Small is the new big
I recently wrote about how Small is the new Big, making the point of how small brokers are able to compete with the large brand brokers much more effectively than ever before due to the evolution of real estate 2.0. The comments were all over the board, many supported my points and there were several dissenting opinions.
However, a few of the comments left me wondering where some agents’ thoughts come from? Are they really their own opinion or have they been brainwashed by the brand?
This article was originally published on July 07, 2008.
The comments were well presented and came to logical conclusions (I am not attacking the commenter(s), merely just pondering the possibility of broker brand brainwashing.) This comment is very logical, but sounds like broker brainwashing to me…
Every year I look at every transaction and evaluate the source of the business. If the brand causes one transaction per year, and I were to allocate 100% of the earnings for that transaction as having paid all the royalties for the whole year, where would I stand? If the brand brings any additional transaction, my payback on the royalties far exceeds the royalty I pay. So far, over the past 6 years, the (removed broker name) brand is responsible for 3-5 transactions per year that we would not have received otherwise.
Take me to your leader
Every broker I know makes this assertion when dealing with push-back on commission plans from agents. “Would you question the splits if our brand delivered enough leads to cover these expenses every year?” That’s a hard question to say ‘yes’ to. But if you think through this assertion and realize what you are getting into, then the assertion begins to have less value.
What if a small broker could send you the same amount of leads? Would you still pay more for the brand name? What if you generated so much business on your own that you didn’t have time to work the leads from your broker? Would you still pay more for the brand name? How do you know that you would not have received those leads from a small broker? Why allocate 100% of your work on a transaction to cover royalties?
Do you enjoy working for free?
These aren’t the droids you’re looking for
Granted there can be many reasons (but often times they sound like justification or rationalizations) for going with a large brand name broker, and I contend broker brand means less today than ever before. Small brokers are generating as much or more leads from utilizing web 2.0 tools than many of the large broker brands in local markets all across the country. The real questions you should be asking yourself (and your broker) are… Did the large brand name itself generate business I would not get from a small broker? If so, then does the income from those leads offset the additional fees charged by the large brand? I simply advise you to consider small brands when shopping for a broker. Often times small broker commission plans are far more attractive and you may not give up any leads handed to you by the broker.
If large brand name broker gives you a bundle of services and leads at a cost to you of X and small broker gives you the same bundle of services and leads for Y (where X is greater than Y), then why pay more for the brand? Do yourself a favor and shop broker services and don’t forget to consider the small local broker.