The past few weeks have been quite fun in real estate brokerage world.
I mean, they are usually fun, but the drama factor has been running particularly high of late.
First, Town Residential closed up shop at the end of April.
Then yesterday, Keller Williams NYC had a bunch of rumors swirling of its demise- not really true, just a bit of shuffling people around and firing people who weren’t producing.
There seems to be a need for these types of stories to heighten the drama.
Agents scrambling to find a new home.
Are they going to get paid on their deals in process?
A time to be thankful that my firm is privately owned by such deep-pocketed and excellent operators.
Journalists want to see the impact of tech disruption in the residential real estate space.
There is every reason for people to want this to be true.
No business is safe from disruption, except perhaps the major construction trades, garbage collection, other items that can’t be done by a computer.
I often wonder why college is seen as the end-all, be-all outcome for everyone graduating high school.
There are plenty of ways to make a living, a good living- and being a plumber or contractor often seems like a viable option – these do not require college education or college debt.
I’ve grown somewhat cynical about college as a cure-all.
But I digress.
In residential real estate, Compass, which is a competitor to my firm Brown Harris Stevens, has been pouring money into bringing on tons and tons of new agents and seasoned, successful ones.
They are building a brand that seems interesting, perhaps with some cool factor or cache- but from everything that I’ve gathered, they are making technological tweaks at the margins- not at the core of the residential real estate business.
They have a long runway with the money they’ve raised.
Perhaps they can build out something insanely great before that runs out.
But in the meantime, they are a regular brokerage.
I fail to see the difference between them and the others in our fair city.
I have seen really interesting brokerage startups that may be much further ahead than Compass in trying to supplant the current brokerage model.
One called Real Brokerage LLC
is extremely cool, and is geared to smaller markets.
Their assumption is that the brokerage brick and mortar model is going to die more quickly in the suburbs and smaller markets as information becomes more easily organized online- and walk-in traffic becomes less critical on the buyer side, with online lead generation really being the primary method.
Other shops are working on cool technology, I’m sure.
The focus should be, and likely is, enabling agents to be super productive wherever they are.
The desktop computer must be the backup to the mobile device.
And yet- there are still big limitations as to what can be accomplished working with buyers and sellers on the go.
Any successful agent must have some assistance at the office administratively to keep things in check.
I have already had a lot of fun with Artificial Intelligence assistants that are incredibly cool (www.claralabs.com, for instance), but still are not close to replacing the scheduling function for real estate.
Further, the assemblage of coop board packages is moving towards a digital age- however, it’s still clunky and cumbersome, and unique to every coop board.
Coops are not moving to a “Universal Application” like colleges do.
And of course, plenty of colleges still demand applicants do a unique application for them.
What is missing from these different tech products in markets across the country?
What is missing from these tech products in New York City?
First, across the US there are still synergies that agents will find being in communities of agents- so whatever tech is disrupting, human beings still need to congregate, share ideas, and build trust.
The trust element may actually be the critical element that keeps agents around.
Yet, I have found that certain elements of Zillow and Streeteasy, these pay-to-play advertising items, for instance, really erode consumer trust.
What I mean is that when buyers realize that brokerage are paying to insert themselves between them and listing agents as a lead generation tool, there is likely to be a backlash.
Have you ever tried to simply contact a listing agent about a house outside of New York?
It’s like pulling teeth!
In the world of the Multiple Listing Service, though, what is probably left in the end is agent expertise.
There will remain tons of need for agents to guide buyers through the process in every market.
The question I have is really whether the agents in general are savvy enough as a bigger cohort to understand what their power is- whether they are sophisticated enough to branch out or leverage their value effectively against brokerages.
The value of the brokerage as advertiser, marketer, etc certainly could be called into doubt in these situations.
But the question is whether brokerages simply splinter into lots of smaller brokerages, or if they could disappear altogether.
But in major luxury markets, the buyers need a very different level of service.
Houses may be much more commoditized, while coop apartments, mansions and like, cannot.
The cost of marketing, locally and globally, is staggeringly high, not to mention liability costs, insurance costs, rent, and administrative staff- Brokerages will remain an critical component to getting things done in these market if only because agents must have a big megaphone to cut
through the noise here.
PR, new development, research, on and on.
Seller demand market intelligence
in a way that isn’t called for in most markets.
This high-touch requirement for buyer and agent alike will keep brokerages alive in New York.
Yet, agents are waking up to their value- and there definitely is a change in the marketplace, where agents are evolving into teams- buyers and sellers seem to prefer the notion of getting this top-down coverage, where they benefit from the expertise of a long-term agent, and the energy of less-experienced agents- the result being more coverage, more energy, more know-how, and better results.
Older agents may get lost by the wayside, unless they adopt technology, get faster, more efficient, etc.
In all, it’s a fascinating time to be an agent- albeit an occasionally bizarre one.
For me and my business, it still boils down to relationships and expertise, and finding ways to add value to every transaction.
There remain myriad ways to do that. -Scott