A Full Service Proposition

Key Takeaways 

  • Consumers expect and desire a consistent service experience and are unwilling to accept a substandard level of service to achieve cost savings. 

  • In order to succeed long term, a hybrid brokerage must offer an excellent, predictable level of service to every client, every time. 

Many hybrid brokerages have tried and failed to disrupt the archaic service/pricing model of the real estate industry. Examples include Foxtons North America and Help-U-Sell, organizations which declared bankruptcy in 2007 and 2008, respectively.  

These failures, in part, suggest that consumers are not satisfied with partial real estate services, regardless of price. They want reasonable pricing, but they are also willing to pay inflated commissions of up to 6% if it means they will achieve the service level they desire. 

Consumers have expressed doubt in their ability to trust real estate agents; a December 2015 Gallup poll ranking consumer trust in numerous occupations ranks real estate agents in the bottom half of the list, right between lawyers and labor union leaders. But consumers’ desire for fair pricing and transparency does not outweigh their need for service. The mistake past (and some present) hybrid brokerages are making is the assumption that a pricing discount should equal a discount in the level of service provided. The price for real estate services is out of line with the value of the services provided, but the need for a thorough service experience still exists. The failure of partial service organizations to radically disrupt the industry, despite a significant cost savings for the consumer, is proof that price alone is not enough.

A viable full service real estate proposition includes control over the level of service and predictable, extraordinary customer experiences. Consistency is vital to the success of every transaction. 

The challenge self-service, a la carte and discount/partial service hybrid brokerages have had in the past, and will continue to have, is that a certain level of emotional support is necessary to sustaining clients through the difficult portions of a home purchase or sale. 

  • Consumers need experience-based reassurance from an agent or team during negotiations, before and after an inspection, while waiting for the appraisal to come in and any time an unexpected event occurs over the course of a transaction.
  • The consultative side of a real estate transaction is completely missing in the case of a for sale by owner scenario, or a minimal engagement level with a la carte services. 
  • The value of the counseling aspect of a real estate agent or team is more than a value-add for consumers; it is invaluable. 

Real estate agents are predominantly independent contractors. The model of independent contractor Realtors as non-employed associates of a traditional real estate brokerage does not encourage a consistent customer experience; legally, a real estate brokerage has little control over the level of service an independent contractor within their organization provides. The nature of the employment relationship between a broker and an independent contractor lacks enforceable oversight; the level of service an agent provides, his or her level of training or education and the ability to offer a predictable experience for consumers are variables that cannot be controlled by a traditional brokerage. The agent must be employed, trained and put on a career path to success, all inside of a full service predictable environment in order to ensure a consistent customer experience. 

A managed approach to the sales and service process has streamlined the consumer life cycle in many industries including food service, retail, health care, legal and insurance services. The entrenched level of inconsistency among service professionals in the real estate industry creates a standard below that of many other industries, and the inconsistencies of some agents damages the reputation of many.