Some fantastic viewpoints lately about the future of the residential real estate business. A few see our business becoming more "agent-centric". Others see it becoming almost exclusively "broker-centric": the big broker brands will dominate by being consumer-centric.
Really? What big brand? Is there even ONE big brand that has a name (a brand?) that means anything to anybody? The only national "big brands" that the agent public or the general public even thinks of as representing much of anything is either a discount company or a "100% company". What one company is the most well known, most well thought of (by agents and the public)? That would be Re/Max, a 100%, agent centric company. What other company is going to pass them by? If anyone can and ever does, it will be Keller Williams, an even more agent centric 100%company. In a buyer’s market, there is no discount real estate company that is ever going to dominate any city or area, let alone, the country.
Take what is currently, factually, the really biggest real estate company in the world, Realogy: other than Sotheby’s what brand do they have that matters? Try none for an answer. What meaningful difference does the general public or even the agent public see between Century 21, ERA, Better Homes & Gardens, or Coldwell Banker (just to name a few)? Which one of those is a "good brand"? (yes, yes, I know, Coldwell Banker is supposed to be their "premier brand")
Is Coldwell Banker a better brokerage firm to the public than Century 21? Do people across the nation think to themselves, "It would be so great if we could buy our next home from a Coldwell Banker agent"? Ever? Does anyone, anywhere, ever think that? How about, ERA? Does anyone say,"I only want to do business with an ERA agent"? If not, what are those "brands" worth? Not much. Why? They don’t stand for anything. To matter, a brand must mean something in the mind of the public and few national real estate firms have ever done that and then managed to hold on to their position. Century 21 did it years ago, they were the number 1 company in the world. Re/Max passed them and started claiming number 1 in their ads too. They even went to court to get C21 to stop making the "We’re number 1" claim. Re/Max won. They kept their position by attracting more and more agents with their name (which does mean something to the agent public and the general public). In terms of brands (which is what it would take for a company to "own" a market – have a brand that was perceived as desirable by the public) Re/Max probably has the "best brand" in the United States. I don’t know of any cities or states where they "own the market". Why not? Being "Number 1" isn’t enough. The buyers and sellers will still choose to do business with that incompetent relative who just entered the business. Over the years, those agents (they’re in, now they are out) – on the average – will sell three houses before they leave the business. That is three sales I didn’t get. You didn’t either and it isn’t going to matter much what scripts you use. Their "brand" of I-know-you must be senior to someone being number 1. Or any other number.
What is the difference between ERA and Better Homes and Gardens? Other then the logos and phone numbers, is there any meaningful difference that anyone would ever really care about? By the way, this is the very same problem that General Motors achieved for themselves with their brands (why yes, as a matter of fact, they have also run their big company into the ground and are currently broke). What is the real difference between a Buick, a Chevy, an Oldsmobile and a Cadillac? Not much, it seems. You can buy cheap Cadillacs, an expensive Chevy, an Olds that costs more than a Cadillac. All mixed up. All standing for nothing. The only brand General Motors has where they name actually means anything is Corvette. Corvette actually stands for something and is a "valuable brand". The others, not so much. You can also see this nonsense at work from the executives at Volvo: Volvo = safe. So, brand-wise it is beyond stupid for them to have a convertible or a "sports model" Volvo. Currently, Volvo is trying to change Volvo = safe to Volvo = life. It is a stupid strategy and will fail. If they continue in that direction they will crap on their brands the way General Motors has crapped on theirs.
If we shift the discussion to a local one vs. a national one it can change completely. Are there companies that dominate their local markets? Or a segment of that market? Absolutely. But it is accomplished by representing something. Something that is wanted and needed currently by that public in that area. The same thing is true for an individual agent.
In some of the posts on various blogs and also on Inman there has been discussion of IDX vs. VOW and how perhaps a national MLS is needed and that some fantastic company using really wonderful technology is going to attract loads and loads of business, pay the agents less and sort of take over. I contend that if such a thing were possible it would have already happened. Zip or Redfin would be making a ton of money (instead of endlessly feeding their companies with investor capital that is not likely to ever come back to them). I don’t think it makes any difference to any big company if only IDX or only VOW is used. About the only people who it will ever make a significant difference to are those agents (not "companies") who primarily work buyers. They use other people’s listings (via IDX or VOW) as bait to attract buyers who aren’t working with any agent yet.
Desk-fee agents are not only not going away, they ARE the future of our industry. Don’t believe it? Look at the actual trends for the past decade. Our industry is shifting from a totally broker-centric model to 100% companies. Right now, in most parts of the country it is the big national 100% companies who dominate (in terms of numbers of agents). Take a closer look at where 100% started (Phoenix) and you see a very different picture: most of the agents are with 100% companies and the "traditional" companies have changed their splits to the point that they may as well be 100% companies. But it is the less well-known 100% companies that have the largest number of agents. Hint: they charge less. A lot less. My prediction is that these companies and teams of agents (with a rainmaker, mentor) are the future of our business. We will have fewer agents and I believe that is a good thing. A very good thing.
Thanks to Michael Wurzer for his post which got me to write this one! And to Al Ries for helping me to actually learn what branding really is.