There are enough different business models out there. I think most agents can find a suitable match. But everyone's needs and wants are not the same. What one needs as a new agent is different from what they need or want once they are seasoned. It's good to have choices.

The basic business--getting sellable listings--has not changed in the 38 years I've been a Realtor.  Realtors have always talked about changes, but it hasn't happened in any substantive way.

When the market is good, the number of brokerage increases; when it's bad the number of brokerages contracts.  Franchises have always been unpopular with agents, but not with the buying/selling public.

Technology and the Internet have vastly improved marketing and have changed communication, but not the basic business of listing sellable property. 

I am with Suzanne McLaughlin I love working from home and I an not with a big box company either.  My office fees are minimal- seriously minimal.  I have several brokers that have consistently invited me to come and work for them- they can't come anywhere near my agreement!  To make the amount of money I am currently making in a big box company- I would have to sell about 2 million more a year before I would be even with my agreement now;) 

I have not found that to be the case.

My broker and I left the big box over seven years ago, and we are so happy.  I hate how they charge for every little thing, and I love officing from home.  Plus the benefits of writing off the space for taxes!

Yes, the antiquated real estate system is definitely broken. We have a surplus of several hundred thousand real estate agents and the average age indicates that young people are avoiding real estate as a career.

Cindy, Good question. I agree, it is evolving and will continue to change. I was at a seminar last week and the speaker was on the Profession Standards committee. She said change is coming regarding the Independent Contractor status of Agents. 

I see more and more agents breaking off from the big names and opening their own brokerage.  I feel that the big name brokerages will be dwindling s time goes n.

I think the internet really gives more power to the local agent/brokerage.  As to the commission structure I will not address the amount, but I know some want a fee for service.  This may work on a limited basis, but I think commission is here to stay.

Our market is definitely dominated by the national brand name brokerages. Fees don't vary much between them and our independent brokers. 

As bigger name brokerages take more comissions I can see more independent borkerages start up. The value add for a brand name is less with the advent of social media and other mediums available and affordable to the individual.

I have seen more local brokerages opening than big box franchices expanding.

I do not think so. The limited-service brokers certainly do charge the sellers less money, but that is reflected in the service they provide.

Cindy Davis one thing is for sure - the traditional model IS changing! I have seen it over last decade - and yes, now all franchise want to be agent-centric!

I do not think so.

Those who adapt to the changing times will prosper, others may not.

I don't believe so in the luxury market.  

There is synergy and comraderie  in the big companies. They have a big bank of knowledge.

For agents who have the discipline and production and don't mnd being alone, I like RE E Brokers and they charge only $600 per transaction. It's also good for part-timers.

Others might benefit from a medium size company.

Many hide behind the cardboard Country 22, Richochet Max or whatever off color blazer. Now with a little thing called the Internet, you don't need the training wheels that are expensive. Independent and control on the spending with a strong online presence you direct make it build your own model, platform to sell. Own it instead of renting the shoulder to shoulder perception of big and happy and pulling together... for a high monthly fee and nothing you ever own working for another.

I don't know about broken but I am getting a lot more agents calling me to join my company because of the overhead costs.

I'm with a non traditional brokerage and love it.  I work out of my home and don't have to go to madatory meetings.  All of my leads are self generated and my home office has everthing I need right here.  I was with a traditional office for 2 years and I just couldn't see the overhead that I had to pay.  My brokerage fees now are minimal. 

The cost of doing business without paying huge brokerage fees and large split commissions is still high.  

In our market, the big box companies still dominate, but there are some great up and coming companies that are pulling big agents away.

Interesting comments.

When I opened my office I was an independent - as was everyone else in our small town. When C-21 came in they didn't do very well and didn't stay  very long. The sign brought in "tourists" but the locals were distrustful. They wanted to deal with someone they knew and didn't realize that offices are owned and operated by local people. (In that case it wasn't true - it was owned by someone in the next town over, but...)

C-21 is back now. They bought into the office I used to own. Since they're the only ones left in town, and the people who were there before are still there, I suppose they're doing OK.

I think it depends on the area and market.  What works in a small town may not work in a large city.

Most definitely the answer is "YES" ... the traditional model is broken.

WHY?

Because the "old model" was artificially created by the MLS and it was based on limiting access to a resource (information) & making agents the only ones able to disseminate that informatin to consumers.

Fast forward to the 21st Century Information Age and today's consumers can find a lot of information they need on their own and come much more prepared than buyers & selllers of days gone by.

A lot them are starting to question the 6% remuneration that is part and parcel of most real estate transactions. I'm not disputing that a good agent is not worth their commission. I'm saying that today's clients are looking for more VALUE ADDED BENEFITS.

We can argue all we want about how hard we work and what our value is, the reality is that we will have to do more to justify our existense. 

Remember the old typing pools?

That's the way the real estate industry is headed if it doesn't change. 

Hate to be the purveyor of bad news but in my past life I was a research analysist in the field of Organizational Planning & Change. As I used to say to CEO's " ... It's not my opinion, it's just what the data set is telling you."

So don't take my word for it ... just watch the "old model" disintegrate in the next 5-7 years as aggregate sites and technology do away with at least 60% of agents.

Lloyd Binen hit the nail on the head in my opinion when he said, "Franchises have always been unpopular with agents, but not with the buying/selling public.   " 

As much as there is extra expense to the agent when working at a franchise, for better  or worse, it lends credibility in the public's eye.    I track my leads and get enough by my association with a franchise to make it worthwhile.   Plus, they pay a lot of operating expenses.

To answer your question, I do not think the model is broken.   I like that there are so many models to choose from though.

Personally, I wouldn't know one model from another as I'm not a traditional RE broker. I use my license as more of a necessity when needed for projects I'm working on. At the end of the day I guess I really don't even need a license but it does add some credibility and I didn't mind going through the learning curve.

It depends on the agent's personal goals and objectives, doesn't it? Some agents are not prepared to work independently, so starting in a traditional model may be the solution to get training and experience learning from other successful agents in the office. 

I agree that easy to use technology and social media have changed everything. however in our case at least, the agents who spend time in the office do better. There is some value in "being there". And yes, an independent contractor had better be truly independent..no mandated meetings, the same rules that would apply if you would hire a contractor to work on your home. Real estate companies have blatantly violated this for years.

This is an odd question. What does traditional look like?

In my market, the mom & pop brokerages don't have a chance at market %. If you can't change the system or invent a new model - who cares?

Cindy, I think we're seeing the same changes:  some smaller boutique agencies,, some cut rate agencies and the large firms.  I see more and more agents getting their broker's license and becoming independent's as the major trend in our Phoenix real estate market. 

It seems to be working just fine down here, Cindy except for the market share of the big franchises which seems to be declining.

Cindy,

I would say it is evolving, and there are many out there who are trying to do away with 5-6% commissions.  I do see the office sizes shrinking and desks being shared, which definitely reduces overhead.  Time will tell. A

Cindy,

I an not sure I know what a traditional real estate model would look like.

Some brokers/team leaders impose minimal compensation standards on agents.

Some franchises dictate from the ivory tower what the compensation will be.

Some allow the agent to create their own business model and establish their own compensation schedule AND benefit from a brand synonymous with real estate.

Some models allow an agent do turn a transaction every year or two while others need to see 25 a year or you are FIRED.

Some allow close collaboration with investors, property managers and diversified income.

I don't know what the tradition model is......UNLESS the definition is entirely based on compensation at the level you suggest. Then one must question why you think it is broke.