The Real Estate Broker of the Future?

I was at a conference this week and one of the issues we discussed was the “Real Estate Brokerage of the Future,” a topic that has come up a lot in discussions at industry conferences in the past year. Unfortunately, much of the discussion drifted, as it tends to do, to a simple application of technology, particularly the effect of technology on facilities. The idea is that the brokerage of the future tends to be perceived as a less office-intensive enterprise, leveraging technology to free agents from an office, or at least from a specific desk in the office.

I have no particular problem with this thought. My company has 23 offices, with 23 leases, and hundreds if not thousands of desks, phones, copiers, etc. Any sort of evolution in the industry that allows us to reduce our cost footprint without impacting the services we give to agents or clients would be a good thing.

But I do think that I’ve been part of that “broker of the future” discussion a half-dozen times now, and it seems we always end up talking about facilities. Every single time. It’s sort of like a framing limitation to the discussion, that all anyone can think about is how brokers of the future will be freed from their obligations to pay for office space.

It seems to me that the “broker of the future” issue is larger than that, that facilities are but a small part of it. Indeed, I think technology is a relatively small part of it, and that people tend to overestimate the effect of technology on the industry. Of course, the internet and mobile technology has had a significant impact on the real estate industry, just like all other industries. Consumers are more empowered with information, and do most of their shopping online rather than in person. And agents have myriad more tools to market properties and attract clients than they did ten years ago. But all that technology hasn’t really changed the dynamic of the industry. People still list with brokers, they still go out with agents to look at properties. Agents now market properties on the internet, rather than the newspaper, but the basic methodology is just an improvement on the old process, not a whole new process.

Will that change? Maybe. Certainly, lots of people are spending lots of money and going to lots of conferences to talk about how the industry is doomed (i.e., the travel agent example), but those people have been saying that for a long time. I’d be curious to pull out an Inman conference agenda from, say, 2002, and look at the list of presenters who predicted the death of the traditional brokerage industry back then, and how many of those presenters are still working for that same company and whether that company still exists. They were wrong then, but it may just be a matter of time before these predictions of inevitable decline play out. Maybe.

That said, I do in fact believe that the industry will change, and that technology will have its impact. But if I were to guess what the “Real Estate Broker of the Future” would look like, I am less interested in talking about the superficialities of facilities, website display, commission models, or agent compensation models. If there is going to be a transformative moment, I think it is going to be something more foundational and simple:

Essentially, I think that the real estate broker of the future is going to be the brokerage that finds a way to deliver a better experience for the client, and a way to add value to the transaction.

It’s that simple, and that hard. I have no idea what the broker of the future will look like, whether it will be a virtual office or a single big office with 200 desks and no private offices or a broker that essentially acts as a landlord for agents rather than a partner. All those things are possible. But what I think it inevitable is that the only real estate brokers who will thrive in the next ten years are those that find ways to go beyond the traditional service offerings of the industry.

There’s not a company in the country that doesn’t pay lip service to service through various platitudes and slogans, but there’s also not a company in the country that I’ve seen successfully implement a service ethic that creates a different experience for the client. Better information. Better care. Better communication. Right now, brokers do not differentiate themselves on the actual service experience they give.

Why? Because they haven’t had to. Clients are just not that choosy. They pick the agent they meet at an open house, or answers their call on a sign, or responds to their internet inquiry. Some choose an agent by referral, or work with the agent who helped them last time, but even to this day a plurality, if not majority, of agents are not particularly choosy in selecting an agent. And because of that, they end up with the experience they bargained for: sometimes good, sometimes not so good.

That’s going to change. One thing that’s going to happen in the next few years is that clients are going to be more selective about their agents, and one of the selection methods they’re going to use is the experience of past clients, and the statistical performance of the agents. Agents who burn their clients, who are good at prospecting but not at delivering service, are going to find that a difficult transition. Agents who take a lot of listings, and never sell them, are going to find this a challenge.

So the brokerage of the future, to me, is the one that actually finds ways to improve the qualify of the service experience delivered by its agents. I don’t care how that happens, whether its technology or compensation or commission or whatever, but the companies that create better client experiences are going to thrive as brokerages of the future. And the companies who ignore the client experience are going to become brokerages of the past.