When we started our full-service brokerage, we had many considerations when it came to brick-and-mortar offices.

There were three main questions:

In this increasingly modern era, are brokerage offices still really necessary in order to provide outstanding full service to buyers, sellers and agents? While agents and brokers are often office-focused, do buyers and sellers really want or care about real estate brokerage offices? Should we spend the significant money required for brick-and-mortar offices that could instead fund more marketing and more robust agent support?

These are a few of the questions we asked ourselves in 2011 and 2012 as we researched and designed our brokerage’s business model.

To be clear about our model, I’m not talking about the increasingly popular model of a web-powered, referral-only brokerage. I’m talking about a full-service brokerage with its own local, licensed agents in multiple states.

Creating the blueprint

We spent months and months evaluating existing real estate companies across the country, looking at national business models and local boutique brokerages.

We evaluated mainstream business models and new business models (often mistakenly called “hybrid brokerages,” but that is a conversation for another day).

It’s obvious that offices are still very popular for many brokerages and their agents. There are many articles, including a number across Inman, about brokerages with new offices using technology. And there’s often an emphasis by brokers and owners about how many offices locations they operate as a sign of success.

There was (and continues to be) a lot of buzz about web-only real estate companies, be it advertising companies like Zillow and realtor.com or licensed brokerages that use the internet to feed a referral-only revenue stream.

That said, we found that shifting consumer behavior and improvements in collaborative technologies meant the answer to the three of our questions was a resounding “no.”

Our research

Real estate offices may remain popular or even perceived as mandatory with most brokerages in the near future. However, we found that we could offer our buyers, sellers and agents more service without the overhead of expensive offices.

More specifically, as we researched and designed our business model, here is what we found:

1. Offices are still appreciated by some consumers, but this is a rapidly diminishing number.

Like video rentals, travel agents and now banking, most of the public cares less about physical offices for real estate services. Even the National Association of Realtors regularly reports that 92 percent or more of consumers start their home search online and not at a real estate office.

2. Agents typically care more about a physical office than buyers and sellers. These same agents frequently believe buyers and sellers find the office important even if that’s not the case.

After long discussions with hundreds of agents, I believe this is for two reasons: First, consumer habits have changed, and these agents are not paying attention or just don’t care. Secondly, we all tend to sell what we bought, including ideas (such as the importance of the office).

3. A nice or convenient office is often used by the brokerage as a selling point in agent recruiting more than for selling property.

Offices are also seen as a status symbol by agents and brokers, who might justify that it creates more business even if it doesn’t.

4. Brick-and-mortar offices are still valuable for brokerages for recruiting and training agents in volume. This is more critical when the brokerage is designed for a very high volume of agents.

With the industry turnover of agents, these offices are really more recruiting centers than real estate sales centers. As we were interested in only a few high-success agents instead of constant recruiting in each market, our model is better suited to be highly-virtual.

5. Real estate offices are more important when there is an active property management activity, as this often has a high volume of people completing and submitting applications, rent payments, key pickups and key returns.

In time, technology will make much of this effort virtual (at certain price points), but this is still some distance away for most brokerages.

6. Because full-service, highly virtual brokerages are very rare, agents and brokers have very little experience as to whether or not these can be successful. A physical office still feels “normal” and “safe” even if it is losing its effectiveness.

The real estate office is a great social center for agents, but the bulk of agents who love an office for social reasons are typically not very good producers. They may be retirees who need purpose in their lives, part-timers who need human interaction or low-motivation agents.

A brokerage without offices is not the same as a web portal for listings or a referral-only brokerage, but many agents often confuse all of these as being the same thing.

Results

Moving on from our questions and theory, we are now finding success and rapid growth by focusing more on consumer interests than old industry habits.

Is this approach the future of real estate? We clearly think so, but one size doesn’t always fit all. Only time and the behavior of buyers and sellers will answer that in the long run.

What is known is that an impossible business model 20 years ago is viable today, and it allows us to reallocate resources to better serve buyers, sellers and agents.

At the end of the day, isn’t that what we all seek?

Glenn S. Phillips is the CEO of Lake Homes Realty, a full-service, multi-state brokerage. You can connect with him on LinkedIn or follow him on Twitter.

Email Glenn S. Phillips.

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