I asked the question at the very end of an agent focus group I conducted this week for our Inside program:
Would you pay $3,000 per year for Realtor Association dues if it meant a million unproductive agents would drop out of the business?
“In a heartbeat.”
“$3,000? I’d pay $5,000.”
That was three of them. The other two weren’t so sure. They valued the vitality that comes from new blood, and the political power that comes from big numbers.
These were very smart pros. Thoughtful people. And, together, they pretty much summed up the paradox of organized real estate: what keeps you strong may eventually destroy you.
I think we’ve all internalized the “raise the bar” debate at this point. And lord knows, I have sermonized about the scandal of letting forth a plague of ill-prepared Realtors upon the world for years here, to no effect.
In any event, a surprising number of people seem content to simply pick the first agent that responds to them anyway, so perhaps none of it matters. I mean, I don’t think one should go to Tijuana for plastic surgery, but people do. Maybe I’m the one who’s off base. No butt lift for me!
Clearly, the bar isn’t going to be raised from its subterranean depths. It’s not gonna happen. New licensees are the empty calories feeding too many organizations right now.
My point in bringing this up at all is to think about what it means that this is the case.
On the one hand, a million “surplus” Realtors can be seen as an ingenious defense. Like a pit of quicksand surrounding a deep-jungle encampment, this mass of agents presents an obstacle in which those who seek to change real estate sink slowly and consciously, knowing as they drop exactly what kind of mess they’ve gotten themselves into.
Every low-producing agent has a sister-in-law, uncle, or church friend who will hire them; every Realtor who does no business pays their dues.
This makes it very hard for disrupters to gain critical mass, or for policymakers to push for change.
This is why Opendoor, while fabulously financed and very successful, still only sells a few thousand homes each quarter, seven years in. It’s why the episodic scrutiny from entities like the DOJ, FTC, and the United States Congress has, as yet, had little consequence.
Recently, I spoke with Guy Gal, CEO of Side. He shared his vision for a real estate future dominated by thousands of local, boutique brands run by hyper-professional practitioners. I remarked that this was going to take a long, long time to realize. He agreed, and suggested that it might be 10 or 20 years.
This from a man who runs a high-growth startup currently valued at $1.5 billion.
So if you kinda like the way things are, maybe being surrounded by hundreds of thousands of unserious licensees is a perfectly fine state of affairs. They are your flak jacket in the war for the future of real estate.
But on the other hand… yowza. Talk about a devil’s bargain. Tolerating a low standard of practice in this business presents plenty of vulnerabilities if you’re into preserving the status quo.
I’ve always said that “portals” would never have come into existence if agents had simply kept their past clients close. The agent masses weren’t capable of doing this, or just didn’t care too, and the opportunity to turn listings and eyeballs into leads was opened.
Right now, the fact that so many Realtors are chasing so little inventory makes it virtually impossible to pre-empt commission compression and alternative business models. If you had 100,000 Realtors divvying up 6 million sides, many agents and teams could run leaner, taking the wind out of the sails of those who enter the industry animated by a spirit of outrage at transaction costs.
You can’t do that with 1.5 million mouths to feed.
From racial steering to buy-side commission steering, accepting a low standard goads those who, rightly, dig deeper in an effort to remedy abuses.
The low bar comes at a cost — one that has been deferred a long, long time.
It will likely come due.
And that will have consequences.
Enjoy the long weekend.