Advantages of a large 100% commission real estate brokerage begin with size. As with many contact sports, size matters.
A study by Armstrong Atlantic State University in Georgia revealed that “larger brokerage firms obtain higher sales prices.” This study involved U.S. real estate brokerages.
Size also matters with real estate brokerages and internet usage. A different study by The American Real Estate Society observed: “Internet use is found to be positively associated with franchise affiliation, affiliation with a referral/relocation network and firm size, while negatively related to single-office firms”.
Another study published in The Journal of Real Estate Finance and Economics indicated, “Many real estate firms are too small to take full advantage of the cost reductions possible with a larger scale of operation.”
To Summarize: three academic studies show that large real estate brokerages “obtain higher sales prices”, “positive internet usage”, and “cost reductions” for obtaining equipment and support services for their agents.
The Difference between Small Real Estate Brokerages and Large Ones
Large real estate brokerages have these advantages over smaller ones:
Economy of Scale: Large brokerages usually possess greater capital, generate larger revenues, and reduce the cost of doing business with better buying power. As a result, they often provide greater training, modern facilities, retain better legal counsel, and pay higher commissions. Smaller brokerages simply can’t afford to provide such benefits.
Specialization and Niches: Larger real estate company agents often branch out into their own specializations or niches like commercial, raw land, selling businesses, luxury homes, and specific neighborhoods. Small brokerage agents usually fall into the “jack-of-all-trades” syndrome.
Perceived Stability: Firms substantially growing over time creates an image of stability that consumers like. After all, a small brokerage with little history or track record may not be in business next year.
Diversified Revenue Stream: The ability to approach an agent specializing in another niche. Large firms make it easier for an agent to refer clients to another agent. For instance, an agent specializing in raw land refers a commercial property buyer to a commercial agent. This encourages in-office commission splits. Small firms don’t provide such opportunities.
Brand and History: Larger firms generally have more history and greater brand familiarity than small firms. Agents’ marketing efforts become easier when associated with a great brand name.
Employment Stability: Potential employees feel secure working for well-established firms. Employment stability often results in more productivity.
Prestige: Established brokerages with name recognition and a good reputation create a persona of prestige which attracts good agents, stable employees, and more clients.
To Summarize: Large real estate brokerages possess a better-known brand name, prestige, greater buying power, stability, and provide better training and facilities than smaller brokerages.
Tech Drives Real Estate in 2018
Forbes recently published an article asking, “What is the Role of a Real Estate Brokerage in 2018?” Forbes boldly predicted, “In 2018, the firms that will succeed are the ones with sustainable, tech-driven models that serve agents and consumers better.”
According to Forbes, 88% of buyers used real estate agents to purchase their homes. However, buyers are unwilling to pay commissions supporting traditional brokerage overhead like franchise fees, offices, and TV ads for buyer’s agents.
Since everything is online (like communications, data, contracts, and support), Forbes suggests that in 2018 brokerages must trim their overhead fat. Sellers demand full service from agents at a lower cost. In order to accomplish that, brokerages must become “tech-savvy” really fast while reducing overhead not directly serving clients.
The Future for Real Estate Brokerages
Forbes recommends six ways for brokerages to remain competitive in an evolving real estate industry:
1. Cut the Fat: Real estate brokerages must drastically cut overhead. Beginning with flashy office and franchise fees. Nowadays, anyone can run a business with a smartphone. Besides, successful agents prefer to be on the road with their clients than sitting in an office.
2. Automated Back Office: Using automation and technology to drive operations providing excellent services helps agents with no or very small back office teams.
3. Agent Branding: Making it easier for agents to produce attractive sites and provide support for their digital marketing efforts.
4. Mobil Office: Facilitate the ability of agents to market themselves. Provide support for agents to use mobile apps for searching listings, communicating with clients, completing paperwork, and networking with each other.
5. Offer Higher Commission Splits: Capitalize on back-office savings in order to pay agents higher percentages. Then the agents thrive and service their clients better.
As a result, the clients win along with the agent and the broker.
Offering new technology supporting its agents allows a broker to better help clients.
Advantages of Large 100% Commission Real Estate Brokerage
As this article demonstrates, large brokerages possess many advantages over smaller ones.
Want to join a San Diego Real Estate Brokerage with over 850 agents? Take a look at our 100% Commission Home Page.
On top of that, we are also very proud to be 5th ranked for the largest increase (39%) of California real estate agents from 2017 to 2018 by the same journal.
In addition, Big Block Realty received the Inc. 500 ranking as the #1 fastest growing real estate brokerage in the U.S. in 2016.
That’s because we offer the following advantages to our 100% commission real estate agents:
√ 100 % Commissions with no hidden fees. We offer several options with all of our associated fees transparent so you know how much you earn with every sale. Check out our 100% Commission Plans.
√ Office Support services at no extra cost such as:
√ In-house Real Estate Attorney to answer your legal questions.
√ Broker support just a call, visit or email away.
√ Training Classes including legal issues and contracts, internet marketing, along with others.
√ Technology and Social Media support
√ Lead Generation and Marketing support
√ Transaction support
√ Multiple Offices for free access workstations, conference rooms, and equipment.
√ Agent Concierge helping our agents with the little things to make work easier like booking a restaurant for client meetings.
Contact Us so you can learn more about us before joining one of California’s fasting growing real estate brokerages.
Steven Rich, MBA – Guest Blogger
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