2. THE REAL ESTATE
OFFICE OF THE FUTURE
The Options: Target, Starbucks, or Amazon.com?
2

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Challenges
• Like Starbucks, location is key,
and the café-lounge needs to be
placed in a good central location
with preferably good foot traffic
and/or easy access, otherwise it
defeats the purpose of making it
easy for consumers to visit.
• With limited or no opportunities
to have the agents together in the
café-lounge space on a regular
basis it will be difficult to build
strong team spirit and culture.
THE CLOUD-BASED
OPPORTUNITY
The growing number of Millennials in
the work force is definitely one of the
largest drivers reshaping the office of
the future. They have little interest in
the corner office, for them its become
passé. Since most of them live in the
online world they prefer to work off-
site from home or their favorite Wi-
Fi stop. At the office they want an
“open atmosphere” with maximum
flexibility for interaction with their
contemporaries. One of their growing
preferences is the new co-location
facility where people from varying
industries share common amenities
like Wi-Fi, printers,
phones, conference
rooms, kitchen facilities
and secretarial services.
Office space no longer
means a separate private
office, just a Smartphone or laptop,
an Internet connection and ear buds.
The bottom line is that there is
an undeniable generational shift in
how young people today perceive
their living, social and working
spaces. As Robert Lang, professor
of urban affairs at the University of
Nevada-Las Vegas put it: “There are
other markers for status. It’s not the
turf. It’s your network power.”
Amazon is of course a well-known
new paradigm electronic commerce
company that started as an online
bookstore before diversifying into
movies, music, software, electronics,
apparel, furniture, food, toys and
jewelry. Today they sell almost
everything, and with revenues over
$48 billion they are already the size
of Best Buy and 70 percent the size
of Target, the second largest discount
retailer in the country.
We cite this company as a
comparison for the model because
it’s an e-commerce business that
facilitates the buying and selling of
products or services over electronic
systems such as the Internet and
other computer networks. There is a
difference between those companies
that are cloud-based—a “pure-click”
company—and those that are “brick
and click channel system” companies.
According to Wikipedia a
pure-click company is one that has
launched an online business without
any previous existence as a bricks firm
and does not operate brick locations.
Brick and Click companies are those
existing companies that have added
an online website for e-commerce.
So Amazon, although operating
many warehouses across the country,
is a cloud-based model and served as
a great example for the real estate
company we went hunting for.
The Real Estate
Office in the Cloud
For two decades industry pundits
have been debating when it will be
possible to build a genuine full service
real estate brokerage online.
Well today, 20 years after the
arrival of the Internet in real estate,
many agents have evolved into a fairly
technology-savvy, mobile sales force
that has a decreasing dependency on
location. The growth of broadband,
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2 The Real Estate Office of The Future
has removed the limitations of the
virtual and suddenly most major
real estate offices are racing to
move certain components of their
company to the online world. Today,
virtually all real estate brokerages
have significant online capabilities,
allowing their agents to connect to
their offices virtually and execute
some level of a paperless transaction.
But that, although valid and viable,
is of course not a true virtual model.
It’s only the adaptation of an existing
model using new virtual tools.
To find an actual virtual real
estate example we went hunting
in the cloud and found eXp Realty
(exprealty.com), a virtual company
built from the ground up, and
like Amazon it's a true pure-click
company.
The Model
The cloud-based model is unique
in that there are no physical offices
other than those legally required to
operate in a given state (or by the
MLS). eXp utilizes a 3D immersive
work environment to create a cloud-
based office ecosystem. Everyone in
the company, including the corporate
staff and state and provincial
managing brokers, are all cloud-based
as are all the documents. Brokers,
agents and staff can now truly
collaborate from anywhere at any
time. For those agents who
require an office environment
eXp partnered with a global
Executive Office Solutions
company to provide drop-in space
or a conference room in over 500
markets across the U.S.
Entering eXp in the cloud is
a bit like sitting down to play a
video game—one with realistic and
extensive interaction—often referred
to in the gaming world as a “massive
multiplayer online role-playing
game.” This is of course not a game,
it’s a real workplace with a reception
area, boardrooms, training centers,
transactionrooms,aWordpressdesign
studio, a business plan development
space, a coffee club, an administration
office and so on. There are rooms for

