Thursday
November 23, 2017

Growing Pains in the Gig Economy

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Growing Pains in the Gig Economy

Brokerages find trade-offs as they outsource more of their workload.
outsourcing

When Joe Pryor decided to redesign his website three years ago, he uploaded a job description to Upwork.com, a website that connects its users with freelancers. By the following morning, he had seven bids to choose from.

As broker-owner of The Virtual Real Estate Team in Oklahoma City, Pryor says he’s always looking to remove friction points from his business in order to work more efficiently. He’s found that outsourcing certain tasks lessens his workload, saving him time and money. Since he sought out his first freelancers seven years ago, Pryor has developed relationships with professionals around the world. For instance, he can’t live without Victor from Romania, who started off handling Pryor’s video editing, then took on tasks such as assembling cash flow spreadsheets for investors and preparing PowerPoint and Keynote presentations with content provided by Pryor.

Pryor is fond of sites like Fiverr.com to find freelancers for simple tasks, such as hiring someone for a flat $25 to enter keywords and tags on his blog posts and videos. He estimates freelancers, all told, now save him $250,000 per year in salaried positions. His brokerage currently handles about 300 transactions a year without any staff, and Pryor has cut his unrelenting 80-hour-a-week workload to a reasonable 40 hours. “Why should I spend 10 hours doing a PowerPoint [presentation] when I can outsource it and focus on my clients,” Pryor says.

According to a 2016 Pew Research Center survey, 72 percent of U.S. adults have used some type of shared or on-demand service, including 11 percent who have used a home-sharing platform such as Airbnb, HomeAway, or VRBO. What’s more, a 2015 study by Intuit and Emergent Research estimates that the on-demand labor market will grow by 18.5 percent each year for the next five years. The study predicts that by 2020, 43 percent of the U.S. workforce will be comprised of “on-demand entrepreneurs,” up from 36 percent in 2015.

Pryor is taking advantage of the rapidly expanding “gig economy” to power his business. The convenience of the internet grants business owners the ability to connect with independent workers and tap their specialties for specific projects. For some real estate professionals, this means turning away from in-house help while embracing an array of newer tech platforms.

A Hybrid Approach

While Pryor may be on the extreme end of the outsourcing spectrum in real estate, others like Gretchen Pearson, president of Berkshire Hathaway HomeServices Drysdale Properties in Danville, Calif., are using a combination of in-house staff and outsourced support—depending on what makes the most logistical and financial sense. Pearson has built a lead generation system and offers a lead incubation service through a third-party company, Referral Exchange, which calls leads and tracks those potential customers until an agent takes over. “[Agents] are buying the leads through their closings so they don’t even have to write a check,” she says. They also outsource their SMS text messaging services, like text codes for listings, to the popular Mobile Real Estate ID service.

On the in-house side, Pearson has launched Drysdale Services for her 35 offices and hired staff who work with agents on their custom business and marketing needs. Agents can now rely on the brokerage to deliver a virtual tour, an emailed blast to other agents for every listing they have in the area, and other marketing services. “From a broker standpoint, we’re keeping highest and best use [services], and my rainmakers can focus on belly-to-belly, ear-to-ear relationships,” Pearson says.

Still, some brokers who have tried outsourcing find the disadvantages outweigh the benefits. Brad Allen, managing partner of The Art of Real Estate in Columbia, S.C., has hired freelancers to help with lead scrubbing, graphic design, and video production, but he often found the quality and timeliness of their work lacking. “It would take us a month and a half to get a project completed when it should have taken us a week,” Allen says. “The market moves so fast, and when I want something done, I don’t want to wait.” He’s now bringing more staff in-house with specific expertise to assist his 16 agents.

He missed having a true collaborative experience when he used a remote video editor he found on Fiverr. The freelancer would take up to three days to respond to emails, and the proofing of multiple video drafts was cumbersome. So Allen hired a full-time in-office videographer/photographer, and his team went from producing one video a month to two or three per week. The videos now go beyond listing tours, including neighborhood profile pieces, restaurant reviews, new construction promos, and Facebook Live videos. Allen also added an inside sales position to his team in January. “I was spending $800 a month to have [an outsourced] lead scrubber. But now, for a salary of $2,500 a month plus bonuses and some benefits [a 401(k) and paid time off], I have a person who’s motivated and knows what’s going on at the brokerage,” Allen says.

Eye on Efficiency

Some kinds of outsourcing don’t require hiring people at all. Mark Choey, cofounder and chief technology officer of CLIMB Real Estate in San Francisco, focuses on ways to apply technology to solve problems in his business—and then ways to scale it to support agents. CLIMB Labs, a division of the company, is currently researching the best ways to help agents shift away from email communications and become more mobile.

To tackle overflowing email inboxes, CLIMB is replacing most of its internal communications with messaging and text apps such as Slack. “Emails get buried and lost, but with text, the open rate is tremendous,” Choey says. The company is also using Textline, a desktop application that allows you to send texts from your computer.

“We’re trying to think like our agents,” says Eugene Pak, director of business development at CLIMB. “We took a step back and looked at the process of a transaction—starting with how agents meet clients. We broke out all the steps and looked at what parts of the process could be done better, then analyzed which tools out there could make it more efficient.”

In the mobile realm, CLIMB Labs is working with Structurely to develop a chatbot that searches every piece of public real estate data in the country, triggered by entering an address into Facebook Messenger. The beta version has already been rolled out to CLIMB agents, who use it to pull information on legal property owners and find transaction history, mortgage balances, and other research for clients. Typically, this would cost agents time at their desk, or they’d have to rely on an assistant to obtain the data. But in CLIMB’s beta system, users simply type the property address into Messenger, and the bot replies with results within seconds.

For all of the benefits of technology and conveniences of outsourcing, though, the continued escalation of the on-demand economy raises largely unanswered questions about the future of work and the economic stability of individual workers. Even champions of the gig economy, like Pryor, have started to ponder the challenges posed by this massive shift toward entrepreneurism. “This is something we have to keep our eye on,” he says, “because the downside is that we become so automated we’re not only displacing workers, but we become disengaged.”

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