photo credit: collisionality
Transparency is not just a buzz word anymore but something expected, even demanded, by the consumer. The consumer wants information, lots of it, and they want honesty and full-disclosure in its delivery.
And when I am representing a seller, it is my job to give it to them.
I wrote this last January in response to the Zillow’s release of added features to their site. I said then that they are doing it right, and I still believe they are, at least in one important regard. They tend toward States’ rights over Federalism, a ground-up approach to information delivery. As first an agent associated with a large brokerage and now as a small independent, I appreciate an equal playing field. After all, like the consumer, it’s access I want.
In Zillow’s case, the consumer is both the real estate agent and the homeowner (which makes for one crazy-big target market), and Zillow needs two things to succeed. They need data, sales and “for-sale”, and they need eyeballs. You can’t have they latter without the former, but rather than build their reputation and their inventory by taking the more-traveled route, courting the big real estate brokerages, they have reached this point primarily by appealing to the individual agent. It is the individual agent who is online and socially connected – and blogging.
Before become independent brokers, Steve and I watched as a critical shift was occurring in the industry, and it was a shift that had us questioning the value of the big broker in today’s environment. Historically, the large firms have had three major selling points in recruiting agents: Brand recognition; power of size and economy of scale; and training. Sure, they also take the administrative monkey off the agent’s back, so to speak, but the business part of the business is not difficult, just time consuming, and in an industry where we are all in effect our own little businesses, this is not a large hurdle to overcome outside of the big, comfy brokerage environment.
Brand Recognition
This ship has sailed. Agents have been branding themselves within their broker’s brand for years. The problem for us became that we were in a constant thumb war to ensure that our personal brand did not get squished dead by the thousand pound gorilla. Where the broker’s household name once had enormous value, much like my Grandmother would have starved before purchasing a can of soup not named “Campbell” (because the message coming from her RCA Victor told her this was the right thing to do), new media have afforded the little people the same advertising opportunities which the big boys enjoy. During one of our moves between brokerages a few years ago, Steve and I dutifully sent the big announcement out to our clients. “We’ve moved!” we trumpeted. The overwhelming response? “Where did you work before?” Our clients, it seemed, had become far less concerned with the name on our office monument sign than we had imagined. They just knew us as the Castle People.
Back before the Internet, the big brokerage offered a big network of agents, each of whom was schlepping a five-pound book of listings around. Advertising occurred between and among them, and this was necessary due to the lag time between listing and publication. This competitive advantage has now gone the way of the keypunch machine. Some 14-year-old in Wichita knows about my listing the minute my MLS does. So, we now we start to see the brand struggle as one of company survival. It is a recruiting tool, but it is not meaningful from the standpoint of service delivery. This is why as a managing broker I have vowed to take the States’ rights approach to agent branding. Go be successful; the last thing you want your broker to do is get in your way.
Power of Size and Economy of Scale
Power of size was important to the agent yesterday when big companies were big print advertisers able to negotiate big, fat discounts off the rack rates. But reduced rates on the Sunday Real Estate Section in-line classified ads are now about as useful to me as my first-generation iPod. Advertising is online, and online is, if not free, downright affordable. Ironically, it has gotten infinitely more affordable now that I am not scurrying around from site to site paying for “enhanced” listing ads to maintain some semblance of control. Most brokers “feed” their office listings to the various listing portals; they can do this because they have a lot of listings, and every Yahoo! and Trulia and FrontDoor out there wants to get their hands on them. This is good for the agent who doesn’t have the knowledge to do it themselves or the interest in spending the time, but it is neither in the interest of the agent who does nor of their clients.
At every turn, I was being trumped. I would send my listing to a site to find it replace the next week with my broker’s ad for the same listing. The result was that buyer inquiries where being redirected to a black cyber-hole. My ads included my own words, a full complement of photos, and links to my web site with the floor plan, virtual tour and other goodies. My broker’s ads, on the other hand, were truncated MLS listings, unattractive and incomplete, and the inquiries on those were directed to my broker’s own site, never to be heard from by me again. One Friday, Steve called the number on one of these listings, our listing, just for giggles. He got a company voice mail box, left a message expressing interest in seeing the home, and never got a response. I understand that the corporate relocation department doesn’t work weekends, but the Internet does. And so do the home buyers. And the agents. How is this in my client’s best interest? It’s not.
On my own, I can be everywhere the big brokers are, either directly (Zillow), through syndication (ListHub), or straight from the MLS (for those sites relying on IDX, or Internet Data Exchange, agreements). It’s simple, and I control the message and the conversation.
I probably could have put these random thoughts into one, concise sentence: Size really matters little in today’s wired world. In giving the individual equal access, technology has eliminated much if not all of the benefit of the big company model. In my case, when you take away the window dressing (a fancy office, a large administrative staff, and a corporate committee making decisions for me), I reached the point where the modern-day value proposition of the traditional model was lost on me.
Of course, there is the company training, and that is a topic for my next “Changing the World” installment .
ABOUT THE AUTHOR Kris Berg is Co-Owner and Designated Broker of San Diego Castles Realty. If not-so static web sites are your thing, go here at once where you will find loads of real estate information including homes for sale, market trends, floor plans and more. Kris's hobbies include fencing and spot welding. She likes kittens. 
