White Label Brokerage vs. Big Brokerage

I quit working for a big brokerage firm last year when I realized the efforts of the national brokerage firm as well as the local office I worked in were returning less and less qualified leads. 

There were five sources of income this brokerage was taking from my commissions.  And each piece was becoming less relevant and more punitive as the year wore on.  Entire areas of online marketing were being ignored, traditional marketing was being scaled back and no effort was made to offset the drop off in qualified leads, prospects or traffic.

In the meantime, my efforts to create an online presence and social media footprint were starting to bear fruit in the form of local exposure, increase blog traffic, qualified leads and even clients.

The four fees I paid were 1. Commission Splits,  2. Corporate Fee 3. Consortium Fee (fancy name for technology) 4. E&O Insurance.

So at the end of the year when I looked back at the return on investment of these 4 fees, I came to only one conclusion.  The ROI was almost nothing and what little return I was getting for the one fee that did have a return was deteriorating quickly.  The corporate fee was going straight to Texas to paid for the CEO to write books that he could sell  back to the agents in the company.  The consortium fee paid to build a set of technology features on a website that had no traffic, no SEO and no hope of ever generating a lead to an agent of the company.  And the split I was paying had become out of line with the flow of leads, prospects and potential commissions.

So I took a leap and joined a small brokerage that charged me none of those fees.  I only paid a small fee to clear the transactions that I complete.  And I was free to brand myself (and now my company) as an expert in my local market.  It is a "white label brokerage" that allows me to build my own company under the umbrella of their administration and brokerage services.  It sets me free to do what I do best and it will allow me to reap the rewards of my efforts directly.  I am no longer paying for services I don't want.  I don't pay for misguided efforts of a corporate monolithe that has become irrelevant in today's fast changing real estate market.

And I am not alone in my evaluation.  Many agents have come to the same conclusions as I have.  The question is whether or not this "white label brokerage" model will become the next generation of brokerage.  Will enough of these progressive agents be willing to band together under a common "white label brokerage"?  Will a white label brokerage created in a form similar to Realogy's model become a player in tomorrow's real estate brokerage landscape?

I am hoping so.

Comments

[David G from Zillow]

Fascinating and very well articulated post, Tony. This is a common story - especially among more marketing-savvy Realtors.

Question: how do you think of the trade-off between going the white label route and becoming a broker like Kris, Jay and others have done?

[Tony Arko]

Hey David, I don't think there needs to be a trade-off. You can do both if the setup is done correctly. Run your own brokerage firm under the umbrella and retain complete autonomy. The white label brokerage would provide clearing services, insurance and community. There will come a day when all the small brokerages might need to have big enough numbers to be heard regarding things like MLS rules changes, future legislative issues, etc.

[UK Estate Agents]

This is a very insightful and mind stipulating post. It will help realtors as well as people who are interested in real estate. Great job in viewing some aspects.

[Shawn]

I'm new so I'm not roped into any mindset, it seems like that's the only logical way to go really. To me it's really all about knowing how to market not so much who you're with.

I'm learning so I'll check back with any info that I think might help.

http://www.inexpensiveinvestinginflorida.com/

Thanks