Real estate is changing.
Between iBuyers, new technologies, and the instant gratification economy, the traditional real estate industry of slow-moving mechanics and inefficiencies isn’t going to survive unless something changes—and fast.
We’re already seeing companies like Carvana removing the necessity for someone to go to a salesman or car dealership to purchase a vehicle. So, why couldn’t Zillow or another major player do this with real estate?
But most importantly, how could these changes affect the job market for the 1.3 million real estate agents in the United States?
How could their roles change over the next 20 years?
Let’s talk about it.
Real Estate Brokerages Could Centralize
This isn’t a common belief, but it’s certainly an interesting idea.
When companies within an industry or even massive empires throughout history are faced with adversity and conflict, one of their first instincts is to centralize and consolidate their power.
They need to control their fate, and the only way to do that is by taking charge and directing its employees and assets to overcome the competition.
As we know, real estate agents operate as 1099 independent contractors. They simply “hang their license” under a brokerage. At the end of the day, it’s their own individual business.
They hold special values, host a unique culture, and conduct business on their terms.
Large brokerages have little to no control over their agents. Therefore, as of right now, they do not have the power to compete with Zillow or iBuyers, effectively dooming the future of real estate agents.
However, if brokerages were to centralize, as in, remove 1099 contractor status and employ their agents under an hourly wage or salary (with benefits and all), they may be able to stand up to the big dogs with controlled agent performance, mandatory use of systems, and the effective use of structured budgets.
Centralizing May Reduce the Total Number of Active Real Estate Agents
One of the major attractions to becoming a real estate agent is the idea that you can operate your own business, schedule your own hours, and create profit relatively quickly, all while having an exceptionally low barrier of entry.
All you really have to do to become a real estate agent is take a class, pass a few tests, and boom, you’re licensed.
If brokerages were to centralize, this all goes away.
Sure, the licensing process may stay the same. But the incentive isn’t there anymore. You’re simply just going after another 9-t0-5 job with no freedom.
This would dramatically reduce the number of real estate agents in the marketplace.
Real Estate Agents Will Become Less Important for “Finding a Home”
Over 90 percent of all buyers are beginning their search online. If we dig deeper, we find that 99 percent of millennials are beginning their home search online.
What does this mean?
It means real estate agents are less important than ever when it comes to finding a home for their clients. In fact, only 28 percent of all buyers are finding their homes due to a real estate agent’s recommendation. That number is only declining.
The days of the real estate agent being a gatekeeper of homes are over. The MLS books are gone, information is everywhere, and people know what they want.
I personally advise my clients to find a home themselves at this point. They were already searching on Zillow. They can see everything I can see except pocket listings. So other than pocket listings, how can I possibly help them find a home more efficiently than they could themselves?
If I see something that fits their criteria, I’ll send it to them to make sure they’ve seen it. But I’m no longer actively searching for homes on behalf of clients anymore unless specifically instructed to.
My role as an agent has already changed.
What Will Agents Become Then?
Real estate agents will become something akin to a consultant. Technically we’re already consultants, but our roles will become less active over time.
We’re going to be the people you go to after you’ve gathered all the necessary information you need to buy, sell, or invest in a home.
Nowadays, when someone needs an attorney, the last person they end up speaking to is an attorney. They’ll scour the internet for all the information they can possibly soak up, sleep on it, and then make the dreaded phone call to a legal expert.
At that point, the lawyer is simply clarifying and explaining in simpler terms what the person already knows.
This is no different from real estate agents.
Clients are looking for information before they ever approach us. Things are different now. Younger people don’t want to talk on the phone. They don’t want to interact with professionals until it becomes necessary.
Therefore, the real estate agent needs to become the best at explaining things in simpler terms and guide clients through the sales process instead of telling them how it’s going to go down.
In effect, this may make it cheaper to use a real estate agent. Instead of the average 3 percent professional fee, we might be seeing more and more of agents asking for 2 percent or less.
Specialties Will Matter More
You’ll often see a lot of real estate agents stating that they are specialized in helping first-time homebuyers, luxury real estate, investing, VA loan sales, foreclosures, and literally every other field imaginable.
While sure, there may be some agents who have been around for so long that they’ve genuinely seen it all. But for the ones who haven’t, there is no way you could specialize in so many fields.
In fact, at that point, it’s not even a specialty.
Specializing in something means that that’s basically all you do and you’re super good at it.
In this alternate universe of real estate 20 years from now, specialties will matter way more than they do now.
Especially if brokerages centralize. You’ll see different pay scales for agents who specialize, just like attorneys have.
Luxury agents would be the highest-paid due to the complexity of marketing campaigns and the higher fees. First-time homebuyer agents would be in abundance since nearly a third of the market consists of those type of buyers.
This increased focus on specialization is actually fantastic for the industry since clients will start receiving the best possible service, raising the perceived value of a real estate agent.
While it’s impossible to predict the future of anything, let alone real estate, it’s important to at least anticipate something.
I believe the idea of a centralized brokerage system is very interesting, and I’m curious to know if it’s in effect already within certain firms.
What do you think the role of agents will be in the future?
Join the discussion in the comment section below.