I read an article in Inman the other day that said brokerages should shift from being agent-centric to consumer-centric. But why not be both?
Real estate brokers are, at their core, marketplaces.
“In mainstream economics, the concept of a market is any structure that allows buyers and sellers to exchange any type of goods, services, and information. The exchange of goods or services, with or without money, is a transaction...where transactions are processed by the marketplace operator.” (Source)
A real estate transaction needs three parties to get executed: a buyer, a seller, and a middleman. Whether low-fee, traditional, or tech-enabled, a brokerage (middleman) is a marketplace where operators (agents) execute transactions between buyers and sellers.
HomeLight, Compass, Zillow, Opendoor, Redfin, PurpleBricks, Knock, etc. – these are simply marketplaces with different monetization strategies.
Like any successful marketplace, a brokerage adds value not just by connecting buyers and sellers, but by reducing friction in the transaction. Look at how Amazon simplified e-commerce or Airbnb made short-term rentals easier than booking into hotels. In real estate, brokerages do the same when they streamline communication, qualify leads, and remove barriers for agents.
Why is this? The agent is essentially the one who executes the transaction. The more productive the agent is, the more money the brokerage makes.
As a broker, then, you should be thinking of how you can get your agents to execute more transactions. Redfin's agents, for example, are 30x more productive than a traditional agent. That's because Redfin has taken some of the tasks off of the agent’s hands in order to mak them more productive, such as generating leads, scheduling showings, and paperwork. They not only provide the tools, they do the actual work.
And this approach has been proven, too. The 2023 Real Estate Brokerage Software Market Report found that 79% of agencies implementing digital solutions reported improved operational efficiency, as well as average productivity gains of 32%.
The 2024 Delta Media Group Leadership Survey found that getting agents to actually use the tech their brokerage provides is one of the top three challenges for residential brokerages – proving just how important it is to set agents up for success in the marketplace.
While some are choosing what side to focus on, others have already embraced the idea that becoming a marketplace might be the winning strategy. A healthy marketplace balances both: empowered agents that deliver better experiences for their clients, and satisfied customers that drive more business for those agents.
Brokerages that view themselves this way are optimizing both sides of the transaction, improving efficiency, and ultimately increasing profitability.
