5 difficult realities independent real estate brokers will face in 2022



It has never been more interesting or demanding to be an independent broker. In November, Inman celebrates indie by focusing on growth tactics that work best and emerging technologies that offer the best competitive advantage.

In the wake of the 2020 global pandemic, where we all had to learn to pivot and change the way we do business in order to survive, many of us have had a fantastic 2021, financially. Despite a tight inventory and more challenges learning to live with the COVID-19 virus, our office has seen a record number of closures and the highest dollar volume in our 15-year history.

As we look to wrap up 2021, independent brokers need to look at industry trends to prepare to start in 2022 and prepare for new challenges.

1. Hot markets eventually cool down

The real estate market is cyclical. Newer agents who have never experienced an economic downturn may not be prepared for the difficulty of this business when the market shifts from a sellers market to a buyer’s market. Remember when a brand new ad failed to generate dozens of showings and multiple offers on its first weekend in the market?

We are already seeing signs in my area of ​​a market downturn. Homes are staying on the market a little longer and we’re seeing price drops on homes that may have sold out quickly last summer. When the market changes, life will become easier for buying agents, but much more difficult for those who focus on listings.

How to fight

Prepare your agents now to know how to manage a changing market. Explain the cyclical nature of real estate and put in place a plan to move from a sell to a buy market. Will your marketing efforts change? Are you going to put more or less effort into acquiring ads, or are you going to spend more money to attract potential buyers?

2. The real estate market is closely linked to the health of the economy

Many of us brokers – and our agents – had a banner year in 2021. Those of us who invested in the stock market were also very successful. But just as the real estate market goes up and down, so does our economy.

The government has done a good job supporting the economy in 2020-2021 during the pandemic. But the increase in unemployment benefits, stimulus checks and mortgage abstention programs are now over. The Fed has started to shrink its monetary policy injecting money into the system, negatively affecting the stock market recovery.

When there is uncertainty in the markets, this can spill over into home purchases. When people feel nervous – about their job, their nest egg, or their finances in general – they’re less likely to move to that next home.

How to fight

I’ve read conflicting reports on whether or not we’ll see a wave of foreclosures, but I’m preparing my office to deal with an increase in short sales and foreclosures. Several of my agents have obtained their SFR designation from NAR in the past few months, and we are actively seeking distressed homeowners to get a head start.

3. Increased government regulation and oversight is coming

It is not a maybe; it’s a fact. The confrontation between the DOJ and the NAR has been going on for years. The changes voted by NAR at the November board meeting are just a first step in showing the government that we have an open and transparent system, to try and end accusations of antitrust violations and anti-competitive business practices.

Anyone who answered the phone call where the buyer on the other end of the phone has no idea how we operate or how we get paid knows this is a problem.

Buyer’s agents do not work for free. Their remuneration is built into the price of the house (as in the case of sellers, the price of the house, taking into account the amount they will pay to the listing broker, who will then compensate a portion of it to the buyer’s broker). Buyers do not get free representation, but they have to pay for the term of the loan (unless they are paying in cash).

Buyer’s agents should educate their buyers up front, explaining how they are paid. They should always show them all properties that meet the buyer’s criteria and not steer them away from those properties with a “less than desirable” compensation offer.

If it happened like this should, the government would not be looking for skeletons in the industry closet.

How to fight

Educate your agents now (if you haven’t already) on the correct way to handle the buyer representation agreement and not to screen homes in or out of runs based on the compensation offer . Be sure to add these instructions to your office’s policies and procedures manual if they are not already covered.

The purpose of regulation is always to protect the public. This is not to protect brokers or agents or to increase our commissions.

We will see more rules and regulations, not less, in the near future. Make sure your agents understand and follow the law. It sounds simple, but we regularly see bad behavior in our ranks in practice, and the responsibility ends with the broker.

4. Attracting and retaining talent will be even more difficult

The membership of real estate agents reached all-time highs in 2021, but we had a record stock this year. This means that more and more salespeople are chasing fewer and fewer ads.

The winners in this scenario are strong listing agents and experienced salespeople who have a pool of old customers to tap into. The losers are the newer agents and the weakest agents in general.

Recruiting and retaining agents is the cornerstone of any brokerage house. Maybe you don’t have the ambition to reach the size of a mega-brokerage. That’s good, but you’ll still have revenue. The agents leave the company, they retire and sometimes they change companies. Unless you are an office of one, you will need to recruit.

Over the past few years, we’ve seen the biggest franchises grow even bigger, acquiring strong regional indies and buying up competitors. With deep pockets, some will throw money at agents to leave you with login bonuses and division promises that you won’t be able to compete with. Other new models offer stock options or residues to recruit others into their ranks.

How to fight

If you are a strong and successful independent broker who produces well-trained and successful agents, other brokers will constantly recruit these agents.

How are you going to fight this and protect your agents from recruiting away from you? The promises of more money are always the basis of the pitch. What should you provide when you can’t compete spending more money to fix the problem?

Know your value proposition, what you are providing to your agents that they cannot get elsewhere. These could be company-generated leads or exclusive marketing.

What about training, systems and tools? Big franchises offer all of this, but that doesn’t necessarily mean their training, systems, and tools are better. I work with successful independent brokerage firms that have built their own technology stacks that directly compete with franchise systems.

As a final note on technology as a big draw: Be aware that a recruiting broker might boast during the interview that their technology is top notch and state of the art. It sounds appealing to the agent, but at the end of the day, the technology is only as good if the agents use it. I’ve also seen brokers spend a lot of money on tech tools for their agents that they never use. Shiny new tools are as useful as adoption rate.

5. We are a threat to ourselves

In NAR’s DANGER report, the study found that we are our own worst enemy – incompetent agents are a huge threat to our industry. We, as independent brokers, can also be a threat to ourselves. The enemy is inside. We are a huge segment of NAR members, yet our focus is more on big box franchises and the threat they pose to our survival than what we have to offer agents and clients.

How to fight

First, find out what the competition is saying about you. What do other brokers use to attract your agents? How do they recruit new recruits? What do they tell potential customers to gain the list? How do they market their brand in your market to attract customers? What’s in their list or packet of buyers? What is on their website to attract customers?

Second, turn it over to them. If anyone claims to have a relocation or referral business that will attract buyers from an international network, explain how we all have that power. All brokerages – independent and franchised – use the MLS system and IDX websites to advertise your ad worldwide. Zillow is leveling the playing field, isn’t it? All the listings end up there and are marketed on a tier platform regardless of the broker.

From an agent perspective, make sure your agents know and understand your tech stack. Run lessons on your CRM and explain lead generation and how it works in your office. Some agents may not even know how much you are bidding.

Make sure they understand everything you offer them, and you may need to audit the system for agent usage. Target those who do not log into your CRM or who do not use your transaction portal. Why not? I know, that sounds silly. (I am the broker and I pay for it, so why don’t they use it?)

Besides recruiting, you need to spend time re-recruiting your current agents. Educating them on everything you offer and helping them learn the systems and tools is a step in keeping your agents close. Checking in with everyone regularly and auditing their use of the company’s paid platforms is one way to identify if someone may be looking elsewhere.

These are just five threats that I see on the horizon for independent brokers in 2022. Yes, they are threats, but that doesn’t mean you can’t be proactive and figure out how to turn them from threats to opportunities. The best thing you can do is believe in your strengths as an independent broker and get rid of the perception that you cannot compete with franchise brokers.

Erica Ramus, MRE, is the broker / owner of RAMUS Real Estate. You can follow her on Twitter Where LinkedIn.



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