The search for a brokerage can be more than arduous. The menagerie of interviews and the comparisons of each one can be a dizzying array fit to confuse the savviest of professionals. We have all heard of eXp. We have all also heard of those established brokerages with names that just about everyone has seen a sign for — Sotheby’s, Saunders, and many others that have made their mark in the past 50+ years through the gatekeeper model and a splendid marketing campaign.
Yet, what about those that are a combination of both? A newer model in real estate provides a different solution. While not totally cloud-based like eXp and not solely kept as a relic in tradition, the virtual hybrid (or digital hybrid) updates the older, established methods and current technology and introduces a model that increases efficacy and bottom line. Now there stands a new ideal that brokerages must start striving to reach, especially in these times where digital is becoming more prevalent and convenient to use.
So, what exactly is a purely virtual/digital brokerage?
A virtual brokerage is when a brokerage lacks a physical office REALTORs® to work from. These rely heavily on their technology to deliver the services that their professionals need. From there, the agents manage themselves like they would their own business. This is essentially what eXp and Realty Partners does for their agents while also placing time in their training, classes, and individuality.
Many people have commented on what eXp offers. One Facebook user reported, “You have to be very self-motivated and comfortable with working by yourself. Although my company offers several online pieces of training and a cloud office, I do tend to be by myself most of the time.” This works for those that can maintain their own workload and organize themselves enough, and in which case perhaps eXp would be suited to their needs. For those that claim an independence and lack of “office politics”, as another user stated, as a necessity, then pure virtuals would likely fit this need. But we have to break down just what are the pros and cons of having part of such a brokerage?
- Work individually
- Little amount of “office politics”
- Great for self-starters and those that need little to no hand holding
- There’s not really a mentor readily available for you
- Teams are less apparent
- Brokers can be less than stellar in their approaches
What about those other guys like OpenDoor and Offerpad? Aren’t they brokerages too?
In the loosest of definitions, they could be, but I’m not sure it would hold water. These two companies are more like big flippers that will work with an agent’s buyer, but as far as the seller goes, they would essentially be on their own. The many reviews and testimonials have stated the speed and ease of the transaction between them and the seller. What they don’t mention is that the seller can take a moderate to a severe cut in their list price. However, this is not solely because of their 6-7% fee they impose, but also the requisite to have one of their inspectors come out to assess the home for the need of repairs. This shouldn’t cause anxiety… until the list of repairs is handed over.
Tami Klingenberg of Realty Partners Orlando states, “In the long run these offers can be devastating to the sellers. After the seller signs the sale agreement, which includes a 6% transaction fee, they then send in the company inspectors and come up with a list of items that must be repaired on the property or OfferPad will deduct the cost of repairs from the sales offer price. One client was asked to replace her whole driveway.”
So why would someone want to sell/buy a house with these companies?
- Quick sale; near instantaneous
- No fall-through risk
- No showings, open houses, listings
- Likely to get “low-balled” on an offer from companies like these
- Extensive repairs when they’re not truly needed
- Base a house value based on “collected data and unique information” (opendoor.com)
I mean, that’s neat to know about, but can I get a job with any of these guys?
Of course. If you have your real estate license and just want to park it at a job that’s steady, then maybe working at one of these places would work best for you. But realize you won’t really be meeting any of the clients, establishing a relationship, and becoming a leader in your community. That’s just what happens when working for a company like Offerpad. Yes, it does streamline the process for any seller that just wants to be out as quick as they can (maybe the place is haunted…ooooo), yet can you rest with knowing that they are likely discounting several sellers below their appraised price?
OK, but Jo… what about this traditional model you keep throwing shade at?
Firstly, I’m not throwing shade at anything. Let’s shine some light on that, shall we?… No? No one?
