate Business
1. Your business must make a clear offer to your customers.
Traditionally, brokerages put their focus on creating offers for real estate agents, not their end customer (the homeowner). They offer signing bonuses, low splits and all-expenses-paid trips for the top producers. Rather than courting agents, brokerages must make clear offers to the homeowner.
One way to do this is to offer a flat fee for service to list a home with the brokerage. Another way is to incentivize buyers. Finally, brokerages must clearly communicate their unique value to their customers — the homeowners — in order to thrive.
2. Predictable customer experience can only be achieved through operational excellence.
Operational excellence means processes, systems and the discipline of execution by a team with an interdisciplinary skill set. You need a framework to produce predictable results.
Your brokerage must have a good process to create a new contact, a process to turn that contact into a contract and a process to execute a cadence of multiple touch points to encourage additional revenue-generating interactions. A good process is documented and measured and has the right team members executing for optimal results. Teamwork in this framework is crucial to success, and operational excellence is achieved when each team member understands their role and contributes to the continuous improvement of the brokerage.
3. Be a part of something bigger than yourself.
A company or team can serve the customer at a deeper level than an independent service provider because a team has exponential expertise and bandwidth. By definition, an independent service provider holds all the responsibility in servicing the client, which is not limited to the core functions a real estate agent’s license affords them by law. In addition, one person is obligated to ensure all marketing, administrative and compliance tasks are complete while taking care of the constant need to grow their business. In my 18 years in the real estate industry, I have yet to meet a real estate agent who is an expert at all the individual functions required to serve a client well.
Building a brokerage that works as an operational team allows each team member to work in their genius zone and optimize their role for the benefit of the customers. Agents can truly focus on the customer in front of them because they are not worried about the administrative, marketing, business or accounting functions, or where their next client will come from.
4. We are moving from the real estate industry into the homeownership industry, vertically integrating all ancillary services a customer will need (i.e., insurance, title, mortgage, inspection, warranty, etc.).
Obtaining a customer puts them on your platform, giving you the opportunity to serve them over and over again. Consider how Amazon founder Jeff Bezos obsessed over customers’ needs: low prices, ease of use, customer choice, additional services, information to make better decisions and customer service. Once Amazon got customers on the platform, it began to take market share and established itself at the top of the customer’s mind.
Brokerages must think beyond one-off real estate transactions and move to an integrated service model to take care of the homeowner in their homeownership journey. The opportunity to serve clients at multiple touch points increases the lifetime value of a client to the brokerage and allows the brokerage to be the authority in the homeownership industry.
5. Your customer is the hero of the story, not you.
Obsession over the customer journey is more important than self-promotion. Your customer needs a guide who educates and works to support them, not an agent who focuses on vanity metrics and makes the transaction all about them.
A brokerage can make sure agents and staff are always putting the customer first and making them the hero of the story by acting as a fiduciary, putting their clients’ interest ahead of their own. The first place a brokerage can make this shift is in considering the compensation structure for agents. When you act as a fiduciary, you have the ethical obligation to preserve your client’s net worth.
The name of the game to thrive during this shift is value innovation: Whoever can create maximum value for the client will win. It’s not about being a better agent or finding incremental ways to make things better through technology. The transformation of real estate agents and brokerages is realized by creating an entirely different business model — one that restructures the way families sell and buy homes with the primary goal of serving the client’s best interest.