Brokerage Alliances: What’s In It for You? (Part 2)

In our last installment on brokerage alliances, we discussed the setup and costs associated with the two existing business models, auction-house style and strategic. In this installment, we’ll look at some of the perceived benefits and drawbacks.

Should you invest in these real estate trends?

• Maybe?
  • Many brokerages point to the powerful branding achieved with alliances.
  • The President/CEO of Sotheby’s states under his brokerage’s 10-year Reology ownership, sales volume has doubled to $15 billion as of 2014.
  • BlackRock’s CEO cites the connection between art and high net worth individuals as the culprit.
  • Brown Harris Stevens Realty points to the brokerage’s Christie’s affiliation as bringing about “specific business” through provenance, thus commanding a higher price

• Maybe not?
  • Though brand visibility may increase, that doesn’t necessarily translate into high-dollar sales. If alliances made that big of a difference, those firms would have every listing.
  • A Sotheby’s nameplate doesn’t ensure listings are exclusive and the embodiment of luxury lifestyle. Some affiliates list trailer homes on websites.
  • Some opponents believe the marketing system takes advantage of ignorant sellers, who wrongfully anticipate higher sales prices and greater access to buyers, such as those in the foreign market, when actual access to the market, brand recognition, and true referral business is diminished.

Is the proof in the pudding?

Maybe it would be, if anyone knew the ingredients. Firms are by-and-large closemouthed about the business they’re gaining through affiliations. While some firms point to evidence the money is there, overall data is nebulous. Many firms advertise the relationships as a means of gaining business, but decline to disclose the volume of deals garnered from them, instead pointing to continued reinvestment in the alliance as proof of success. Relationships are resources, but it’s still unclear as to whether these relationships are actually translating into what matters — commissions.

To view the original article, visit the Properties Online blog.