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Historically, the real estate business model has never been about the client. Before the internet and the rise of buyer representation, the broker controlled the scene. If a consumer wanted to buy or sell in town, they went to the local real estate broker who was the gatekeeper to all of the information. This was a broker-centric model. The broker controlled all and the agents worked for the broker to earn a small portion of the commission.
Later, with the rise of the multiple listing services (MLS), the agents were able to have more information about the properties on the market. This meant that a buyer or seller could now communicate directly with the agent instead of going to the broker. This transition started the shift toward an agent-centric model of real estate. In this model, the agent became the driving force in the growth of the brokerage business. The broker’s role changed from one focused on generating business to a managerial one, focused on recruiting agents who would generate their own business. The more agents a broker had under this model, the more money they made.
This is where real estate has stayed for the last 40 years. Agents are the primary revenue generators for the real estate brokerage and the broker’s job has been to attract agents to work for the company and keep them there. The most radical changes that have happened over the last 30 years in real estate have been the manipulation of how brokers pay agents. Brokers, by and large, do whatever they can to attract the largest headcount. New startups and massively funded companies are “disrupting” real estate by changing the compensation structure or offering technology that is an all-in-one solution. But the way I see it, new firms are not innovating. They’re not changing how real estate is done. They’re just offering a different tech package or retirement plan.
Most of the companies that are trying to reach the consumer directly are not brokerages. They’re massive corporations that are taking a direct-to-consumer approach by doing what real estate agents have historically ignored: These companies are listening to the complaints of the consumer and attempting to create a solution to their pain points in a real estate transaction.
The response by agents has been to retreat to their safe zone, bash the companies for trying to do what the consumer wants and complain that they can do a better job than the companies entering the space. This is not acceptable behavior by anyone who claims to be a professional, nor do these reactions create a positive outcome for our consumers.
The good news is that we know how to battle the changing landscape of real estate. There is a growing movement of top-level professionals who know exactly how to shift their businesses to stay relevant into 2030 and beyond. The only requirement is to shift their business model from agent-centric to client-centric.
Making this shift requires focusing on one word throughout the entirety of the corporation. This one word needs to be engrained as the focus to every agent, employee and vendor who is affiliated with the brokerage’s name. What is this one magic word?
Relationships.
Relationships are the key to creating a client-centric brokerage, the next iteration of the real estate model. While this may sound simplistic and easy to preach, it’s an entirely different way of thinking about how a brokerage is run.
A client-centric brokerage operates with different focal points than the traditional agent-centric model does. Where the traditional model may teach agents how to prospect or get their foot in the door of a new expired listing, the client-centric approach focuses more on how to provide a great experience to the consumer.
A client-centric brokerage offers training focused on customer service skills, replacing much of the traditional cold calling techniques. Strategic gift-giving replaces door knocking. Humility and service replace ego and pressured sales. Most of all, becoming client-centric means becoming authentic in everything you do, say and advertise. A client-centric firm is not focused on bashing a competitor. It’s focused on the client and how to provide a great experience.
The client-centric brokerage model is not new. In fact, it’s a model that has worked for top agents for decades. Any agent who has survived in the industry and built their business to operate by greater than 80% referral business understands client-centricity. These agents focus on being great at their job and providing an experience that surpasses all expectations of the client in the transaction. Further, they maintain ongoing and never-ending nurturing of the relationship with their consumers over the course of years between sales.
The new idea is taking this model that works for the best agents and applying it to a brokerage at scale. We must shift the focus of our agents away from the traditional selling techniques of the used car lot and into the relationship-building techniques that build trust and loyalty. The real estate industry has failed consumers time and time again. It’s about time we step up our game to give the consumer what they want: Professionals they can trust, instead of the cheesy salespeople they expect.
