Side co-founders: Don’t take a ‘strip mall’ approach to growth 

In 2017, Guy Gal and Hilary Saunders co-founded the brokerage platform Side with a mission to help entrepreneurial agents build teams and businesses outside the traditional brokerage model.

Now, as many large brokerages are getting even bigger, they believe smaller, community-minded firms can still beat the corporate giants. On a recent episode of Real Estate Insiders Unfiltered, Gal and Saunders offered candid takes on brokerage consolidation, the "marketing ploy" of private listings, and the key to sustainable success. 

Opportunities for small firms

Gal sees the recent wave of M&As, including the Compass-Anywhere mega-merger, as history repeating itself. Twenty years ago, he noted, Anywhere's predecessors bought up tons of firms in local markets — and that was followed by "the greatest expansion of local boutique real estate companies that real estate had ever known," Gal said.

"I think we're at the beginning of a new cycle, where the market is wide open for more boutiques to emerge," he said. "The most enduring structure in nature is community, and agents are incredibly important in serving communities," Gal said. "Corporations do the complete opposite."

Private listings don't benefit 98% of sellers

To Saunders, a former real estate lawyer and broker, private listings are "a marketing ploy." They're only right "for about 2% of sellers who have very unique needs for personal reasons," she said. "Everybody else is much better served by having more buyers see their property."

"So when some corporation says that's not the way to go, I question their motives," she added.

A lawsuit waiting to happen?

Brokers who push for private listings could also be putting themselves at risk, Saunders believes. "A fiduciary duty is literally the highest duty that the court sees," she noted. "And when you're not getting your client to potentially get the highest dollar" because the listing wasn't widely accessible, "then you effed up." 

"I think there will be a lot of scrutiny here from a fair housing perspective," Gal added. "There's legislation in Washington state now with respect to that, directly targeting private exclusives and that practice."

The traditional brokerage 'strip mall'

Gal and Saunders believe large corporate brokerages are motivated by agent count "because the more headcount you get, the more money you make. It's like a strip mall," Saunders said. 

Those firms would "rather have a thousand agents doing one deal each year at 50% than 10 agents doing 10 deals a year each at 20%," Gal added. "It's not the business of brokerage or real estate. It's the business of a membership club, a fixed monthly paid fee structure." 

That model, the Side founders argue, doesn't benefit consumers. "I do think it's bad that today, 67% of all transactions nationally are handled by part-time agents at a profit to brokerages and not in the best interest of that person who actually is buying or selling or renting the home," Gal said.

Focus on productivity, not bodies

"What we're seeing the successful people do is cutting the fat," Saunders said. "They're not hanging their hat on how many bodies they have in their little companies, but actually focusing on the people who are the most productive."

The biggest shift of the past decade, Gal said, is that motivated, entrepreneurial agents see themselves as business owners — and they're acting accordingly. "If you're an agent that's closing $100 million-plus a year," he said, "why would you be paying a brokerage 20% for a logo and a stamp?"

Those agents are seeking differentiation and "increasingly treating brokerages more and more as a vendor and less and less as a partner in the business that they're doing," he added. 

Leave your ego at the door

Saunders' blunt advice for team and brokerage leaders looking to grow? "Get the f--- out of your own way."

The leaders of companies on Side's platform that have "knocked it out of the park" have "taken their ego out of it and focused on actually growing their teams, their companies and making a successful entity versus standing in the front and saying, 'Look at me, come join my team,'" she said.  

... and put in the work

Sustainable success doesn't come from chasing quick wins, Gal said. "The number one mistake I see people make is they try to shortcut and they build things out of mud and hay. And the moment a gust blows through, you have to start from scratch." 

Successful agents need to think long term: "Do the heavy lifting, and that takes the form of being in your community," he advised. "Brick by brick, build a Roman castle that allows you to be here a thousand years from now."