Amazon, Google and Apple are looking to invest in real estate tech. The growth in popularity of smart homes makes this a logical move. Facebook has also announced plans to venture into real estate. Real estate data is published on Facebook by agents daily, and that data belongs to the social media giant.  

So why are these mega-corporations trying to get into residential real estate, besides the obvious? Because numbers don’t lie.

Check out some of the brokerage models that are currently out there.

The Brokerage Model Is Broke

Let’s face it, brokerages have a weak value-proposition that no longer appeals to agents or consumers. Brokerages have been slow to adopt new technologies, slow to implement them, and largely ineffective at addressing the needs of the 21st millennial home buyer.

Proptech startups have forced the real estate industry to rethink the traditional brokerage model. A broad range of proptech apps are redefining the relationship between agents, brokerages, investors and consumers. Hybrid models with multiple applications beyond real estate are also emerging, offering tech companies and stakeholders exciting new ways of turning real estate into revenue.

5 New Brokerage Models You Should Know About

A) Discount Broker (Redfin, Purple brick)

Agents become employees, paid a flat fee, serving less than 10% of the market. They will continue to survive as long as there are agents happy to work with a model that offers greater stability despite smaller commissions.

B) Full Stack Brokerage

National brokerages seeking to develop comprehensive tech solutions that consolidate marketing, operations, customer service, insurance, etc all under one roof (Compass, Keller Williams).

the problem here is that these all-in-one platforms are expensive to create, maintain, and need to be constantly adapted. Most brokerage houses do not have the resources or know-how to deliver such a comprehensive model for their agents. As  a result companies like Keller Williams prefer buying tech companies to create solutions for their agents.

C) The I-Buyer Model

This is an online service that empowers buyers and sellers by connecting them directly with consumers. consumer-facing platforms like Offerpad, Opendoor and countless others are attracting interest from investors and homebuyers alike because they can significantly reduce the fees paid to agents and brokerages, while facilitating home flips expediently.

D) Tech-enabled brokerage

Aggressively acquires technology companies with solutions to develop integrated platforms, carving their own unique industry niche to focus on a specialized market segment

E) The Virtual Brokerage

Provides licensed real estate agents and brokers with training, tools and supports virtually. A virtual brokerage saves money on operational costs, and saves agents valuable time. Companies such as Virtual Brokers and  eXp Realty are leading the way in the development of this new technology.

Brokerage Models: Who Will Win?

The fundamentals of real estate haven’t changed, despite the impact of technology. According to NAR, FSBO’s are actually on the decline. So there’s still a role for agents and brokerages.

Proptech companies that successfully serve agents will be the most successful, attracting interest from national brokerages and investment.

There are 3 key ways in which I foresee success for new brokerages:

  1. Brokerages and Technology that enhances a fundamental of real estate will survive
  2. Technology that seeks to remove/replace fundamentals (agents, brokers) will ultimately fail
  3. Proptech solutions and brokerages that help agents diversify their sources of income/leads will thrive.

Conclusion

The reality is fewer people are interested in home ownership. Today’s agents need to help future buyers and sellers find ways to earn money in real estate

The brokerage of the future needs to support agents in their effort to provide a more comprehensive user experience. They need to provide technical solutions, marketing platforms and branding strategies that turn agents into neighborhood experts, not just realtors.

At Parkbench, we’ve already helped over 1000 realtors build a brand as THE local expert in their neighborhood. We’ve figured out how to leverage technology in a way that helps agents have more conversations and build trust in their farm.

If you want to know how we do that, get in touch with Parkbench today. We’d love to work with you!

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