No Brokerage Technology Backbone – How we got into this mess!

by THE WAV GROUP on November 11, 2010

Brokers large and small, face significant challenges they did not face 20 years ago. Profit margins have eroded and control over their independent contractors has been minimized. The consumer has taken on a much more vocal role in the process and is forcing transparency and responsiveness never before experienced. Some of these challenges are related to technology and the advance of the Internet while others are cultural challenges that have come about through the changing broker/agent relationship.

Most Brokers really do not have a clear view of their operations from front to back today. With increased expenses and aggressive competition this is more important than ever. Broker systems have developed over time and are typically made up of multiple products from multiple vendors that were not developed to work in an integrated fashion. The result is numerous points of entering the same data over and over and not being able to share data easily between modules.

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Brokerages are experiencing cultural challenge as well. Consumer and industry pressures are forcing an evolution in the role of the Broker and the services they offer for today’s agents. The sense of community that used to be evident in every brick and mortar office is largely gone.Agents are mobile and more independent today. Smartphones, wireless Internet and even wirelessly enabled laptops, iPads and tablet PCs have changed the way agents do business. Many Brokers, however, still approach business the way they did before the Internet and this is a losing battle.

Brokers today face numerous issues to make their business profitable. Technology is both part of the problem and the solution. Brokers that run their offices the way they did ten years ago are a dying breed. If there is one absolute in our business world today it is the fact that change is happening exponentially. To be successful, Brokers need to reinvent their businesses on a continual basis. Having the right infrastructure and view into their business is a key element to allow them to navigate these changes.

This paper explores the issues Brokers face today in choosing technology and in recreating their value proposition. It examines how brokerages need to evolve from a pure brick and mortar approach to technology that will allow them a clear view of their business while creating a virtual community to meet the needs of today’s modern agents.

How Did We Get Into This Mess?

The Problem and the Old Broker World

To appreciate what has to be done to solve these issues it is helpful to look at the typical broker’s world today and see how it has changed as a result of technology advances. The shifts that have occurred within the broker’s world in the past several years have been dramatic. Most brokers have become more reactive than proactive and it has limited their ability to look at their technology requirements holistically. It has also limited their ability to fine-tune their businesses at a time when it is needed the most.

Throughout the country Brokers are struggling to survive and to remain relevant, as agents have taken more and more control of the real estate process while consumers have demanded more and more information and responsiveness as well.

Broker brands, even major ones, have lost power and relevance. Brokers today have less control over agents than they once had when brick and mortar brought them all together on a daily basis and MLS books ruled the day. Technology has loosened the ties that once banded the troops together.

Within the Broker’s office many manual processes have been replaced with a network of products strung together from the back office to the website. In some ways, these products are strung together with rubber bands and paper clips, or not at all.

In recent focus groups conducted by WAV Group, lack of technology integration was one of the key complaints voiced by both Brokers and Agents. Broker technology solutions are prevalent, but there are few seamless solutions that connect the broker’s consumer-facing technology needs with the ability to work effectively with agents and back office management systems. Often these disparate “moving parts” do not “talk” to one another or share information and the same information has to be entered in system after system. The back office system does not integrate with the marketing system or the lead generation system, for example, and some of the same data has to be entered in each of these products because there is no infrastructure or standard behind the products linking everything together. Additionally, there is no opportunity to leverage the power of these products together to create a more complete and accurate view of the overall business.

This is Not Your Father’s Brokerage!

In the late 70’s and early 80’s, most brokers were not computerized. MLSs were just beginning to computerize and the entire real estate process was centered around the office and the MLS book. The MLS book was the Holy Grail of real estate and the office was the church that it came from. If you wanted to be in real estate you needed to go to church, I mean the office, and you needed the book, which only the priest, I mean the Broker, could dispense. It was a great old system and it worked well for all involved.

Agents as keeper of the Holy Real Estate Grail, bestowed upon them by the Broker, were seen as necessary and critical to the real estate process and since the Broker was where agents had to go to get access to the books, Brokers had power. The office itself was important too because remote communication didn’t exist in any real usable context. If you wanted to learn something you had to talk with someone face to face. Brokers managed their businesses and agents listened if they wanted to work there. There were office meetings and “social networking” around the water cooler and a sense of belonging. Brokers controlled their brand and provided their agents a “community” to learn, share information, resolve issues and to get the needed MLS books. It was a simple time!

