Virtual, cloud-based, and online real estate brokerages are no different than traditional brick-and-mortar brokerages—other than you don’t have a physical office to go to for meetings, questions, and support. In a virtual real estate brokerage, this is all done by chat, video conferencing, or other software. So never mind, they are entirely different!
So, What Is a Virtual or Online Real Estate Brokerage?
It depends on exactly how you’d define it, but I’d argue that the first real online real estate brokerage opened up in 1999, under the name ZipRealty. While it was eventually acquired by Realogy and spun off into a brokerage tech firm, it surely inspired eXp, VORO, and countless others to create a suite of tech tools that can support agents and brokers working from anywhere.
So, while virtual brokerages are not new, today they are seeing explosive growth. The recent willingness to work entirely virtually stems mainly from the fallout of the COVID pandemic. Many real estate agents had to make major life adjustments during the pandemic and have since decided that working virtually isn’t so bad.
If you are currently working in a brick-and-mortar office, you may be wondering if a virtual brokerage is right for you. As someone who’s both worked for and taught in a virtual brokerage, I can tell you that this depends on a wide variety of factors. In this article, I’ll cover the specific differences between a traditional and a cloud-based brokerage. I’ll also get into the pros and cons when it comes to the important stuff: your earnings, support, training opportunities, staffing, and more.
Cloud-based real estate brokerages don’t spend hundreds of thousands of dollars on large offices with floor-to-ceiling glass walls and conference rooms. Therefore, they’re typically more affordable to run and scale than traditional brick-and-mortar brokerages.
This savings is often passed through to agents in one of two ways. The first is via reduced costs. For example, the virtual real estate brokerage VORO offers plans as low as $149 a month with no split or transaction fee.
The second is through some form of revenue share in return for assisting with helping the brokerage grow. Following a traditional multi-level marketing model, cloud-based brokerage eXp pays the referring agent a portion of the commissions earned from any real estate pros who are in the agent’s downline.
eXp’s blistering growth over the past five years has inspired other virtual brokerages like Real to follow suit. For the average agent, both eXp and Real’s splits and fees are about 25% to 30% lower than the top-brand traditional brokerages (which I’d estimate as $16,000 to $24,000), so unless you are planning to grow your downline, there isn’t a ton of savings over brick and mortar. In other words, to make the switch, there needs to be more upside than saving a few thousand dollars each year.Related Article What’s the Best Real Estate Company to Work For?
Pros of Online Brokerage Splits, Fees & Revenue Share
1. Lower Cost
Virtual brokerages cost less to operate than traditional brokerages. Therefore, the savings are passed to the agent.
2. More Options
Cloud-based brokerages often offer more flexibility when it comes to commission splits and fees.
3. No Royalties
Most virtual brokerages are not franchises, so there are no franchise fees or royalties.
4. Additional Incentives
Some virtual brokerages offer revenue sharing or stock awards as recruiting and production incentives.
Cons of Online Brokerage Splits, Fees & Revenue Share
There are no cons from me when it comes to saving money! But costs shouldn’t be the only determination when it comes to moving to a new brokerage.
Technology & Software at Online Brokerages
Virtual real estate brokerages couldn’t exist without technology, and to add to that point, the better the brokerage’s technology, the better the agent’s experience will be. This is why the largest virtual real estate brokerage, eXp, took the leap and purchased VirBELA back in 2018.
VirBELA is a metaverse that allows agents to have an office-like experience while working from anywhere. National meetings, team meetings, and support staff can all be accessed in real time, online, in the virtual world.
But it’s not just about creating a virtual working environment. Most online real estate brokerages also often use software to assist agents with marketing materials, file management, and commission collection and disbursement, whereas a traditional brokerage may have an actual person in the office to handle those tasks.
Pros of Virtual Technology & Software
1. More Productive
Since the entire culture of online real estate brokerages is based on independence and self-reliance, if you are motivated and self-accountable, your productivity will soar in this environment. With good technology, there are few boundaries that will prevent you from learning and implementing your new knowledge.
2. Work From Anywhere
Great technology allows you to work from anywhere, as long as you have a computer and an internet connection.
Cons of Virtual Technology & Software
1. Limited Relationships
Many cloud-based brokerages aim to replace people with software, outsourcing, or chat functionality. If you are someone who is used to having personal relationships with the staff in your office, you may feel a little like you’re on an island.
2. Buggy Technology
While most virtual brokerage software is tried and true, there will be times when it doesn’t perform quite as well. Your productivity can come to a crashing halt if your entire business or commission check relies on one piece of software.
