On Sept. 14, RISMedia held its annual Real Estate CEO & Agent Leadership Exchange, this year co-presented by the National Association of REALTORS® (NAR). The exclusive, full-day, virtual event attracted thousands of industry professionals, featuring broker- and agent-focused sessions with real estate’s most influential and successful executives, brokers, agents, coaches and more.
During “Evaluating the Trends: Experts Discuss the Industry’s Future,” on the broker track, Inside Real Estate CEO Joe Skousen led a discussion with industry leaders spotlighting some of the biggest trends that are making waves in real estate right now, and evaluated the real impact they may have on business in the months and years ahead.
Panelists included Vanessa Bergmark, CEO of Red Oak Realty; Mike Pappas, CEO of The Keyes Company/Illustrated Properties; and Matt van Winkle, broker/owner of RE/MAX Northwest, who discussed the new business models and consumer behavior that are driving the trends that brokers need to be thinking about as they look toward the future.
While these three traditional-model brokerages don’t plan on altering their structures, they are keeping an eye on the tech models and disruptors, along with iBuyers and team models, to see what they can learn from them in solving consumer pain points.
Joe Skousen: Are you feeling any pressure from some of these new tech-enabled models? Are they impacting your model at all, and why or why not?
Vanessa Bergmark: We’re always keeping our eye on other brokerages and what’s coming in and ways that we can innovate that we maybe hadn’t thought of. I have to give kudos to the brokerages that come along and look at things differently, and maybe get the industry and homebuyers and home sellers to look at them differently. I think as far as is it making us change our entire model? I’d say, at the moment, no.
JS: Whether it’s office space or one of the other attributes of , have they changed how you think about the agent value model? How you offer agent value or team value?
VB: Not especially. I’m always looking at what I am offering my team so that they can, in turn, offer it to the consumer. So when it comes down to our marketing, our brand awareness, our ability to handle litigation or complex legal transactions, insurances, construction—there’s so much to selling a property, and it’s not getting any easier.
We’re getting way closer to the construction side of things; we’re getting way closer to massive disclosure items when we’re taking over an entire property and basically remodeling it from the ground up. So I would say it’s not changing the way I would value what we’re doing because we are making sure that we’re constantly supporting our agents, and that changes constantly, but it doesn’t necessarily change the structure of the model.
If your agents are trained, are well-educated, they’re paying attention to stats, they understand the laws, they understand contracts, they have good relationships; they’re able to negotiate; they understand the idiosyncrasies of the neighborhood, the schools, the dynamics, the crime, all of those things—when they’re really good, they’re always going to remain needed.
Mike Pappas: There’s no question a lot of dollars are coming into the marketplace trying to disrupt us. It’s exciting at the same time it’s challenging. And so I think you have to be aware. Study the competitors and know what they’re offering. One from a recruiting standpoint, and two, from what they’re offering the consumer. And then you have to know your own model. What is your core value, are you able to articulate that?
We’re a community of care. We believe in the brick and mortar; we believe in community; we believe in support. So if that’s what drives you, you need to be able to sell that and articulate that well. We take away the pain points for our associates. We automate things in the process of lead to close. So all of those things are making this one of the most challenging times in our careers because there’s so much Wall Street money coming into our business that is trying to disrupt the $85 billion dollars of commissions that we’re all used to working on and earning.
Matt van Winkle: What I’m looking at is what are the competitors doing? And it’s not necessarily that I’m going to do what they’re doing…but I’m looking at what’s the underlying pain that they’re trying to solve. One of the things that they looked at from a pain-point standpoint is availability of the agent. You’ve got a great agent, but if they’re a one-person shop, they run into the problem that they can’t be in two places at once. So we looked at that model and said we are going to create a field agent who can take off a lockbox for an agent or…show the house to grandma…so our agent doesn’t have to go change their plans if they were going to be on vacation to accommodate that.
I think five years from now it’s going to be an unrecognizable industry compared to where it is right now. I think if we’re not really shifting our models, shifting our service offerings and shifting how we work with consumers, we’re going to be on our way toward irrelevance. So we look at it like, are we going to wait for somebody else to do it and play catchup? Or are we going to be the ones to try and figure out what that next thing is and figure out how to really make this work and make sure that we’re the ones who are doing that?
JS: Talk to me about iBuyers. What impact is out there? I know we see something along the line of less than 1% of transactions in the U.S. are going to iBuyers, but some markets may feel it more than others. Is the bark worse than the bite?
MP: They’re going public…they’re not going away. I think you’re going to have to adapt to change, partner with investors. What they’re trying to do is disintermediate the broker and the agent, take that commission, “uber-ize” it so to speak, and then resell it without that agent and keeping the dollars and cents. So I think relationships matter and a certain percentage of the business will be there, but there’s still 95% – 90% of the business that still wants somebody, a trusted advisor, to walk them through that process and to maximize their dollars and cents. I’m a little surprised and it’s interesting to me— the one “ah-ha” moment is people will sell less for convenience which I hadn’t understood before because being in the business, we’ve always had sellers that want to maximize their price, not sell for less.
