Brokerage Models, Model Perfect, REALonomics
Home Real Estate – Model Perfect
March 22, 2007 by REALonomics · 3 Comments
Home Real Estate is the premiere recipient of the REALonomics Model Perfect recognition for real estate brokerage business models. More will follow. In fact, nominations have already started arriving as we engage in the Quest for Model Perfect. Although, we speak of “perfect” the true emphasis should no be on an unattainable flawlessness but rather, we should emphasize “quest” as the imperative. The Quest for Model Perfect is about the journey not the destination.
Real World Modeling
Perhaps the most accurate description of Home Real Estate’s model is that it is just flat out “real world.” There is a refreshing absence of the all too common place bravado and hype sometimes seen in a company’s offerings. Home’s real world approach to business modeling is clearly NOT lopsided, being neither “Broker-Centric” nor “Agent-Centric” (our terms).
Home’s ownership team seems to grasp reality…i.e., we are in a third economic wave of the real estate industry, one that is decidedly different in focus, being market-driven and consumer-centric. There is a keen, sharp edge to their recruiting website and if I were an agent shopping around, I’d be spending some time analyzing Home’s agent offering and setting up an appointment.
Real world modeling has to be based upon economic performance and viability for the owners (a.k.a. ROI); Home’s model appears to fit the bill. With a pragmatic eye for agent options, Home seems to have struck the balance between the essential and non-essential overhead components. It seems to be working, having attracted 1,300 agents in just a few years!
The right model is always real world and Home Real Estate’s model keeps agents where they need to be; in the markets, meeting consumers, running a business and executing transactions. Real world modeling always involves the tri-fecta of real estate operations: Company…agents…consumer. Home is real world.
Home Real Estate’s Common Sense
We reviewed Home’s their recruiting website and assessed their offerings. Our take was “hmmm…common sense has prevailed.” Home’s common sense business model hits ONLY the important issues…optional compensation programs for agents, relevant “hard-hitting” training, make-sense overhead, empowerment of the market to work its own magic, ancillary services and dead-on, no frills Internet models.
The common sense approach is seen in their recruiting bullet points:
- More Money
- Independence
- Upscale Facilities
- Hard Hitting Training
- A Program that Works!
Some owner/brokers will look at Home’s common sense approach and instantly conclude with the question, “Why didn’t I think of that?”
Consumer-Centricity and Transparency
REALonomics believes the best real estate brokerage models of this era must contain two important ingredients, transparency and consumer-centricity.
Transparency. When one visits the culture of Home Real Estate , as exemplified within its online marketing messages and their recruiting website , one comes away with a sense that all things are transparent. There exists a refreshing absence of “smoke and mirrors” in the message. Transparency creates trust and with Home Real Estate, everything’s on the table.
Consumer-Centricity. This is the big one…and, it’s subtle. The business model of Home Real Estate, without its saying so, is a consumer-centric model because it shoves the attention away from the bricks-n-mortar monoliths of the previous brokerage eras (broker-centric and agent-centric) to the markets where the consumer now resides. Smart thinking!
In the early days of my real estate career, my broker used to tell me, “the market is not in the office, it’s out there…go get it.” But, the building kept seducing me, drawing back into the old-line retail model and sucking me out of the market where I should have been. True, in those days, we had the MLS books and the books were in the buildings and the consumers had to come to the buildings. Home Real Estate lays claim to but one structural offering…”Upscale Facilities.”
Home Real Estate – Model Perfect!
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Home Real Estate is Hardly a Perfect Model in the scope of professional real estate offices of the future. West USA Realty in AZ, has been running this model for YEARS. Home is a landing spot for the increasing number of low-no producers. The bottom line is that they have class C office space at best, underpaid and under staffed offices, long hold times to set showings or even locate brokers. They have poor technology if you can even call it that. 1300 brokers is due to the fact that if you can’t do business, (50% of all brokers do under 3 transactions a year!) at a BRAND name Company, why stay. So not having a brand that costs you 6% and the traditional Broker % split instead of a flat $300 for your 1-3 deals a year is a better ROI at Home. But I can tell you that the average broker production for is sub 3 transactions a year….which is a not a model of professionalism and expertise in the market, it’s just a model that is cheap. This makes it difficult to deal with not only brokers from Home, but with their offices, staff to staff.
Hey Mark…interesting perspective. In your thinking is Model Perfect a design that benefits owner ROI and risk or, is it a design that simply creates image, supported by quality environments made up of top producers.
How do your transaction numbers stack up against Home Real Estate’s?
Maybe beauty is in the eye of the owner-beholder. Thanks for thinking through the issues.
REALonomics