Today’s Houston area real estate consumer is the most sophisticated ever. They are techno-literate and completely at home on the Internet, engaged in an ever-growing number of real estate related search engines, portals and sites. Their Internet activities go far beyond mere searches for listings into any number of informational treasure troves. They are increasingly engaged in blogging and interactive chat activities. Using these resources, they not only learn about the “how to” of real estate but also engage in comparing notes about the performance of real estate professionals.
Third party commercial Internet operators such as Google, Microsoft, Yahoo, Zillow, HomeThinking, Backfence, and HomeFinder.TV, financed by millions of dollars in venture capital, are assuming ambush positions within the Internet’s real estate space. Each of these entities has as their purpose in being the goal of carving out a small piece of the real estate market dynamic through which they can generate revenues often in the nature of referral fees paid by real estate professionals.
Pressure on the Realtor® owned MLS continues to grow as no less than three external forces continue their efforts to reengineer this vital industry function. Google continues to develop and promote its Base function and its sense that the MLS ought to belong to the organization that can couple listing information with the greatest amount of peripheral information. The U.S. Department of Justice continues its aggressive prosecution of the suit it filed against NAR in September of 2005. The DOJ’s theory seems to be that listing information ought to be in the public domain. Despite some early indications that its basic case is very flawed, the Department continues to move on its MLS vision. Finally, the NAR PAG on the future of the MLS continues to move forward towards what many believe will be some manner of “nationalization” of the MLS function.
Some of the largest corporations in the world are engaged in the research and development of informational and transactional technologies that could have a significant impact upon the brokerage’s current industry position. No more impressive example of this struggle can found than the current mapping battle between Google and Microsoft.
These are serious times for Houston real estate brokers. Each, in order to survive and prosper, will have to make equally serious adjustments in their business, marketing and Internet operations. Some of course will choose not to change and will simply hope for the best. But the majority, reflecting the spirit and entrepreneurialism that has always characterized the Houston broker, will do what has to be done and will charge into the fray ready to meet the challenge.
This then raises the question relative to who will ally with Houston area brokers in their efforts to prevail against venture capital funded third party entities committed to capturing a large share of the industry’s revenues?
Some will suggest that the largest brokerages may be able to use their own resources to fight this battle. A natural response would be to ask why should this be necessary. The threats that are facing the brokerage community are not aimed at specific firms but rather at all firms. They are intended to negatively impact all brokerages in the same manner. Firms that elect to internally finance solutions to survive the battle against these Internet giants may or may not gain a competitive advantage but they will most definitely weaken their financial stability.
Others will point out the fact that those brokerages associated with franchises will be able to use these relationships to weather the storm. Those who take that position would do well to review the present circumstances within the franchise sector. At the present time, no less than seven major real estate franchise organizations are going through survival moments of their own. Some are dealing with new owners whose immediate objectives may be more focused upon return on investment than service enhancements. Others are suffering from market “disconnects” as their traditional business models continue to lose effectiveness within the new marketplace. It is not clear that the franchise sector will be part of the brokerage solution.
In any event, it is the vast majority of the Houston brokerage community that is at greatest risk in this situation. Most do not have the financial, technical or human resources to meet the challenges being presented by today’s industry environment. They are facing the highest level of risk.
It is from this perspective that the goals and objectives of the Houston Association of Realtors® can best be judged. Every HAR member broker should be asking the question; if called upon, what can HAR do to assist me with this struggle?
Astute brokers may want to consider some of the following questions:
Q: How familiar is HAR with what is happening on the national scene, especially with respect to matters that may have a direct impact upon my business.
A: The HAR leadership and staff are intimately familiar with what is currently happening on the national scene. They closely follow what is happening with brokerage operations and what steps brokers must take to be competitive. For 2007, the entire Association is focused on meeting these challenges.
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Q: What level of expertise can HAR bring to bear in terms of assisting me to make the hard decisions that will be necessary as I prepare to meet these challenges?
A: Several members of the HAR staff are nationally recognized experts in key areas of the industry. They are regularly called upon to make presentations at national meetings and to comment on a wide range of programs that are being designed to help brokerages meet the challenges of today’s transitioning industry. The HAR staff is frequently referred to as the best in the country.
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Q: Where am I going to be able to access affordable tools to meet and match the techno-literacy of the contemporary consumer?
A: During the past few years, working together with the HAR technology team, the HAR brokerage community has developed and tested more than 30 technology tools designed to keep them on the leading edge of informational and transactional technology.
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Q: Where am I going to get the information I need to understand how to effectively work with today’s real estate consumer?
A: Beginning in 2005 and continuing into this summer, the HAR staff is collaborating with the University of Houston to collect data from Houston area real estate consumers that will be invaluable in assisting HAR brokers to meet the challenge of satisfying consumer expectations.
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Q: How am I going to be able to protect my marketplace against marketing and promotional assaults launched by national entities with millions of dollars of venture capital funds?
A: During the past two years, HAR leadership and staff has worked with the HAR brokerage community to develop the most effective Realtor® value program in the country. Billboards, Television, radio and print ads are all being used to drive consumers to HAR.com where they can access the listings of HAR member brokers and agents without cost to HAR members. The value of this member service alone in 2005 amounted to more than $27 million.
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Q: What is being done to protect our local MLS?
A: In January, the HAR Board of Directors adopted an aggressive plan to protect the HAR MLS operation. HAR leaders and staff are already implementing that plan.
It is critical that local Realtor® association rise to help their member brokers during this time of threat and opportunity and HAR is doing just that. It is both the ethical and moral thing to do. Many brokers have been members of their local associations for decades and have asked for little. Now it is time for these organizations to rise to the defense of their brokerage communities. Working closely with its members HAR will be fighting in the air and in the trenches. Who would want it any other way? Ask how you can help.
