Friday Flash: Looking around
When I bought my home six years ago, my agent was a friend who sold real estate full time at her one-woman brokerage while she was busy building an entirely different career in marketing and raising a teenage son on her own.
She was busy, for sure. But she was no dabbler. I had zero doubts. In fact, I chose her not just because I knew her so well but because she was also an attorney before real estate, and one of the smartest people I knew.
She got the legalities and the psychology of buying a home like no one I’d ever come across.
This friend is not in real estate anymore – not for failure, but for her ambitions, which took her to amazing new heights in her current career. But I think of her always when I come across agents who are extremely smart, driven people (usually women) who ended up in real estate out of mere circumstance.
We talk a lot in this industry about impending disruption, as if it’s a given. And maybe it is.
But let’s explore for a moment the possibility that it’s not – that real estate, however fragmented, complicated or “old-school” it may seem, may never be disrupted in the same way other industries have been. Or should be.
Maybe this industry is fundamentally sound.
While the consumer experience has evolved in the last 20 years (e-signatures, text messaging, listings online, digital transaction management, etc.), the business model of how real estate is sold, by whom and how those people get paid has essentially stayed the same:
The most successful brokerage companies still grow by recruiting the most successful agents.
Agents by and large still work on commission as independent contractors.
The most successful agents still get a significant portion of their business by referral.
Co-brokerage is still very much the same, with the seller paying a listing commission that gets split among the listing agent and buyer agent.
For the last 15 years, I’ve stood by observing, talking to people, reading and writing about brave new entrants trying new things – trying to make it better. Often with really good intentions.
But maybe – just maybe – things aren’t as broken as we are being led to believe.
The independent contractor status. Commission-based fees. Co-brokerage. These things do work for a lot of people, including the almighty consumer.
I know enough talented agents and brokers who got to where they are simply because real estate offered them an opportunity to work a flexible schedule, build a business they could be proud of, and earn a decent living without having to trade their soul for a desk sentence.
If we took this all away – if we really did see a movement to salaried agents grinding away at transactions or a movement away from the cooperation model that’s worked so well for over 100 years, what would we have?
Part of me thinks we’d have a serious shortage of great agents.
For several years now, I’ve had the same conversation running with people about real estate. When I realize someone is looking for a home, selling their home or has recently bought or sold, I ask them a simple question:
Why (or how) did you choose your agent?
The answer usually comes in some form of these examples:
My brother recently sold his condo, so we called up the agent he used and really liked him.
We went to a couple of open houses and met an agent who was really professional and easy to talk to.
We’re using Janet, who’s the mom of one of our son’s friends at school.
Likability and trust are key.
Buying and selling a home requires a lot of clear communication, the ability to handle emotionally charged surprises, and the ability to track and steer the hundreds of details that need to come together before the close.
There happens to be a population of really capable people who’ve spent years honing these exact skills every day before breakfast.
And they’ve had to be likable and trustworthy in the process.
They often choose real estate for the flexibility, independence and chance to connect with people over something really significant.
Flexibility and entrepreneurial drive are amazing things. And could it be that a “low barrier to entry” is really an open door welcoming people who have life experiences – parenthood, varied careers, hard knocks – that produce the kind of resourcefulness and empathy great agents possess?
Because of this, and my experience, I feel more and more that this idea of raising the bar in real estate by eliminating commissions and independent contractors is the exact wrong way to do it.
Instead, let’s honor the system that’s enabled so many to thrive.
Smart industry takes and creative inspiration.