Does the real estate franchise model need to evolve to survive?
At the inaugural RMAOpen last month, we polled agents about current issues in real estate.
Among our questions: does the real estate franchise model need to evolve to survive?
Sixty-one per cent of participants said yes. Twelve per cent were unsure, while 27% said no.
61% of agents said the real estate franchise model needs to evolve to survive!
In other words, almost two-thirds of Australian real estate agents not only understand that the traditional franchise model needs to change, but that it already is. Market disruptors like Purple Bricks, Upside, @Realty and The Agency have entered the field and are shaking up the way real estate is marketed and transacted.
One way they’re doing this is by lowering the costs involved with the traditional franchise model. To some extent, they’re emulating the US model, where giant franchisors like Keller Williams operate quite differently from Australian-style suburban office networks.
Keller Williams and other major franchisors don’t operate as highly visible storefronts with strong branding. They are a source of systems and administrative support for individual agents. They may have one or two large offices in a city where agents can gather for meetings, access administrative support and so on – but essentially, their agents work largely on their own.
Attacking the cost base
In Australia, industry disruptors like Purple Bricks Upside, @Realty & The Agency don’t have expensive large suburban office networks. They have large central offices that run the systems which support agents. Without the expense and encumbrance of a big network, generally speaking they take a smaller percentage of agents’ commissions – making them highly competitive with better-known established franchises.
The agent as the brand
In the US model, the brand is less focused on the franchise, and more on the individual agent. Each agent creates their own profile, so they don’t rely as much on the prominence of the franchisor to generate business.
We’ll likely see the same thing starting to happen in Australia over the next five to 10 years. In fact, it’s already happening. With today’s fast-evolving technologies, agents are more mobile than ever before. They don’t need to meet with clients in an expensive office. They can transact over the phone or by email while they’re on the road. This ‘virtual office’ makes it far cheaper to do business, so they can pass the savings onto clients.
Over the coming years, Australian real estate will move from agency-based brand recognition towards agent-based brand recognition. A good agent offers top-notch service, is a skilled negotiator, and takes advantage of technology to access market knowledge. These skills have little to do with the agency they work for.
Keeping pace with consumers
Consumers are driving this change towards a US model of transacting real estate. If they think you’re charging too much to sell their property, they’re more likely to go to one of the new kids on the block instead of a traditional competitor.
The best way that you as an individual agent can compete with these new players is to build your online brand. And that’s exactly what RateMyAgent does – it helps great agents develop their brand by demonstrating their sales track record and client reviews.
Ultimately, the strength of any agent rests with their commitment to exceptional client service – and that’s what RateMyAgent is all about.
Suggested read:
40% of agents said they don’t spent enough on digital marketing – enter: Ongoing Promoter Campaigns (plug warning)
