Factor 1 – Agent Centric Cultures
March 24, 2009 by e-Partner · Leave a Comment
The emergence of the new real estate economy has been fueled by the agent-centric cultures created by brokerage firms during the past two decades. In the past the "Broker" provided all of the fundamental tools necessary for an independent contractor to operate his/her business in the local market. The power of the broker/owner enabled a favorable economic relationship that would ensure profitability.
Four events changed this economic model, turning it on its proverbial ear. What was not so predictable was the replacement of the Broker as the controller of the real estate transaction with the modern, tech-savvy, home-officing agent.
The first trend was a real estate information distribution shift and it entailed the move away from the distribution of property information via a printed model (the MLS book) toward the automation of the Multiple Listing Service (MLS) through server-based technology.
This event launched a new era in real estate, one where the Broker would no longer be able to control what real estate property information. The new server-based technology loosened the Broker’s grip on the central controlling factor that empowered them, property information control.
Secondly, Brokers and books were replaced with personal computers in the homes of agents, giving them anytime access property information once controlled by Brokers. This factor began to systematically break the iron grip Brokers once had over the the real estate transaction and thus their economic control of their business model.
The Internet is the third factor transforming real estate brokerage from its broker-centric model to the new agent-centric model. With its limitless capacity for information distribution, high speed communication and nearly limitless playing fields, the Internet is redefining the relationship between the Broker, the agent and the consumer.
Finally, the advent of the so-called 100% fee-based real estate agent began to emerge as a sustainable and highly competitive brokerage model. Fees for the services provided by the firm created the modern "freedom agent" who could run a businss and pay only for services either selected or necessary to the transaction. Agents are now able to create self-sustaining business approaches that gave them control over the client, not to mention their own broker. Agents flexed their collective muscles and in the ensuing confrontation Brokers backed down; but they did so in many cases without adjustment to the services they provided.
Today, the economic challenge for brokerage firms is the creation of new working relationships that redefine the services a company provides, limits traditional operating overhead and empowers agents to run the business, generate the revenue and yes, set the policies.
