Game procedures and routines in the context of agency law and practice

[This is the sixth entry of 18 in a game design journal series introducing Spheres & Farms™, a game about real estate brokerage branding in the Puget Sound region. Previous | Next]

[Note: in Washington State, the setting for Spheres & Farms^™, all agents are referred to under law as “brokers.” To avoid confusion with the meaning of this term in other states, we refer to them in the game as “agents.”]

In the U.S., real estate law varies by state; but usually, the brokerage owns the listings and is considered to be the actual agent of the seller or buyer in a real estate transaction. In practice however, it is an individual—the seller’s agent who hangs their license at the brokerage—who wins the listing. Except in cases of dual agency, another individual—the buyer’s agent—negotiates the purchase on behalf of the buyer.

While more brokerages now employ salaried agents (Redfin is just one example), commissioned sales remain the standard practice of compensation in the real estate sales business. Legally, brokerages “employ” these agents as contractors and charge them desk fees for the brokerage’s platforms and services. Yet again in practice, the brokerage is a service provider, with the individual agent as their client. Brokerages provide their agents with information, training, coaching, hosted events, and marketing collateral. Most of all, they provide a recognized brand that helps their contracted agents to signal their value in their targeted markets. So equipped, the agents’ successes are shared by the brand, whose visibility and value increases with each sale.

As long as they conduct their business legally, including conformance to antitrust law and the Fair Housing Act, agents are generally free to target whichever markets they choose, according to whatever strategies they prefer. They are not directly controlled by their hosting brokerages. Brokerages can train novice agents, and some of these may mature into effective rainmakers. However, a brokerage may find it more effective to recruit brokers with an established track record in those markets that the brokerage has targeted to build their brand.

Based on the foregoing, the brokerage brand owners, and their managing brokers, are confronted with a difficult task: assembly of a self-directed, independent sales force that can be piloted toward the brokerage’s strategic objectives amid economic and regulatory uncertainty. Meanwhile, concentrating agents in a single area does not convey any advantage, as there are a limited, but unknown number of potential listings available in any community, and any of these agents might just as well win and sell a listing anywhere else. This is truly a cat-herding exercise, one that Spheres & Farms^™ seeks to model.

The greatest obstacle to gaming or simulating this subject is the scale. Most activity is concentrated among the most molecular units—the agents themselves—with those units largely independent and uncontrolled, yet operating across broad and diverse geographic areas. Widening the scope to simplify the design risks distilling out the agents’ operations that actually drive the business. The interaction between these operations and the brokerage’s own activities, consistent with their strategic goals and policies aimed at brand visibility, are what determine success or failure. The contrasting agencies between the brokerage and, collectively, their contracted agents represent the different equities to be reconciled through playing the game. A thorough understanding of the agents’ perspective would be lost with too broad an attempt to amalgamate their operations, making them composite characters. Were the prospecting, listing, and selling processes and risks to be abstracted away, little would be learned.

A real estate brand-building game that abstracts out market prioritization, farming methods, pricing strategy, listing promotion, risk management, economic cycles, and their effects on demand and supply offers no insight into the business.

Besides market prioritization and risk management, brand owners, brokerage owners, and their managing brokers do take an interest in their agents’ selling strategies, promotion, and listing quality. The visibility of these listings and their successful sales shape the brand and drive visibility, drawing in new clients and raising the brand’s eminence. How this is addressed by game components and processes will be presented in the following three journal entries concerning agents and their personal attributes, farming methods, market selection, and other details.

Schedule of entries