Deep in Central Florida’s white-hot real estate market, Shawn Pupello, known as “The Tenacious Mrs. P,” is starting a new brokerage. Pupello, along with her husband Anthony, ventured into the world of real estate in 2016. The couple quickly found that they had a knack for matching people with properties, with Mrs. Pupello going so far as to earn her local association’s “Rookie of the Year” award in 2017. But as time and deals marched on, the husband-and-wife team decided to make the leap into a new brokerage, and, as of this week, have officially snipped the ribbon on their new firm Pupello Realty Company, LLC.
Rather than renting an office space, the Pupellos decided to create a digital brokerage, one that operates primarily online. With a click of a button, buyers and sellers can access property listings, view photos and videos, and even take virtual tours. This accessibility means that buyers and sellers can get a better idea of the property before making an offer, which reduces the likelihood of wasted time and resources. But there’s a trade-off: digital brokerages often rely on virtual rather than in-person communication, which can be a detriment when it comes to dealmaking. But in a post-COVID world that’s had to rapidly adopt hybrid work trends, not having as much face time with clients is worth the benefits. Plus, Pupello Realty Company is a proud tenant at a co-working location. “We currently have a flex space on hand with a conference room,” Pupello explained, “We do want to have some sort of office presence.” After a few years, their plan is to branch outward to other counties in Florida and establish satellite offices where buyers and sellers and agents could meet face-to-face with clients in those areas.
Pupello told me that she had initially planned on starting with a brick-and-mortar location, but quickly realized her overhead costs would plummet if she kept her operations to the internet instead. Digital brokerages have much less overhead than a traditional setup, which usually translates to lower administrative fees that get passed onto the agent. “Oftentimes brokerages will charge a desk fee,” said Pupello, “which is literally hundreds of dollars a month just to have a desk at the office.” By operating in a virtual space, digital brokerages can eliminate many of the costs brokers pass on to their agents.
Substantial fees have long been a huge point of contention for both agents and buyers, in both the residential and commercial sectors. Commission splits vary from brokerage to brokerage, but commission splits in the United States are reportedly some of the highest in the world, leaving many agents largely dissatisfied. After spending seven years as a real estate agent, Pupello is adamant that her firm won’t be charging her realty team any more than a 90/10 split commission, with 90 percent going towards the agent’s favor. Additionally, the agents will receive their commission at the closing table via a CDA (Commission Disbursement Agreement), so agents won’t have to wait for the commission check to go through the broker, thereby eliminating another middleman in the commission process. Part of it is for compassion, but another part is just good business sense. Pupello realizes that her firm’s most valuable asset will always be its ability to build a stellar team of real estate professionals. After all, a competent and charismatic real estate agent can earn their broker hundreds of thousands of dollars over time. “I think it’s a much better strategy to take on costs that aren’t as traditional for a broker to pay. Your team is your bread and butter, and not tacking on excessive fees gives them the opportunity to make more than the competition, so hopefully they’ll stay with you for longer,” said Pupello.
Brokers are becoming increasingly attracted to the virtual model because of the steep cost-savings that allow agents to keep more profit. Along with the reduced overhead, digital brokerages can offer a more flexible and personalized approach to real estate. Thanks to the digital platform, agents can work from anywhere to connect with clients (or “customers” as designated by Florida real estate law), and manage transactions, which can be particularly beneficial for clients and agents who live in rural or remote areas and may not have easy access to traditional brokerages. In addition to these benefits, reduced overhead can also allow digital brokerages to invest in other areas of the business, such as marketing and technology which can attract more clients and provide a better overall experience.
The rise of digital brokerages also poses challenges for agents and clients alike. In a digital environment, agents must rely heavily on technology to conduct business, which can be a steep learning curve for those who are not technologically savvy. But Pupello isn’t so concerned, especially because among the non-traditional fees she’s taking on, Pupello will be financing educational opportunities for her agents, including contract classes. By doing so, she is aiming to provide practical knowledge (“Whoever knows the contract wins the day” is a favorite saying of hers), and effectively set a foundation for her agents to better understand administrative processes as well as the technology those processes are carried out on.
With a wider reach and lower costs, digital brokerages are catching on. While the gravitas of a physical office was once an important feature of a real estate brokerage, it has become less important. Consumers now are used to interacting online and brokers are keen to eliminate unnecessary costs. In the future we will likely see more digital-first brokerages, leaving one less tenant for offices around the country.