This problem can be further exacerbated when the technology or software is being outsourced from another company, leaving you to have to deal with the other company’s customer service to resolve your issue. So if you struggle with technology, you may want to consider this before joining a virtual brokerage.Related Article How to Start a Real Estate Brokerage in 2024 (Without Going Broke)
Online Brokerage Training & Classes
One of the most difficult challenges for all brokerages today is finding the most optimal way to train and coach agents. You may have noticed that, since the pandemic, agents participate less in both live and online classes. This unfortunate truth is likely amplified in a cloud-based brokerage.
As I noted right at the start, I have both worked for and taught in a virtual brokerage, and the technical challenges and nearly constant interruptions, both live online and in the metaverse, can be excruciating. I’ll never forget one particular class hosted in the metaverse where the instructor didn’t realize that his mouse was controlling his avatar’s head movements. His avatar’s head was looking up, down, and all around the entire time he was teaching the class. It was really distracting, and we were all trying to text him to tell him how to correct the situation.
The alternative to live video conferencing or metaverse classes is prerecorded or on-demand video training. However, as all of us have experienced, you must be fully engaged and accountable to be successful with this type of self-guided training.
Call me old-school, but I can’t imagine how difficult it would be for a new agent, who doesn’t have local or team support, to learn in this environment. For this reason, I think if you need accountability or are a newer agent looking to join a cloud-based brokerage, you should strongly consider doing so under a local team.
Pros of Online Brokerage Training & Classes
The main benefit of virtual brokerage training is it can be done from pretty much anywhere in the world. All you need is an internet connection.
2. Quality Instructors
Another unique benefit of cloud-based brokerages is the ability for the top instructors throughout the country or the world to teach agents—no matter where they are.
Cons of Online Brokerage Training & Classes
Many virtual classes are filled with distractions and interruptions that can interfere with learning and discourage future participation.
2. Technical Issues
Less tech-savvy agents often have challenges with managing the technology required for online and virtual learning. Additionally, at times, technology fails.
3. Lack of Camaraderie
There is something to be said about the connection with peers who are learning and applying new techniques and habits together. This can be lost in a virtual world.
4. Lack of Accountability
In virtual and on-demand training, nobody is going to call you to see if you understood the assignment, ask if you had any questions, or hold you accountable to complete it.
Virtual Staff & Managing Broker Support
The biggest concern for most agents regarding a virtual real estate brokerage is access to the managing broker and staff. Many virtual real estate brokerages are designed to have a larger agent-to-managing-broker ratio (ABR) than traditional brokerages.
The RE/MAX brokerage where I began my career in 1995 was limited to 40 agents. This was because they only had 40 desks and they required all agents to have a desk. Therefore, the ABR was 40:1.
While it is common today to see traditional real estate brokerages with an ABR of 200:1 or greater, some virtual brokerages today have an ABR exceeding 2,000:1. Due to the higher ABR, a common complaint from agents is that they cannot get ahold of the managing broker to get questions answered or to even get help with difficult situations.
Cloud-based brokerages may use outside companies and software to manage office tasks such as marketing design, file management, and commission collection and disbursement, where a traditional brokerage may have a person in the office to assist. This change can be challenging for some agents who are used to being able to walk into an office to get their fliers printed or commission check cut on the spot.
Pros of Virtual Staff
The main benefit of a virtual staff is that they are prepared to answer questions no matter where you are. You don’t have to stop by the office to pose questions or make requests.
Since many online brokerages are national and must be available for agents on both the East and West Coast, virtual staff members are often available up to 12 hours a day.
Cons of Virtual Staff
1. Limited Access to the Managing Broker
Higher agent-to-managing-broker ratios will reduce your access to leadership.
2. Fewer Support Staff
Traditional offices usually have someone in the office at all times to help with questions and technology issues (specifically with the printers). Virtual brokerages use more outsourcing and software for office support tasks.
No Physical Office
Since the invention of the cell phone, real estate has become a business where agents no longer have to be tethered to the office. This allowed agents to be constantly on the move, working from anywhere. (Picture the man on the side of his daughter’s soccer field, talking loudly on his cell phone and missing his daughter scoring the winning point.)
For many experienced agents, working from anywhere is already part of their nature. So if you are a seasoned agent and already working from home, then a virtual brokerage may be a good fit for you.
On the other hand, new (and newer) agents will have a much harder time picking up the unwritten skills and habits of real estate while trying to learn this business from home. Early in my career, I was fortunate to work for the 25th-highest-producing real estate brokerage in the nation. This provided me the opportunity to see the effort, commitment, and discipline of top-producing agents. By observing and modeling them, I was able to learn much faster and achieve outstanding results for myself. I don’t think I would have had nearly the same success had I not been in that environment.
