Ted C. Jones, Ph.D. is the Director of Investor Relations for Stewart Information Services Corporation (NYSE-STC) and also Senior Vice President-Chief Economist for Stewart Title Guaranty Company. He addresses the information needs of stockholders, conducts on-going research and supports economic and financial analysis for the company and its customers.
Prior to joining Stewart he served as chief economist at Texas A&M University's Real Estate Center, the nation's largest publicly funded real estate research group. An internationally recognized real estate expert, Jones has completed appraisals and property analysis in New Zealand, Australia, Canada, Mexico, the United Kingdom and the United States. He serves as a member of Board of Directors and as Chairman-Elect for 2003 of the Houston Association of Realtors®, the largest individual Realtor organization in the country. He typically gives more than 100 presentations annually on real estate and the economic outlook.
Ted can be reached at ted@stewart.com
As an "industry visionary", what do you see as the major changes occurring in the real estate industry?
The Internet has empowered buyers and sellers to be better informed than ever before--which now makes the services of the Realtor that much more needed in assistance in interpreting the mass of data available, in negotiating and in the steps necessary for the complex process of transfering the bundle of rights from the seller to the buyer. Even seasoned buyers and sellers still need assistance in the ever-changing array of services necessary to close the transaction.
What major "corporate players" are driving change and what may be their impact?
Innovation, which is rampant and occuring at a growing rate, is not limited to the corporate environment in the real estate business. Since most agents are true independent contractors, they in turn are their own business--and we literally have more than a half million business incubators that daily change the landscape for the brokerage industry.
At Stewart we complete several surveys annually of real estate professionals, and typically ask the question of the importance of the brokeage firm's franchise affiliation to agents. On a five point scale ranging from Highly Essential to Not Important, we consistently find that by a factor of more than two to one, the franchise affiliation is Not Important to the individual agent. Most important is the image of the company in the local market place, not surprisingly followed by the technology support provided by the broker.
Even from the lending perspective, with merger mania continually compressing the number of national lenders, mortgage brokers still account for 70 percent of all loan applications.
And regardless of what innovation a corporation provided yesterday, the mentality of 'What did you do for me today?'remains alive and well.
Who are the "individual trendsetters" that are shaping the future real estate industry?
Typically the point man in a military operation does not last long at their job--they are the first exposed. Jim Sherry, on the other hand, has long been and continues to be the point man for the real estate industry. His ongoing trailblazing remains unparalleled by any individual in the country. And more important, Jim is able to delineate those trends which are likely to be short-lived to those that are fundamental changes in the way we do business.
Bob Hale, CEO and President of the Houston Association of Realtors (HAR), is truly the leader and shaper of the framework, services and economics of the association realm. You do not grow to a local association to more than 16,000 Realtors without exceeding expectations. Local dues have declined for four consecutive years (now in the low $80 range) while at the same time member services have exploded. Each and every agent can have their own Website--free. Bob lives and breathes on the philosophy that you need to figure out what the consumer wants (here the consumers are brokers and agents) and give it to them. Bob believes in driving business to Houston Realtors. Period.
The Internet remains the 'Individual' that continues to shape the future of the real estate industry. Instant information, complete flexibility to change and almost costless to the ultimate consumer makes the Internet the champion for the future.
What are the expectations of the emerging real estate consumer?
We have instant coffee, instant tea, instant emails, instant messaging--you can even buy a $100,000+ auto in less than an hour--so why does it take so long to close a real estate transaction?
The real estate services industry outside of the brokerage segment continues to invest heavily in technology that ultimately will facilitate expeditious real estate transactions.
Auctions will continue to grow in the brokerage segment--and not just for the distressed property segment. More and more agents and brokers will utilize this tool to efficiently, cost-effectively, professionaly and timely market properties.
How should the Brokerage and Realtor Association / MLS respond to these real estate consumer expectations?
Take a look at the automobile industry. Quality and selection ranges from a minimalistic vehicle to the ultimate in luxury and quality with a wide range of pricing in between. The same is true with individuals involved in real estate transactions (buyers, sellers and agents).
I believe that MLS providers business models will change significantly as they evolve from simply a listing database to that of a complete information exchange for real estate.
What changes should a Brokerage implement to ensure profitability in the future?
First and foremost the broker needs to treat the enterprise as a business. That means rethinking why business is done today as it was yesterday.
To me, the owner of a real estate agency is just like the owner of a pro sports team. Unfortunately, too often management has given all of the profits to a few star players leaving nothing for the owner. This is a philosophy that requires rethinking.
There are also fundamental functions that the lack thereof should not be tolerated. I question why any broker would tolerate agents that are mediocore. Go to most any local Realtor Website and pull up a group of listings. Note how many of those listings do not contain photographs. I can assure you that as prospective homebuyers view sites on the Web, they skip right over those listings without photographs--which means that the broker has just had valuable office space and their management time occupied by non- or low-productive agents. Yet they broker takes on all of the risks that the less than productive agent generates.
What role do you see the Realtor Association / MLS playing to ensure Broker profitability?
The exclusive mission of the association should be to drive business to its members in a cost effective manner. Thus anything the association does should ultimately result in their members doing more business and making more money or reducing core costs.
Based upon your vision of the future of the real estate industry, what are you doing to help influence positive change?
I feel like an offensive blocker and defensive tackle that merely supports the star athletes and enables our team to score and prevents the other team from doing likewise.
As Chief Economist for Stewart Title, my job is to provide information to both internal and external customers allowing them to make better informed decisions. External customers include brokers and agents.
What books would you recommend as a "must read" that have influenced your
vision?
Required reading for all (and particularly brokers) should be 'Intellectual Capital: The New Wealth of Organizations' by Thomas A. Stewart. It should be a sobering thought to owners of real estate companies that the majority of their assets are not owned by the company and walk out the door every day--hopefully to return. As stated in the book, 'Infomation takes on an economic life of its own.'
Another must read is 'The Mystery of Capital' by Hernando de Soto which details why capitalism works here but fails elsewhere--and that is because of the inability of buyers and sellers to have a similar bundle or rights to real property outside of the western economies.
What advice would you give Brokerages and Realtor Associations / MLSs to assure they stay relevant and successful in the future?
It's real simple. Figure out what the consumer wants (the consumer in this circumstance being brokers and agents) and give it to them.
At the Houston Association of Realtors the philosophy has been to drive homebuyers and sellers to our members.
The bottom line is that both must treat this as a business (even the non-profit association) to assure prudent use of agent and association assets.
