Dramatic upheaval seems to be the rule of the day everywhere, including the real estate industry, and real estate brokerage is not exempt from this upheaval. The entire real estate sales industry in the United States is in a state of extraordinary and violent change.
Of course, traditional bricks-and-mortar brokers who have millions of dollars invested in their business models are a bit defensive on this subject, and "rope-a-dope" seems to be their primary defensive strategy. Yet we are in the midst of changes so massive in the real estate economy, no one can deny that change--major change--is under way.
On the battle field are two warring factions: traditional real estate brokers and a new generation of brokers. The traditional brokers have huge buildings with massive overhead. While they all claim to be using cutting edge technologies and the Internet, the argument is that they are stuck in old ways of thinking. The new generation of brokers claim to be bridging the gap with exciting technologies using the most powerful communication platform ever known to man--the Internet.
Who will win this battle? Where is real estate brokerage going? What are real estate agents going to do? And how does all this affect consumers? Let's look at these questions in reverse order.
The simple answer is that consumers will win this battle. The Internet has given consumers power they've never had before. They now have the power to search for real estate without going to a real estate agent's office, without calling an agent, and they can do this at no cost. They love the fact that they can do all this anonymously.
Under the strict rules of the traditional bricks-and-mortar business model (and all that goes with it, including expensive print advertising, radio, T.V., billboards, and large luxurious buildings), consumers were "sold" and cold calling and mass mailings were part of the obnoxious interruptions. Consumers are done with telemarketing, cold calling, and annoying advertising spots. Consumers love the power, control, and freedom that the Internet has given them.
A new generation of real estate brokers and agents have a different mindset than their traditional counterparts. They are much quicker to drop what doesn't work in trade for the latest technology and Internet tools, and they are keen to recognize where their time and money are wasted. According to the National Association of Realtors, over 300,000 Realtors have left the business since 2006. The new generation of Realtors knows this, and the survivors are creative, dynamic, hard working, and forward looking salespeople who realize if they don't bridge the gap to the future, they will be statistics.
Real estate agents around the country are looking for new ways of doing business, ways that are less espensive, more productive and can make them money even in a recession. Traditional brokers and owners rely on agents to pay the mortgage and the overhead, but agents are no longer willing to play that role. Many agents are like consumers. They are done with old ways of doing business, and they are looking for new methods, new tools, and even new business models.
It is no surprise that traditional brokers are closing their doors, filing bankruptcy, merging and consolidating. And it is no surprise that some new brokerage models are thriving by bridging the gap to the new world of marketing. This answers the question, "What are real estate agents going to do?" They will find new business models, lower their overhead, increase their Internet marketing effectiveness, and change the way they earn their income. Business models such as eXp Realty are leading the way with Virtual offices, the latest in cloud technologies, and revenue sharing for agents.
The real estate industry is in a time of upheaval, but the traditional bricks-and-mortar brokers who have invested so heavily in their traditional business models will be the biggest loosers. If they do not learn how to bridge the gap, and do so very quickly, they will become history. Of course, the challenge some traditional brokers may have is that trying to completely rebuild an old model may be harder than bringing in a demolition crew and starting all over with a business model designed specifically with this economy and the latest technoloies in mind.
An entirely new generation of agents is being born in this real estate recession, and changes in consumer behavior and advances in technologies using the Internet are the catalysts of these dramatic changes. This new breed of real estate agent will also become the new entreprenuer that everyone will be talking about in the years ahead. Ultimately after all the dust settles over the next few years, consumers will be the big winners.
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