The American real estate industry is currently tracking two developmental phases that will reach full impact in late 2008 and early 2009. For those markets that are currently working through their down period (e.g. Florida, California, Washington, Nevada) all eyes are focused on trends and directions that will signal a return to full market. But markets and industry segments in every marketplace are also carefully watching the current generation of Internet based trends and directions. These factors are going to impact every market regardless of location, price point or viability.
The growing Internet impact on the Real Estate experience was the subject of last month’s Houston Strategic Leadership Retreat in
Even with all this expertise in the room a speaker who reported on some recent research completed by the firm with which she is associated made one of the most amazing presentations. Charlene Li from Forester Research was simply amazing. First of all she is exceptionally bright. You know, the type of individual that twenty minutes into her presentation you suddenly realize she is thinking on four different levels, and you were proud to see two. Charlene has the ability to talk about current developments on the Internet in a way that first makes it come alive and second makes it really relevant to day-to-day life in real estate. She raised so many important points it seemed appropriate to share some with a broader audience.
Consider this:
· While half of American households now have one or another type of high-speed Internet connection, one third has no connection at all. Much of this last group will be connected within the next 36 months.
· The Average age of an Internet user is 43.5 (versus 46.3 overall) and the average of this group who has purchased a home is 38.8.
· The Average household income of the Internet user is $72,744 (versus $65,298 over all and $80,080 for households that have bought a home).
· By and large homebuyers spend much more time on the Internet each month performing a wide variety of self-educating tasks. Almost 60% of this group also reports that the Internet has significantly enhanced the quality of their life.
Forester’s research also has developed a number of points that bear directly upon the real estate buying and selling experience. Charlene presented four trends that she says moving forward will demonstrate how consumers’ use of the Internet will impact the real estate buying and selling process.
· Real estate web sites are currently spread across the Internet. Forrester believes that aggregators and search engines will bring these data sources together and that the final presentation will also include FSBO offerings.
· Endorsements and reviews (agent and brokerage rating services included) will become essential, as the consumer demands a high level of trust and accountability.
· Savvy buyers will demand control over the process, selecting “a la carte” services and paying accordingly.
· The historic status of the REALTOR® as the “first point of contact” is fragmenting across a wide spectrum of users.
Forrester’s newest data also reflects that the gap regarding where consumers first hear about the property they purchase has narrowed to where agents only hold a ten percent lead over the Internet.
The research also demonstrates that while the service package of most agents has not changed significantly in recent years service being delivered by Internet players continues to add new features such as new data, blogs, interactive mapping (realtor.com), “bird’s eye” mapping (Microsoft virtual earth), architectural mapping (mapwing.com), video marketing (youtube.com), generational marketing, enhanced home valuation (zillow.com), rich community information (trulia.com), RSS feeds (propsmart.com), related information (Yahoo.com), agent reviews (Yelp.com), comments on listings by consumers (propsmart.com), and a broader array of widgets (tools) that help consumers perform real estate related tasks such as mortgage calculators.
In the face of this new evidence some of the following conclusions should strike home with REALTORS®.
· None of these features may, in and of themselves, be the secret weapons that give the ultimate advantage to an Internet player over a traditional real estate professional. It is more a matter of relevancy and movement. The research clearly demonstrates that the consumer’s migration to the Internet for a wider and wider range of economic, social and intellectual benefits will continue over the next few years.
· The research demonstrates that the efforts of the Internet players will change the way we buy and sell residential real estate. It cannot be good that the Internet is more heavily impacting the new process than the REALTOR®.
The research further demonstrates that the consumer is gaining both competency and comfort with their ability to perform many of the traditional functions of the REALTOR® themselves. In return for this effort these consumers will expects real estate commissions and fees to be reduced even from their present low levels.
Using just these last three points as a reference we are once again reminded that if REALTORS® want to remain economically viable and anywhere near the center of the real estate transaction they must 1) add to their value proposition and 2) enhance and excite the consumer’s real estate buying and selling experience to a whole new level. Nothing less will support either the role or the economics.
The action step here is engagement and involvement. Work within your brokerage team to envision how to improve the experience and the value. Work within your association to expand the competency and skills of the whole REALTOR® community. Incorporate the whole range of Internet tools and new information into the new consumer experience.
2009 is only fourteen months away. With just a bit of creativity, an ounce of innovation and a sprint of energy our industry can prevail and move forward as ‘the’ consumer resource in the emerging home buying experience. Let’s make the effort.
