Post contributions from Sherry Chris, Marc Davison and Kevin Doell

Note: At Inman’s Real Estate Connect San Francisco, Better Homes and Gardens Real Estate LLC sponsored the “Real Estate Brokerage of the Future” breakout sessions. The following Idea Map resulted from a group workshop that captured “blue sky” thinking on four aspects of brokerage: 1.) the physical space, 2.) the virtual space, 3.) the broker/agent business relationship, and 4.) what the consumer wants. See Part I https://bhgrealestateblog.com/mapping-the-brokerage-of-the-future-part-i-of-ii.html. This topic also being covered by Marc Davison on 1000Wattblog.com

The Business Model
(Facilitated by Chris Crocker):
Outlines the relationship structure between brokers and agents.

There needs to be a balancing of the risk/reward of being a broker with the wants and needs of the agents to be highly compensated.  This market has reinforced the need for this balance of power and to get away from the power via the agents.

• 1. Institute a hybrid commission compensation model largely based upon an agent split with SMALL monthly fees for basic services that reduces the risk of the broker (monthly E+O, tech fee).
• 2. “Build to Order” Menu Pricing (Dell computer model).For this there would be a minimum floor of basic services provided to anyone who affiliates with the office. After these basic services, an agent could opt into a menu based pricing on widgets and tools that work within the single login agent intranet These are all menu priced and any agent can choose any combination. This puts all agents on the same expense structure, making a fully transparent system
• 3. Creating a transparent cost structure for agents showing desk cost and the threshold an agent needs to achieve for the broker to make a 15{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} rate of return on expenses. The team felt the need for the broker to assert their right to earn a profit for the effort and draw the line on “breaking even on brokerage to make it up on affiliated services.”The agent would receive a better split once the 15{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} ROI threshold was achieved. This open communication makes it a partnership versus a competition of who will get the better of the other.

Sherry’s Take: first of all, the broker deserves to make a profit, he or she is taking all of the risk. And that should be openly communicated to agents. Some brokers share their office financial statements with their agents – true transparency. Making any sort of profit is tough right now. It seems like there is a shift away from 100{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} shops, as agents are looking for brokers and franchisors to provide tools and training to help them in this market and with the needs of today’s consumers. Whether it is menu based services or all inclusive, the partnership between the agent and broker is more important than ever. Even though they are independent contractors, agents are looking for leadership. Don’t be afraid to provide it.

The Consumer Gets…
(Facilitated by Marc Davison)

• An Agent Scorecard. Similar to the back of a baseball card that deliver every single, double triple, HR and error by that agent. This will help place the Honesty, Integrity, Experience, etc., into a very real context.

• Paperless Transaction. No more boxes of transaction paper when the deal closes. Online storage, flash drive delivered, digital paper.

• Flexible Commission Structure. Real estate services and expertise are not cut and dry, neither should it’s pay structure. Consumers should have choices ala a buffet menu of services with associated pricing.

Sherry’s Take: I like the agent scorecard idea, Web 2.0 and user generated content means agents can and will be rated by their customers in many different ways. My suggestion is to be proactive and set a scoring system up yourself for your company. It will hold your agents to a higher standard.