Crossing the Chasm

2020 will be the year residential real estate “crosses the chasm”. The what?

Marketing professionals of the early 1990’s so quoted Geoffrey Moore’s epic business book, “Crossing the Chasm”, it achieved an almost gospel-like status. It’s truly a great book, but more than anything, the book’s timing couldn’t have been better. The book, sub-titled: “Selling Disruptive Products to Mainstream Customers” was published at a time when technology breakthroughs seemed to be happening hourly. 

So what does a 30 year old book have to do with today? While much of its actual text is technology related, the book introduces a “life-cycle” concept that can be applied to almost any situation. Within every life-cycle are recognizable easily defined stages. All life-cycles goes through these same stages in the same order.

For this article, let’s look at the life-cycle of the, “6% commission” (in the Atlanta market). We all know the real estate industry hasn’t experienced any significant change, disruptive or otherwise over the last 50 years. We STILL live in the six percent, split-driven business model that was created in the 1970s. Sadly, most of the Country’s agents are stuck with that. But not Atlanta! We are a free market. We are a collective of free agents who are all allowed to create their own way. Be in their own cycle.

Life-cycles are often illustrated as bell curves. A life-cycle, bell curve of Atlanta’s 6% commission is illustrated above. You will notice this bell curve has one significant gap. This is the “chasm” that new ideas and concepts must traverse in order to achieve the goal of general consumer acceptance.

Consider the Atlanta market at the onset of the last real estate crash in 2007. In terms of real estate business modeling, Duffy Realty and Wynd Realty were the outliers in promoting a movement away from the traditional franchise format. Duffy Realty created a flat fee consumer product that was wildly different from the 6% norm. Wynd Realty identified itself as a “Micro Broker” by separating brokerage services away from the sales cycle. Eliminating the idea of a Broker “split”.

Early adopters of both Wynd Realty and Duffy Realty had to make a leap of faith in these new business models. And, thankfully they did as both companies thrive today. As a matter of fact, both companies have had their share of others trying to duplicate their business models. But, as successful as each company has been, the 6% franchise commission noose is still around the industry’s neck. 

2020 will be the year real estate “alternative” goes mainstream. (At least in Atlanta) Many factors are converging toward this premise. The continued rise of the “little r” agent. (only in Atlanta) Small agent team development, the rise of specialty boutique brokers, enhanced agent DBA capabilities, the advent of the Community Realty market, and the continued explosion of the i-buyer market.

Clearly, the traditional franchise 6% format is on the backside of its life-cycle.

As traditional methods continue to wane, 2020 will also be the biggest year of retirements ever seen. At least until next year. Actually over the next several years, the industry will see hundreds of thousands of Boomer agents calling it quits. The calendar printing industry is devastated.

2020 will be the best year yet for changes within our industry. We may even start to see court rulings on the various outstanding NAR fair practice lawsuits. Allowing all the nation’s agents to have choice would mean the rest of the nation would look like Atlanta is today. We are the goal. We are the test lab and people are watching.

What Atlanta does in 2020, could very well become the blue-print for the rest of the nation.