The Commercial Real Estate Brokerage Model Works, But Will It Last?
By Duke Long

The tried-and-true adage, “if it isn’t broken, don’t fix it,” still applies to many situations in life. The truism equally applies to many business applications, operations and such, yet keeping the status quo risks, or even mitigates, innovation. Lack of innovation can result in mediocrity across a broad spectrum of things, such as client relations, hiring and managing processes, top line revenue generation and bottom line income growth.

For the commercial real estate brokerage industry, leaving the way agents and brokers work in the status quo could mean leaving hundreds of thousands of dollars on the table for brokers – millions over the course of several years if the agent/broker is a top producer or even close to it.

There is a subtle change happening right now, some might call it a radical change, but those are the people clinging to the past and not in any way looking beyond what is the ultimate potential of the real commercial real estate brokerage model. That model is one that focuses on the broker only, the broker as an individual, the broker as the one and only source of business for the entire commercial real estate ecosystem.

Before delving deeper into the broker as an individual model – and let’s face it, the tools exist to enable this evolution, let’s take a brief look at the existing brokerage company model, and why there remains some merit to the brokerage company model.

There are according to most estimates hundreds of thousands of commercial real estate brokers around the globe, and most of those brokers function under the same brokerage structure set forth decades ago. To that point it’s been decades of transactions, collaboration, property transfers and money changing hands. All of this based around a simple premise that one party represents the other and for that representation those parties agree to pay the procuring and cooperating source of business. At its root it’s a sound and fair system for one of the largest asset classes in the world, especially when backed by proper regulations and laws.

There are of course many businesses that still function quite well and stay the same as they always have without any change whatsoever. But as we all know, how many more have in recent times become literally extinct because of their unwillingness to adapt, adopt or move forward in any way.

This isn’t to say that traditionally brokerage models are completely flawed. In fact there are several merits to them, including hiring/training mentoring, resources and benefits provided by the company, local market share, camaraderie among co-workers, and the ability to leverage local reputations.

Yet for the experienced and particularly mature and successful agents and brokers currently active, the individual under the current model is stifled and limited, not only by structure but by traditional and unnecessary boundaries. That same individual broker now demands autonomy and capacity. That individual’s experience is grounded in ridiculous analog processes that hinder the most basic functions of business. Should that not be a premise for what some would call radial change, beyond the fact that it will only affect a very few whose entire livelihood relies on the old model?
A simple step forward enables the individual broker by allowing them to keep one hundred percent of all commissions earned. The brand attached to the broker will thrive because of the association with that individual — not the other way around. The network of that broker is and will always be the key to all business, so why not give that broker the technology to enhance and grow that network, without fear? By enabling that broker with all the simple tools necessary to complete a transaction or if they so choose do it for them. The broker is the ultimate entrepreneur. Let them run their business the way they want, and watch it thrive and for all these simple things charge them a nominal monthly fee to facilitate certain aspects of running their enterprises, including branding. Maybe pennies.

Subtle thought or radical change? It depends on where you sit. If you are that individual broker no matter where you are you are the center of it all. The power and leverage you have is unlimited and with that power you can easily change what has been a model that enhances only a few. Will the existing brokerage model last? Only individual practitioners of the craft and trade of brokerage will decide.

Duke Long is the principal of The Duke Long Agency in New York. He is a real estate investor, broker and advisor to CRE firms and technology companies. Earlier in life he served in the United States Airforce at numerous domestic and international bases. He can be reached at dukelong@dukelong.com.