How Watters International Realty Protects Against Disruption

Fifteen years ago, an aspiring real estate agent would have little choice but to join an established practice. The big box agencies may not offer much by way of support, but they do provide branding, which was a crucial asset in the days before social media and online review sites leveled the playing field for service providers. Brand recognition remains a lucrative benefit today, but it’s not the essential barrier to entry it used to be, and many legacy brands are having a harder time attracting and retaining the best talent as a result.

Real estate is just one of countless industries feeling the squeeze of technological disruption, but there’s one brand that, thanks to a unique, team-based operational model, has shielded itself from disruption and remained a profitable home for real estate professionals. Watters International Realty was founded just eight years ago by Chris Watters, who designed the firm in part to be invulnerable to the technological disruption he saw so many brands succumbing to at the turn of the decade.

“When I founded Watters International in 2010, we were just barely on the other side of the peak of the recession, and there was this sense that the landscape was changing,” Watters said. “We’d already seen how sites like Yelp and Angie’s List and Craigslist were letting service providers get their names out in front of a larger audience, so we knew we had to have something more.”

New operational model

That something more would become a new kind of operational model designed to promote the growth of the agent rather than just the brand. The result is a brokerage in which agents operate as business owners rather than independent contractors.

“The real estate industry is built around the practice model, where agents use the branding of a parent company but are essentially on their own,” said Bradley Pounds, President of Watters International Realty. “We’re setting up our agents as owners of an actual business — an actual asset that has worth beyond whatever deals the agent closes on a given day.”

That strategy may sound simple, but it was not easily executed. Pounds says years of work and millions of dollars went into its refinement.

Research and development

“We put more than $5 million in research and development to perfect this model,” he said. “We tested and experimented with everything from the best ways to staff a team to the most effective marketing campaigns, and that allowed us to develop very clear, very practical, do-this-don’t-do-that guidelines.”

Those efforts have paid off for Watters International Realty, which has built a growing roster of teams in both major and secondary markets, each owned and operated by agents who are experts in their own territory. Watters says each of those agents is the best of the best in their market, and it’s that high bar for talent that allows Watters International Realty to invest so much in each agent.

“We have an incredibly high barrier for entry for brokers and agents who want to join our organization,” he said. “They are like the navy seals of real estate.”

As Watters International Realty has grown, Watters says the brand remains shielded from a new field of competitors threatening to disrupt other corners of the industry.

Industry disruption

“Recently we’ve seen a wave of discount brokers coming on the scene and raising hundreds of millions of dollars,” he said. “They are focused entirely on top-line revenue, rather than profitability, so it becomes attractive for investors, but it doesn’t do much for the agents or their clients; it’s that Wall Street versus Main Street mentality.”

By focusing on the success of its agents, Watters International Realty has flipped the traditional brokerage model, growing the business from the inside out. That innovation, Watters says, is the difference between success and failure for Watters International, and it’s why the brand is growing faster than virtually all of its competitors.

“Most brokerages want to become giants. They want to have a huge brand and billions in revenue to attract as many agents and investors as possible,” he said. “They don’t care about the success of any individual agent — it’s a numbers game. We’ve taken the opposite strategy, focusing foremost on the growth of our agents and allowing their success to drive the growth of our brand.”

As the real estate industry continues to evolve, Watters says “Traditional brokerages are flailing.” Meanwhile, Watters International Realty’s agent-centric model is scooping up the best agents and securing a rapidly expanding client base in turn.

“We’re focused on the long-term,” he said. “We know this industry inside and out, and we’re prepared to deal with any changes it may face.”