'Small Is Beautiful'

In a world of ever-increasing consolidation and concentration into mega-companies, it is interesting that the business of real estate brokerages remains fiercely independent. There are 330 real estate brokerages in North Idaho, with about 3,200 agents working in those offices. This does not include administration personnel and support staff, which is another few hundred people. Some of these brokerages are affiliated with a national brand (like Century 21 or Sothebys) but they are not at all mere branch offices following a corporate line. Each office has its own style and business model and hiring practices, and each office reflects its specific local geography and community.

Some things are standard, for example, the forms that are used in buying and selling property. Idaho has some of the best, most clear sale documents in the U.S. These forms provide a high degree of consumer protection in the complicated process of acquiring or disposing of real property. Although the brokerage might be a “small business,” it has tools such as these forms that are worthy of any sophisticated Fortune 500 corporation. In what was a very robust year 2021, the total amount of real estate transacted through the Selkirk and the Coeur d’Alene MLS systems was more than $4 billion. That’s a lot of small business! 

The realty office that handles the transaction is not the only small business that is involved. There are home inspectors, appraisers, mortgage brokers and lenders, title companies, and a host of subtrades that renovate/repair properties. All of these are classic small business operations. The multiplier effect of these other service providers is huge, and in North Idaho, where we do not have conglomerate employment, these small businesses are the backbone of the economy. 

There’s a lot of buzz now about Artificial Intelligence replacing real people. AI utilizes Large Language Models as it tries to regurgitate in press release language that I find somewhat obsequious, responses according to the prompts of the programmer. It hasn’t made any inroads into North Idaho real estate brokerages as far as I can tell: there’s too much blood, sweat and tears involved, too much “humanity” in this business. Face it, if you could be replaced by a mindless robot, how useful were you in the first place? A Large Language Model uses algorithms to work through massive amounts of data to synthesize a position. But nuances and details are what drives real estate and AI doesn’t get that. Bigger is not necessarily better, it’s often an excuse for mediocrity. 

Similarly, there’s a lot of media frenzy about Tech revolutionizing the buying and selling of property. The widespread access to data and information is a positive aspect of technology — buyers are more informed today than ever about potential properties. I’m perfectly comfortable buying a commodity type product using my cellphone, where there is little risk to the purchase and it is not a complicated transaction (I buy tennis balls online!). That is definitely not the case in real estate transactions, for seasoned professionals in commercial/investment careers, or for the homeowner who may only buy/sell two or three homes in their life. Both AI and Tech are useful tools, but real estate brokerage is still very human, and small is beautiful type business. “Small” does not mean inferior, or less than, it means the ability to focus on one person’s needs at one time. Isn’t this how we all want to be treated?

"Small Is Beautiful: A Study of Economics As If People Mattered" is a collection of essays published in 1973 by British economist E. F. Schumacher. The title "Small Is Beautiful" came from a principle espoused by Schumacher's teacher Leopold Kohr advancing small appropriate technologies and policies as a superior alternative to the mainstream ethos of "bigger is better."

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Raphael Barta is an associate broker with an active practice in residential, vacant land and commercial/investment properties. Email: raphaelb@sandpoint.com