Pros of an Online-only Real Estate Office
1. Save Time
Working virtually will allow you to save time commuting to and from the office to work or just to the weekly team meeting. But also, you get back the time you spend showering, getting dressed, and any other sprucing up you may need to do before presenting yourself in public.
2. Save Money
Depending on how fees work at your brokerage, working virtually may allow you to save the cost of paying for a private or shared office in your brokerage. And, of course, you’ll avoid the high cost of fuel by not driving to the office.
The best part of working from home is getting to do your work from a soft couch with a warm blanket on top while your dog is cuddled next to you (my current situation as I write this).
Cons of an Online-only Real Estate Office
1. Copies & Printing
While this may sound simplistic, getting quality printouts quickly when working from home is a real issue. Most brick-and-mortar brokerages provide high-speed, professional copy machines that allow you to make quality fliers and mailers. Without access to these printers, you will need to spend a few hundred dollars for a home color-laser printer or plan ahead by printing online or at a local print shop. And that’s not even factoring in the time and money you may spend learning how to work your own printer, troubleshooting issues, and replacing ink cartridges.
The greatest challenge with working from home or at a coffee shop is the potential distractions. Social media, TV, and even the neighbor’s barking dogs can pull you off task. This is especially true when it comes to doing the most important task of lead generation.
3. Lack of Face-to-Face Contact
It is said that you are a combination of the people you surround yourself with. As for me, I learn best and am more productive if I’m surrounded by others who are focusing on the same or similar tasks as I am. That’s why, in order to be successful at a virtual brokerage, I would need to be on a team or lead one.
4. No Location to Meet Clients
Without a physical office, you will need to find creative places to meet clients. Co-working spaces, coffee shops, and even title companies can fill in in a pinch, but they don’t appear as professional as a brick-and-mortar office with signage.
Online real estate brokerages are here to stay, and they will continue to improve. However, they are not for everybody. Newer agents, those who need accountability, tech-challenged agents, and professionals who desire camaraderie and community may need to reconsider or look for a team within the virtual brokerage world.
The agents who thrive in cloud-based brokerages are self-reliant, team-builders, and tech-savvy … or at least tech-capable. If this sounds like you, it may be worth your while to do some investigating and use this article to flesh out your concerns to ensure that an online brokerage is right for you.
I am an experienced professional in the real estate industry with a deep understanding of the virtual and online brokerage landscape. Having both worked for and taught in virtual brokerages, I bring first-hand expertise to the discussion on the differences between traditional brick-and-mortar brokerages and their virtual counterparts.
The article you provided covers various aspects of virtual and cloud-based real estate brokerages, discussing their origins, cost structures, technology, training methods, and the pros and cons associated with these models. Let's break down the key concepts mentioned in the article:
Virtual Brokerage Overview:
- Definition: Virtual or online real estate brokerages operate without a physical office and conduct business through digital platforms, chat, video conferencing, and other software.
- Historical Context: The article mentions ZipRealty as one of the first online real estate brokerages, starting in 1999.
- Virtual brokerages are more affordable to run and scale compared to traditional brokerages due to the absence of large physical offices.
- This cost-saving is often passed on to agents through reduced fees or revenue-sharing models.
- Cloud-based brokerages like eXp follow a multi-level marketing model, offering revenue share to agents who bring in new members.
- The average costs and fees of virtual brokerages are noted to be 25% to 30% lower than traditional brokerages.
Technology and Software:
- The importance of technology in virtual brokerages is emphasized, with examples like eXp purchasing VirBELA to create a virtual working environment.
- Virtual brokerages leverage software for various tasks, including marketing materials, file management, and commission processes.
Training and Classes:
- Challenges in training and coaching agents in virtual brokerages are discussed, including technical issues and distractions in online classes.
- Pros include convenience and access to top instructors, while cons highlight potential distractions and the lack of camaraderie.
Staff and Managing Broker Support:
- Concerns about access to managing brokers and staff in virtual brokerages are addressed, noting higher agent-to-managing-broker ratios.
- Pros include convenience and availability, while cons mention limited access to leadership and fewer support staff.
No Physical Office:
- The article explores the benefits and drawbacks of not having a physical office, discussing factors like time savings, cost savings, and comfort.
- Challenges include issues with printing, potential distractions, and the lack of a professional meeting space for client interactions.
- The conclusion highlights that online real estate brokerages are here to stay but may not be suitable for everyone.
- Thriving in virtual brokerages is associated with being self-reliant, tech-savvy, and potentially part of a team.
In summary, the article provides a comprehensive overview of the virtual brokerage landscape, discussing its evolution, cost structures, technology, training challenges, staff support, and the suitability of this model for different agents. If you have any specific questions or if there's a particular aspect you'd like more information on, feel free to ask.