Are Real Estate Franchises Dead?

What do Brokers do?  I really don’t know.  Despite our name, we have never considered ourselves a “realty” company.  We are a “service provider” extending brokerage services to real estate agents.  What’s the difference?  Well, lots of money!

Traditional realty companies are an agent’s “partner”.    And while brokerages don’t share in any of their agent’s expenses, Brokers do share in whatever commissions their agents earn.  It is a partnership.  Not entirely equal or fair, but a partnership, nonetheless.  In most of the United States, agents don’t have a choice.   This forced “realty partnership” is a take-it-or-leave proposition.     

In Atlanta Georgia, agents have choice; we have NO NAR requirement telling us what to do.  Atlanta agents don’t have to have a partner if they don’t want one.  There is an alternative.  Agents can affiliate with a brokerage “services” firm.  Wynd Realty introduced the brokerage services business model in 2008. 

We don’t know what happens at traditional brokerages or what those Brokers do to earn their share of the partnership?  We can only speak to the services business model and how it differs from a traditional realty.  

Traditionally, real estate brokerages are the world-class experts in blowing smoke and thinking very highly of themselves.   Some more worthy than others.  But pull back the covers and see what they actually do, and a pattern emerges showing a base set of services that all brokerages perform.  The alternative approach puts away all the BS and ego and creates a “services” company using just the base set of standard functions.     

In the “services business model”, real estate Brokers do considerably less for their agents than their franchise counterparts.   Gone is any pretense of partnership.  And with it goes the horribly antiquated idea of a commission split.  Why would an Independent Contractor ever need to split or share any of their revenue?  That makes no sense in 2022. 

Real estate brokerage service providers charge a flat fee for every transaction regardless of sales price.  Wynd Realty began in 2008 with a $300 dollar flat fee for every sales transaction.  The sale of a $240K house carried the same $300 dollar fee as the $1.4M dollar house.  We didn’t get to charge more for ink written in higher numbers.

Today, the sales transaction fee at Wynd Realty remains at $300 dollars.  The cost of providing base services to real estate agents hasn’t really gone up. And, the software and apps we use today far exceeds that of yesteryear.   In contrast, the traditional franchise realty has had to deal with expenses that will forever grow.  Rent, salaries, consumer advertising to name a few.     

Traditional real estate brokerages began as consumer brands.  The “brand” was king and their agent communities were interchangeable players along for the ride.     The services approach to brokerage never advertises to the public.  At Wynd Realty, we speak only to the agent community.  We honestly don’t care if the consumer ever knows our name. 

Brands die, services last forever.  Realty brands from the 1980s still dominate our industry.  But they are now starting to get that TGIFs vibe about them; they’re still around, but do you know anyone who eats there?  Why would a new agent entering our market today opt toward a brand of their parents?     

“Stay in your lane”, is a popular phase of our day.  Ever notice how many lanes a franchise brokerage tries to control?  Take training for example.  Without exception all franchise brokerages speak highly of their outstanding training.   And surely some are better than others.  But, if you are really serious about training as an independent sales contractor, the Internet has hundreds of options.  Training from professionals who have decades of experience in training! 

But the single biggest difference between a traditional real estate brokerage and a services brokerage is simple.  In one approach, agents join and pay into something they believe to be greater than themselves only to find out later they’re on their own.  In the other approach, agents realize up front they must chart their own course. 

The services business model isn’t for everyone.  If you enjoy the social atmosphere of a franchise, the extra fees an agent pays seems more like “club dues”.   It becomes your lifestyle.  But if you are an agent who would rather invest that money in themselves, a services business model will work best. 

A services business model also extends a brokerage’s capability into market areas that have yet to be tapped.   In our next blog we will discuss new agent opportunities in Atlanta

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