JS: So you feel like there are some tools and strategies that you can use as a business to really combat the iBuyer effect and have it working for you rather than just against you.
MP: What we found is you need to know what’s out there in order to overcome the objection and to be able to answer the questions, have the knowledge of what there is, but in our mind, maximizing the price in that short period of time for the consumer is really what the consumer wants today. But they are gaining ground. They’re not going away and they’re a competitor that we have to compete with.
JS: What do you think about the importance of the consumer experience to the brokerage and what changes does that drive as we look toward the future?
MVW: The consumer doesn’t like the process of buying or selling a house, and that’s where all this disruption money comes in. And the question is, can the brokerage model—those of us who are used to working with the consumer, the agents who are guiding consumers through this process—can we adapt fast enough to provide that better experience? Or is somebody else going to come in who doesn’t understand the brokerage process? Who doesn’t understand the agent experience and how to guide somebody through…? Can they grab enough market share promising a better experience faster than we can basically deliver a better experience with the knowledge that we have?
Most consumers…still want the agent. So how do we look at the adaptation of the model? How are we streamlining it, how are we leveraging technology? How are we helping agents leverage themselves so that they’re delivering their highest value?
Part of the issue here is the agent who is negotiating the contract, that is, who’s helping prep the house, is often the same person making flyers or running errands or doing all the other things. Most agents are still running solo. Teams are starting to grow but it’s not the dominant amount of business in most markets.
So how do we, as broker/owners and managers, really help our agents still be the center of the transaction, but really streamline that experience. I think that’s the challenge that everyone’s trying to solve right now. And doing that at the same time as other people are coming in and saying, “Well the agent isn’t really that important part of the process. We can diminish the value of the agent. We still have an agent as part of this transaction.” But they’re not really at the same level as an independent agent and I think that’s really where the challenge lies for the industry and for broker/owners.
JS: As you empower your brokerage more with technology, does that also help with other issues that you face in the business: retention, recruiting the right agents, driving more referrals?
VB: Without a doubt. We already have these relationships. We also have our own data. The key element is I think there’s some things we see in the iBuyer relationship or technology that’s been a savior. And I think that regardless of what model you’re using, there’s always friction in the transferring of ownership of a property that people have lived in to another person. And that can be in title, construction, in liens against the property…so even if you made that quick and painless and you reduce the cost of it, those problems still exist. Somebody’s dealing with them somewhere.
So the question is how do you get better at seeing those and dealing with them, coming up with creative solutions for them and then knowing your overall market. That’s what we’re focusing on. We work with a very defined market, we’re not everywhere, we’re very deep, we’ve been there for 40 years but we keep evolving on how to take care of this particular market. When you pay attention to that, when you provide those resources, they’re taking some of these great ideas of other models and infusing them so that they can support their agents and in turn support their consumers, and we’re doing pretty much the same thing. Once you do that, once you come up with these creative problem-solving solutions, then retention becomes an easier factor to compete against. People will stay where they are if they are getting what they need.
JS: What about teams? Are teams important today, are they important in the future, does that change at all as we go?
MP: I think there’s no question there’s been a momentum and a direction for teams. Associates want construct, they want support. They’re willing to work for less within a team. I almost call teams the old broker of yesterday—smaller offices, selling managers, engaging their clients. So there’s no question that teams will continue.
VB: We’re a very low inventory market, so we have an extremely high price point and a lot of demand for support. The more people you have working for that client or working on that product, I find the better. I look forward to the evolution of that part of an agent’s life because they’ve had to sacrifice everything to be a real estate agent. We all know there’s no boundaries, the hours are long, so teams have created a little bit of balance and structure into an industry that was really lacking in giving people some boundaries and work-life balance. I’m all for teams or partnerships or doing what I can to support anyone who is looking for growth and sanity opportunities while also providing a really great consumer experience. So I think they are going to rise, and I think it’s our role to support them.
MVW: The team is the solution to the second problem in the industry which is the agent experience. It’s a tough business: it’s 24-7, you’re always on call, always on demand. So the team gives a little breathing room around that experience and yet the client can still be taken care of. And I think that that’s one of the areas we’re looking at from the brokerage standpoint. If you have somebody that doesn’t want to fully support building their own team, but they don’t want to go on their own, what’s that middle ground and how do we help that middle agent?
I think a lot of teams are struggling too, trying to find that balance between profitability and scale and how they’re able to provide the service they want. But we’re embracing them. We’ve got successful teams and I know that we’ll certainly have more in the future.
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Beth McGuire is RISMedia’s VP of online editorial. Email her your real estate news ideas to firstname.lastname@example.org.