Future of Real estate agents

[James Canavan]

I got into a heated debate with a close friend on where we see the real estate agent in the next 10-20 years. It started as a question from my friend, " would you encourage your daughter to get into real estate when she gets older?" I actually had to take a moment and think about that, but My passion and love for the industry quickly flooded my thoughts, " absolutely!"  I said. Now deep down, I wasn't as confident in my answer. With all the "ibuyer" sites that continue to grow and spread throughout the industry, I cant help but have some doubt. My friend feels and has always felt that the agent is becoming less and less essential to the transaction with all the tools and sites that are available to the public. Now he does make some good points and I can understand his view on this, and it is a legitimate concern. 

My question to you is: Where do you see the agent in the next 10-20 years?

[James Orr]

I've been thinking (and acting on my thoughts about this for years). I remember Larry Kendall (the author of the Ninja Selling book/course) talking about Real Estate Brokerage 2.0 and 3.0... I think he was referencing someone else's research, but he was talking about what agents did changing over time.

If I recall, it used to be that agents were "keepers" of the book of listings and limited access to those that went through them. I suspect they did other stuff too, but that seemed to be their primary value proposition.

Much of the industry transitioned over the years to include additional value propositions like improved marketing plans (3D tours, single home websites) and some highly specialized knowledge about the local market and how transactions occur in their local marketplace. Plus, there's negotiation.

I think the role of real estate agent will evolve over time.

We will need to find ways to change and add more value to the transaction and our clients--especially as some of the value we used to offer is replaced by technology.

For example, here's what I've been doing and how I've been thinking about it personally:

1. Many agents think they are educating their clients, but there are entire sub-industries extracting millions of dollars per year educating our clients as investors. I don't think most of us are educating enough. I'm taking the education piece back as a value I bring to the transaction. I am doing it by teaching more-detailed, more-localized-versions, less "get rich quick" salesmanship and more "best practices for long-term wealth building" types of classes the "get rich in real estate" folks have been teaching our clients for $30,000+ each. Save the $30,000 and use it to buy houses. I very systematically look at what does a buy-and-hold, Nomad™ or house hacking client of mine need/want to know about and do a deep-dive class on every single one of those topics. I create tools and resources for them (more below). It makes me better and makes my clients better and adds value. By the way, this also becomes one of the best client acquisition/marketing tools you could ever use.

2. There is a gap where financial planning overlaps with real estate investing. There is a significant shortage of professionals knowledgeable about real estate and how to use it to plan for retirement. I've spent several years now writing software to help myself (and to educate potential clients and clients through classes, podcast episodes and books) model real estate as a  tool to achieve financial independence and to fund retirement. Personally, this is another area that I think I can continue to add massive value and have additional "job security" as a real estate broker.

3. I was trained to operate nuclear reactors for the US Navy. We didn't do anything on a reactor without a checklist (standard operating procedures), so when I got my real estate license I looked around for the equivalent. It did not (and except for the checklists I created internally) it still does not exist. I am not talking about a single page checklist you fill in and send to your broker to make sure your file is complete so you can get your commission check at the table. I am talking about a comprehensive checklist that covers EVERYTHING. My checklist for buying a property is probably close to 50 pages (not including any of the email templates or detailed descriptions/notes about the to do item)... that's 50 pages of "to do" items. We have a similar, separate checklist for listing properties and another one for when a contract comes in on a listed property. This is really part of the "secret sauce"/intellectual property that I'll talk about next.

4. I think there are ways to create a moat or put a fence around your clients by creating and using valuable-to-the-end-user proprietary intellectual property. So, I create tools and concepts like our Return on Investment Quadrant™, Return on Equity Quadrant™, Cash Flow Power Meter™, Lowest Monthly Payment Guarantee™, Maximum Cash Flow Guarantee™ and dozens more. We need to be innovating and creating valuable resources that iBuyers don't have and therefore can't use. We provide them The World's Greatest Real Estate Deal Analysis Spreadsheet™ for free, we provide clients that buy a property with us a lease we spent over $6,000 to create and education on how to use it. We allow them to model their own investing strategies using our Real Estate Financial Planner™ software. I try to provide so much stuff that we could create a business even if the commissions from brokerage disappeared.

5. I specialize... and specialize again. To carve a niche out that is likely to last I think you need to specialize... I think the generalist real estate agent will get crushed. I even think the quasi-specialist will eventually be crushed. It is not enough to specialize in working with investors... I think you need to specialize in specific segments of the investor population. For me it is not fix and flippers and wholesalers and BRRRR folks... for me it is buy-and-hold-investors, Nomads™ and house hackers. Filter EVERYTHING though that... does this help and add value to buy-and-hold-investors, Nomads™ and house hackers (clients/potential clients in my market)? If no, then why am I considering doing this? If yes... then do it... I want to add value and be helpful and serve those folks. You could pick a different specialty, but this one is the one that works for me.

Stepping down off my soap box, that's where I see brokerage stuff going in the next 10 to 20 years. Happy to discuss more. I also think there is a huge business opportunity in helping other agents be extremely valuable to investors in their own markets. There are folks out there doing it like me and my buddy @Chris Lopez is doing in Denver. But, this is a blue ocean strategy in my opinion.