We are watching Wall Street dump billions into the home selling sector. They are not doing that without the belief that they can take the lion's share of the commissions currently going to Brokerages and Agents. We have allowed them space in the market, just as we did Zillow by not focusing on client experience and believing that our value was simply our control of information and data. As an industry most gravitated to a transactional model and away from a consumer focused one. This allowed our services to become commoditized making it vulnerable to these outside threats.
I am doing a deep dive study in my family's ancestry and since I'm a history and economics nerd I'm seeing some real lessons we should pay attention to today. As I look back across the centuries in my family almost all were farmers. Each generation the oldest living son would take over the farm. This went on from the 1600's until my siblings and I were the very first generation that no one stayed on the farm. This was in the late 70's to 1980. My dad and I tried to keep it going but to create enough cash flow to support two families we had to increase 7 revenue per acre. We tried to put in a confinement hog operation to do that but were shot down on zoning. When you look to economic history you would see that in 1930 there were 30 million American farmers producing just enough to feed 100 million Americans. By 1980 there were only 3 million farmers producing enough for 300 million Americans as well as shopping all over the world. In 50 years technology eliminated 90% of American farmers. But this was fifty years so it wasn't as noticeable until about 1985 when Willy Nelson was having Farm Aid to try to save family farms.
I believe we are at the tipping point right now in the real estate industry and will see a similar sea change take place. My beliefs are that there will be two models that survive and thrive and those will he large super efficient systematized teams that will be transactional. They will be the Walmart lower cost per transaction to make everything happen quickly and smooth but the client will be responsible for more leg work. This will be lower commission but high volume. The other will be the Nordstrom model as professional concierge level service for those who value their time and experience more than trying to do it as cheaply as possible. This will be a higher commission rate for higher service levels. All those in the middle become Sears with similar futures.
All of this will require running as a true business model not the traditional self employed model where agents get lost doing all the transaction activities "pushing paper" and not focused on the ONLY two things they should be doing, giving their clients a WOW Experience that they will refer and pay more for, and communicating with database and doing business development. Anyone who doesn't figure out how to systematize all their back end processes are going to be the farmers heading into town.
