The real estate landscape has shifted over the years. Today, independent brokerages need to have a clear view of those changes and use their strengths to pivot and meet them. Here’s how they can thrive in 2021.
Today, indie brokers face the ever-increasing competition funded by unlimited Wall Street cash and large franchises fighting to grow. Many indie brokers would like to bury their head in the sand and think about the good old days.
In the good old days, all real estate was local, people were willing to pay big commissions, and no one had heard of iBuying. However, that’s not the case anymore, and we need to be honest about the situation we are in and rise up to these five challenges.
1. Consumers expect instant gratification
People have embraced same-day delivery and instant gratification across all industries. In real estate, sellers are tempted by the value proposition of a no-hassle or instant gratification experience of selling their home with an online portal.
Speed and big promises can draw in customers to online companies, but diligent execution keeps them — and that’s a challenge for bigger companies with salaried agents.
We have to offer our indie version of the no-hassle experience. We have to come up with strategies that make homeselling and buying easier. Companies are experimenting with enhanced open house programs to minimize the number of showings and partnering with investors to provide clients with quick close options.
Others are taking a concierge approach and offering turnkey services such as managing repair vendors or coordinating moving. We can provide a level of customer service that big companies just can’t touch, and we need to look at every angle of the customer experience.
Even though it’s hard for a real estate professional to imagine, the reality is that some people want to give up equity and sell their home quickly. So, we need to accommodate them.
Buyers are looking at iBuyer programs online already, so our agents need to be the ones showing them a comparison and bringing an offer to the listing appointment. When the agent shows them how to maximize their equity as well as experience the value of a full-service real estate agent, the decision is pretty clear. On the other hand, if they want to sell that day, we can make that happen as well.
3. Commission compression
Some people don’t see the value of agents and are not willing to pay full price. We just have to accept that and adjust. We can lower the price if we like, but oftentimes, we don’t need to do that.
These new competitors are not putting downward pressure on price as much as they are putting upward pressure on value. We know that we can provide a better experience. Not everyone likes to buy with a 1-800 number and no personal touch.
Our brokerages and our agents can offer a lot of value, but we often don’t train agents on how to sell that value. They need to be able to articulate the value that they bring to the transaction. Our competitors can cram their value into an eight-word billboard or a 30-second commercial. Can your team do that?
As indie brokers, we can not afford to be “pre-profit” like some of our Wall-Street-funded competitors. They have to constantly lower their fees and commissions, and pay more for houses to grab small scraps of market share. We have to be profitable every month or let a lot of people down. The good news is that we don’t need huge market share to be wildly successful.
We don’t have to take the huge financial risks like ibuyer programs and salaried agents to capture more share. We sell what we can and embrace our shorter road to profitability.
An indie broker’s fixed expenses are smaller, or at least they should be. We have to look hard at our payroll, office space and lead gen expenses and make sure there is a significant return on investment for each one. These three items are the most critical factors of indie profitability even if we don’t have huge market share.
5. Real estate as a commodity
Being the local neighborhood expert was a real indie advantage at one time. Unfortunately, real estate is no longer local. It is hard to swallow that concept, and there are even legal issues of geographic competency to consider, but times have changed.
People are willing to talk to anyone who can provide them value wherever they are. Clients perceive that agents have the tools to advise them in their hyper-local situation — and we do. The disrupters have overcome the general public’s skepticism about their virtual model, and we need to realize that we can take advantage of that.
We can thoughtfully expand our service areas and not limit ourselves to niche markets. We have to face these challenges with a clear mind, but the good news is that we have two incredible advantages over the disrupters.
We saw during the COVID-19 crisis how quickly high-flying iBuyer companies stopped buying, and how the disruptors had to rethink their models. Even when there is a downturn, people are still going through life changes and buying homes.
We are more flexible in the ways our agents generate leads. What’s more, we are embedded in the community that will want to turn to local experts when times get tough.
Clients trust us
You and your team have a phone filled with past clients who already trust you. Online lead generation and Facebook ads can’t reach into an agent’s phone — but your agent can.
Our agents will find that phone filled with people who probably know someone interested in buying or selling a home. If asked, those people will refer others to your agent before they would refer them to some faceless website. We can build a business on that trust.
As an indie broker, if you compete with a clear view of the changing marketing, run your business like a business and focus on our strengths, then you have nothing to fear. You will never match the market share of the disruptors — but you don’t need to. You can thrive where you are and win the day.