2005 may have been one of the most contentious years in the history of the American real estate industry. According to Real Trends, “a 30 day period in the summer of the year saw more negative media coverage against the real estate industry than the past 18 years.”
A December article in Inman News said, “It’s a safe bet that 2005 will be one of the most memorable - if not unforgettable - years on record for the leaders of the National Association of REALTORS®. It was the year that many believe will be seen as the end of the longest ‘hot’ market in the industry’s history. It was a year of regulatory harassment and government interference.” It is probably true that merely surviving 2005 should be seen as an achievement. Unfortunately, many who can lay claim to that feat may have a propensity to spend the first quarter of 2006 celebrating the achievement rather than recognizing that, like the effects of a flood on a great river, the landscape of the real estate industry has been forever changed. Those who must ply the river in search of professional success and profit must immediately recognize that many if not most of the navigational “way points” they used to guide themselves in 2005 may now be sandbars and tree stumps. Success in 2006 will mean setting new courses and executing new maneuvers. This article is intended to suggest some of those points of travel.
The first and perhaps most critical point of departure will be the attitude of consumers themselves. Two forces are at work. The first arises as a result of the negative publicity that swept through the print and electronic media last year. While the industry’s spin doctors are attempting to put forward the best face possible, the fact remains that many consumers now have a very negative view of the experience provided by real estate brokers and agents. Every brokerage business plan, marketing initiative and sales campaign must be guided by this factor and must prioritize creating and sustaining a superb consumer experience, while at the same time doing everything possible to rebuild REALTOR credibility.
Brokerages must next address the fact that a record level of real estate consumers, empowered by Internet access and an impressive amount of researched practical knowledge about real estate transactions, now believe that they can proceed through the complexities of the transaction without the assistance of a professional guide. The recent New York Times story about the Madison, Wis. FSBO MLS and the announcement of yet another FSBO based DIY (do it yourself) real estate service only drove home this new reality. REALTOR value in 2006 represents a significant challenge that every industry participant must prioritize.
The industry media during the past month has been celebrating the fact that the long awaited market “crash” may be less violent than originally thought. While this is indeed good news, it does not extinguish the fact that any slowdown will create practice circumstances virtually unknown by more than 80 percent of today’s agents, managers and brokers. As any river pilot can attest, lower water is lower water. Surviving in a market that is producing 6.6 million units in a post boom year will require a different set of business skills and competencies than the relatively “free for all” environment of a 7.4 million unit record market. A recent survey by RECON Intelligence Services determined that more than 75 percent of the brokerages contacted did not anticipate making any substantial change in their marketing programs or service procedures. This approach harkens back to the often quoted aviation philosophy that any landing you can walk away from is a “good landing.” This will not be the case for real estate service companies in 2006.
2005 should also be seen as the year that the Internet finally became the definitive venue for the real estate experience. From both a statistical and practice perspective, the Internet has now become the operational center of the REALTOR’s universe. With this factor in mind, company marketing and technology budgets should look radically different than at the onset of 2005. Companies will not want to be the last in their market to shift funding from print media to Internet-based programs. The challenge of Internet-based leads will not be met by responding within 10 minutes unless that response meets the expectations of the consumer who sent them.
As suggested above, 2005 will be seen as the year in which regulatory zealots and government harassment targeting the real estate industry reached a zenith. While the philosophical aspects of this shift will be debated for years the threat potential must be addressed immediately.
The first step must be to sound the alert. THE REAL ESTATE INDUSTRY IS UNDER ATTACK!
The second step must be to put real teeth into the REALTOR defense mechanism and that means getting serious about TREPAC (Texas Real Estate Political Action Committee.) Despite the impressive sums that have been raised during the past few years, the current low participation rate defies imagination. Many REALTORS apparently are still acting shocked about the fact that “money is the mother’s milk of politics” (A term coined by Jesse Unruh, Speaker of the California Assembly from 1961 to 1968.). They would be advised to “get over it.” Such is the case and from here on forward, REALTORS had better be the best at the game or they will find themselves the victims of a world in which MLS information is considered public domain, three percent real estate commissions are common, FSBOs are given religion-like status and new entrants into the industry are celebrated regardless of relevance, merit or value proposition. Protecting an industry that grosses more than $2 trillion annually and provides a livelihood for more than one million professionals is neither child’s play nor optional. TREPAC participation must be celebrated and non-participation scorned. TREPAC is not about political philosophies or spiritual rightness, it is about business.
We are entering into a new chapter in the industry’s history. It is a time to be focused about future directions. It is a time to recognize threats and opportunities. It is a time to work together. Most of all it is a time to get serious about what it means to be a member of the REALTOR community.
