Does a Physical Office Matter to Real Estate Agents or Consumers?

Yesterday Inman News posted an article, Real estate’s ‘unfranchise’: LeadingRE, an “Executive Profile” with Leading Real Estate Companies of the World (LeadingRE) President and CEO Pam O’Connor. (Unfortunately, the article is now behind Inman’s pay wall. Don’t get me started on that practice…)

What is LeadingRE? From the Inman article:

LeadingRE represents 600 local and regional real estate firms with a combined total of 5,000 offices and 150,000 sales associates worldwide. The network’s participants produced nearly $250 billion in home sales in 2009, according to its website. The network competes with national brands such as Re/Max, Keller Williams and Coldwell Banker.

. . .

LeadingRE is a "diversified brokerage services network," O’Connor said. "We’re sort of the ‘unfranchise.’  We do everything franchises do, but we’re not a franchise. We take a local brand and give them that global connection."

As the co-owner of an independent real estate brokerage, this unfranchise concept has a certain level of appeal. A way to pull “indies” together and build off each others' strengths. To help each other out in the good fight against the “Big Boys.” It makes sense on some level.

I know several people – very smart people – that are a part of the Leading Real Estate Companies of the World network. I was even honored to be invited to speak at a LeadingRE conference a couple of years ago. They do good work.

But there were some parts of the Inman article with Ms. O’Connor that made me sit back and think, “Hmmmm…. really?”

Specifically, two parts:

LeadingRE members also have to have a good reputation, a quality website, and "nice" offices, among other requirements. (My emphasis in bold.)

and

"One of the big headaches has been brick-and-mortar (offices), so I think a lot of (brokerages) are thinking about how to redo (them)," O’Connor said.

She doesn’t like virtual offices — mainly because they lack agent cohesiveness, she said. (My emphasis again in bold.)

"A lot of brokers are struggling to find enough of an office presence where people can come and congregate and get energy off each other without the ridiculous overhead," O’Connor said.

Thompson’s Realty has no brick and mortar presence. I guess that makes us a “virtual office.” Why did we elect to have no physical office space? Simply put, Pam is right — the overhead is ridiculous. And, (importantly) in my opinion, the vast majority of home buyers and sellers couldn’t care less if a real estate brokerage has a “nice office.”

So I said as much in a comment I left on the article:

"Nice" offices don’t lead to agent cohesiveness (nor client satisfaction), and it is *absolutely* possible for a virtual office to have agent cohesiveness.

This kind of short-sided thinking is surprising coming from such a well-regarded leader in the real estate vertical.

"A lot of brokers are struggling to find enough of an office presence where people can come and congregate and get energy off each other without the ridiculous overhead," O’Connor said.

Brokers struggling with this (and I agree that many do) ought to investigate the use of coworking space.

Pam was gracious enough to reply to that comment:

Gosh, Jay, you misunderstood. My point was that there needs to be a convergence of ‘less space/overhead’  with ‘company culture/teamwork’  that is difficult to build when there is no physical way to interact; i.e., an office. Look at many of our members – @properties comes to mind in Chicago – who have done a fabulous job of bridging this gap of getting away from huge offices you could shoot a cannon through, but still creating a vibrant, energizing (cost-effective) place where agents can come, congregate, and benefit from each other even if they do the lion’s share of their work from a home office or out with clients. That balance is what I was talking about, and it’s very difficult, if not impossible, for purely virtual companies to provide that.

The other point is that a presentable office does play a role – in my opinion – in establishing credibility with consumers. If I’m entrusting a major transaction to a professional, I kinda want to know they have some corporate stability. The office helps tell that story as opposed to meeting with an agent in his or her extra bedroom-turned-home-office.

To which I replied:

Pam -

I appreciate your response.

I have a lot of respect for LeadingRE, and what they stand for. I even spoke at a LeadingRE conference in Scottsdale a few years ago.

@properties is a great example, and I’m honored to call some "@ Folks" friends. Clearly @properties "gets it."

