Our Changing Industry
We spend a lot of time on discussing new business models, social media, technology, and how we all think the consumer wants to buy. We prognosticate endlessly about how each idea we have or new technology we observe is going to revolutionize the real estate industry, and agents are going to either evolve or die (Whenever I hear things like that I think of the old Comic Book Alien with a Huge Head carrying off a struggling woman who looks well dressed for either work, a cocktail party OR an alien abduction).
Sometimes I think we forget about the basics that are involved in our business. No matter how much time people spend on their computer looking for property, they need to walk the neighborhood, see the property, experience the home and the neighborhood. And they want someone they can trust , who is knowledgeable about those things to help provide them with guidance in finding a property that has the right location and appropriate physical attributes in a community that they have chosen.
And then they still need help with negotiation, the physical inspection of the property, the contractual portion of the purchase, obtaining financing etc. And no, I don’t think attorneys negotiate worth a damn in real estate (unless they specialize – and have a great deal of knowledge about real estate valuation and the current market, in which case they are a real estate professional with a law degree).
We Still Need Boots on the Ground
And with all due respect to all of the on-line real estate models I’ve seen to date, they still end up with an agent meeting a consumer and providing the on the ground service that all of us provide to our customers and clients. No, I’m not a Luddite. I love technology and think that its a very useful tool, and I am constantly looking for new ways to use technology to make me better at my job and my company more efficient. But I don’t think that we’re going to wake up anytime soon, and find out that we need to be retrained for new jobs.
Let Me Give You an Example
The store pictured above is an amusing business model that represents IMHO the contradictions of the thought processes found in much of the real estate business and the RE.net
People have always had stuff they didn’t want. We have all heard that one man’s trash is another man’s gold. And we all know that when we have trash, we want to sell it and turn it into gold. At first people would sell things from their house , or on local physical bulletin boards in stores and schools, on their own. Then there were enough people recycling things that antique stores and thrift shops became their venues of choice.
Technology improved, and people started by posting things on Electronic Bulletin Boards for Sale. But these were limited enterprises commercially, until someone got the bright idea of building an on-line auction site know as EBay. EBay changed the way people sold their junk. It was easy to buy on EBAY, and there was tremendous exposure for your junk. But some people found it unsatisfactory, and the store above was born (and it is only one of a number of such stores, and franchises around the country. People are now going to a physical location to sell their stuff on the Internet. (There is a great conversation about this business model in the Steve Carell movie The 40 Year Old Virgin, but I just couldn’t find the video clip to add here- But what the heck its a funny movie go see it and you’ll remember this post when you see the scene) Is it just me or is this a huge ironic circle?
The More Things Change
Maybe its just because I’ve seen so much in the industry over the years which have brought some tremendous changes in How we do What we do, but the basics are still the same. We take Buyers and Sellers through one of the most traumatic events of their lives, protecting them as best we can, helping them to reach their goals, and making the process as smooth as possible for them. We reach farther, get more information faster, and transmit it to clients in distant places, but we still add value to the process, and I believe its a value the consumer wants and looks for, So far I haven’t seen a technology that changes their needs or our ability to satisfy it – as hard as that seems to us some times. So I guess we’ll keep on needing to go to work for at least a little while longer.
Funny thing is, you’re right even if the belly to belly turns out to be virtual. I think that’s what my English teacher called ironic.
Bill..Bill.. Bill..just when I think we’ve turned the proverbial corner….
While I doubt seriously that the real estate agent as an animal will go extinct, the business model is on the endangered species list. Adaptability may be a word to add to the repertoire.
Like Kelly wrote yesterday, real estate agents, IMO, need to stop speaking in the terms of what they want and what they feel.
For instance when you say “they need to walk the neighborhood”…Bill, I live in a waterfront community on the east side of Fort Lauderdale. People don’t walk neighborhoods when they look to buy here. They barely even drive the neighborhood. In fact seldom are there even open houses.
When people buy here they are doing so from previewing homes online and then contacting a Realtor who they also found online.
That’s not an anti-realtor factoid, it’s just the state of the market. Sure, the old 5 and Dime was a great place. I used to love the neighborhood feel of yesteryear. Kids could actually grab a bottle of Pepsi and parents felt safe letting us go down to the corner store.
Then it got torn down and they built a Walmart!
