When Will Real Estate Innovation Help the Consumer?

Copyright© CREST Network

Posted: Mar 15, 2022

Home » When Will Real Estate Innovation Help the Consumer?

Grant Clayton is the co-founder of 1 Percent Lists
 [email protected]

I began my real estate career in the spring of 2011 just as the tech boom was really starting to take hold. Smart phones were popping up everywhere and apps were being developed to make a real estate agent’s life better, and Bluetooth lockboxes were making houses more accessible than ever. Electronic signature programs were becoming the norm and cloud-based storage made administrative work much less painful. As technology continued to evolve the office changed from a place everyone to which everyone went to a place that only admins and brokers went. Brokerages started to realize the amount of money wasted and “virtual” brokerages became the norm.

At every turn innovation and disruption has taken place. The ‘Blockbuster’ real estate brokerages have paved the way to the “Netflix” brokerages of the future. With every new bit of technology, brokerages and agents have found a way to leverage it to make their lives easier, and their work faster, more efficient, and, most importantly, more cost effective.

A funny thing about this age of technological enlightenment is that the shining light never seems to pass down to the consumer. Real estate agents have been charging 6% since the late 1800s. Stop and ponder that for a moment. The light bulb began illuminating homes and was the latest and greatest invention in the late 1800s. Fast forward 140 years and we are literally 3d printing homes and charging 6% to sell them! This tsunami of technological achievements in the past 140 years has led to almost ZERO dollars in commission savings for the client. Thomas Edison would pay the same commission to sell his home that Elon Musk does today! 

How is this possible? The answer is complicated, and it involves greed, protectionism, and a lot of brainwashing. Cost efficiencies and savings are taking place; they are just not being passed along to the consumer. This is where greed comes into play.

When I began my career, brokerages were often keepng 50% of an agent’s check, but now that number has dropped drastically as technology has made everything more efficient. Massive offices are less necessary than they used to be. A huge administrative staff is less necessary as well. The savings created by these efficiencies have created higher broker profit or been used to offer better agent incentives and to do more recruiting. Virtually none of the savings created by technological efficiencies has gone to the consumer.

The next hurdle we have to overcome to achieve real competition in the industry is protectionism. You see, to do business in an area as an agent, you have to be able to access the multiple listing system (MLS). To join that, your broker must be a member in good standing with that MLS board— which takes money and time. In this modern age of efficiency you’d think we would have one nationwide MLS, right? Actually, no, we have a lot. So now you’re thinking we probably have 50 MLS boards right, one for each state? Actually, no, we have a lot more than that, too. Right now, there are roughly 580 MLS boards in the United States. Some of the smallest states in the country both geographically and from a population standpoint have the MOST MLS boards. The only purpose to having many MLS boards is to make it harder to do business on a larger scale. This makes everything purposely inefficient to continue the status quo.

The final issue is the brainwashing of new and existing agents. Agents are immediately trained to think and act like a small business owner, but then are also immediately instructed not to innovate/negotiate on their fees. Imagine any other business operating this way. Is there another industry in the world in which their peers determine what a new person in their space will charge for their new product or service? This is not just a problem for the public, it’s a problem for the agents as well. The issue created is that it is impossible to establish a true value proposition if your fees must match everyone else’s. A brand-new agent with no experience is expected by their broker and peers to charge the same fees as the most experienced agent at their firm with a track record of success. Is it any wonder that so many agents fail?

As a real estate agent and brokerage owner, I love the technological advancements that make my life cheaper, easier, and more efficient. My company—1 Percent Lists— believes in leveraging these new tools to be full service, and high value for our clients due to our remarkably low fees. We are bringing that to the masses with our franchising efforts across the country. It’s time to let the public enjoy the savings that innovation has provided to us. Embrace the changes coming to our industry. You will be happier for it and so will your clients.

TRENDING

Upcoming Supertall Buildings (March/April 2022 Issue)

Buildings that reach over 980 feet tall are classified by the Council on Tall Buildings and Urban Habitat as supertall skyscrapers. Since the Chrysler Building in New York became the world's first supertall skyscraper in 1930, over 170 supertalls have been built...

Smiles, Laughs, Chortles & Snorts

Leave ‘Em Laughing I dialed a number and got the following recording: "I am not available right now but thank you for caring enough to call. I am making some changes in my life. Please leave a message after the beep. If I don’t return your call,...

Emmy Award-Winning Journalist Battles Through Covid

The last two years have transformed almost every aspect of our lives. Almost overnight, Zoom meetings became the new norm. Most people worked remotely. Shopping online became the norm, even for groceries. Our friends, family, colleagues, and communities have had their...

Articles You May Also Like

Smiles, Laughs, Chortles & Snorts

Smiles, Laughs, Chortles & Snorts

Leave ‘Em Laughing I dialed a number and got the following recording: "I am not available right now but thank you for caring enough to call. I am making some changes in my life. Please leave a message after the beep. If I don’t return your call,...

35 Properties on the World Heritage List are in Mexico

35 Properties on the World Heritage List are in Mexico

This is the second installment in which we bring these world treasures to our readers country by country. See the March-April issue for the World Heritage Sites in the United States. Each of the hyperlinks will take you to more information. The United Nations...

Truth is Stranger Than Fiction

Truth is Stranger Than Fiction

The United States Post Office began its Parcel Post service for fourth-class mail on January 1, 1913. Almost anything could be mailed parcel post, including day-old chicks, baby alligators, and honeybees. Only items that could be dangerous to handle could not be sent...

Share This