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Today’s real estate industry is going through a similar experience. The focal point of this interaction is the information war. By way of historical review consider the following.
Over most of the past century American professionals were the dominant influence and control relative to their industries and areas of expertise. To a great extent they held this posture by controlling access to the information associated with their particular\ profession. Doctors were the only place to get information about medicine, lawyers guarded the door to legal information and accountants were virtually the only source of knowledge relative to taxes and financial matters. Likewise the power of American real estate professionals over their marketplace was to a great extent maintained through their control of information including “listing” information regarding the specifics of properties available for sale and purchase.
It was over ten years after the 1985 advent of the information age that the real estate industry finally began to reach consensus relative to the need to make this information more widely available to the American consumer. Much of that pressure came from challenges posed by the .com movement that first raised the specter of alternative real estate brokerage business models. The creation of REALTOR.com and a general recognition within the industry that the public should have greater if not unlimited access to listing data came out of that movement.
REALTOR® Association and MLS leaders across the country further responded to this open information philosophy by creating public websites that provided consumers with access to listing information within a trusted but yet “REALTOR® friendly environment. A number of these sites also provided information that met the consumer’s other “research needs.”
The past five years have demonstrated that even the best laid plans can run astray. While the original intent of putting listing information on the Internet was to encourage consumers to “be all they can be” these efforts and other market factors appear to have encouraged other forces to come upon the real estate marketing scene. For many within the industry these forces now appear to be a threat because they create primary relationships with consumers during their “research” phase.
As the success of these third party forces has increased there has been a growing perception within the industry that these third parties are “feasting” upon the information provided solely for the consumer. The fact that (1) an increasing number of consumers are finding value in the services offered by these third parties and (2) many of these third parties now refer consumers to real estate professionals in exchange for “referral fees” amounting to 25 – 35% of the earned commission has further incited both debate and controversy within the industry.
It is onto this scene that over the past twelve months a new and somewhat ominous movement has raised its head and is stimulating a new dialogue throughout the real estate industry. This movement seems to be of the opinion that if the listing information is jammed back into the genie’s bottle the consumer will have no choice but to return hat in hand to their brother in law the real estate agent’s living room in search of the Holy Grail.
The energy of this movement is, at least at this point, focused on both Multiple Listing Service rules and regulations and on the continued existence of public Internet sites. In communities throughout the country the controversy is growing and in some marketplaces it has expanded to open conflict between warring factions of brokers.
The focus of this article is not to question the wisdom of the “bottle” theory but rather the probability of its success and the ramifications of its mere existence. Actually the bottle theory is self validating. If the only place for the consumer to get listing information was from the “book” held by the agent and if the consumer had no power to either initiate or respond to any other service model then indeed that is where the consumer would go. Unfortunately the mere promotion of this theory raises concerns about its underlying assumptions.
Consumer research has long been a staple of the marketing discipline. Over the past five years more research has been completed on the contemporary consumer than at any other time in history. Much of this research has been done by firms and entities that are seeking to either transition from traditional business models or markets or those who are hoping to discover, identify or create new market niches. Industry to industry the findings are almost perfectly parallel. The thought processes of the contemporary consumer relative to information, value and experience are much the same whether searching for a new garment, responding to a political campaign, purchasing a home or watching a movie.
Simplified for presentation the following factors appear to be most influential:
· Consumer wish to conduct their initial research through unbiased sources
· Consumers wish to conduct many of their initial transactional relationships electronically
· Consumer want to maximize the level of control they exercise over the transaction
· Consumers have a very clear ideas relative to the experience they wish to have
· Consumers increasingly understand what value proposition best fits their needs.
Unfortunately several of these basic tenants of contemporary consumerism are contrary to the ideas of the bottle theorists. This then leads the industry to address the question of whether, in a direct confrontation, the consumer or real estate professionals are going to win the information battle? Or, more discreetly, will the battle be won by those, including those third parties, who subscribe to the theory that customers are always right.
Throughout the American economy the smart money seems to be riding on the contemporary consumer. Armed by the Internet and driven by the lessons learned by several generations of consumers who were vulnerable to “professionals” today’s consumer appears to be on a clear course to create a more accountable, predictable and responsible transactional experience.
So before everyone in the real estate industry is forced to “Love it or leave it” perhaps the time should be taken to understand just what dynamic is unleashed when existing “unbiased” industry sponsored Internet based sources of information are cut off. Will the assumption that the consumer will migrate to brokerage websites pan out or will the research that suggests that they will proceed directly to non industry third party sites that are perceived by the consumer to be “unbiased” be the rule of the day. It is interesting to note that these third parties are spending millions of dollars annually in anticipation that the later rather than the former will occur.
It is certain that consumers will continue to seek information from sources that they consider to be unbiased. It is clear that they consider information provided by REALTOR associations and MLS’s to be unbiased. Those who are advocating putting the genie back into the bottle must be able to demonstrate that their theory and its ramifications are in the best interests of all real estate services providers.
The industry must avoid emotional and unproductive reactions to the circumstances presented by today’s evolving informational and consumer situation. In the final analysis stonewalling and bravado will not keep today’s consumer from creating the experience they seek or the value proposition they consider appropriate. The industry must address what is known about today’s consumer. The industry must spend more time focusing on building meaningful relationships with the consumer and less time trying to frustrate their needs and demands.
