The real estate industry is undergoing some significant disruptions. Volatile markets, shifting political climates, environmental changes, rising mortgage rates, and changing technology trends are just a few of the challenges facing the industry. But what about threats to independent brokers? Larger real estate companies may be in a position to weather a storm, but independent brokers face some unique challenges. Here are five of the biggest ones:
- Competition Against Larger Companies
Let’s face it – independent brokers have to compete against real estate agencies with some serious name recognition. Some of those companies spend significant amounts buying talent as well as investing in online marketing. A few even offer their agents stock and revenue share, which most independent brokers can’t compete with.
That said, you’ll often find many savvy Realtors and brokers at an independent brokerage. Agents who choose to work for these firms have their own reasons. But some of them include fewer corporate rules and the ability to be nimbler in a fast-changing local market.
- The Availability of Homes is Challenging
For real estate brokers, income depends on the availability of homes. For several years running, brokers have been faced with inventory shortages across markets, and this isn’t something that is expected to change in the next year or so.
New independent agents are in an especially challenging position because they lack the reputation necessary to secure listings or even get a seller to lend their ear when the competition is stiff. Since most sellers only interview a single agent, referrals are vital when inventory is low.
- Online Listings Have Become a Threat
Everyone knows that it’s been a seller’s market for some time. Online listing services have not only become something that lessens an agent’s role in the home buying or selling process, they’ve eliminated it in some cases. Online home shopping is all the rage, and even the nationwide real estate brokers are finding it difficult to deal with. Imagine what the indie broker is going through.
And it’s not just homebuyers that have taken their business online. More and more sellers are opting to cut brokers and agents out of the transaction completely by attempting to list and sell their homes with an online ad. It’s tough to compete with this but not impossible.
Many consumers might try to buy or sell using only their smartphones and a few photos, but a good number will also quickly figure out that this is a complex process. There are a lot of moving parts and tremendous value to having an experienced broker on the team. Independent brokers that welcome these customers into the fold will be able to quickly earn trust and add value to a real estate transaction.
- Digital Transformation is Highly Competitive
Whether an independent broker needs to build a new website, focus on SEO, get active on social media, or figure out how to use email marketing effectively, keeping up with others in the industry isn’t simple or free. What may be an easy task for one person, like speeding up a website or updating a server, can turn into a serious issue for a small company that doesn’t have dedicated technical support.
It makes sense for independent brokerages to try to save money wherever possible. This is going to be an ongoing challenge. But, when looking to do something outside an area of expertise or try something new, bringing in experts can save time and money, especially when you’re competing for marketing share in the digital space.
- Difficulty Meeting Legal Responsibilities
Everyone in the real estate industry has to meet legal responsibilities. But this can be particularly challenging for independent brokers who may not have in-house counsel or dedicated procedures to keep the team on track.
For example, there are emerging privacy regulations that everyone must adhere to, necessitating an update to various policies. Real estate brokers are required to remain in compliance with all state-based real estate laws and maintain high levels of client service. Further, a brokerage assumes the responsibility of educating and continually monitoring its agents, which can carry considerable risk for an independent brokerage.
Contact United Title Today
Property markets across the country remain hot. While this should be good news for real estate brokers, there will be some ongoing challenges. At United Title, we are committed to partnering with real estate agents and brokers throughout the area to help clients successfully complete transactions. To learn more about our residential and commercial title services, call us today at (410) 544-5441 or contact us online.