What is the Future of Real Estate? My Prediction

What does the future hold for real estate sales? Clearly, the industry is in a huge state of flux.

So, where will we end up in 5 years?

First, I predict that part-time, low-producing agents – those who do maybe 4 transactions a year -- will eventually disappear. Commission compression, advancing technology, and the costs of obtaining and maintaining a license, will combine to convince those part-time, low-producing, average-or-below agents that the effort is not worth the shrinking reward. And, frankly, that is a good thing for the industry, since these agents often get in the way of a real estate transaction closing smoothly, rather than actually facilitating it.

Second, I foresee that there will primarily remain only two types of agents in each major market:

1) Agents who work for mega teams funded by Wall Street lead opportunities, and have limited income potential, similar to an employee. Let’s call them the Wall Street Teams.

 and

2) Agents who turn themselves into omnipresent local celebrity agents (those with deep local roots) who provide deep value to their communities, and have nearly unlimited income potential. Let’s call them the Local Celebrity Agents.

I anticipate that, as their profit margins fall, these Wall Street Teams and Local Celebrity Agents will invest in technology tools and strategies to streamline the transaction process in order to increase transaction volume without having to devote more time to transactions.

I also expect that one-stop-shopping transaction bundles will pick up market share. That means the brokerage sales, title, mortgage, insurance, home services, and even moving services, will all be bundled under one-roof, probably put together by the brokerages and offered to their agents.

These bundled services will be offered at a discount to those customers who choose to use them all together, and they will provide more income opportunities to the brokerages who offer them.

Under this scenario, I predict it will be primarily the one-stop shopping Local Celebrity Agents – not the Wall Street Teams -- who will end up the winners.

Why?

Because real estate sales is relational, and Wall Street is not – it is transactional.       

The markets will inevitably keep changing, but one constant remains: most people will still want personal advice and guidance from a trusted professional when they buy or sell what is probably their largest asset.

Local Celebrity Agents, who have deep community relationships and connections, the wisdom and connections that comes from those experiences, and the motivation to provide the excellent service needed to maintain a sustainable, referral-based business, will be able to offer that, while still providing the same efficiency and lower price-point of bundled services as the Wall Street Teams.

Wall Street Teams, which are tethered to online leads and based on volume of transactions, will be hard-pressed to find a talent pool willing to work as agents for mere pennies on the dollar.

The really good agents will refuse to work for employee wages, receiving only a tiny percentage of their commission after splits with their Wall Street owners/brokers/teams, when there is a good alternative:  become a Local Celebrity Agent who keeps nearly all that gain for themselves.

The best agents, the ones with an incredible work ethic, vision, and a passion for customer service, will chose to reap the fruits of their labors for themselves, their families, and their communities, and not line the pockets of Wall Street investors.

Do you agree?

What do you see 5 years down the road? Share a comment and let’s begin the conversation