R
eal estate brokerages have faced unprecedented challenges in the past year, including shifting business practices, a slow housing market, and rapid technological advancements. This has led some to wonder if brokerages are on the brink of extinction. At HousingWire's The Gathering, panelists Craig McClelland, James Dwiggins, Linda O'Koniewski, and Byron Lazine discussed this question.

    The panel agreed that shrinking profit margins and AI technology pose significant threats to brokerages. However, they don't believe brokerages are at immediate risk of extinction. Dwiggins, co-CEO of NextHome, emphasized the importance of human agents in transactions, citing their role as therapists who guide clients through emotional and infrequent processes.

    Despite this, Dwiggins believes the agent's role will evolve over time, with a focus on ancillary services to generate revenue. However, major industry players like Rocket and Zillow are working towards creating end-to-end transaction platforms, which could disrupt brokerages' business models. Dwiggins predicts that brokerages may need to share more commission with agents or adopt a 100% commission model.

    O'Koniewski, CEO of Leading Edge Real Estate, took a different approach, advising companies to focus on their strengths and avoid diversifying into ancillary services. McClelland, president of Local Realty, emphasized the importance of profitability over growth, warning that brokerages need to prioritize revenue lines that make sense and are durable.

    While AI may change the agent's role in transactions, panelists don't believe it will replace human agents entirely. However, they agree that brokerages who fail to adapt to AI technology will struggle to remain competitive. Dwiggins sees AI as a tool for increasing efficiency, but acknowledges its potential to make it harder for new agents to break into the business.

    The panel consensus is that companies like Zillow and Rocket will become the most influential industry voices over the next decade, forcing brokerages to adapt and evolve to remain relevant.