Today, while the world changes around them, many real estate companies still try to run their businesses using this old model. There is a good amount of denial going on in our industry with many still clinging to models that have simply “had their day”.

The New Real Estate Broker World

Times have changed. The 90’s came and brought the Internet and nothing has been the same since. The computerization of real estate has flipped our industry on its head in many ways and Brokers may have taken the biggest flip. In some ways it is better but in some ways it has created changes that many haven’t come to terms with yet. The industry has largely shifted from being Broker centric to Agent centric. Broker’s who once controlled agents with a key to the office and the MLS book found they have lost their leverage. Few have recognized the Internet has actually created a consumer-centric industry and this has hurt them as well.

The reason this is important from the context of this paper is to point out that a fundamental shift occurred in the “culture” of the broker office that was a direct result of this shift and advance in technology. This technology allowed the agent to get the data they needed without a book, without even an office computer and without being in the office. The result, over time, was a lessening of the dependency that agents felt toward the brokers.

As this shift occurred other things happened as well. Brokers faced with increasing expenses shifted costs they once handled, like advertising, more and more to the agents. New franchises sprang up. RE/MAX and other companies employed the 100% concept that moved all costs to the agent. More and more was pushed to the agent and agents pushed back. If they were going to take on more of the expense, they wanted more of the commissions. Top agents became offices in themselves. If brokers weren’t going to advertise the way they used to then agents would do it themselves. They did. They became their own brand. They moved farther and farther away from the traditional real estate model with the broker as the keystone. The agent population in many ways had “gone native”.

Brokers in the meantime were busy adapting technology and looking for ways to improve their businesses, reduce costs and create a competitive edge to recruit more agents to cover splits that were shifting the wrong way, towards the agent. As splits began moving in the agent’s favor, Brokers found they were competing with agents for brand recognition and struggled to find ways to recruit and maintain relevance and control. They automated, they updated and they provided technology to help agents. They put in back office systems and front office systems. They set up drip campaigns and websites. They set up automated scheduling and productivity products for their agents. Some installed Transaction Management systems. They syndicated listings and created tools for lead generation and lead tracking.

Brokers truly embraced technology but instead of reducing costs in many cases it did the opposite. All of these different products required additional training and each product was an additional expense. Adoption was often weak at the agent level. Often, the same data had to be entered separately into each module because the modules were not integrated. As a result, technology did not reduce expenses but instead raised it due to the need for staff to manage all of these different products and services.

On top of these direct technology changes, Brokers noticed the importance and role of their offices had changed. They were still paying for the brick and mortar and agents still came by but things had changed culturally for Brokers and agents, and not necessarily for the better.

There are exceptions however, and some Brokers and real estate companies did evolve along with these changes. The fastest growing franchise today, Keller Williams, is a great example. They saw the writing on the wall and built their franchise to go with the flow. They have created a common platform for reporting statistical and financial data. They do not compete with agents but have rather adopted the company value that the agent is the brand. They have also created a sense of community within their brand that provides relevance for their brokers and franchise. They have embraced the growing independence and brand building at the agent level. We aren’t promoting this as the “right” way but they certainly have shown, through their expansion, that something is working!

We will come back to this sense of community later in the paper and discuss ways brokers can use the technology that helped destroy the old broker culture, to build a new sense of community based on how business is really done today.

This is part one of a five part series called “Broker Technology- An Industry Needing a Backbone.” This white paper was written and researched by WAV Group, Inc.

Part 1: No Broker Backbone: How We Got Into this Mess

Part 2: Sifting Through the Maze of Broker Technology

Part 3: Light at the End of the Tunnel: New Products Bring Hope

Part 4: One Broker’s Case Study- Taking Back Control

Part 5: Creating a Broker Technology Plan- Control, Transparency & Profitability


If you would like to download this white paper, please click here.

To learn more about WAV Group, please click here.

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