“Mom-and-Pop” Real Estate Shops are a SmarterChoice™

During 2009 and continuing into 2010 several top agents left large real estate brokerages to start or join smaller companies.  That trend is expected to continue.  Why?

Many were asked by their managers: “Why would you leave a big company to go to a new and small ‘Mom-and-Pop’ shop?”

Smaller, independent, lesser known – are how some see the small brokerage companies – the “Mom-and-Pop” shops.  Selectivity, quality, veterans – these are other characteristics of the smaller brokerage companies.

In real estate we are all really Mom-and-Pop enterprises, regardless how big or small.  It’s the agents who are front-facing.  It’s our image, our talents and our visibility in the neighborhood that the customer sees and hires.   We are the “Moms” and “Pops”.

Wal-Mart changed the retail landscape by dealing in volume that, in turn, allowed for lower pricing of its products. This, in concert with greater efficiencies, gave Wal-Mart an advantage over smaller retailers.

It was thought that the same rules would apply to real estate – that big would be better, and that consumers would save.  In real estate, though, a case could be made that the reverse is true.

Larger brokerages deal in volume — of agents and therefore transactions – but that tends to have no effect on fee structures.  Large brokerages actually lack the efficiencies of a right-sized shop.

OK, take the advantage of volume out of the analysis; what’s left.  Is there a compelling appeal or advantage of the big broker over the Mom-and-Pop?

Would a consumer find greater quality when shopping at the big box? 

The last time I checked, brokers large and small belong to the same associations; we use the same multiple listing services, the same Code of Ethics, subject to the same Nebraska license law. 

Small brokers also recruit less and can spend more time on selectivity.  The small broker (Mom-and-Pop) is less immune to the financial pressure of vacant desks and the onus of maintaining market share dominance.

So we are back to the individual agent, and the quality of the agent has virtually nothing to do with the size of their franchise fee. Quality control, in fact, is much harder to achieve on a grand scale.

Real estate brokers are again becoming fragmented, no question, and it will continue to happen at a faster pace. 

But Mom-and-Pops are not by their very nature evil-doers who pose a threat to the industry, nor do they threaten the quality of the customer experience or the services they receive.

I suppose the only real threat is to the big brokers, and that is really the issue.

Given that the overwhelming majority of customers do not care about their agent’s brokerage affiliation.  As a result the broker (company) has two choices:

1. The broker can try to change the reality by powering home a brand, or
2. The broker can focus on improving the quality of all the little guys on the front line — the real Mom-and-Pops.

I like the second choice, because with that one, the other just may be a pleasant side effect.  As a broker, I know it is the agents who matter.

If I were selling towels and toasters, the numbers of offices or the number of agents I have could put me at a competitive advantage.   But I don’t sell towels and toasters, and I am not subject to the market rules of Wal-Mart.

As long as we are selling our services and our abilities — ourselves — the customer has little interest in company size, sales volume, or any other quantity or quality index that doesn’t apply.

So, call me a “Mom-and-Pop” if you must; it is a better world, and I’m glad to be there.