BaaS (brokerage as a service)
Issue 99 - September 2nd, 2022
BaaS
At Pinnacle Realty Advisors, we are building the world's first "BaaS (brokerage as a service) platform" empowering agents to control their brand, run their business how they wish, keep more of their hard earned dollars, and access services for themselves and their clients directly in our Pinnacle HQ Dashboard product.
Why Now?
The real estate industry is one of the largest industries in the entire world. The way homes are bought and sold has remained pretty much the same since homes have ever been bought and sold.
The industry is changing and technology is empowering new business models and concepts to pop up in all industries including real estate. Real estate agents are still involved in over 87% of the transactions that take place today, and the brokerage platforms for agents have remained relatively the same since homes have ever been bought and sold: agents join a brokerage, they agree to give a percentage of their earned commissions to the broker in exchange for the licensing compliance layer and some additional services such as marketing, tech, or other types of support.
Agents are the lifeblood of the industry, and they will be around much longer than people realize even though their role may evolve and change. The brokerage platforms that serve the agents also need to evolve and change, and we believe that the industry is finally ready for some massive change and open to new ideas. We are solely focused on reinventing the relationship between agent and broker, creating a platform that does not exist in its current form in the industry today; we do not consider ourselves a consumer brand but much more so a B2B platform to empower agents to build a better future for themselves.
I get questions a lot about our company, and I always think it is good to explain what we are and what we want to become by clearly defining “things that we ARE NOT”…
Things We Are Not
We are not just a cloud based brokerage company.
We are not just a 100% commission brokerage company.
We are not just focused on the lowest fees.
We are not trying to get rid of agents.
We are not competing solely on price in a race to the bottom to recruit agents.
We are not trying to build technology from scratch that already exists today.
We are not a commission split business model.
We don’t think like others; we are not your traditional brokerage firm.
Things We Believe To Be True
We think commission splits are a horrible way to run a business in today’s world.
We believe agents are the most important piece of the real estate ecosystem and if we empower agents to be better and have a better brokerage platform to run their business then all pieces of the transaction process improve which benefits consumers in the long run.
We believe in transparent pricing for our services.
We believe agents should be able to run their business however they wish.
We believe agents are some of the most entrepreneurial and ambitious people in our country.
We believe you can provide great service and a competitive pricing platform if you reinvent the brokerage business model from the ground up.
What are our thoughts on commission splits?
We believe that commission split models are a horrible way to align incentives between broker and agent.
Commission split brokerages are constantly trying to weigh “just enough service to keep agents happy” BUT “not too much service & expense so they still make some money”.
Commission splits are an outdated revenue model and a tough way to provide consistent service. Brokerages have a tough time planning and investing in the future when revenue is lumpy and staff layoffs and service suffers big time in down markets.
We believe the commission split revenue model will suffer even more over time as fee compression kicks in on transactions and brokerages are making less per transaction which in turn leads to worse service for the agents or “hidden fees” to make up for lost revenue. This is already happening today at a number of legacy brokerage firms in this country.
The New Way
We are building a brokerage platform for ANY agent in this country who wishes to launch a brand of their own and run a business on their own terms. Our customer is the real estate agent and everything we do revolves around building a better brokerage experience for them.
We are bridging the gap between old and new - what do I mean by that?
We are still a licensed brokerage platform and a compliance layer for our agents but we are re-thinking the way agents interact with their broker partner.
We are breaking down barriers and giving agents total brand freedom on our platform
We are giving our agents fixed TRANSPARENT pricing to allow them to make the most money possible and also spend their money wherever they wish to invest back into their business
Finally, we are building a Pinnacle HQ Dashboard platform that connects our agents to incredible vendors, service providers, and vendors and service providers for their clients. We believe this platform will be a revolutionary way business is done in the real estate ecosystem in the future.
Tell Me More… Instead of forcing agents to use certain tools or certain vendors, we believe in transparency and an open-source mindset connecting vendors, tech providers, and freelancers who serve agents together in our platform. We give our agents the freedom to choose whatever tools and systems they wish to run their business. We aim to keep our costs to our brokerage platform as low as possible and go out of our way to suggest the best tools and systems that are unique to THEIR business.
Why Do We Choose This Path?
We choose this path because we believe a better platform should exist for agents in this industry; a platform that truly has an “agent-first” mentality and doesn’t just use that in marketing jargon and recruiting materials. We are agents ourselves and we know the pains of the old way.
We are building our platform from the lens of an agent in the trenches because we have been in those same shoes. We understand our customer (the agent) better than most people in this industry. Our team has the right balance of curiosity and industry experience, and we look to other industries for innovation and ideas that we can apply to our business. We don’t bring outdated thoughts to our company, and we take a first principles way of thinking into everything we do at Pinnacle. Could this be better? Why is this done that way? Would this be better for the agent if that was done this way?
How Do We Make Money?
We charge fixed monthly subscription fees (just like you pay for other things in your life) for an agent to be affiliated with our brokerage platform. Our revenue model looks way more like a SaaS business model than a traditional brokerage business model because we are nothing like a traditional brokerage business. We also plan to monetize our dashboard product in the future through affiliate relationships, memberships, and transaction fees much like other platforms operate today.
Why Has This Not Been Done Before?
So many companies and other VC-backed startups have focused on the wrong things like trying to completely displace agents or fight wars purely on technology tools and other “features” that agents rarely care about.
No one has really taken a hard look at the industry and rebuilt the brokerage platform from the ground up where the revenue model (the foundation of the business) is completely free of “split revenue”.
A lot of the new age firms today are just like house flippers that slap paint on a home with crappy bones and cracking foundations and call it “new”.
If you have not fundamentally changed your business model architecture then I think it is hard to say you have revolutionized something in the industry.
It is hard for some people to see another way forward when an entire industry is entrenched in the old ways, but we will keep beating our drum and blazing our path until the entire world knows about our company. We look forward to reinventing the brokerage business model from the ground up because we believe agents deserve better, and we think there has never been a better time than now to attack this market.
Our Company Culture
We foster a spirit of innovation & creativity internally which we believe leads to the best ideas and plans for our path. We treat everyone with respect and there are no bad ideas. Sure, we disagree and argue, but we come out of these discussions stronger and get better every single day. We constantly ask our agents for feedback. We make changes quickly. We admit mistakes. We do not have egos. We love competition.
We look forward to sharing more with the world, and our actions will speak way louder than our words.
Newsworthy Links To Share
Compass CTO ousted as firm continues austerity measures (Real Trends)
Qualia launches an API to track title orders (Housing Wire)
In July, the average rent in Manhattan was a staggering $5,113 per month.
Consolidation of the real estate industry continues as commercial real estate platform Northmarq acquires Stan Johnson Co., adding hundreds of employees to their roster.
The Wing, a women-only coworking space company, is closing its doors permanently after losses sustained from the pandemic and increasing global economic challenges.
PROPERTY HIGHLIGHT: 137 acre high-alpine ranch near Aspen,CO for $15,950,000! Anchored in the heart of the redstone-flanked, Gold Medal trout waters of the famous Fryingpan River, the legacy Wood'n Handle Ranch has been carefully stewarded by the Dallenbach Family for a generation. With 137 acres and a half-mile of totally private river - very rare on this stream - this property possesses the best of the rural West with the convenience of quaint downtown Basalt only 2 miles away and world-class Aspen just a thirty minute drive. Numerous cabins dot the property, with some dating back to the days of the Basalt-Leadville railroad. No conservation easement and abundant water resources on this expansive acreage that is virtually surrounded by a state wildlife area. (Zillow)