The Brokerage Illusion

The real estate brokerage industry is at a crossroads. Some players are embracing change and thriving, but too many are stuck in outdated practices that are holding them back. The truth is, most brokerages are playing a losing game—and it's time to be blunt about why.

The Legacy Model is Broken
At the heart of the problem is the traditional brokerage model. For decades, it’s been built on high commission splits, large office spaces, and rigid hierarchies. It hasn’t changed much, and frankly, it no longer works. Here’s why:

• High Overhead Costs: Too many brokerages still think they need big office spaces and a large administrative team. In today's world, that's an unnecessary drain on profits, especially when everything is shifting online. Those costs are preventing growth and innovation.

• Inefficient Commission Splits: The traditional commission structure often favors top agents, leaving brokerages with razor-thin margins. It’s no wonder there’s no room to invest in technology or better systems that would benefit everyone.

• Resistance to Technology: Many brokerages are stuck in the past, relying on outdated systems and face-to-face meetings. Meanwhile, clients are demanding efficiency and convenience. The industry is falling behind because it won’t embrace the tools that could make it better.

Agents Are Over It
I understand the frustration agents feel with the old ways. They’re speaking out—and they’re right to do so:

• “Why am I paying for office space I never use?” Agents are working remotely more than ever, yet many brokerages still charge them for offices they don’t need. It doesn’t make sense.

• “Where’s my tech stack?” Agents want tools that make their jobs easier—automated marketing, AI-driven lead generation, and systems that work. Unfortunately, many traditional brokerages aren’t delivering.

• “What am I getting for my split?” Agents are starting to ask themselves whether the traditional commission split is worth it, especially when they see little reinvestment in their growth or success.

The Winners Are Innovating
On the flip side, there are forward-thinking brokerages that are rewriting the rules. And you know what? They’re winning. Here’s how they’re doing it:

• Cutting Costs Smartly: By eliminating the need for physical offices and unnecessary expenses, these brokerages are able to offer better splits to agents and reinvest in the business.

• Leveraging Technology: These brokerages are using virtual showings, predictive analytics, and other cutting-edge tools to serve clients more effectively. They’re meeting clients where they are—online.

• Building a Strong Culture: Instead of sticking with outdated hierarchies, successful brokerages are fostering collaborative, agent-focused cultures. They’re putting people first and prioritizing growth and innovation.

Consolidation is Inevitable
The inefficiencies in the old model are creating a perfect storm for consolidation. Smaller, outdated firms will struggle to compete, and the bigger, more agile players will dominate. For many brokers, the smartest choice might be to sell now—before they’re forced to shut their doors.

What’s Next?
The real estate industry is evolving, and it’s clear: adapt or get left behind. By blending the best of traditional brokerage with the innovations of today, I believe you can build a future-proof business.

The game is changing. But for those of us who are ready to play smart, the rewards are enormous.

Noel Roberts is the Co-Founder & CEO of Pending, Inc— a tech-enabled real estate brokerage & holding company. Pending focuses on a consumer platform to help homebuyers discover properties before they’re listed, as well as acquiring profitable boutique brokerages.