The next five years will set the stage for the new world of real estate brokerage. Those currently in the space and companies choosing to enter the business will have to decide the path best for them. Bigger, tech-heavy firms will need significant capital to advertise purchase data, and acquire staff. It is a volume game. This model will be ideal for clients who are self-reliant and cost-conscious. These firms can charge and pay lower commissions because a seasoned agent is not necessary. On the flip side, smaller, boutique brokerages will find their niche with those clients in the very high end of the market who demand expert service, or those clients with more complicated deals. It will also be the choice for people who simply feel more comfortable working with a seasoned professional. Brokerage owners will be able to charge higher commissions for their services, but they will be paying higher commissions as well to retain top agents.
What did Bezos mean by his take on large companies? It is hard to sustain a logistics-based, volume-reliant business when there are those right around the corner who can find a way to improve performance. Client loyalty is more to the price and simplicity aspect, rather than the company itself. Clients who favor small companies tend to do so for the expertise of the people working there and the personalized service received. These things are built over time and are focused on the art of the business — understanding, knowledge, and compassion. As long as people continue to purchase homes, I believe there will always be a need for this level of personal service — and I stake my career in this belief.
So is it getting harder for small firms to fight off those larger Goliaths? Absolutely. Boutique brokerages and agents might have it tougher in the short term, but by staying true to our values, I suspect we will be around long after the large firms have slugged it out.
I see the future of real estate branching into two directions: One will be a more science-based approach using technology to allow easy buyer to seller transactions. Why? Because it is cheaper, faster, and easier. This will be the preferred method for less complicated deals at lower price points. The second direction will rely on expertise, whether that be related to price point, building type or location. Highly specialized brokerages will employ well-educated, premier real estate professionals who are experts in their field and they will work with clients who value — and can afford — this level of service.