Dan Sullivan came up with the concept that everything we do as entrepreneurs involves guessing and betting.
We first make guesses about what may happen in the future and then we place bets on the guesses we think we have the best chance of being right about.
Another take comes from Jeff Bezos, the founder of Amazon.com. Bezos famously said that his focus as CEO was on the things that are not going to change in the next 10 years. In other words, he wanted to anchor his thinking to what he knew he could count on – no matter what.
For instance, in the real estate world, we know that home will always be the most important thing to all of us. That will never change. It’s a guess I am willing to bet my entire working life on.
My goal today is not only to make some guesses about the future but to figure out where the safest bets are for the next 25 years.
The NAR Has Become Our Trade Union
The NAR is a powerful force in the real estate industry and has a significant impact on the lives of its members. It is a trade association that is often compared to a trade union because it shares some of the same characteristics.
Both the NAR and trade unions are membership organizations that represent the interests of their members.
- The NAR represents the interests of real estate agents and brokers. Trade unions represent the interests of workers in a particular industry.
Both the NAR and trade unions engage in collective bargaining to negotiate contracts with employers.
- The NAR negotiates contracts with MLSs (Multiple Listing Services) on behalf of its members. Trade unions negotiate contracts with employers on behalf of their members.
Both the NAR and trade unions provide their members with various benefits, such as:
- Education and training opportunities
- Legal and legislative advocacy
- Discounts on insurance and other services
Trade unions are more focused on collective bargaining and political activism, while the NAR is more focused on providing services to its members including political influence.
The Future of NAR
As its ability to attract members and support from the industry giants, its relevance will diminish over time. NAR will become less and less of a force to be reckoned with, much like the NRA. The NAR also has a vested interest in having as many members as possible.
The industry is going to become more productive, meaning there will no longer be a need for 1.5 million Realtors. Obviously, the NAR is going to be against anything that potentially reduces headcount.
Zillow has the makings of a national MLS platform where sellers pay to advertise their properties – but that would make a huge change to their business model. They will fight this as well because buyer agents are the ones who pay Zillow the most money.
New business models that benefit the consumer will naturally be at odds with the NAR’s reason for being.
What will be lost when NAR folds or becomes irrelevant?
We’re going to lose influence on state and federal government legislative and rulemaking bodies. The states have followed NAR’s lead for a long time. If a vacuum is created, either an industry or an expanded bureaucracy will fill the void. Either of which could be problematic for consumers and practitioners.
Brokers are going to need to get involved at the state level to promote fair competition, transparency, and consumer protection.
I’m willing to bet on it.
The Case for Buyer Agents
Buyers’ agents are critical and deserve every dollar they make. Working with a buyer is the part of the equation that cannot be automated.
You can’t digitize putting Mom and Dad at ease when it comes to their kids buying their first home. You can’t digitize helping Nana manage, expand, or liquidate her holdings.
The distinction between listing agents and selling agents will fade, and real estate consulting will be the norm. Just like the buyer agent function, real estate consulting cannot be digitized.
Now, there are ways to automate and systemize what we currently call the list side of the equation. One of the problems with the current real estate brokerage model is that, with so many individual practitioners, there is little standardized experience for sellers from one agent to the next.
One of the ways to add value to the equation is to make the process far more predictable. The function of the listing agent can be better systemized and automated by the brokerage at far lower cost and far greater efficiency.
A few well-managed teams do this here and there – but it is the exception rather than the norm.
We need to look at all aspects of the home selling and buying experience with fresh eyes and identify the bottlenecks throughout the listing, marketing, negotiation, contingency, and closing phases. This part of what we do is ripe for a wholesale transformation.
Once a major player steps up and removes inefficiencies from the entire process, we will see commissions begin to drop across the industry.
Market Making is the New Value Add
Sellers hire us to sell their houses. They don’t hire us to let other agents or other companies do it. This is not about agency, it’s about doing the job they hired us to do.
The value of a real estate professional with local expertise and a market-specific database of buyers will become more valuable than ever before.
My big bet is that market-making is the new value add.
Market making cannot be digitized, but AI can be a powerful tool to help us do it. In my opinion, the best way to win a listing contract is to be able to honestly say to a seller, “I may already have a buyer for your home.”
