The brokerage model failed because the brokerage model itself is inherently flawed as a business model. Nowhere does this become more apparent than in the real estate industry. Its natural inclination is toward Bernie Madoff-like pyramid, where consolidation and cartel-like cooperation among "a few" (the Brokers and Agents) hurts "the many". Agents are forced into paying brokers for the "privilege" of association and access to the MLS... agents pass those costs on to clients by forcing those clients to sign on the dotted lines ("closing the deal"). Clients end up paying inflated commissions, as each person (or entity) up the chain takes their cut in larger and larger portions.
42Floors was trying to be the Redfin of commercial real estate? Well of course that doesn't solve the problems created by the existence of brokerages, especially when we're talking about renting or leasing a space, where ROI is already ridiculously negative from the get-go. Where commissions are just unnecessary garbage expenses. Why would it ever have been a good idea to involve brokerages at all?
We’re going to step decisively away from that model now and focus only on providing a great search experience. We’ll leave the deal closing to the professionals.
Over time, we’ll develop our new business model, which will be based around premium listing opportunities for those that want greater exposure to tenants
So the idea is to package the potential client list from a "better search engine" and sell it to those poor, struggling brokerages like it's insider information? Sounds like the MLS on steroids. Doesn't make much sense.
42Floors was trying to be the Redfin of commercial real estate? Well of course that doesn't solve the problems created by the existence of brokerages, especially when we're talking about renting or leasing a space, where ROI is already ridiculously negative from the get-go. Where commissions are just unnecessary garbage expenses. Why would it ever have been a good idea to involve brokerages at all?
We’re going to step decisively away from that model now and focus only on providing a great search experience. We’ll leave the deal closing to the professionals.
Over time, we’ll develop our new business model, which will be based around premium listing opportunities for those that want greater exposure to tenants
So the idea is to package the potential client list from a "better search engine" and sell it to those poor, struggling brokerages like it's insider information? Sounds like the MLS on steroids. Doesn't make much sense.