(This is part one of a two-part series)
I spoke with Sherry Chris, CEO of Better Homes and Gardens Real Estate, two weeks prior to Real Estate Connect to think through a roundtable session we were tasked with running at the show. We agreed it should be something more than a few folks sitting around a table talking while others listened. That seemed too Web 1.0-sh. We wanted to create something interactive. All-inclusive. Web 2.0-ish. A chance to tap into everyone’s collective genius.
With the help of co-moderators Chris Crocker (NRT), Rick Spencer (Windermere), Kevin Doell (BH&GRE) and my business partner Brian Boero we managed to pull this off.
We called it, “Building the killer brokerage from scratch: A think tank.“
We split the audience into four groups. Each was asked to reinvent an element of the real estate brokerage. We urged them to think without the self-imposed rules that hamstring every broker. And to dispense with timeworn politics. Skies were the limit here.
The four categories/groups were:
Group 1: The physical office, moderated by Brian Boero
Group 2: The virtual brokerage, moderated by Rick Spencer
Group 3: The business model, moderated by Chris Crocker
Group 4: The consumer experience, moderated by me
Sherry — who has spent the last nine months actually doing what we were contemplating — oversaw the whole thing, adding her perspective to each of the group discussions.
The groups were given thirty minutes to brainstorm. They were then given ten minutes to reduce their output down to the three most important components/ideas. Easels, markers and paper were provided.
A representative from each group presented the results to all participants. Here’s what they came up with:
The Virtual Brokerage
- Killer Search. One that dispenses all the listing data. Brokers would serve as a funnel, sending listings to “the cloud” on behalf of agents. Consumers would use their search tool of choice to find listings and agents that meet their criteria. Brokers would provide teams of specialists to support agents (data entry, copy creation, formatting media, etc.).
- Transparency. An objective preview of the agent’s reputation would be offered on the company website along with a similar preview of their “recommended contacts” (mortgage brokers, title reps, inspectors, etc.) for equal reputation evaluation.
- Choice. Agents would be free to craft their own business models (fee based, hourly, commission). Consumers would receive bids from agents, and choose what suits them. Agents would be free to form teams that provide a variety of models, and a variety of specialized services.
The Business Model
- Hybrid broker compensation. Agent/broker split with small monthly fees for basic services that reduce broker risk (monthly E+O, tech fee).
- Menu based service/support pricing. A minimum floor of basic services would be provided to any agent who affiliates with the brokerage. Agents could then opt into menu-based pricing on additional widgets and tools from within a single login agent Intranet. Any agent could choose any combination. All agents would be given the same expense structure — one that is fully transparent.
- Transparent cost structure. A production floor would be set for agents so the broker could make a 15% rate of return on expenses and draw the line on “breaking even on brokerage and making it up on affiliated services”. The agent would receive a better split once this 15% ROI threshold was achieved. This open communication would create partnership not competition.
As you can see, there is some overlap here. But overall, the common theme is transparency. It’s a word used often and arguably abused. However, the notion of openness permeates this new model from broker to agent to consumer.
All in attendance took a hard look at less-than-helpful practices — dual agency, passing clients off to “preferred” vendor partners, irresponsible marketing tactics and others — that have pounded broker trust into powder.
It was agreed that the best thing a new model can offer is open access to everything.
Choice was also a major issue. As an industry of independent contractors, agents with twenty years of experience and five hundred sides under their belt felt a set commission diminished their value to the consumer. Most everyone believed there is a better way to establish splits with brokers and compensation packages with consumers.
Some noted the difficulty of implementing these ideas. We cautioned them to let it go — at least for this exercise.
This ends part 1. Part 2 will review the recommendations of the other two groups, which cover the physical brokerage and the consumer experience. Click over to BH&GRE’s CleanSlateBlog for an alternative take on this event.
[Disclosure: Better Homes and Gardens Real Estate is a client of 1000Watt Consulting.]