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I totally agree with your take on how little the big brokers bring to the table, and how clients don’t care who we work for. I’m curious how you would see a medium sized indep broker (50 agents/20 semi to very active) adding value. My broker doesn’t have the name recognition of a franchise, but does give agents that don’t want to go out on their own a place to be. I’m on a team trying to reduce costs while still providing services to agents that will help them succeed.
If you were going to turn your indep brokerage into one that had 20-30 solid agents that just didn’t want to start their own brokerage, what would you do that would make their lives easier while still keeping costs down and splits high?
Karen,
First, I apologize for the late response. (I have had to do that a lot lately.)
That’s an excellent question and one that Steve and I have spent many a date night discussing. (For the record, we don’t have “date nights.” We just talk shop while we do dishes, but I digress.)
Honestly, I am not sure I am qualified to answer that question, primarily because we are working brokers operating under a different sort of model.
Our goal in creating our own independent brokerage wasn’t to create a profit center which would allow us to manage our business while vacationing in the Hamptons. We were and continue to be active, working agents ourselves. Independence gave us opportunities, for ourselves and our clients, which weren’t available under the big brokerage umbrella. In other words, it was never (directly) about the money.
But with any brokerage, there is a need for a little critical mass. Depth is important — for support, coverage, even camaraderie. So, even the leanest and meanest can’t avoid the managerial and training duties, if even on a smaller scale.
In that context, here is our model in a nutshell. Think of it as a “co-op” of sorts. Our agents commit to customer and team loyalty, they commit to the highest standard of integrity, knowledge and service. In return, we carry the administrative burden and incur the increased liability, we meet regularly (as does any office) to discuss new laws, contracts, and disclosure requirements, and we provide the most current technological tools to enable them to stay contemporary and meet the demands of an evolving customer base. Because we are working agents ourselves, we respect their personal branding (to the extent they want it, and not all agents do) and business goals. In other words, we treat them as we have always wanted to be treated — as independent CEO’s who hang their license with us at their pleasure.
We, foolishly perhaps, do not wish to see our agents as profit centers but as colleagues who strengthen our collective through the ways in which they conduct their business and serve their clients.
The key to the real question, though, the one about keeping costs down while helping the agents succeed is, for us, this. We have this contrarian approach. We do not want to be a new agent training camp. We do not want to spend our days and nights recruiting, and we are committed to being selective. There are simply far too many experienced, passionate, great agents out there, and those are the agents who might find our model a good fit. Or not. In the meantime, we have shunned the big, shiny building meant to impress for the modest but efficient office. We offer generous splits in return for the expectation that the independent contractors, the agents, will take responsibility for their own businesses and their own successes. We show them the options and opportunities, but it is up to each of them to make hay.
We keep costs down by eliminating the non-essentials. We don’t work out of the back of a pick-up truck, but we don’t need excess, and excess no longer impresses. Being virtually virtual isn’t practical, but being virtually antiquated is a death sentence. We promote and preach certain practices (such as “paperless” transactions) that are not only efficient and cost effective but a convenience for and applauded by our clients.
I guess the bottom line is that our Pollyanna approach wouldn’t work for the big corporate overlord. But we are agents first, and our model allows us to surround ourselves with other agents who have similar goals and values.
Thanks for such a thoughtful response. I do like my brokerage…not too big but not to small. Independent and flexible enough to be responsive to agent needs and new ideas. I like being a part of the team that makes things better for everyone. But, if I had to start over…and I might at some point…I’ll be looking for something like you offer if it exists in my city.
A-freaking men!
After eleven years in the business I decided to go out on my own in 2002 with a partner. Our business model was very simple, hire a few very experience agents, maintain a small brick and mortar office with a high profile address (we use executive office suites), and have all agents (including myself) work from a home office. We offer an 80/20 split with a maximum of $15K per year per agent. No other fees attached. This models allows myself and my partner to basically work for free and come out with a small profit at the end of the year. In my area, Portland OR, desk fees run around $24K per year with the large brokerages. We make our income from our personal sales not the ‘company profit’.
This works for two reasons. One, we only have six very experienced and independent agents that have been with us from the beginning. I don’t need to train them, I simply need to keep them current with the changing market and laws. And two, we have fixed monthly expenses that are very modest. Because we only have eight agents total, the paper work and administrative duties which are split between myself and my partner are very manageable and leave plenty of time for the real income producing activities of selling houses myself.
If we wish to increase our income , we do it by increasing our personal production and NOT by adding additional agents. I have had an administrative assistant helping me in the past, but this past year I have been able to do most of it myself. With our monthly costs fixed, we have been able to survive the downturn just fine and the company is making a profit.
Jolynne, As me girls say, OMG!!! You just described our model far more eloquently than I ever could have. This is precisely what we are about.
BTW, that little typo made me sound Irish. It was “my” girls.
Breaking News:
Kris Berg warms up to Zillow! “they are doing it right” “I mean I used to think they were a soulless abomination, but now I just see them as an abomination”.
In related news, the Pope declared that it’s Atheists can be Catholic too, and President Bush was noted as saying “Well, maybe Iraq wasn’t such a good idea.”