Not so fast tech companies

Decades ago, when I was a manager in a corporate environment, I received some training which included an assessment. What I remember was the criticism. I scored poorly on not offering my employees a vision for their future.

I probably also retain the memory because, after a bit of reflection, I could still not put my finger on any examples of just that- verbalizing a future. But now more than ever I can see the importance of it.

Tech companies have swarmed over the real estate industry in the last dozen years. Two items seem to attract them. First the sheer dollar figure of the commissions paid to realtors. And second, the absolute certainty that realtors do not earn (or if you would rather, deserve) their fee. It doesn’t matter that the occupation of a Realtor has been in existence for over one hundred years. It doesn’t matter that the profession is one of the most monitored by commerce departments everywhere for price setting. People with advanced degrees claim collusion and cartels.

If you have been a part of the industry for the past thirty years you can vouch for the fact that every variation of for sale by owner to fee-based marketing to full commission brokerage has been tried. With the advantage of technology which unleashes exposures to all levels of buyers, you would think that the share of homes sold by owners would be up. In fact, the opposite is true.

According to the National Association of Realtors:

  • Only 7% of recent home sales were FSBO sales this year.
  • FSBOs typically sell for less than the selling price of other homes; FSBO homes sold at a median of $260,000 last year, significantly lower than the median of agent-assisted homes at $318,000.
  • The majority of FSBO sellers, 57%, knew the buyer of the home.

But still, tech companies persist in the narrative that the likes of Open Door, Exp, and Compass are the wave of the future for the industry. That what they do and how they do it is novel. They will be more efficient. One of their bragging points is the number of agents they are recruiting to their brokerages across the nation.

Mike Del Prete

From what I hear they are paying bonuses to those agents to make the switch. And with salespeople being opportunists, it is not surprising that some make the jump. But while I think these tech companies are simply going down the well-trodden road of the traditional agent broker relationship, I do give them credit for spinning a better tale of the future.

The Steve Jobe’s overtones run rampant.

If traditional brokerages with established reputations in their market want to retain agents, they will need to learn to communicate their vision of the future of the industry.