The next big evolution in the real estate industry is happening to the core of the business model itself. Real estate agents historically had to pay anywhere from 20% to 50% of their commissions to the brokers they worked for. Well, not anymore.
Sarasota, Florida (PRWEB) May 15, 2012
There was a time when buyers needed to visit every real estate brokerage in town and spend time thumbing through listing books and speaking to agents to find the best properties for sale. Then in the 1990s the real estate industry experienced a major evolution with the digital Multiple Listing Service accessible through the Internet. The 2000s saw the next phase of real estate information distribution when the MLS offered downloads of MLS data that could be used to display MLS listings on individual websites. Virtually overnight local real estate information had acheived a global reach.
Today, the next big evolution in the real estate industry is happening to the core of the business model itself. Real estate agents historically had to pay anywhere from 20% to 50% of their commissions to the brokers they worked for. Well, not anymore.
New brokerages are springing up all over Sarasota that offer agents 100% of their commissions for a small monthly fee and some of these brokerages are starting to do quite well in terms of sales as sellers see the true value in these business models.
Atchley International Realty has had its best year for sales in the 2011-2012 winter season, Dawn Cohen and Associates just recently switched to offering agents 100% of their earned commissions to increase their service value, and Sarasota Bay Real Estate is providing sellers some of the best real estate marketing services we have ever seen in our market.
The Force behind the Trend
Along with marketing costs drastically going down since the advent of the Internet, computer technology has streamlined the buying and selling process so drastically that the traditional services typically provided by the corporate real estate brokers have become obsolete. Corporate real estate brokers were largely entrenched in print marketing for property promotion, TV advertising for brand promotion, and relied on their inventory and prime city locations to attract walk-in customers.
Today the Internet has leveled the playing field, extended the reach of brokers beyond local physical locations, and the large corporate brokerages are struggling to reduce their extensive overhead and catch up with more nimble and streamlined 100% business models built around technology.
Today it is possible for a real estate brokerage to attract buyers on the Internet and submit a contract without ever printing a single page. Docusign, a leader in electronic signatures, claims nearly 15 million members using their service. Gone are the days of attracting customers to the office to search listing books or to put pen to paper. Today a home buyer can find the perfect home and real estate agent on the Internet and the transaction can be completed over a cup of coffee at Starbucks on an Apple ipad.
Roy Hunter, together with real estate broker, Christina Miller of Sarasota Bay Real Estate, are two of the most tech savvy owners of one of these new 100% commission brokerages that have come on the scene in Sarasota. Rather than build a business that revolved around a bricks and mortar building, they built a business that revolves around the Internet at http://sarasotabayrealestate.com
Christina Miller, managing broker of Sarasota Bay Real Estate said: “Without the high overhead of running a huge business, paying a lot of staff, and paying premium rents for the best locations, we can keep our overhead low and pass that savings onto the agents and broker associates that work for us. This low operational overhead also gives us substantial financial resources that can be spent on marketing for our sellers and provide them with best-in-class marketing strategies and products that corporate brand brokerages simply cannot compete with on a sale-by-sale basis.”
But with these new brokers paying out 100% of the commissions being earned by their agents, how are they making any money?
Roy Hunter who oversees all of the marketing at Sarasota Bay Real Estate explained: “Consider these 100% commission business models to be a CO-OP of sorts. Each agent contributes anywhere from $100 to $300 a month that covers the minimal office expenses. If you have 100 agents, it’s pretty easy to cover the rent of a modest office. As an owner, my profit comes from the marketing services we sell to our agents. Everything an agent previously needed to outsource while working for a corporate brokerage we do in house at a greatly reduced cost. We literally are a marketing company that focuses on marketing real estate.
When a real estate agent is paying 20-50% of their commission to the broker they work for, as well as covering their own personal operational overhead, there is not a lot of commission remaining that can be spent on marketing to grow their customer base or market their listings.
Since we pay the agent 100% of their commission, the agent now has additional financial resources available for marketing and we as the owners have a customer base in our agents to sell the marketing services to. It’s a win-win situation for everybody. Every agent that has joined our company and has taken advantage of our marketing services has made more money working for us than their previous broker. Jonathan Woods, one of our agents who came on board the beginning of the year, is on track to double his income from the previous year and is having a hard time building an inventory of listings since his are selling so quickly.
Many sellers do not realize that most real estate agents in our market are left to market their listings out of their own pocket when they work for big corporate real estate brands. If that agent has to pay a large percentage of their commission to their broker when the home sells, that does not leave a lot of money left to market their property. Many Sarasota listing agents under this immense financial pressure simply put the listing in the MLS and hope some other Sarasota real estate agent who is doing all the marketing brings them a buyer.
Change is being Fueled by Compelling Market Trends
The National Association of Realtors 2010 Buyers Survey revealed that 88% of new home buyers begin their search for a new home on the Internet. Within an Internet browser, the person searching for a new home is not interested in how big and beautiful your company office is, that person is more interested in the quality of your website information and how easy your website is to use.
A small boutique real estate company can easily have more exposure to buyers on a per agent basis than the large corporate franchise brokerages dependent on walk-in traffic. Sarasota Bay Real Estate’s company, and owners personal websites receive more than 1000 visitors a day combined. This is drastically more traffic than any brick and mortar real estate office in Sarasota currently receives.
“There are 10 slots on the first page of the typical search results page and to the Internet searcher looking for a new home, if you are not on the first page of search results, you basically do not exist. Home sellers really need to consider this when selling their home. If you do a search for “Sarasota Real Estate” and you do not find your listing agent/broker on that first page of search results, how do you expect the 88% of home buyers searching on the Internet to find your home? Listing your property with a brokerage or agent that is not keeping up with Internet marketing trends greatly reduces the exposure your property will receive and this could result in receiving a lower price for the property when it sells." Mr. Hunter went on to say.
A 100% commission business model offers greater value to all of those involved. In this model every agent in the company has more financial resources to grow their career, market their listings, and the sellers are getting more exposure for their property as a result.
As hot as the Sarasota real estate market is at the moment, If a sellers property has been on the market for a long period of time and is a competitively-priced, good-quality home, chances are that sellers listing agent is not doing anything to market the property. In most cases the reason is, they simply do not have the money to advertise it to buyers.
When you are paying a broker 20 to 50% of your commission to work out of their office, $4 for a gallon of gas, car insurance premiums, taxes, MLS dues, association dues… there is not a lot of money left to put food on the table for their families, let alone spend on marketing a sellers property.
Just as Netflix and on demand media brought about the demise of Blockbuster, 100% commission brokers have the potential to snuff out the corporate brand brokers. It is just a matter of time before the majority of home sellers and real estate agents discover where the best value is.
About Sarasota Bay Real Estate
Sarasota Bay Real Estate is a Sarasota real estate brokerage that offers agents 100% of their commissions for a monthly fee. The company provides grade “A” websites to their agents, has full bulk mailing facilities in house, provides cinematic video promotions for higher valued listings, pays for listing enhancements on Realtor.com, submits press releases to the Associated Press for all new listings, and publishes some of the most compelling marketing materials for sellers in Sarasota.
Christina Millers personal website can be found here: http://mysarasotafloridahomes.com
Roy Hunters team website can be found here: http://1sarasotarealestate.com