As I winged my way home from a conference last week, wedged in a coach class seat designed for an undersized gymnast and having again successfully violated the "two carry-on" edict by bringing my purse, my laptop, and an entire Samsonite outlet store aboard, I found myself seated next to a man from my own neighborhood.
We hadn’t previously met, but armed with a common ZIP code, a friendly conversation ensued. Of course, it was a conversation about real estate.
For the record, I didn’t start it. In fact, I was far more interested studying my magazine, the one with all of the retouched pictures of people who are famous for no apparent reason. With a teenage daughter at home, I have to do my homework occasionally lest I be relegated to the "parents who aren’t cool" category.
And as I stared quizzically at the photo of some reality show starlet, wondering why the world needed to know who designed her dress that cost more than my daughter’s first year of college, my new friend began briefing me on the active inventory.
"There’s a home for sale on my street," he said.
"Uh-huh," I mumbled.
"It’s listed by Agent X," he continued.
"I know. I am an agent, too," I perked up.
"You are?" he asked, as interested in this bit of news as if I had just delivered the preflight safety instructions. And then he proceeded to rattle off a laundry list of names, "neighborhood specialists" with whom he was familiar. Mine was suspiciously missing.
A lesser agent would have shut down, fatally wounded by the sting of anonymity, but I am a trained professional. And although I suddenly found myself liking him a little less because I didn’t make the cut, I considered his perspective.
Curious that he was naming names. Not once did he mention a company. He could have just as easily said that Big Rock Realty or Hot Air Associates seem to be doing all the business in his geographic box, but he didn’t. It was the agents with whom he was familiar.
Now, I sort of live and breath this real estate thing, especially where my ‘hood is concerned, so I was familiar with his hit list of local rock stars and with the marketing practices of each. You could shake this particular group by their feet and not produce a single blog, brand, tweet, or website of any distinction.
What you would get is a floor littered with postcards, door hangers, yard signs and an open house on Sunday. Most importantly, what you would find is name recognition — of the individual, not the brokerage.
The more things change, the more they stay the same. Bernice Ross recently wrote about the potential negative side effects of eighty-sixing the agent’s familiar 1099 (independent contractor) status in favor of an employer-employee relationship between the broker and agents.
One possible outcome, she said, would be that the "the industry shatters into a thousand pieces." Isn’t that really what we have?
As an agent, I don’t relish the thought of losing my independent contractor status. As a broker, I am less giddy with the concept, but not for this reason. My trepidation has more to do with the financial side of the equation: taxes, health care, and all of the other fun payroll nits that would be involved.
But as far as fragmentation goes, we have forever been a house divided, with each agent representing an independent arm on the body of work. Tax status aside, I suspect we haven’t seen anything yet.
Bernice wrote, "The result would be a huge resurgence in the ‘mom and pop’ model of real estate." And I have to ask: That is bad, how? …CONTINUED
Mom and pop — I’ve been hearing that term more often lately. When several top agents recently left a large brokerage to join us, they were threatened with saliva tests, their sanity under indictment at the exit interview. "Why would you go to a mom and pop operation?"
Mom and pop. There it is again, and again I am finding this phrasing curious. Smaller, independent, lesser known — these descriptors would be just as accurate but don’t conjure the negative images of the antiquated five-and-dime desperately clinging to relevancy in a world of Wal-Marts.
If we are honest, in real estate we are all mom and pop enterprises. It’s the agents who are front-facing; it’s our image, our talents and our visibility in the neighborhood that the customer sees and hires.
Now, I know that in both cases, it was the brokerage being labeled here, not the agents, but even then the argument is lost on me.
Wal-Mart changed the retail landscape by dealing in volume that, in turn, allowed for lower pricing of its products. This, in concert with greater efficiencies, put the small shop owner at a competitive disadvantage. In real estate, a case could be made that the reverse is true.
Larger brokerages deal in volume, but that is where the similarities end. Greater volume — of agents and therefore transactions — tends to have no effect on fee structures. Large brokerages actually lack the efficiencies of a right-sized shop.
So, then, it must be that the customer benefits from greater quality when shopping at the big box. Yet, last time I checked, brokers large and small belong to the same associations; we use the same multiple listing services and the same Internet.
So we are back to the individual agent, and the quality of the agent has virtually nothing to do with the size of their franchise fee. Quality control, in fact, is much harder to achieve on a grand scale.
We are becoming fragmented, no question, and it will continue to happen at a faster pace, whether you use a W-2 or a 1099 tax form. But mom-and-pops are not by their very nature evildoers who pose a threat to the industry, nor do they threaten the quality of the customer experience or the services they receive.
I suppose the only real threat is to the big boxes, and that is really the issue.
Given that the overwhelming majority of customers care not about their agent’s brokerage affiliation, the broker has two choices. The broker can try to change the reality by powering home a brand, or the broker can focus on improving the quality of all the little guys on the front line — the real mom-and-pops.
I like the latter, because with one, the other just may be a pleasant side effect. As a broker, I know it is the agents who matter. When we start selling towels and toasters, the size of my roster may put me at a competitive disadvantage.
As long as we are selling our services and our abilities — ourselves — however, the customer has little interest in how dazzling the display on my storefront marquis. He only cares that the agents have street cred in their ‘hood and can deliver the goods. So, call me a mom and pop if you must, but I think I’m a pretty cool parent.
Kris Berg is broker-owner of San Diego Castles Realty. She also writes a consumer-focused real estate blog, The San Diego Home Blog.
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