The rise and fall of the real estate brokerage


The coming disruption in the real estate industry will be at the brokerage level not the agent level. Agents are important. Brokerages aren’t. That is what this blog post will argue.


The rise and fall of the real estate brokerage

The brokerage model existed pretty much unchanged from the end of World War II until the 1990’s. It worked well for many reasons.


In the beginning, brokerages were small and local and the broker would hire a few agents to help build out his business.

It was often more of an employee-employer relationship.

In the old days brokers would only hire as many agents as they needed and they would nurture them to become successful.

Education was at the brokerage level.

Nowadays, you can do most of the courses needed for a real estate licence online. The offline courses are done at hotel conference rooms.

Update courses that used to be done at the local real estate board have migrated online too.


Information traveled slowly back then. The knowledge knowers were the power brokers. Brokerages didn’t like to share except with their own agents.

The internet changed all that. Whereas brokers and agents used to be the gatekeepers and fought hard to hang onto this role, eventually they made user-friendly, adding pictures and important information. Organized real estate learned that you can slow progress and change, but you cannot stop it.


Offices are like factories for white collar workers. We don’t have factories like we used to. Offices are next to go. There is no compelling reason most people have to go to most offices.


In the mass marketing era, brand was important. Your brand meant something. You controlled the message.

Individual agents today are more important than the brokerage they hang their licences in.


Back then you could advertise your brand, reaching everyone you wanted to reach with your message. Newspaper and TV advertising was actually great bang for your buck. So were the Yellow Pages.


Buyers and sellers walked in the front door of the brokerage. They called the phone numbers on yard signs.

Today, no-one walks in. No one calls the number on a sign. Word of mouth referrals and internet searches generate the best new clients.

All in all, brokerages, to me, are like Pontiac V8 engines, cable TV bundles, greasy spoon diners, newspaper advertising and working the midnight swing shift at the auto parts manufacturing plant.

Been there. Done that.

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