The real estate industry is undergoing a seismic shift as traditional brick-and-mortar brokerages lose ground to modern, digitally-driven competitors.
As real estate strategist Mike DelPrete points out, 2023 transactions were down 19% compared to the previous year. Still, tech-centric firms like eXp Realty, Compass and Keller Williams outperformed the market.
The Real Brokerage grew its transaction volumes by a staggering 78%, while legacy firms were on par with the overall market.
The rise of the disruptors
Over the past seven years, modern brokerages have experienced exponential growth, moving from effectively zero to leading in transaction and sales volume. Meanwhile, incumbent leaders have seen their dominance eroded by these disruptive startups.
Agents are streaming out of big legacy firms as they continue to favor a modern brokerage that empowers them with the best digital tools, allows them to keep more of their commissions and still runs at massively lower operating expenses per transaction.
DelPrete notes that the two leading modern brokerages have one-fifth of the incumbents’ cost structures.
Can you imagine being able to trim your expenses by 80%?
Digital efficiency is key
Alongside transaction and agent count shifts, there is an underlying shift in brokerage business model efficiency. The move toward creating a streamlined, tech-driven model is the only way traditional brokerages will remain formidable competitors.
Legacy brokerages need to take a page from these modern brokerage disruptors, including:
- Bail on the bricks. Stop building new offices and start building better digital infrastructure and services to keep your agents competitive. To compete, you must become tech-forward, embracing the reality that a stellar tech platform for agents is exponentially cheaper than adding a new office.
- Make intelligent efficiency your new ethos. In the world of more for less, you must rethink your cost structures. If you don’t cut the right costs, you will likely hasten your demise. It may be hard to hear, but artificial intelligence will help you make the toughest cuts: personnel. It’s your biggest line item, and as AI improves, it will actually help improve your internal and external customer service.
- Lean into AI and leverage data and analytics. AI is your fastest path to creating data-driven insights into your business for you and your agents. The best decisions are made with informed data. AI can deliver the data you need to optimize your business strategies.
- Learning is your new legacy. This is not an era of winners and losers, but learners and laggards. Learning agility is the prime currency. Brokerages quick to assimilate new information, adapt to change and embrace innovation will rewrite the rules of the game.
This transformative time requires legacy brokerages to pause, critically evaluate and adapt to change.
For more information, visit https://www.deltamediagroup.com/.
