New Business Models Go Mainstream

The relationship between brokers and agents has been redefined a number of times during the last 50 years. Each time the redefinition of the relationship resulted in the formation of a new company and/or group of companies. The innovations brought to the industry by those new companies caused a disruption in the industry that resulted in an increase in the number of agents jumping between companies. In the 1960s and 1970s the franchise model created new national entities, in the late 1970s and 1980s the 100 percent model exploded, and in the 1990s and 2000s the interdependent and team model gained significant traction. Each new business model led to new global companies that dominated the industry for decades. The next winning model could be a technology-powered, agent-centric, flat fee, transaction-based fee, salaried, or auctioneering model.

It is interesting to note that over 40 percent of Fortune 500 companies in 2000 were no longer around in 2010, yet at the same time those top companies that were in the real estate industry in 2000 are all still here. Two of the successful models, RE/MAX and Keller Williams International Realty, both took a decade (or more) to gain significant national critical mass. Interesting companies such as Redfin (in its fifth round of funding and in 48 metros), HomeSmart (a technology-offering already in place), and eXp Realty (a cloud-based virtual real estate brokerage) are still in early enough stages that in time they may become dominant national models. The entrepreneurial spirit in residential brokerage is strong. Innovation of the