Before the COVID-19 outbreak, commercial real estate brokers heard a lot about the death of their profession. Online marketplaces would disintermediate real estate, removing the dreaded “middle[wo]man. “Brokers were going to become obsolete thanks to new internet platforms (or was it AI or blockchain?). Now we live in the COVID-19 landscape, where brokers are not even able to meet the clients or giving walkthroughs. Yet the broker remains, still working to make transactions happen even in this brave new world.
Commercial brokerage, however transactional it may be, presents a great opportunity to look into the future of real estate workflows. On the investment sales side, things are crystallized to their purest forms: one buyer, one seller, one or two brokers and one property, with the potential to turn individual sales into pipelines of long-term opportunities. term. And the company is at a crossroads right now. While it is easy, if not obvious, to ask the question of whether brokers will be present in the future, it is more difficult to ask the more nuanced question of “what will brokers look like in the future?” It is even more difficult to try to answer it. Let’s start by examining the impacts of technology on the world of work at large.
According to Aaron Graham, Innovation Director of National Land Realty, “A study from the University of Oxford predicted that 86% of real estate agents will be replaced by robots over the next 20 years. The truth about this statistic remains elusive. However, regardless of the actual number, the question is whether you will be part of the percentage set aside or will you be part of the elite part that takes the time to learn how to stand out, stay relevant and stay valuable. ? If we can better serve customers by providing them with what they need on a personal, emotional and technological level, while saving them time and money, we become invaluable.
It is the personal and emotional elements of this issue that provide the most fertile ground for brokers to explore. Listing sites can provide access to many properties, and owner databases can allow investors to research off-market transactions on their own, but brokers’ deep expertise in the art of trading allows them to ” help people who might have a main career. in other fields, or even real estate professionals with other targeted skills, successfully navigate the real estate investment process.
These are the personal and emotional elements that computers will struggle to replace. Even when behaviors or “announcements” during the negotiation can be recognized by computer vision, there would be little way to bring such technology into vogue without videotaping every interaction between the buyer, the buyer, the buyer. seller and broker. Despite society’s trend for less privacy, it’s hard to imagine that such an intrusion would ever be widely accepted. Even if it were, humans are uniquely skilled at determining emotional causation and correlation. The difference between a genuine laugh and a nervous laugh, for example, might be difficult to explain on paper, but would make all the difference in the context of the decision to be more aggressive with an offer to buy or to stay stable.
Other brokers are also picking up on this trend. According to Beer beer, a multi-family real estate broker at Coldwell Banker Commercial, “Our role will never go away primarily because buyers and sellers are emotional creatures. There is no remote way that the full number of deals would be made if there wasn’t someone in the middle stopping people from killing each other. This is the reality of the buyer-seller relationship: while nice terms are at hand, human nature, communication pitfalls, and other obstacles can make success elusive.
Taking advantage of the world of residential real estate, where the National Association of Realtors maintains excellent statistical records, the average house put up for sale by the owner in 2018 sold for $ 200,000 against $ 280,000 for properties represented by brokers. It’s tempting to say that delta might be smaller in the trading world, where many professionals have experienced being on one or both sides of a transaction, or may even have replaced some themselves. in the past. But even if the chasm were smaller, investor-sellers and investor-buyers must answer the question of whether the time and stress of managing the deal itself is worth saving a few points. commission. As someone who has seen trades from both the principal side and the broker side, I would say the time spent coordinating due diligence should be enough to make owners think twice before avoiding representation of the broker.
Our skill set will need to constantly evolve, but if salespeople try to do it all on their own, they will leave a lot of money on the table. Good brokers know what people are going to pay, when to call bluffs, and when to bid more.
Beau Beery, Coldwell Banker Commercial
Once again, this underscores the usefulness, and even the integrality, of brokers as transaction advisers and not as marketers of drones or bird dogs. Beau added, “There will never be a time when our value in this area of sourcing, listing, buying and selling deals, will disappear. Our skill set will need to constantly evolve, but if salespeople try to do it all on their own, they will leave a lot of money on the table. Good brokers know what people are going to pay, when to call bluffs, and when to bid more. But if real estate brokers are “emotional guides” to the transaction and beyond, their roles will surely evolve in the future.
Brokers are likely to see more and more time spent helping their clients make decisions, not just execute them. Buyers and sellers will be more likely to trust their brokerage professionals if they know they will get good advice for their particular situations, not just hearing the advice that will lead to a transaction. One easy way to do this is for brokers to spend time using their skills to help clients, existing or potential, in situations where there is no direct opportunity to make a sale. This will likely be heavily based on particular skills from one broker to another. Do you have a past as a property manager? Why not volunteer to support your long-time clients with management advice? Or if you come from a background in selling enterprise technology, why not offer some technical advice where appropriate?
Larger commercial real estate teams are already seeing new hires handling Excel templates and cold calling while leaving relationship building to superiors. The trends we are discussing are actually just an extension of this. But young employees shouldn’t feel left out either. On the contrary, the modern transactional landscape offers an opportunity for new hires to reach out to their peers in client companies in an individual way, with fewer perspectives and established assumptions than their managers, and the managers of managers, may have programmed in. them.
The world of brokerage is changing, but it is far from over. Instead, it transforms and reveals a new face, a face that emphasizes the people involved in the transactions, not the banality of the transaction. Frankly, it’s a new world we should be happy about.