It’s that time of the year again. The summer selling season is in full swing. Once again many American markets are setting new production levels as the “Grand Era” of real estate enters its thirteenth year.
Human and organizational resources are being stretched to their maximum. Little if any thought is being given to anything but surviving to the annual October reprieve.
A hot market provides both brokers and agents with a sense of success and productivity. However, it is also true that its organized chaos is masking many of the realities of the new market.
In many parts of the country this year’s hot market is very different from years past. Those who focus upon the traditional measures of market share, commission rates and days on market may well be missing a whole new set of statistics.
The concept of “competiveness” is now a critical element in the industry’s success formula. This measure much more accurately reflects the rapidly changing rules of competition in today’s real estate marketplace.
How did the industry get to this new place in the sun? Over 60 percent of the industry’s production is now under the control of investor owned firms. For these firms the traditional concepts of market share and agent count can no longer be used as an alternative to the more critical concepts of profitability and return on investment.
A host of new brokerage business models further contribute to this change in competitive styles. Freedom shops, discount firms, entry only, flat fee, core service and online lead generation companies are all making a unique contribution to creating an increasingly complex and competitive marketplace.
Today’s leading edge firms are using listing management, pricing tactics, customer value propositions, selective compensation, variable cooperation and Internet lead strategies to differentiate themselves from the competition.
While the perfect combination of these elements has probably not yet been determined what is clear is that in today’s super competitive market only firms with a fierce sense of competitiveness are likely to win.
So what is your firm doing to define and sharpen its competitive advantage? The following questions will provide a starting point for conducting your competitive evaluation:
· Are your executives, managers and agents thinking and executing like a team or merely following the “them and us” mind games of the traditional brokerage business model? There is no way to win the external game if you can’t win the internal one.
· Is your brokerage delivering a unique consumer experience which is supported by every member of your team? Treating today’s consumer like their parents is a sure formula for disaster. Today’s successful brokerages are dealing with a whole new real estate consumer.
· What Internet strategy is your firm following for success in this highly competitive space? This year over 23% of business volume will come from the Internet and that percentage will grow significantly over the next few years.
· What program ratio are you following to ensure that your team is developing in-house lead generation and management skills as well as third party lead purchasing and harvesting competencies?
· What is your firm’s plan with respect to its business model? Have you asked yourself the simple question, “What business are we in?” There is no clear future in the industry for the traditional business model. Migrating to one of the new models is job number one for many contemporary executives.
· Is your firm carefully tracking the changing competitive environment within your marketplace? Don’t be the last company on the block to rise to the challenge of the new competitiveness. Firms that make this discovery too late in the game may have little choice but to enter into the destructive “price point” business strategy.
· Has your firm considered initiating a listing management program? Listing management practices may seem radical in the face of the traditional “share the listings” approach. Yet they are responsive to current consumer demands and they can be very positive contributors to profitability.
Some combination of these seven internal inquiries will provide the ultimate formula for your firm’s new competitive advantage.
In executing your new competitive strategies be very careful not to violate statutes and regulations regarding anti-trust behaviors under either federal or state laws. Another feature that is distinctive to this year’s marketplace is an historic level of anti-trust and fair housing enforcement. Do not fall prey to this threat. What your brokerage does to sharpen its competitive edge should be both proprietary and unique to you and your team.
There is a new business competency out there. It is the competency of “competitiveness”. It is a skill set that will mark the success of those brokerages that will control the new American real estate market.
Get in the game, set your outcome mark, benchmark your success and enjoy the new marketplace. Remember that age old business cliché; “If you aren’t the lead dog the view never changes.”