Listings Continue to Matter
Listings will be the lead drivers for Real Estate Consultants. Listings are how the best in the business get the attention of new clients.
Securing listings has always been crucial for real estate professionals’ success, but it will become even more critical in light of the recent NAR decision in Missouri.
This decision has opened up the door for more non-NAR members to list properties on the MLS meaning we will see increased competition over time.
This increased competition will make it even more important for real estate professionals to secure listings to generate leads and close deals.
My Predictions for the Next 25 Years of Real Estate
Here are a few more guesses I am making about the next 25 years of real estate.
- A shift in power dynamics.
The ruling could weaken NAR’s influence over the real estate industry, allowing for more diverse voices and perspectives to shape the future of the profession. In theory, this could lead to more flexible regulations, more streamlined processes, and a greater focus on consumer protection.
- Barriers to entry for new real estate brokerages and online real estate platforms are likely to be lowered, leading to increased competition and innovation in the industry.
This could result in a wider range of pricing models, services, and technologies being offered to consumers. State licensing laws are the greatest barrier. Great ideas can get to market now far quicker and for far less money than in years past.
- Greater transparency and consumer empowerment.
The court ruling could lead to increased transparency in the real estate industry, with consumers having better access to information about commission rates, agent qualifications, and property details. This could empower consumers to make more informed decisions and negotiate better deals.
- Evolution of agent roles and responsibilities.
The changing landscape could necessitate a shift in the roles and responsibilities of real estate agents. Agents may need to become more specialized, more tech-savvy, and more focused on providing value-added services beyond traditional transaction facilitation.
- Geographic expansion and market diversification.
With the increasing use of technology and the growing popularity of remote work, real estate brokerages may have more flexibility to expand their operations beyond traditional geographic boundaries. This could lead to a diversification of markets and a broader range of services catering to a diverse clientele.
In other words, go deep into the niches – one target market at a time.
- Emphasis on continuing education and professional development.
As the industry evolves, real estate agents will need to invest in continuous learning and professional development to stay ahead of the curve and adapt to the changing demands of the market. This could include training in new technologies, legal updates, consumer trends, and emerging best practices.
- MLSs are likely to continue to play a central role in the real estate market.
However, I do expect consolidation. For instance, in Ohio – in the 70-mile or so distance between Columbus and Dayton that we operate in – we navigate three MLSs.
- Commissions are likely to remain the primary form of compensation for real estate agents.
There may be some experimentation with alternative pricing models, but I expect to see increased experimentation with new business models in the years ahead.
- Real estate agents are trusted advisors who can help navigate the complexities of a real estate transaction, and their role is likely to remain essential.
However, despite all these potential changes, I predict numerous areas will stay the same.
What Probably Isn’t Going to Change in Real Estate
While there is a great likelihood for change, not everything is going to be impacted by the NAR decision. If you ask me, a lot of things are going to stay the same.
If you’re worried about what may be in the future, I hope this reassures you. Here are the top five things that likely aren’t changing any time soon.
- The need for local expertise.
Real estate has always been and always will be about location, location, location! Buyers and sellers will continue to seek the guidance of agents who have a deep understanding of their local markets.
- The importance of relationships.
Real estate transactions are often complex and emotionally charged, and building strong relationships with clients will remain essential for success.
- The focus on customer service.
Real estate agents are essentially service providers, and their ability to provide exceptional customer service will continue to be a key differentiator.
- The role of technology.
Technology will continue to evolve and play an increasingly important role in the real estate industry. However, technology is a tool, not a replacement for human expertise and judgment.
- The regulatory environment.
The real estate industry is heavily regulated and it is a safe bet that regulation will increase. Staying up to date is the number one responsibility of all licensees – but it is especially critical for broker-owners who shoulder a disproportionate burden of liability and investment dollars.
Final Thoughts
Overall, the real estate brokerage business is likely to undergo significant changes over the next 25 years, but the core principles of local expertise, relationships, customer service, technology, and regulatory compliance are likely to remain constant. Real estate agents who can adapt to the changing landscape and embrace new opportunities will be well-positioned for success.