The Evolution of Real Estate Brokerages and Real Estate Agents

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.

7 Tips on Loving Being a Real Estate Agent

Anyone who has been in real estate for long knows that the reason for which someone gets into real estate, might not necessarily be the reason they stay in it. The perception of quick and good money in this industry is a widely held belief. One that has turned out to be a myth, for the truth is something quite different. Quick and good money will only materialize for those rare, exceptional agents that display both consistency and tenacity right out of the gate. The fact is most every agent struggles, at least at first, due to experiencing the roller coaster effect of closing deals and then having an empty pipeline void of new prospects.

Most agents that I talk to complain that when they enter the business their family is constantly nagging them about the hours that they keep and the phone calls that they choose to take at all hours of the day and night. Then, when they are not working, the agent is either at home, pouting over a lack of business or worrying about when the next client will surface and take up their time again – 24/7.

Loving real estate as a job is a change for many agents. Most are mired in the rut of attempting to make a consistent living while keeping the balance act of sharing time and attention between work and family.

Here are some ideas that I have used to keep on keeping on loving real estate.

Real estate is the backdrop of what you do. You are really in business. Real estate is just the canvas upon which you have chosen to paint and ply your craft. And anyone in business knows that you have to constantly be curious about what you do, challenge yourself to learn as much as you can and keep asking ‘what if…’ Because, ‘what if…’ means you are willing to change things in hopes of finding a better way. This does not mean expensive technology that has huge learning curves, nor does it mean changing the systems that work all the time. It means, saying things differently to get a new result. It means looking at things that are repetitive to see if there is a simpler way of doing them. And it especially means at all times, asking if the routine that you have been doing is necessary.

Ask yourself often, “What is real estate?” Defining it for yourself will open your eyes to what you love and hate about your profession which in turn allows you to connect deeper with and appreciate more what you love.

Set boundaries for yourself and your clients. This allows you to know when something is not working for you because you have already thought it out.
You can set quick boundaries by writing at the top of a paper such leading statements like; I will treat my clients with… And, my clients will not…

Try new things like video while you are showing houses. Make a series that is educational for your buyers to come.

Collect educational materials and make a file that you can give to your future buyers. Knowledge is empowering to both you and your clients. It cuts down on everyone’s confusion, which reduces stress leading to a more rewarding outcome for all involved.

Stay away from negative people in your business and your family for that matter. People who tell you that you can’t should now be considered motivational forces, if you have to hang out with them.

Do your best to find something that is funny everyday in real estate. Something amusing that happened at a house that you are showing, or something funny that your client said or something funny that you laugh at with another agent can make your day more memorable and enjoyable. Remember if something isn’t fun to you, you won’t want to do it.

The bottom line to all of this is that whether you love real estate or not, it is your choice. Your perception is reality. You can make anything that you want exactly what you want it to be.