Why teams emerged as a top ‘danger’ to the old status quo 

Editor's note: Our series on The DANGER Report tells the story of a remarkable document, and assesses the accuracy of the "black swan" risks it said to watch out for in the future — which is now.

The value of agents has emerged as a significant concern in the commissions lawsuit era, to the point that real estate professionals are sharing 179-point lists of what they do for consumers.

But the real issue isn't what strong professionals deliver for their clients. It's the "masses of marginal agents" who damage the reputation of the industry as a whole — one of the top threats identified 10 years ago in The DANGER Report, a deeply researched assessment of the 50 most significant risks facing the residential brokerage world.

Not all the threats were as clearly negative as poor-quality agents, however. The rise of teams, for one, might be better described as a disruption to the way the real estate world looked in 2014, and it has since emerged as a shift with some upsides.

Teams are changing the game — for agents and brokers

The DANGER Report, written by influential industry strategist (and Real Estate News founder) Stefan Swanepoel, called out the rise of teams, both from an agent and broker perspective.

For agents, teams held the promise of greater autonomy and personal brand-building as well as business success, the report said. For brokers, however — already facing challenges like increasing costs and risks, and an evolving tech and portal landscape — teams could threaten their survival. 

"I don't disagree with teams," Swanepoel recently told Real Estate News, as he reflected on the evolution of the industry in the decade since he wrote the report. "All I'm saying is that the structure of teams is basically a company within a company. And if you put these companies within companies, you shift them."

And it's true: Old paths to profitability no longer lead where they used to. "That doesn't mean that companies can't reposition," Swanepoel said. "But it does mean that the old model, which is the office on the street corner next to McDonald's with 40 agents, is probably out the window."

What brokerages have become — and threats that didn't materialize

Presciently, this risk to the existing brokerage structures of 10 years ago came up in the report: "The next winning model could be a technology-powered, agent-centric, flat fee, transaction-based fee, salaried or auctioneering model," Swanepoel wrote.

Skip that auctioneering part, and it's crystal-ball stuff (though Swanepoel emphasizes that the report was not about predictions) — just look at the growth of eXp, Real and Redfin.

A threat that has not come to pass: The IRS reclassifying agents as employees instead of independent contractors, which would lead to "the transformation of the brokerage revenue model" and operational models as well. "Most brokerage companies would be unwilling to hire agents that will not generate enough income to cover their costs," the report stated.

But that doesn't mean brokerage companies have been unwilling to embrace the idea of agents as employees: Redfin was founded in 2002 with this approach and has expanded it to allow for splits as high as 75% while providing healthcare, a 401(k) program and paid time off.

And despite the challenges to agents' value, another threat identified in the report — that agents could become removed from transactions altogether — remains just that: a threat. Even if consumers don't know all 179 things a great agent does for them.