I miss that corner store and the way life was, I truly do. However, I got over it. I changed, as most realtors are going to have to do as well or be left behind.
As the service providers before them, Stock brokers, Insurance agents, Travel Agents, etc…(oh yes, there is still a place for some of them as well) the rest wither and go away because they did not adapt.
While the web is changing the initial phase of the buying process the actual purchase is the same as it always has been. True, buyers can now do their own research before we ever meet them, and they know what houses they want to see, but they still end up looking at all of the properties available. Always have, always will.
Before we see the demise of real estate gents we will see the demise of car dealers. If people are not comfortable buying a car without a test drive then there is no way they will ever get comfortable buying a house without doing a walk through.
Real estate agents are not going anywhere. At least some of them. Those who are ignoring these changes will be replaced. Nothing new here.
What has changed is the playing field between agents and brokers. Little brokers like me can now compete with the mega brokers. The web is the great equalizer.
Robin I agree with Kelley also, and I make that statement based upon my experience as a tech savvy buyer who purchased a second home last year in West LA near the beach. We had the choice of all the communities from Santa Monica to Redondo Beach, and had spent so much time at the Ritz Carlton in Marina Del Rey that they would ask where our dog was when we didn’t bring him.
But when I was going to be putting hundreds of thousands of real dollars into a property, I wanted to knwo what I was buying and what it was going to be like to walk out my door everyday.
And I buy a heck of a lot more property annually then most consumers.
So I still think, becuse our products are so unique, and each area so different that consumers will still have a need for some physical connection with the area before they complete a purchase.
One real estate comparison to that eBay store would be transaction management systems like SureClose, TRPoint, and RELAY. Some agents may have their transactions on those systems, but most of them refuse to learn how to use those systems (even to look up vendor contact information), preferring instead to visit or call the “corner store” of their transaction coordinator.
Bill – I agree! While there are some clients who will buy sight unseen, the majority want to “feel” what the home is like. Even if they don’t walk the neighborhood, they will drive through.They check out the schools, parks, shopping and amenities.
When we moved back to Arizona from California, we knew the city, yet we still looked at homes. We wanted to walk through, we did walk the neighborhood before we decided on the exact home for us.
While we need the online presence, we still do our business face to face.
Fortunately or unfortunately we get about 85% of our business from the leads our website generates. Fortunately because I am thankful for our ranking and traffic, but unfortunately because I haven’t spent as much time developing other advertising and marketing avenues and pray that we never lose our ranking… but I digress….
We’re not trying to sell homes online (rarely have we sold homes sight unseen), we’re merely giving people the opportunity to do some research prior to physically looking at them. It saves everyone time and money. With gas prices the way they are nowadays I’m pretty sure the general public is welcoming the ability to take some of the leg work out of finding an area they want to be in.
I will say however, that from time to time I’ll get someone who doesn’t want to look at all online, they want me to personally find homes for them to look at after we’ve talked about their criteria (which is fine)…. but they still found me as their Realtor ONLINE. I am a full service Realtor who is thanking God I latched on to the internet several years ago. I’ll always have an office and I’ll always have that one on one time with my clients. Those Realtors who don’t “get it” though will more than likely disappear sooner than later.
Paula and Holly – if you guys agree with me I must be right
And I think you make the points effectively and appropriately – thanks for commenting.
Theres 2 ways to look at – from a human perspective, and from a business perspective. From the human perspective, people are still people. Buying/selling a home is generally an emotional roller coaster and we help guide them through the entire process. From a business perspective, there are dinosaurs among us. Either you are adapting to the constantly evolving business, technology, and expectations from your clients, or you are going to become extinct.
@Bill – Thanks! And you are right on! First and foremost, we’re hands on Realtors. Nothing is going to take the place of that. Gaining those clients to hold the hands of is where the internet comes in (for me anyway).
@Jennifer – Well said!
Real estate is local, folks …
The Phoenix real estate market stretches about 75 miles from one side to the other. Many buyers from out of state have no concept of how expansive the area is until they get here.
Last month, one of my buyers who started their search in Glendale ended up in Chandler after side trips to Fountain Hills and Gold Canyon. They drove several hundred miles just checking out different areas.
Sight unseen might work if someone knows a particular community or subdivision they want, but if they just want to be in the Phoenix market in general they are, as my Canadian friends say, hooped.