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teams of agents or meetings between
the state broker and the agents in his/
her state. Being 3D Immersive you
can literally walk around the offices
just like you would in a physical
office and drop in and join whatever
discussion is taking place. All it takes
are a headset, webcam and the ability
to share your screen so everyone can
see what you’re sharing.
It does feel strange, and did to us,
the first time we toured the offices.
However, after a while you become
more at ease with the process,
your Avatar and the functionality
of the site. And then you start
to really appreciate the power of
“anywhere” and “anytime.” The first
thing you do is set up your Avatar,
your alter ego, inside of the virtual
work environment. It’s a graphical
representation in the shape of a
person that has your photo for a head.
Interaction is very similar to what you
do in the real world. In the virtual
office you locate who you want to
talk with and then sit down at their
desk or meet in a conference room.
People entering and leaving the
room are announced and while in the
room you can move around, change
seats, walk up to the podium, turn
your head, walk around and so on.
It’s an environment in which agents
enjoy socialization, broker support,
web development support, training,
coaching, transaction support and
camaraderie like they would in a
physical office.
Advantages
• The major benefit of the virtual
office is of course the ability to
collaborate from anywhere and
stillbepartofalargerorganization
with all the support you expect
from a more traditional brokerage
office. Support is literally a mouse
click away.
• The closest you can get to totally
paperless. All contracts are either
executed electronically between
buyer, seller and the agent or, if
the transaction starts on paper,
it is scanned into the company’s
back office and the transaction
moves to cloud.
• With eXp’s virtual office
model the expense normally
associated with opening up in
new markets is greatly reduced.
Expansion doesn’t involve any
more work than a few lines of
new code and managing the
paperwork and legal issues
according to the respective state
requirements and eXp is up and
running.
Challenges
• One of the biggest challenges
facinganytotallyvirtualcompany
is the fact that brokers and agents
obviously do not have the same
level of personal interaction that
you have in an IRL (In Real
Life) environment. eXp strives to
overcome this through its Chief
Cultural Officer who acts as the
internal glue that keep agents,
brokers and staff connected by
facilitating virtual classes, regular
breakout sessions and private
Facebook groups.
• Current software
restrictions only allow for
a maximum of 50 people
that can be in any one
online office at a given
time. Technology will
however overcome this
restriction in the not to
distant future.
SUMMARY
Over the past two
decades residential real
estate brokerage has
undergone an evolvingSOURCE REALSURE AND COMPENSATION MASTER
Traditional
Conventional 4,000 – 6,000
40 - 100 100 – 125
Large 10,000 – 12,000
Superstore
Starter 8,000 – 12,000
200 - 500 35 – 70
Mega 16,000 – 30,000
Café-Lounge
Boutique 2,000 – 3,000
40 -100 35 – 70
Mini 1,500 – 2,000
Brokerage Size Averages
Brokerage
Office Tiers
Office Size
(sq ft)
Agent
Count
Space Per
Agent (sq ft)
Real Estate Office Type Comparisons
No
longer
applies!

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2 The Real Estate Office of The Future
reorganization. Part of that process
provides for the restructuring of
the home buying process, the
introduction of new technologies and
players and the reengineering of the
real estate office.
What is evident is that the
traditional office model created a half
a century ago has run its course and
is no longer cost effective in the new
economy. Office space per agent must
decrease to make real estate offices
more cost effective.
The three office models featured
in this year’s Report—the superstore,
the café-lounge and the cloud-
based virtual model—address the
challenges, especially downsizing of
square feet per agent, very efficiently
(the virtual model of course does so in
spades). Many ask which model will
win. We think it is inconsequential
as the real estate market is large
enough to sustain all three models
comfortably — probably more than
one of each. These are all very
stimulating and healthy business
models and their growth will be less
at the expensive of each other than
at the expense of the traditional
office that resists change.
People often say that big is bad,
or that bricks and mortar is dead.
Neither statement is valid. There
are literally thousands of examples
to dispel both of those fallacies. Size
does matter and most of us enjoy the
fruits of economies of scale every
day—why would we not extend that
benefit to homebuyers. KW is and it’s
working very well.
In 1998 industry analysts saw
Starbucks as being well on its way to
becoming the Nike or Coca-Cola of
the specialty coffee segment. So who
will be the “Starbucks” of the real
estate industry? People often say that
change will come from the outside.
Our guess is that it will actually be
an ”insider” that has the knowledge,
vision and financial ability to roll out
this new model successfully. At the
moment no one has really snatched
the lead spot but we think RE/MAX
and United Real Estate are the
frontrunners.
The virtual office model requires
the biggest change to the traditional
model and will therefore meet with
the most resistance from traditional
agents. But that’s exactly what
innovation does—it makes many
people uncomfortable. However,
history has repeatedly shown us that
it takes innovation to become an
industry leader. For example, Century
21 did it when they rolled out the
franchising concept, RE/MAX did it
whentheyintroducedthe100percent
commission concept and HFS (now
Realogy) did it when they perfected
the M&A consolidation. Cloud-
based real estate is no different. It’s
showing all the promise of being a
powerful new innovation and eXp is
leading that charge.
And as Victor Hugo said:
“Nothing is as powerful as an idea
whose time has come.”