The way we know real estate today is not the way that real estate was once known. Real estate has evolved over the last few decades into being less of a service business and into more of an expertise. Real estate brokers and real estate agents do business differently today than they ever have before.
Here is the history of the real estate broker and real estate agents from the 1950’s to today, 2008, some 60 years later…
1950’s – In the 1950’s there were no women in real estate. Real estate was a man’s world – period. All deals sold by a real estate company were the real estate companies listing, with few exceptions. Brokers knew each other, but they rarely sold each other’s listings. The broker was also the “deal doctor”. The broker was the smartest person in the office when it came to real estate. Agents did not do a deal without the broker being involved and them going to every listing and buying appointment. The agent was basically the assistant. The broker was the agent in the 1950’s. Listings were kept on index cards and buyers viewed these cards only if they met the broker’s approval.
1960’s – In the 1960’s the first multiple listing service was formed to help companies sell each other’s listings. The first multiple listing service was done with index cards, similar to how brokers had kept their listings before. Cards were sent to each other’s offices listing the commission that an agent from another company would be paid. Then the MLS progressed into the book that was published every week. An agent was prohibited to give this book to their clients. However, every Friday (or whatever day of the week that the book came out) the offices would have new listing night where families could come to the office and see the new listings in the new MLS book.
1970’s – Franchising became popular. Franchising offered brokers some continuity in training. Franchising also brought in referrals from other parts of the country to the broker. The Realtor boards also started offering training and designations. The agents were able to tell the public that they were “trained” and that they have this or that designation. The Million Dollar Club became known as a designation to the public. However with all of this “training” agents became more independent and they started doing business without the broker.
1980’s – The real estate agents take over. They start marketing themselves on signs, not just the brokerage. The real estate agent starts demanding higher splits from the broker for the business they are doing. They start getting glamour shots and personalized advertising. ReMax starts with a bang and many agents leave their current broker for higher splits. Their thought is, they already know what to do to bring in their own business and they have been trained by the Realtor board.
1990’s – Cendant now known as NRT starts to buy all the big affiliations. Coldwell Banker and Century 21 become one in the parent company but still appear as different brands to the public. The real estate business becomes more about branding of the company than advertising homes. Agents are taught more about synergy and passing leads through relocation companies.
The co-founder of MTV is involved in this giant corporation and he starts to teach the business about selling other services besides the home. One-stop shopping for the consumer starts.
1998- Brings Internet shopping for homes to the consumer. This shopping also brings the emergence of discount brokers and multi-level brokerages like Keller-Williams, which is a model based on recruitment and overrides of what those who you’ve recruited sells.
2001 – Hyper inflationary market begins and produces rapid increase in broker and agent populations. The Realtor boards grow from 800,000 agents in the U.S. to 1,400,000. Everyone was getting into real estate. There was absolutely no lead management in most of the brokerages because buyers were plentiful.
2005 – Contraction in home sales begins. Unprepared brokerage firms begin to fail. Unprepared for a lack of profit and agents start getting out the business and many affiliated firms drop their contracts to become independent. Their effort is to make more money for themselves as brokers in the everyday business.
2007 – Housing sales drop as doom and gloom sets into the financial markets. Lenders face record numbers of foreclosures due to hyper inflationary markets in 2001 and their lending practices. Under the Clinton administration, Congress had passed laws for social engineering to help buyers buy homes with loose financing restrictions. These homes could not have been purchased by these buyers without more stability or while under free market conditions. Realtor board numbers drop back to 800,000 as many agents get out of real estate.
Today, the Internet tells the story.
Market and Neighborhood demographics, mortgage history, taxes and Google Earth shows buyers exactly what they want to see before they visit a home. The information highway is doing the job that real estate agents once coveted as the most important part of their job – finding a buyer a home. Now, buyers walk into real estate agent’s offices prepared with the facts that ultimately prepare them to buy a home. Sellers are telling agents what their neighbors sold for and how long it took them to sell. Buyers are now literally and figuratively driving the agents. The power that a real estate agent and a broker for that matter have individually and collectively has now shifted. Real estate agents now need to re-invent themselves to stay in business.