For the past few years, one trend in the real estate industry has increasingly worried me. Without hesitation, most REALTORS in our workshops can tell us all about their local market: the number of homes available, listed and sold this month, the average days on market, even the top agents by inventory or revenue. They know the market share by dollar, number of agents and most yard signs. They can rattle off housing statistics like they were a search engine, organized by price, bedrooms and baths. For all appearances, REALTORS seem to know a whole lot about the marketplace.
Unless you ask them about consumers.
This point occurs in every class, every marketplace, with REALTORS old and new. It’s proven itself to be a major knowledge gap in a sales industry that has steadily lost consumer loyalty every year. When you ask REALTORS what they know about the consumer, the come up blank. Guesses, estimates and defenses against facts – because when the research is presented, it’s never accurate to “their market.” But overall, it’s fairly clear that REALTORS know more about the physical houses than the actual people they work with every day.
And it’s proving to be a serious problem for real estate sales.
Until homes start selling themselves to each other, REALTORS need to close this knowledge gap fast. As recently as this week, in a typical class of 100 REALTORS – agents and brokers – less than 5 have purchased the National Associationof REALTORS Annual Profile of Home Buyers and Sellers; 10 would have even heard of it; the majority barely remember that NAR still exists. It used to cost about $50 to members. There are rumors that NAR will make it free to them. But it won’t matter much, until we get salespeople to understand that they work with people. Not homes.
Whether it’s NAR’s research, or simply good demographic profiling of a broker’s last 100 buyers and sellers, consumer research matters because it makes possible the single most powerful sales tool in the industry:
REALTORS always say this is a “people business” – so why don’t they know more about the actual people? I think it’s a “MLS Mentality” which has REALTORS reading “hot sheets” about physical inventory, rather then research profiles of current consumers selling or buying them. Square footage available? Check. Number of ranch styled homes on the market? Check. Average price for 2 bedrooms, 1 bath? Got it.
How many buyers had children under 18 at home last year? No idea.
This lack of consumer knowledge is killing sales. For example, agents say open houses are ineffective. Only the nosy-neighbors attend. Yet the open house was the third highest ranked place sellers found their next listing agent. Of course, the number one place was referrals, the second was repeat business; only 3% of sellers found their listing agent by searching for their personal website. But don’t tell the agents who keep spending scant marketing dollars on pay-per-click campaigns.
Other research-deficient imponderables include:
- If referrals and repeat business are the highest sources of listing appointments, what explains the broker who told me that he blocked Facebook from his office network?
- How do you explain agents who won’t put better video on their listings, when 68% of buyers who purchased homes last year said virtual tours online were “very useful”?
- What accounts for the continued lack of complete listing data online – how hard is it to type in taxes, square footage and a few sentences of description – when 84% of buyers ranked property details second only to multiple photos as important to them online?
The answer, for once, is that REALTORS really don’t know what consumers want. Without a research mentality, REALTORS remain comfortably in their “supply sided safety zone.” Buyers can purchsae whatever the REALTOR offers, right? Brokers seek “technical” reasons why current inventory isn’t generating buyer inquiries, without researching whether there is a market desire for their current inventory. Rather than blaming price, have some brokers listed the wrong kinds of homes for the current buyers?
Yet we continue to list the home of any seller who calls us.
Anticipation requires that companies know more about the consumer than they do about products. In fact, the inventory and services offered must be determined by what we know about the consumer’s needs and desires. Not the biggest commission on the highest-priced house listed. Managers must stop telling agents not to come back without a listing: instead they should insist that agents only return with sell-able inventory.
When they know who the buyers are, REALTORS can anticipate which listings to add to their inventory.
Anticipation is knowing what makes the consumer happy and configuring business activities around it. When you arrive at a hotel, they know you prefer a king-size bed on a high floor away from the elevator. They study your past stays and anticipate your preferences based upon demographics. They review past room-service orders, to ensure your favorite foods are fresh and available when you arrive next. Anticipation not only makes sure you have the right products and the right services for your actual current customers.
Anticipation creates customer delight.
Delighted customers pay you. In any market. How do we know? The research shows “desire to own a home” still as the highest motivation amongst recent buyers. The key to having the right houses at the right prices comes from knowing who they are, what they need. Then placing it on the market.
Sam Walton built an empire upon one principle: Give the consumer what they want. To do this, he created a company that, to this day, learns as much as possible about its customers. By mastering what the customer wants, then having it on hand, and positioning it at the right place at the right time, WalMart continues to dominate the retail marketplace. Funny how WalMart seems to know “just what consumers want, at the right price, this week” when they walk into their stores.
And consumers then buy. That’s the power of anticipation.