Disruption doesn't mean disintegration The ride sharing service Uber is one of today’s best known industry disruptors. By eliminating the need for drivers to purchase expensive taxi licenses (and work like a dog to repay them), Uber has dramatically reduced overheads and disrupted the taxi industry. Disruption through cost efficiency has also revolutionised the mortgage broking industry. Until relatively recently, aggregators (the ‘middle men’ between banks and brokers) took a cut of all commissions from every loan a broker wrote. This meant that brokers paid a considerable proportion of their income to aggregators for things like branding and business leads. Along came Connective, who charged brokers a flat monthly fee instead of taking a cut of their commission. Now Connective is the biggest mortgage aggregator in Australia, and mortgage brokers who use their services keep 100% of upfront and trail commissions for every loan they write. Disruption doesn’t mean disintegration Uber and Connective may have disrupted the taxi and mortgage broking industries – but they haven’t eliminated the need for drivers and brokers. They’ve just modernised their respective industries by achieving cost efficiencies and encouraging established players to work more innovatively. “It’s the same with real estate,” says Matt Lahood, CEO of The Agency, which supports a network of self-employed real estate agents and uses a single central office. (Matt will be a keynote speaker at RMAOpen on 22 February. Purchase tickets here.) RMAOpen 2018 Conference Awards: Purchase tickets “Disruption is coming from two key sources,” he says. “The first is new technologies. Clients can list properties, send documents and discuss campaigns via the internet and email. They don’t need to come into an upmarket, expensive-to-operate real estate office.” “Disruption [in Real Estate] is coming from two key sources' (Matt Lahood, CEO of The Agency) (It’s a lot like banking – how many of us bother go into a branch these days, when we can conduct most of our banking online?) Matt’s agents work remotely, using little more than a laptop and smartphone. This substantially reduces overheads like commercial rent, property upkeep, signage, branding and administration. Matt says The Agency passes on these savings to its agents, who enjoy a higher commission rate than the industry norm. The individual as the brand The other key source of disruption in real estate is the changing meaning of ‘brand loyalty’. As Matt points out, today’s consumers are more interested in quality of service and value-for-money than the traditional concept of loyalty to a corporate brand. No matter what service or product they’re purchasing, younger people in particular won’t hesitate to switch brands if they feel short-changed on service or price. “Our agents don’t run or work for a franchise,” says Matt, “so they don’t rely on a franchise’s brand to generate leads. They promote themselves as a brand, and generate loyalty based on their clients’ perceptions of service and value-for-money.” In other words, real estate in Australia is beginning to follow the US model, where most brokers are self-employed rather than working in-house, and the client’s primary relationship is with the individual broker who promotes their personal brand. People still need great agents It’s important to remember that disruption in real estate is happening at the industry level, not the individual level. Australian consumers are still many years away from possessing the knowledge and confidence to sell property without an agent. Vendors will continue to seek out top quality agents to represent and guide them through this complex and stressful time in their lives. At the industry level, disruption means having to do business more efficiently – and that’s no bad thing. For individual agents, it means the opportunity to earn more and work less. By working with businesses like The Agency who bypass the franchise model, agents can enjoy higher commission rates. And, since they won’t lose a substantial chunk of their commission to an agency or franchise, they won’t have to work harder and sell more properties to make up for the lost income. Even better: with more commission in their pocket, agents can pass some of it onto their vendor clients in the form of lower fees – so everyone wins. Real ‘added value’ Disruption is already prompting traditional real estate players to ask themselves which operating costs are truly adding value to their clients’ experience. As time goes on, this will generate a more cost-effective and contemporary business model that benefits agents and clients alike. Don’t miss your chance to exchange ideas with Matt Lahood and other key industry disruptors at RMAOpen on 22 February. Tickets are available now! Haven’t bought your tickets to RMAOpen yet? Now’s your chance Tickets for RMAOpen 2018, including the Agent of the Year Awards are available for a short time only. If you’re a nominee or you want to network with the best in the business, purchase your tickets now! More information below: UPDATE: The RateMyAgent 2018 Agent of the Year Award winners have been announced. Congratulations to all the winners and nominees!