The traditional model is what everyone who’s ever been on street transportation in the past 15 years has seen. Those usual signs out in someone’s front yard designating the house is on the market for everyone to see. The Sotheby’s sign, the Michael Saunders, RE/MAX, and the myriad other brokerages that have stuck to a traditional model of conducting business. There are a few RE/MAX agents that I follow on social media that are simply aces at the digital marketing game that many other agents can learn from. But I digress.
These are what we at Realty Partners like to call “Big Box Brokers”. They carry a heavy name with them as they use their consistent performance through the past 50 years to stake a claim in the current century. I’m not saying that there is anything wrong with traditional methods. They’re tradition because many of them still work (you know, like a gift card as a closing gift). However, the agent can pay heavily for that big name in franchise fees, transaction fees, title fees, a unicorn fee — what have you. The client can also pay for that as well as agents are prescribed a “one-size-fits-all” model for a majority of people that ask for their help. Also, having this heavy name could make the client pay as well, paying for the agents’ indiscrete behavior. This often ends with broken promises on all sides, with many pointing the finger at someone else.
So why would anyone want to join something like this?
- Agents can use the name to their advantage
- Full service to clients; can be a high level of service to agents
- Humans exist in a physical location; you can easily talk to one of them
- Nickeled and dimed by brokers
- Lack of personalized marketing and agent branding
- Willing to hire just about anyone to cover their overhead fees
Alright, so you’ve compared the virtual to the traditional. What’s the virtual/digital hybrid?
Now for the main event.
A virtual hybrid is exactly what one would think: it’s the child of a traditional brokerage and a digital brokerage. Kind of like a dog that has the power of a Husky but the adorable nature of a Pomeranian. They’re a real thing, Pomskies. Look it up.
Hybrid brokerages have been noted as the next business model in real estate. “Indeed, the relationship between hybrid and traditional brokerages may be more symbiotic than adversarial,” states the Inman report, How Hybrids Brokerages Are Changing Real Estate. “The two types of brokerages are feeding off each other, breeding new business models that offer something from both worlds.” This combination brings about innovation to a relatively stale industry and has warded off the change from the outside world. It takes what is most successful at virtual brokerages’ core and remixes it with the tried and true methods of the traditional to premiere the hybrid that separates itself from the other two models.
So what would be the pros and cons of such a brokerage?
- Have the liberty to work with a team or work solo; in an office or from home
- Allows agents to avoid serious errors that would send other brokers into crisis mode
- Training and coaching in either in person or online format
- Are technologically advanced
- Can earn less than those that are self-employed or at a national brand
- There is still some overhead to handle – if you choose to
A whole host of reasons provided the rationale for Realty Partners itself decided to be a hybrid. Back in its inception in 2009, Realty Partners has been pioneering the label of “agent-owned company” as well as the virtual hybrid model, incorporating advanced technology with some old school tactics but without all the extra fees mentioned earlier. Inman News declared in 2015 that the traditional model is now obsolete, stating that “The shift to social media and enhanced online networking systems has dramatically lessened the power of the brokerage over the individual and now provides less and less value to the successful salesperson.” With the advents of working from home and remotely added to their mobility, REALTOR®s’ and agents’ capabilities have expanded beyond the confines of an office with a suit and into wherever they please. Placing such restrictions on real estate professionals now would be akin to locking that husky in a small cage and expecting her to be happy. Spoiler alert: it’s not.
If an RE professional takes a look at some social media real estate titans, they immediately see the wealth of potential clients and clout that person has. Bill Gasset is one of the prime examples of how most RE professionals can use digital marketing and social media to rule not just their local farm but become a major figure in the industry. Think of the referrals! If your presence is everywhere on social media when someone searches for real estate, consider what is going to happen over someone who is not incorporating an avid digital marketing strategy.
TL;DR = Traditional model is outdated. Pure virtual brokerage is okay, but for the new agent might be daunting as there’s not really a mentorship program. OpenDoor and Offerpad are not brokers (per se) – they’re virtual house flippers. Virtual hybrids can best serve those that are just starting out as well as others that are looking to work with others, but they’re not forced to.