It really didn’t take that long. Five years ago the industry began to take notice that there was a new consumer. They seemed like mere kids at the time. We laughed at their proclivities and wondered how they would ever survive as adults. They were the minority, different and irrelevant.
Three years ago we began to notice that these kids were entering our marketplace. Surely, we thought, they would respond to our traditional sales approach. After all nothing really changes in the real estate industry so why get all bothered about this new group of consumers.
Two years ago we noticed third party interlopers in the real estate space, and they were offering new and unusual services, in some cases they seemed like techie sideshows. Few noticed that these new players’ service packages seemed to be focusing on the provision of information that heretofore had been “insider” stuff. At about the same time we began to observe receding commission levels, and we immediately blamed “those damn discounters.”
One year ago we began to hear about blogging, rating, credentialing, research, standards and consumer communities. Who had time for such nonsense and who really cared any way? We were in the midst of the industry’s greatest year ever. Nothing could stop us. 2005, what an amazing ride that was.
Today we find ourselves in the fourth quarter of 2006. And the industry finds itself facing its biggest challenge in over a decade.
And then you spot them. Take a good look. They are gathered around their computers. As we lean closer we note that they have notebooks in hand with sheet after sheet of negative media stories and reports of government regulation and antitrust enforcement against our industry. We see long checklists and recommendations for how to deal with something called a real estate agent. Then we hear that some are chanting; “the prices are dropping, the prices are dropping.”
Those ‘kids’ are no longer irrelevant. They are today’s consumer. In their hands may lay the fate of our real estate market.
Some of them are sellers. This group has been listening to the tales, some spread by our predecessors and associates, of how one can grown rich because of the appreciation of their homes and properties. They developed dreams and aspirations that can only be paid for with the proceeds of their upcoming sale.
The rest of them are buyers. The media has recently told them that prices will be dropping by 25% - 35% over the next several months. They think they need merely wait and, as if by magic, homes that are today inaccessible will tomorrow go for the begging.
The power of both of these groups will extend beyond the impact they will have on market values. They will establish our role in this century. Soon they will decide if our business models will survive. In fact, they are even now trying to decide if we are irrelevant.
The buying group is very much focused on value propositions and great experiences. They don’t know that the current market’s huge inventories hide the fact that over the next forty eight months there will be too few properties available and that the pipeline is full of potential buyers. Few suspect that they might soon have to start paying for professional real estate services to accomplish their dreams.
The selling group on the other hand is about to get angry. For many the dreams and promises of riches will quickly be dashed as they realize that real estate may be a great long-term investment but not the venture capital transaction that they had expected. They will grudgingly turn to the system for assistance in their effort to market their properties. Sooner or later they will feel cheated out of their dream, and will, along with many others in the country, blame REALTORS for this state of affairs.
These experiences will be the basis for real estate’s New Order. Four simple rules guide life in the New Order, as imposed by our new ‘partners’:
Rule # 1: Transparency. For most of the past sixty years consumer interactions with members of all professions included a dark inner core of information that was deemed to be too sensitive for consumer ears. Soon transparency will no longer be just a consumer wish but the condition precedent to consumer participation. Information about the players, the property, the community, the transaction and its impact will be not only become common, but essential in successful closings.
Rule # 2: REALTORS Are Not Created Equal. Today’s consumer casts off this once sacred cow, having suspected this rule for a long time but previously lacking the power to demand information about agent competencies, specialties and previous transactions. Whether we offer this as an industry service or it is forced upon us by the growing agent rating sector the consumer will have access to comparative information about service providers.
Rule # 3: “Trust me” means anything but. This nostalgic phrase summons memories of “REALTOR Knows Best”, and everybody knows that show was staged. Both on the buying and selling sides, consumers in the New Order will expect REALTORS to prove their brokerage’s value proposition. They will demand, negotiate and receive services that are specific, quantifiable and relevant to their transaction. The economic future of the industry may rest on its ability to state and deliver a strong value proposition.
Rule # 4: Brokers and Agents Must Provide Exceptional Consumer Experiences. When consumers receive anything short of exceptional experiences, they will walk away to access lower cost options and use their savings to have an exceptional experience elsewhere, like the South Pacific. We all need to be careful about checking this one off as already settled. The bar will continue to rise on exceptional consumer experiences. What was exceptional last year is common today, and will be minimal next year.
The skill with which our industry handles the New Order will, to a great extent, determine the length and stability of the current market. If the industry doesn’t apply its best and brightest minds to this challenge it will be a long winter and many firms will not survive. If we rise to this occasion the current market will have been but a bump in the runway. Will you choose the snow bank, or the clouds?