We’ll just have to agree to disagree on the need for a "nice office" to establish credibility with consumers. My brokerage has no brick and mortar presence, and to my knowledge we’ve never lost a client due to lack of having an office space. Of course, what I don’t know is if a potential client said, "No way I’ll work with these guys, they don’t have an office." But what I do know is that the lack of an office rarely comes up in conversation with clients, and when it does we explain the logic behind it and the clients understand and fully support us.

Personally, I trust my agents to prove their professionalism and commitment to their clients through their actions and results, not through the accoutrement’s a nice office provides.

In other words, there is more to proving corporate stability than office space.

It is indeed difficult, though not impossible, for a "virtual" brokerage to instill "team spirit" amongst their agents. We’re utilizing coworking space, brokerage get-togethers and some tech communication tools to do that. Is it perfect? Of course not. Is it working better than some "traditional" brick and mortar operations? I believe so. Is there more work to be done? Absolutely!

Pam is a very smart lady, of that there is no question. I just happen to disagree with her on this matter.

As I write this, I’m sitting at RETT East – Real Estate Tech Tank – a coworking space some of us have established. Two of my agents are here now. Earlier a title company rep was here. Yesterday two agents not in Thompson’s Realty were also here. It’s a pretty unique concept (in the real estate vertical) but one with huge potential – potential to address some of Pam ‘s concerns.

Pam’s assessment that it is difficult to build agent cohesiveness in a virtual setting is correct. Difficult, but not impossible. It is one of the bigger challenges we face as a brokerage. “Hanging around the water cooler” isn’t just for slacking off or talking about last night’s game. It is a way for members of a group to get to know each other, to improve teamwork, and to build esprit de corps. (Good grief. My days in Corporate America as a Human Resources Manager are flashing back like a bad LSD trip).

Human beings are social creatures by nature. We want to hang out together. Generally speaking, we want people we like to be successful. And I think few would argue that teamwork beats individual effort in almost any endeavor.

Sure, having office space can help agent cohesiveness. But it’s not the only way to skin that cat…

Does office space matter to a real estate buyer / seller?

Not in my experience. Walk into just about any real estate office and what do you see?

Not much.

An admin at a front desk. A broker in their office. And maybe an agent or two at their desks or in a “bullpen.”

Yell out, “Hello? Anyone home?” and the most likely response you will get is an echo.

Agents spend most of their time “in the field.” They are at seller’s homes, or showing buyers potential homes. When they aren’t in the field they are (or should be) prospecting, working on client’s “behind the scenes” needs, studying market trends, and continuing their education. Does it matter if they do those things while quaffing a latte at Starbucks, or sitting in their underwear in a home office? Does it make them “better” if they do these activities in a real estate office accompanied by the sound of crickets chirping?

Oh, sure, there are some people that are impressed when they walk into an office and see the fine Corinthian leather couches and smell the coffee brewing in the espresso machine. I suppose on some level this demonstrates “corporate stability,” as Pam put it. Of course, said real estate client should also take note that it is their money that pays for the furniture, the coffee, the artwork, the light bill and the rent.

Oh, wait. That cost isn’t passed on to just the consumer. The agents in the brokerage also help foot the bill.

Personally, I’d rather my agents keep a bigger slice of their commission check than help buy a “nice office.” There’s nothing wrong with them having more disposable income to help pay for marketing a seller’s home… I don’t want to subscribe to the “body count” model of real estate brokerage – hiring anyone with a license and a pulse so I can collect “desk fees” in order to buy shiny furniture or copy machine toner. I’d rather hire experienced agents that will serve their clients tirelessly. I’d rather our clients get superior service at as low a cost as possible than have them feed my caffeine problem. Or my ego.

If you are impressed by office space, or if that’s proof of corporate stability for you, then you should move along. You won’t be impressed by Thompson’s Realty. If you want an agent that is completely dedicated to helping you purchase or sell a property, then I have complete confidence that you will be impressed, quite possibly overwhelmed, by the agents at Thompson’s Realty.

It’s not where we hang our hat that matters; what we do for our clients is what matters.

Originally posted on Phoenix Real Estate Guy.

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