Takeaways:
- Discount brokers get that tagline from their public persona of being a more cost-effective solution.
- In becoming an unaffiliated brokerage, Wynd Realty could save each of its agents nearly $500 a year in what was universally viewed as unnecessary fees.
- The universal hatred of board dues would become Wynd Realty’s initial strategic marketing push; we had found our universal enemy.
We are called a discount broker. Although technically not correct, it certainly beats most things we have been called. Discount brokers get that tagline from their public persona of being a more cost-effective solution.
That means from the start, the mission was to undercut the competition on price. It’s a one-trick pony. If that’s all there is to a brokerage, odds are they will be roadkill in 14 months.
Wynd Realty was never, ever about the money. The founding mission of the company had nothing to do with real estate per se; it had everything to do with creating a business model between the agent and the broker that was more realistic in terms of value-added services and contribution to the sales cycle.
Not to go all “Field of Dreams,” but there was a feeling if we could build a solid agent-focused, broker business model, we would get agents to come along.
What do the numbers show about new agents?
Market dynamics offers a pretty simple road map for anyone wanting to develop a brokerage. In our area, year after year, the various real estate schools churn out in excess of 500 new licenses every month.
Couple this with published reports of agent success within the industry after year one, year two or even after the third year. The success — or rather, failure rates — are staggering.
Dropouts are far more common than any industry should allow, short of the gym membership industry. So, like the gym membership industry, the real estate industry has an enormous pool of licensees (or members) who just give up every year.
The system seems to queue its new recruits blindly to their eventual fall off the cliff. Why? Maybe because it’s more profitable for the brokers and gym owners to have a steady stream of folks all trying to reach their dreams — of big commission checks or a more youthful you. Simply put, it’s good for business.
Many who went into real estate realized it wasn’t what they expected, or it simply wasn’t for them. But, with such a vast pool of newly ex- and soon-to-be ex-agents, there had to be a business model that could address their needs.
“Hey, you have spent a lot of money and time getting a license, don’t walk away. Why are you giving up?” The biggest complaint was cost, not surprisingly. The most hated cost: board dues.
Unaffiliated brokerages
In Atlanta, Georgia, real estate brokerages are not required to be affiliated with any realty board or association. In becoming an unaffiliated brokerage, Wynd Realty could save each of its agents nearly $500 a year in what was universally viewed as unnecessary fees.
In doing so, each agent under Wynd Realty’s affiliation would no longer be “allowed” to join a board, which speaks volumes for the business models of realty boards.
When Wynd Realty was founded in 2008, Atlanta had only one known unaffiliated brokerage. That brokerage didn’t advertise the fact. Agents heard of this brokerage only over hushed conversations in the copier room or cocktails with other agents. Our aim was to change that.
The universal hatred of board dues would become Wynd Realty’s initial strategic marketing push. We had found our universal enemy. It was also our intention to be as loud about it as possible. We had “ditch the board”-type messaging on everything we did.
Is lobbying worth the dues?
The door for Wynd Realty was opened by the National Association of Realtors’ inability to articulate its value-added message. It was — and continues to be today — easy to craft an agnostic board pitch; it writes itself.
Even in 2008, there were plenty of websites pointing to anti-NAR information. The fact that in the previous decade NAR outspent the good ole’ boys of the oil and gas lobby was always good for a quote.
The ongoing legal battles of the newly installed NAR president of the time — elected to turn things around — always got an eye roll. Even today, NAR’s spending turns stomachs.
Koch Industries spent $14 million lobbying in 2014? Comcast and Google, both large lobbyists, combined to spend only $34 million.
Ask an agent with four or five sales a year what he thinks of the $55 million NAR spent on lobbying last year? You will hear agents say: “Why do we have to pay for that? Shouldn’t the franchises and brokerage houses pay for the care and feeding of the industry?”
We had no idea our common sense, anti-board approach would create such anger. We got a lot of negativity. We also got, “Your agents don’t have to pay NAR dues, how did you do that?”
We had more than a few small independent brokers admit to us they thought they were “required” to offer board affiliation. They were shocked to learn they didn’t.
Today, only franchise brokerages in Atlanta force their agents to join realty boards. I suspect because they have to per their franchise agreements.
The bottom line on savings
To our knowledge, not many, if any, independent brokers today offer affiliation with a realty board. By not forcing our agents to join a realty board, since our inception, Wynd Realty has saved area agents nearly $1 million in unnecessary fees.
That represents nearly $1 million staying in the local economy and not going through NAR to land on some lobbyist’s dinner plate.
Our targeting of the enemy, NAR, might have gotten us noticed, but we needed to figure out a way to change the playing field to our advantage.
Obviously, we couldn’t compete against the large franchise players on their terms. To stay in the game, we needed to create an environment where they couldn’t complete against us, on our terms.
Stay tuned for the next chapter in our story tomorrow.
Jeff Bergstrom is broker-owner of Wynd Realty. You can follow him on Twitter @WyndRealty and on Facebook.