With the digital-first business model offering real estate agents and brokers flexibility, scalability and significant cost savings, what’s not to love for real estate pros looking to expand their business?
An innovation that first began as a means to cut costs is now largely influencing the real estate landscape. Virtual brokerages, the emerging business model that allows agents and teams to operate without a brick and mortar central office, provide everything their agents need, from admin support and marketing resources to training, while passing on the savings in the form of higher splits and, in some cases, revenue sharing.
It’s little wonder then that virtual brokerages like eXp, Real and Fathom are rapidly gaining agents and moving up the sales rankings. eXp, for instance, passed a $1 billion market cap in 2018 when it went public, closing out the year with 15,000+ agents and sending revenues soaring 220%.
So what’s the key to the virtual brokerages’ success? In two words: Innovative technology — without which these agents would never be able to provide the streamlined, mobile-first experience today’s clients demand.
Jessica Owens, a top-performing agent in Albany, GA, had been seeing ads for the virtual brokerage Real in her Instagram feed for months. In an interview with business blogger Melissa Blevins, Owens notes that the idea of leaving her traditional broker to go with a virtual one “just seemed too far fetched.”
But the more she looked at the numbers and interacted with Real’s support team, the more sense it made. And once Owens made the move and replaced a local broker’s office with her phone, she wished she had made the switch sooner.
Owens says that because the virtual system requires her to have all documentation preloaded and preapproved before a closing, she actually gets paid faster. She’s also happier with the new split, which enabled her to reach her commission cap in the first two months.
Remarkably, since her move to Real, she feels more supported and appreciated as a top producer — something she didn’t expect with her brokerage’s hub office located 1,000 miles away.
Owens says one thing she doesn’t miss from her former brokerage are the weekly sales meetings that required her to drive down to her broker’s office during prime working hours. “If you’re spending too much time in the office, you’re probably not making money,” she says.
There are a number of competitive advantages for brokers who are choosing to forego their desk space for agents in lieu of the mobile freedom a virtual workplace affords.
With overhead remaining a fixed cost that must be paid whether or not agents are producing, brokerages can save significantly by reducing such monthly expenses as office space and equipment. This leaner, more profitable operating model also proves more resilient in a downturn.
Glenn Sanford, who founded the virtual cloud-based eXp Realty, notes that cost savings was the initial reason he decided to create a virtual brokerage. With his former company, he had to close numerous physical offices as a result of the 2018 housing crash. When he launched his own brokerage, he simply couldn’t afford to spend all that money on overhead.
Reduced costs also allow virtual brokers to pass on more attractive splits to their agents — a feature particularly appealing to higher producers who want to keep more of their commissions.
Of course, as brokers and team leads develop a winning combination of people and systems and capture significant share in their local area, the next question becomes, “How do I expand outside my market?”
In the past, their only choice would have been to open physical offices in the new target market. But such moves are not only expensive and time-consuming; they also present challenges for managers who need to maintain and deliver the same high quality support and organizational standards that made the core team successful.
The virtual model allows brokers to expand with fewer issues. First, there’s no need to spend time and money to find, remodel and lease new office space, as support, training and broker oversight is all handled remotely.
“Expansion, with the help of virtual brokerages, is taking steps to put the agent’s business back in the forefront,” says Adam Hergenrother, founder and CEO of Adam Hergenrother Companies. Hergenrother, a forerunner of KW expansion teams, initially championed the virtual model as a means of expanding beyond his home state of Vermont, which, on average, produces only 2,700 transactions a year.
With the virtual model, procedures are set up from the beginning to grant agents remote access, enabling new recruits to get up and running on the new system within minutes. For example, Owens notes that it took her only about 10 minutes to create her agent website, access the CRM and onboard on dotloop’s transaction management system.
“It’s all on your phone,” Owens says of Real’s app-based system. “Even dotloop is integrated. You can see in your dashboard what your closed transaction count is, your net commissions, gross commissions, and how much more you need to reach 100% split. And that’s pretty incredible to be able to reach 100% split with no fees.”
Perhaps the main reason brokers are increasingly moving toward the virtual brokerage model is its appeal to agents, who love the mobility freedom, larger commission shares and fewer mandatory meetings at a physical office.
Heading out of town? There’s no need to schedule back-up. As long as there’s a mobile phone and an internet connection, agents can work on a deal from anywhere in the world on dotloop’s mobile-first, end-to-end transaction platform.
Even brokerages who don’t fit the virtual brokerage definition use the all-in-one transaction management system to connect all parties of the transaction wherever they may be. Michigan-based ERA broker Rick Reardon, for example, has found dotloop’s collaborative platform helps economize his one admin’s time.
“With eight offices and 130 agents, we’re able to share docs across the entire network of our company, and with one admin, track and monitor all those files,” says Reardon.
Being mobile-first and having technology like dotloop empowers agents to provide better, faster service with fewer chances for things to go wrong in the transaction, thus allowing admins to review documents and solve problems faster than with some traditional models.
Dotloop for Teams was specifically designed for greater collaboration among agents and admins, who can act on behalf of the agent to quickly review transactions for compliance and collect eSignatures or any missing documentation to keep the transaction moving forward.
Agents can also easily submit for review on their smartphone with dotloop’s fully transactional mobile app and use dotloop’s text Messenger feature to capture quick responses from clients. While a physical office may not be a priority for clients, a quick response time definitely is.
In fact, Zillow’s Consumer Housing Trends Report 2018 found that home sellers rank “responsiveness” only second to “trustworthiness” as the top qualities that are “extremely or very important” to them when choosing an agent. With text eliciting a 90-second average response rate versus email’s 90-minute average response time, Messenger can help speed up both agent and client responsiveness during the transaction.
As every agent and broker knows, real estate is all about relationships. Clients making the biggest buying or selling decision of their lives want the guidance of a trusted professional who meets with them in person.
Likewise, many agents are motivated by in-person support from team leaders and brokers. Granted, it’s easy to convey information virtually, but a video conference doesn’t always have the same impact as a face-to-face meeting.
To maintain a personal connection, virtual brokerages rely on phone calls, live video and, in the case of eXp, an entire virtual world where its 12,000+ agents can interact with anyone else in the company within a 3-D digital environment. Complete with agent avatars and computer mic-enabled conversations, eXp World offers eXp agents the ability to hold private or chat room conversations, participate in online trainings and meetings, and even celebrate company milestones via digital billboards in this virtual world.
To compensate for the lack of face time, brokers using this model have had to reset the bar of remote support — so much so that agents who have moved from traditional brokerages to virtual ones report that they get better support with shorter wait times.
Bruce Milner, leader of The Milner Team with eXp, says that navigating the brokerage’s virtual campus as an avatar is not only engaging, but also a faster, easier way to get problems solved. For instance, if a managing broker needs help with documentation, it would have required a car trip into the office in the past; yet, in the virtual world, it takes just minutes at his computer.
Dotloop for Teams, Milner says, has also been integral to the process by enabling him and his team to train and work through many issues without having to congregate in person.
The virtual brokerage is not the silver bullet that will solve all the challenges faced by today’s real estate broker. It’s also not the ideal situation for every agent. For example, agents new to the business may need to rub shoulders with more experienced agents while they’re learning the basic fundamentals.
But those virtual brokerages that have found ways to keep agents connected, equipped and motivated offer the advantages of lower overhead and greater flexibility as the real estate market continues to move in unpredictable ways.
And as long as digital tech continues to shape the evolution of real estate, the virtual model’s ability to survive and grow in a variety of market conditions will ensure its longevity as an attractive option for both brokers and agents far into the future.