The times are changing

by Shawn Lackie

There was a recent announcement which will have a lasting impact on the Real Estate trade, for many years to come. Real and Re/Max merged, in an $888 million deal. This has deep ramifications on a number of fronts. Real has only been around for 12 years, while Re/Max has been a major player in the trade for 50 years.

Expect some other mergers to follow and maybe even some to eventually fold. Why, you might ask? A number of answers could be put forth, but the most important one is, the landscape has changed drastically in the last two decades, and has really ramped up in the last few years.

There are more boutique brokerages now, which is a throwback to the 50s and 60s, before big companies came along and swallowed all the little guys. The other thing really prevalent these days is, the way brokerages recruit agents.

The old model featured a commission, split between agent and brokerage. These were usually based on the amount of productivity the agent could produce, but in nearly all cases, the brokerage was the one which would win out. If the broker had a stable of a few hundred agents who were good producers, they would stand to make a very handsome living. In some cases (but not all), the broker would buy the building which housed the Real Estate company. This could also be a multi-purpose facility, which would draw some rental dollars as well.

Things were getting quite comfy indeed, then along came, what was commonly referred to as, “The disruptors.” I won’t name names, but you know the ones I am talking about. They would advertise, you could sell your own home and save big bucks, with help from them. On many occasions it wasn’t all it was advertised to be. There were more costs associated with the sale than originally thought. Still, many consumers jumped at the chance.

Next up came the brokerages, which were advertising, the agent would keep 100 percent of the commission and pay a fee per deal to the brokerage. That one seemed to resonate, especially with agents feeling the crunch of the market slowdown.

Gone will be the days when a roster full of agents will support the sometimes excessive lifestyles of the Broker/Owners. That model is not feasible anymore, even though some are still hanging on by their fingernails to keep that alive. The smart ones are the ones who have sold and are now watching massive changes unfold.

This whole revolution is not new. Many years ago, when mere postings and DIY brokerages started popping up, you just knew change was coming, except for those with their heads in the sand. They, too, will soon be gone. The old “Our training is the best” just doesn’t cut it anymore. Bricks and mortar don't hold the same cache they once did. Today's Realtors operate out of their homes and cars, just as easily as they once did from the office. So the agents no longer have to support that scenario. Things could get very interesting over the next year or two. I can't wait.

Feel free to check out this story and more on my blog site, at https://slackie14.wixsite.com/buy-sell-and-more.