In October, Remax Today of San Carlos dropped the ReMax affiliation and is now Today Sotheby’s International Realty. A few weeks ago, Cashin Company was bought by Coldwell Banker. Prudential California became part of Better Homes and Garden Real Estate. In and around San Carlos…..there may be more moves still to come.
Why all the movement?
Below are just a few of the possible reasons for the sudden changes:
Any industry which has experienced the turmoil that the real estate industry has experienced over the last three years is going to be naturally susceptible to mergers and acquisitions. Our local market is no exception. While our market appears to have stabilized, the past three years have taken a toll on most local brokerages. Most brokerages are concentrating on (1) staying solvent; and/or (2) positioning themselves to be in the strongest position possible to increase their market share once the market does get moving in the right direction once again.
Most brokerages in and around San Carlos have seen the volume of transactions fall over the past three years. Some have seen a drop so massive, it’s hard to believe they have been able to withstand the hit. It’s just not the brokerages that are hurting. Many realtors, who for years were doing one or two transactions a month, are now doing three or four a year. Unfortunately, some are having difficulty just doing that. When trends such as this continue long enough, the grumblings for change and a new direction start to become more vociferous. This, in turn, adds more fuel to the fire for a possible brokerage change.
Face of Real Estate is Changing
As it has been said many times, the internet changed everything.….including the role of the traditional brokerage in residential real estate transactions. It took some time for this change to impact the pocketbooks of brokerages and realtors, but it has hit home. The research that is now available online has cut out a huge part of what a traditional realtor used as a value-added proposition for their clients. In other words, the internet and the various real estate dedicated websites that are available to the public have made some of what good realtors used to bring to the table, obsolete. Much of the real estate industry has fallen behind the curve in understanding that their business models and the once traditional roles of agents have changed over the past five years.
For San Carlos and much of the peninsula, the real estate brokerage industry is headed full steam toward a fork in the road. I believe that over the next five to seven years, the buying and selling of real estate is going to be dominated by two groups (1) discount brokerages; and (2) the higher-end, value-added brokerages. The discount brokerages will attract those who believe they can do much of the transaction on their own. The higher-end, value-added brokerages will be an option for those who believe the agent and the brokerage can offer value, insight and services that are of a high enough caliber to justify the expense. All other middle-of-the-road brokerages and realtors who do not adapt will continue to fade away.
Real estate is a very tough business. I’ve worked at start-ups and I’ve worked as one of eight hundred attorneys at a massive corporate law firm. The one thing I can tell you is that neither of those industries has a leg up on our local real estate industry when it comes to the cutthroat nature of a changing market. Just as in the normal business world, everyone is looking to increase their market share and stay ahead of the curve. Clearly, the market is doing well with the former, but definitely struggling with the latter.