Industry Visionary

The question is not what corporate players, but what sectors of the industry are driving change.  Technology, while not the driving force it once was, has fundamentally changed the business. It has shifted the role of the real estate sales professional from a gatekeeper of information, to an analyzer of the information, as well as a negotiator and manager of the sales transaction.  This has resulted in more qualified sales professionals, as they have had to upgrade their skill sets to handle the large number of buyers and sellers who start their process online and who have more information, in some cases than their sales professional.  While increasingly more consumers begin their search on the Internet, they still need sales professionals to help them complete the transaction.  We can automate the simpler tasks, but still have to defer the more complicated tasks to our sales professionals.  Therefore, their skill in negotiations and managing the transaction are where the highest value is derived. 

Standardization of the closing process by Fidelity and others will result in a better closing experience, since the introduction of transaction platforms will help integrate as well as provide status on closing information the consumer wants when they want it.  The consumer is time starved. And the ability to integrate these desperate functions is key to improving consumer satisfaction.  

The emerging and/or first-time real estate consumer seeks a trusting sales professional and advisor who can help them navigate through the unfamiliar loan and closing process.  Because the homebuying/selling population is becoming increasingly more diverse culturally, our system of home purchasing is unknown to a lot of buyers and may even be at odds with some of their cultural beliefs.  For example, many non-U.S. born purchasers do not understand what it takes to establish credit that would enable them to secure a loan, despite not having the down payment and the necessary income to qualify.  In many cases, English is not the language they are comfortable communicating in, and as such, desire to work with people who can communicate with them. 

The other dynamic is that emerging first-time homebuyers are becoming increasingly younger and accustomed to communicating via email and instant messaging either online or remotely.  It is natural for them to use these mediums, as frequently as we use the telephone today.  Having a sales force that can meet their communications needs is essential, as they prefer to work with people that look like them and understand their preferences.  With our real estate population becoming increasingly older, the need to bring younger sales professionals into the business could not be more acute.

Finally, the real estate needs of baby boomers, who are moving in mass to the “golden years,” are going to change.  Many real estate practitioners do not know a lot about retirement homes and assisted living facilities or how to transition their clients into these venues.  While not everyone is ready for retirement, many are starting to look at their options.  However, it is an area that has not gotten a lot of attention until recently.  This obviously is where our aging real estate population can transition their business over the coming years, as this clientele definitely wants to work with someone who looks like and understands them. 

In order to adequately respond to these expectations, Real estate companies must put a plan in place to address diversity (age, ethnicity, cultural), one-stop shopping (integrating closing services around the transaction and after the sale) and use of technology as an enabler to broaden their service offerings in a cost-effective manner.  The plan should be based on the demographics of each of their markets.  For example, St. Louis has one of the largest Bosnian populations outside of Bosnia.  San Francisco has an area called South of Market, where the population is decidedly high-tech and young, this represents an opportunity to look at a more technology-driven solution.  The point here is that understanding the unique opportunity in every situation is good business.

Because consumers are increasingly time-starved, they want a one-stop solution.  Therefore, a plan to provide a means of addressing this issue through either a company-owned, alliance or ABA solution must be explored.  For smaller companies, the use of a standardized closing platform will give them the ability to compete in this area, despite not having scale.  While this is easier said than done, it is on the horizon.  The further advantage of having a standardized closing process is that it allows the introduction of after-the-sale services that enable a continuing relationship to be conducted with the customer, allowing the sales professional to build a larger sphere of influence.

Finally, a plan for introducing technology is essential.  However, technology only works if it is used.  While consumers are embracing technology, as evidenced by the increasing numbers using the Internet to begin their housing search, our sales professionals are not as enthusiastic.  There are many sales professionals who still view email as inconvenient.  The issue is that some consumers only want email communications.  Because of the time starvation factor — getting information to customers when, where and how they want it, can only be driven through technology.  The fact is, Realtors will not be replaced by technology, but by Realtors with technology.  Therefore, brokerage firms must ensure that their sales professionals are technologically savvy in order to meet the expectations of the emerging real estate consumer.

Managing company dollars is one of the most critical issues in our industry.  High GCI, without the necessary company dollar margin improvements, often means you may not be able to make it up in volume.  Look for ways to re-margin your business.  While this is easier said than done, most companies have taken most of the costs out of their business, in order to grow the top line. For example, one of the largest cost centers for any firm is the bricks and mortar of the operation – the occupancy costs. With sales professionals being more technology savvy and having the opportunity to work from home, there is less of a need to have a desk for every sales professional. View your offices as a business development center for your sales professionals that they would utilize to promote and grow their business. An example of a service would be to have a marketing team that would market the company and sales professional’s services on a per fee basis.

Many brokerage firms have introduced ancillary services in such areas as mortgage, title and escrow in order to create additional revenue opportunities beyond the real estate transaction itself.  This type of strategy focuses on what a consumer wants and that which is convenient. Time is precious to us all and those real estate companies that create an atmosphere of convenience and value will have a greater chance of winning the consumer’s business and loyalty.

The focus of our strategy is to assist our Prudential Real Estate affiliates in growing their businesses and to maximize the value of the Prudential Real Estate brand within their marketsphere. The real estate business is best operated by the local entrepreneur, as real estate is a local business. That is the foundation of our strategy. 

By focusing on the growth of our affiliates, and thus, our network, we build a stronger organization. With some organizations building a base of corporately owned companies, the voice of the entrepreneur is lost. The diversity of opinion and creativity is compromised. We solicit the opinions of our network members, for they are our voice and through them we generate new ideas and concepts to integrate into our overall strategy.

Lastly, as an industry we need to promote and implement greater diversity in ownership of real estate companies and in the ranks of our sales professionals. We are a global society and we must be positioned to service the diversity of our consumer base. That is a critical component to any organization’s success.

One of the most recent books I read was “Good to Great” by Jim Collins. What I learned from that book is to confront the brutal realities, but always have the faith that you will prevail.  I also learned that great companies are those that understand and implement what they are good at.  In other words keep the main thing, the main thing.

Remember we are in the service business, and as such, our services and our business is based on people.  Having clear goals and objectives and alignment of the people who make up your company is essential.  Independent contractors can go anywhere, but they stay with those companies that have a vision of what the future will be and carefully paint that vision with their people in mind.   We must also continue to monitor and learn from what the recipient of our services seek and adapt our business platforms to meet those needs. The brokerages and associates, who consistently deliver quality services that meet the needs of consumers, will be the leaders in our industry.