Thank you for the insights, Pam. I think something that’s motivating me quite a bit is how even in the Internet Age, the so-called Age of the Consumer, brand loyalty is stronger than ever. If anything, as offerings proliferate thanks to the power of the Web, I feel that consumers are desperate to find a trusted brand for various aspects of their lives.

Just look at how consumers look at Apple.

The counter-intuitive thought I have is that as information simply explodes, and access to info becomes commonplace, consumers will turn more and more to trusted brands to help them make sense of all that info.

Great independents like Kris can’t ever be eliminated, in any business. Even in CPG’s, you’re going to find the niche companies offering unique, specialty products to certain segments. But neither do independents drive wholesale industry change — at least, not without becoming one of the Big Boys in the process.

I think some of the current generation, and certainly many of the next generation, of leaders in Big Real Estate will drive the sort of change that the industry needs. Like Sherry says, go big or go boutique.

But boutiques don’t change the world. Big does.

-rsh

PS: Now, if you get a large number of boutiques together, then you’ve got The Swarm, and they can change the world….

What BHG brings for agents is an understanding of real estate, customer service, agent behavior in a new consumer centric model. BHG is far more likely to succeed as a brokerage than companies who are skilled at driving visitors to their web sites and try to make the transition to a brokerage.

In some respects getting visitors is a commodity. The brokerage brand is built on far more than just raw visitors.

Great points, all of them, Louis — I wouldn’t have expected any less from you.

Having said that, here’s what I wonder: Did the folks at Benchmark Capital really think that Zillow was going to make scads of cash doing just advertising? The only way that works out is if you end up taking the lead-dog position in the vertical search space.

And for what it’s worth, I’m suggesting that the IAC and Trulia and Zillow and all these guys — including HomeGain, incidentally — are not yet setup to do virtual brokerage. But to get setup that way doesn’t take millions of VC dollars; it takes fairly minor additions and bizdev deals. The big dollar capital expenditures have already been made.

Getting brokerage licenses is certainly no barrier. Recruiting agents is a big deal, but not rocket science and very much in-line with how various companies try to recruit agents to be advertisers.

I suppose one way to look at it is, if you’re a VC and you’ve sunk $50m into some real estate website, do you just write it off? Or do you maybe strongly suggest that said real estate website look at virtual brokerage as a monetization model given the weakness of brokers and major brands to compete effectively?

Who knows… since as I said, I do renounce the whole approach. But I think it’s going a step too far to suggest the model can never happen.

-rsh

As Kris so aptly points out, there will always be big and small, but regardless of size, those who deliver that ‘wow’ customer experience with character, competence, convenience, and connectivity (both technological and personal) will prevail.

I don’t believe we are entering (actually already in) the Age of the Agent, or the Age of the Brokerage, but rather, the Age of the Consumer. And in thinking “outside in,” what makes sense for them? Will it be easier to identify one of a finite number of brands that becomes known for that great experience because it takes on quality control (which is only possible when it has the leverage of delivering leads and other great value), or picking through thousands of small agent shops to find the really good ones? And will that consumer see value in having a company advocate involved to monitor the process and make sure he/she is happy with his/her associate, versus dealing solely with the practitioner if an uncomfortable complaint needs to be lodged?

I think great agents like Kris who go it alone will have plenty of business in their model, because of scale, but looking at the bigger picture, I really believe companies (not defined as one or two agent teams) have a great opportunity if they adopt some of the best Aybaf concepts to hone performance, while remembering that trusted relationships got them here.

Setting up a brokerage is not easy, nor is maintaining one.

I don’t have profit statistics for new brokerages Redfin or better home and gardens but we know they are admirably facing challenges as new and innovative brokerage companies.

We know that IAC’s brokerage realestate.com is not yet profitable, and they went precisely the route you advocate of converting from a lead generation model to a brokerage one-the thought, just take all that traffic and those leads and give them to your own brokers who will convert them and the money pours in.

Its not that simple.

It may work out one day but realestate.com is not yet there.

Or check out brokerage Zip Realty-a formidable traffic getting entity-according to hitwise Zip realty gets more traffic than Trulia. While they are growing,innovating and generally doing a great job, according to public filings they are not yet profitable after five years.

As to trulia and zillow – are they profitable in their current forms?

Would traffic to a White House Zestimate convert into a transaction? How about Dueling Digs traffic?
This type of traffic may please an advertiser but not a realtor looking to close business.

Assuming Trulia and Zillow are not profitable and don’t have tens of millions of dollars lying around, they can correct me if the assumptions are incorrect, where would the money come to convert to a brokerage?

Its a hard sell to an investor of VC to ask for more money to convert an unprofitable entity towards another model where the comparables are not making money.

I think Trulia and Zillow are pursuing a traffic acquistion strategy that may one day serve them well.

Converting to a brokerage would be far more costly then the money they have already raised and even if they did raise the money their success would not be preordained.

Indeed its a moot point. In today’s economic climate, there is little chance that any entity could raise the tens of millions required to start a new online brokerage.

This is one of your more spot-on posts on the subject yet. Onboard Realty and Infomatics has a rather nice ring to it, but the idea sounds a little like Redfin on steroids, and I have yet to see global domination in their cards. There is a DNA element missing — the one who sits at your kitchen table on Sunday night, who knows your home down to the studs because they watched it being framed, and who you know knows your neighborhood because you regularly bump into them in the produce section. This is what the consumer who thirsts for knowledge down to the neighborhood level ultimately cares about, not signs in Time Square or first-response “voices” on some online information buffet. And I say “ultimately,” because ultimately is where the agent comes in. The rest is just the pre-game show.

There is far too much in your ten thousand word post to digest on a Sunday night let alone address in a short comment. However, that soon infamous “your brand is in the hands of your worst agent” line still thumps me upside the noggin. Easy to accomplish when you are a dozen or ten-dozen strong. Start talking in scientific notation, and you have thrown down one scary gauntlet. Fun rhetoric, but hard to implement.

And to complete my string of incomplete sentences, at some point this discussion becomes just too much academia. In the real world where I reside, there will always be big and small, indies and giant corporate blobs, and it will be up to the agent to decide where they best fit in. As I said at Inman, I have no doubt that we will move into the future as one big, diverse, disfunctional family.

What really worries me and what I really hope comes out of this conversation is the realization that our industry needs a wholesale realignment of thinking. Our “industry” is only as good as our worst agent and, be it big brokerage or small, unless we get our collective act together and demand minimum standards, unless we have the courage to self-police and walk the walk rather than sell concepts in search of the next “deal,” we are all in deep doo-doo.

Thank you for continuing this discussion. It is an important one.