The Southern California real estate market, like many other markets around the country, is becoming overridden by big-box real estate companies buying out other brokerages — creating somewhat of a monopoly.
Many of the firms that are being acquired are the smaller independent (or “indie”) brokerages, which have been an integral part of our business and are a vital alternative to the major players for agents and consumers alike.
Certainly, acquisitions by the “big boys” are not exclusive to the real estate industry. Take Amazon, Disney, Ma Bell, Chase — the list goes on. Back to real estate, why such a trend toward takeovers?
Put simply, to make recruiting easier and get more market bandwidth. Instead of trying to farm talent, brokerages have now seemed to turn to poaching and buying out existing real estate companies with good track records to get their market share.
Some of these brokerage acquisitions have even put offices out of business, with entire teams lured away, forcing them to shut their doors.
One must consider, how does this shift to the behemoths affect those agents working for the smaller firms and, more importantly, their customers?
The agent’s new identity
While indie agents once had a differentiator for themselves in the market, one centered on boutique personal-touch service, they are today being grandfathered into this new big-brokerage formula that seems to be taking over. These “confiscated” agents who once had their own identify are, in effect, merely becoming just small fishes in a big sea.
Let’s think about this situation for a moment. If a real estate company has a 20 percent market share in a particular city, most likely, you’ll have a couple of agents from that brokerage competing for the same listing, in essence becoming rivals when seeking to land a potential home listing appointment.
What do they have to offer to differentiate themselves? Except perhaps their sales history. That’s great; but let the better agent win. Newer agents may be at a disadvantage in this scenario, unless the sellers are merely basing their choice on chemistry, enthusiasm or connections alone. Most often, that’s not the case.
Hurting or helping the client?
The other primary question that remains is: How does this all help the buyer or seller? In my opinion, not much.
The independent real estate broker has much to offer, not just to agents but also to the customers they are servicing. In some ways, smaller firms may seem limited, but overall, they are not.
Although the real estate business of the modern day revolves around the latest, greatest technology and use of digital platforms, real success for any-size brokerage still relies upon the quality of its people, training and services.
Why go with the little guy?
So in the wake of takeover trends, why would anyone, agent or consumer, choose a boutique real estate firm? Several reasons actually.
Boutique brokerages are extremely specialized in their market and focused on above-average client representation.
Clients benefit from the expertise of a proficient, dedicated agent and capitalize on the skills and support of an entire office working on their behalf to ensure a smooth, successful transaction.
Agents can concentrate on quality over quantity, with a primary mission of building relationships and delivering personalized results rather than just achieving volume numbers.
Even commission structures can be flexible to entice or reward exceptional talent.
Indie firms can go head-to-head with their big competitors in terms of technology, having access to the same multiple listing service (MLS) representation, the same properties, the same online marketing offerings and the same high-quality marketing products.
If you look closely, you’ll find a number of indie brokerages that put the “real” back in real estate by offering a very unique model of client-centric, relationship-based service, while optimizing the use of the high-tech, industry-wide resources available at their disposal.
As the founder of a boutique brokerage in the middle of a hotbed of acquisitions, I believe strongly in advocating for the concept of local real estate companies and local agents, and I hold firmly in our stance to ward off aggressive solicitation by large out-of-state firms that may not have the best interests of the community and its residents at heart.
We put people first and treat our agents and clients like family, not numbers, as it should be.
Troy Palmquist is the founder and broker of The Address in Southern California. Follow him on Facebook, or connect with him on LinkedIn.
