CEO/Founder of Ask DOSS, developing the best technology to make homeownership in AMERICA more affordable. #proptech #placetech #voicefirst
In the popular movie What Women Want, the main character suddenly develops the ability to read the minds of women. Imagine if a real estate broker could suddenly read the minds of their agents. What would they find? Just like the movie, it could be both a blessing and a curse. The real estate industry is a very complex and dynamic industry governed by many rules and regulations — and the other potential variables that can impact an agent’s failure or success in this business add to the complexity. In the absence of mind-reading capabilities, how can we know what real estate agents need and want from their brokers in the post-Covid-19 world and into the future? One thing is for sure: Brokers will have to evolve their value propositions in an industry that’s changing before our eyes.
One thing to consider is most real estate agents are marginal. There are approximately 1.3 million real estate agents in the United States. Approximately 32% closed zero transactions last year. Another 33% only closed one to three transactions. That’s a total of 845,000 of all real estate agents closing less than three transactions each for the entire year. That means 455,000 real estate agents in the country are generating the lion’s share of the business.
The purchase of a home is the largest financial commitment that most people will make during their lives. How many people would use a marginal agent who only closes zero to three deals a year? You can look at working with an agent similar to selecting a heart surgeon for an operation. If your life depended on it, would you allow a surgeon who had only done one or two surgeries in the last year to operate on you? In a more life-threatening situation like open-heart surgery, you might ask about previous operations. However, does the average person ask their real estate agent how many transactions they’ve closed in the last 12 months?
Could the success of real estate agents depend on their broker? Unequivocally, the answer is yes! However, the bigger question is, are brokers responsible for their agents’ success? The answer to that question is all over the place. In my experience speaking to and training both agents and brokers, I’ve learned many agents believe their broker should create an environment that will facilitate or incubate their success. Many brokers believe that agents are responsible for their own success.
For brokers, laws prevent them from doing many things in the best interest of their agents. Brokers are not employers, so they can’t make any real estate agent attend any meetings, report to the office at set times, attend training and more. As an independent contractor, a real estate agent must have the ability, capacity and desire to succeed in this business. So, what gives? A real estate agent who wants more guidance, support and training versus a broker who wants their agents to be more productive and successful but can’t make them do anything because they are independent contractors.
What Real Estate Agents Want
The real estate industry has changed more in the last five months than it has in the past five years. If everything around the real estate industry is changing, agents and brokerages must also adapt to better support a more modern and tech-centric consumer. But what does that model look like?
Many agents I’ve spoken with believe their current brokerage is ill prepared for the future. They also express a desire for more active support and mastery training to strengthen their value proposition. In addition, they want technology that helps them automate their business and communicate better with clients.
Three Things Brokers Should Do
I personally believe that over the next decade, the demographics of real estate agents will significantly change. Collectively, Millennials and their predecessors, Gen Z, are the most educated and diverse generations yet. If brokers want to capitalize on these changes and new purchasers of real estate, these are the things I recommend that they do moving forward:
1. Be more selective. Traditionally, brokers would take anybody with a license and a pulse, but in 2020 and beyond, you can’t afford to be that broker.
2. Don’t attempt to be everything to everybody. Define a niche, and make it your religion.
3. Recalibrate your real estate agent value proposition. Agents need more than low broker fees. They want support, technology and training.
Three Things Agents Should Do
Real estate agents throughout the country are in a very vulnerable position. Legacy companies that were historically sound are losing their footing because they refuse to migrate from yesterday’s antiquated tactics for today’s modern and tech-savvy consumer. Homebuyer and seller demands are changing, while technology is rapidly evolving. The average broker is not capable, ready and willing to adapt to a consumer who expects the best service at a fair price. If agents want to remain relevant, they need to:
1. Think for yourself. Join a brokerage for you, not your friends.
2. Shop for brokerages based on what you believe you need to be successful. Do you vividly know what you need from your broker? Do you need support, training or tech? Decide — then shop.
3. Shop for brokerages that make you feel good about yourself. Join a brokerage that aligns with what you believe and your values.
Although real estate agents are independent contractors, they often want more structure. The number of marginal agents closing zero to three deals per year is too high, and brokers need to take more ownership in that failure. Moving forward, brokerages should vividly determine what their brand will provide and represent, and how it will make a social impact in the communities they serve. They should display these value propositions not only to real estate agents, but also to their clients. Consumers today are different. Unlike in the past, many consumers now want to work with mission- and purpose-driven companies that make them feel like they are the center of the universe. To evolve, brokers and agents need to work together to meet the needs of the market.