Over the past few decades, real estate — like pretty much every industry on the planet — has undergone a huge transformation, thanks to technology.
Let’s flash back to 1972 for a moment. Things were simple back then: A gallon of gas cost 55 cents, brand-new homes were selling for less than $30,000, and every town had a few friendly local Realtors who guided buyers, sellers and investors through one of the biggest financial decisions they’d ever make in their lives.
If you were interested in buying a home in Livonia, Michigan, for example, you’d visit Ethel the Realtor — a nice lady who’d lived in the area for decades — and she’d parade you around town and give you the inside scoop.
This was the perfect solution for the times. In the pre-internet era, Ethel served as an investor’s Google or Zillow (or any other digital service you’d use today). She knew which houses were currently for sale, which houses would soon be for sale, and how much homes in the area should cost.
These days, however, Ethel is falling out of fashion. Though you can still find thousands of people just like her all across the country, there are great limitations to working with localized Realtors.
Why Ethel Is Passé
Ethel is a hard worker, but she’s only human.
Back in the day, her firsthand knowledge of her market was invaluable. She was the gatekeeper of all local insights and research, providing clients with data that helped them make informed decisions.
Today, however, some brief browsing on the internet can teach you more about your potential investment than Ethel ever could.
Beyond that, Ethel’s services are grossly overpriced. As an individual, she’s only able to sell four to six homes per year. In order to make a decent living, she charges her clients out the wazoo and pockets a hefty fixed commission for every deal she facilitates. In some cases, that’s 6 or 7 percent!
Due to her low volume, Ethel’s priority is milking every possible cent out of each transaction. In fact, she used to guide clients to overpriced listings because consumers just couldn’t conduct their own market research.
Thankfully, things are much different today. Modern investors see much more bang for their buck when they use technology to their advantage and partner with large, high-volume brokers who conduct business nationally.
Benefits of the Team Experience
Large brokers take a team approach to real estate — and this provides a number of benefits to investors, including:
1. Responsiveness. Ethel the Realtor can only devote her undivided attention to one client at a time, and she definitely can’t be in two places at once. When you work with Ethel, you end up speaking with her voicemail more than you speak with her.
When you work with a team, however, someone is always available to answer your call, respond to your email, or — if the firm is especially tech-savvy — take you on a virtual tour of a property.
2. Marketing. Ethel wears a lot of hats, but not all of those hats fit very well. She can’t afford to hire a marketing team, so she takes care of everything herself: photography, social media, staging and more. If you’re selling a property through Ethel, her grainy iPhone photos won’t do the home any justice, and her modest Facebook following just won’t drive enough eyeballs to your property.
A team provides all the benefits of a full-fledged marketing service. That means professional photography to showcase the property, high-quality staging, an expert copywriter covering the property highlights and more.
3. Expertise. As I mentioned earlier, Ethel can only do so much. Even if she were a well-rounded expert in all things real estate, there’s simply not enough time in the day for her to give every facet of the deal the attention it deserves.
Working with a team, you have multiple experienced professionals standing in your corner, and each of them specializes in a part of the process. As the deal progresses, you can be sure that your main point of contact knows what the heck he or she is doing — and your best interests are always being kept in mind.
4. Property management. Once the deal is done, Ethel is done. She’s off to find her next source of commission. She’s not going to find you tenants, collect your rent checks, perform maintenance or manage the property for you.
Many large brokerage firms offer property management as part of their services. Once a house is bought, investors can sleep easy knowing that the same group of people will now help them maximize their investment.
In the end, Ethel simply can’t compete.
She should be applauded for all of the hard work she’s done for so many buyers, sellers and investors over the decades, but nowadays, she can’t offer the same quality and breadth of service that a modern real estate team can.
Sorry, Ethel, but the real estate biz is a team game now.
About the Author
An entrepreneur at heart, CEO Mike Kalis leads the team at MarketplaceHomes.com, a Detroit-based brokerage that specializes in new construction sales and property management. Marketplace has sold more than $1.5 billion in new construction homes, gained a controlling interest in more than 2,000 single-family properties, and been a four-time Inc. 5000 list awardee. In addition to his managing partner role at Marketplace, Kalis is a venture capitalist and investor in ZipTours. The startup helps homebuyers and renters see a home with an agent streaming live to their smartphones; it has conducted tens of thousands of tours since March 2015. When he’s not busy creating new real estate solutions, Kalis loves wakeboarding, playing guitar and spending time with his family.