We began to note 36 months ago that these kids were entering our marketplace. We simply assumed that they would respond to our traditional sales approach. After all nothing really changes in the real estate industry so why get all bothered about this new group of consumers.
Two years ago we began to notice that third party entrants into the real estate space were offering new and unusual services. We shrugged it off. Few noticed that these new player’s service packages seemed to be focusing on the provision of information that heretofore had been “insider” stuff. It was also at this point that we began to observe receding commission levels. We immediately blamed those “damn discounters.”
A year ago we begin to hear about blogging, rating, credentialing, research, standards and consumer communities. Who had time for such nonsense and, who really cared any way? We were in the midst of experiencing the industry’s greatest year ever. Nothing could stop us. 2005, what an amazing ride that was.
Today, we find ourselves in the fourth quarter of 2006. The industry finds itself facing its biggest challenge in over a decade.
We observe, gathered around their computer, our new consumers. As we lean closer we note that they have notebooks in hand with sheet after sheet of negative media stories and reports of government regulation and antitrust enforcement against the industry. We see long checklists and recommendations for how to deal with something called a real estate agent.
Then we hear that some are chanting, “the prices are dropping, the prices are dropping.”
Those folks sitting around their computers are no longer irrelevant, they are today’s consumer. In their hands may lie the fate of our real estate market. As much as we would like them to know that the Houston market is different, the blitz of adverse news in the media may deny us that very important distinction.
Some of them are sellers. This group has been listening to the tales, some spread by our predecessors, of how they have grown rich because of the appreciation of their homes and properties. In reliance they have new dreams and aspirations that can only be paid for with the proceeds from their upcoming sale.
The rest of the group are buyers. The media has recently told them that prices will be dropping by 25% - 35% during the next several months. They think that they need merely wait and, as if by magic, homes that are inaccessible today will tomorrow go for the begging.
The power of both of these groups will extend beyond the impact they will have on market values. The buying group is very much focused on value propositions and great experiences. Little do they know that the current positive status of the Houston market, hide the fact that over the next 48 months there may be too few properties available nor that the pipeline is full of potential buyers. That now what they read or heard.
For the consumer engaged in the current market as seller or buyers the reality may vary wildly from the media tales. Some will feel cheated and sooner or later they and many in the country will get around to blaming Realtors® for this state of affairs. This interaction may be the basis of the new real estate order.
The first rule of the new order is likely to be transparency. For most of the past 60 years consumer interactions with members of all professions included a dark inner core of information that was deemed to be too sensitive for consumer ears.
Moving forward transparency will no longer be just a consumer wish rather it will be the rule and a condition precedent to consumer participation. Information about the players, the property, the community, the transaction and its impact will become the currency of the transaction.
The second sacred cow that is unlikely to survive the new order is the idea that all real Realtors® are created equal. Today’s consumer has known this is not true for a long time but lacked the power to demand information about agent competencies, specialties and previous transactions. Whether as an industry service or a product of the growing agent rating sector, the consumer will have access to comparative information about service providers.
The third rule relates to brokerage value propositions. Moving forward consumers, both on the buying and selling side, will no longer accept the traditional “trust me” approach. They will demand, negotiate and receive services that are specific, quantifiable and relevant to their transaction. The economic future of the industry may rest on its ability to state and deliver a strong value proposition.
The fourth rule is that brokers and agents will either provide exceptional consumer experiences or the consumer will access lower cost options and use the savings to have a great experience in the South Pacific.
The skill with which brokerages handle these challenges will, to a great extent, determine the length and stability of the current market. If brokers don’t apply their best and brightest minds to the challenge, it will be a long winter. If brokers rise to the occasion and take control of the situation, the current market will be the first chapter of the next boom.
