Numbers and Sense: Social Networking in Real Estate
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• Posted by Matthew Ferrara on January 19, 2009 |
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As part of a new ongoing series of posts on our blog, we’re going to apply our brainpower here at Matthew Ferrara & Company to looking at the latest numbers from real estate industry research and helping our readers make sense out of their meaning. Many organizations from NAR to Case-Schiller to research firms and universities worldwide study consumers, agents, brokers and the business of real estate. They release “findings” – lots of numbers – but rarely interpret their meaning. Of course, that’s where we have always been helpful to our clients: leveraging the research facts about the marketplace to make sensible decisions – not gut reactions – to be one step ahead of the consumer.
And forget about the competition – since they’re mostly not really competition, when you look at the numbers. In that spirit, let’s start with some startling numbers that may indicate that NOBODY in this business is really in competition for the online consumer: The sorry state of social networking usage by real estate professionals.
According to the latest numbers from the 2008 National Association of REALTORS Profile of Home Buyers and Sellers (which, by the way, most REALTORS don’t even know exist – so here’s the link to go buy it) 44% of all buyers use social networking every day. If we look at age groups 18-44, which represent the first-time Gen Y buyer through the move-up Gen X seller/buyer, the number rises to 61%. Another 34% of that same group participates in social networking at least a few times a week. Add them up, and here’s a critical consumer fact:
95% of consumers between the ages of 18 and 44 who bought a home last year used social networking sites at least a few times a week, and a majority used them daily.
Now, let’s make some sense out of those numbers. First, it means that nearly everyone who bought a home last year with a REALTOR has made social networking a way of life. We shouldn’t be too surprised. Last August MySpace beat Yahoo for online ad displays in one month – which means more people were viewing pages on a social net than on a search engine. Yet the real estate industry is still talking about SEO and PPC and other search-portal strategies. The consumers on train have already left the station, and they’re not coming back.
Where is the pent-up demand in real estate today? When the market comes back, it won’t be from the 45-and-older group, especially not the Early Baby Boomers aged 60 and older. Why? Because their homes will have returned to 2001-level values, their retirement accounts largely decimated by the recession and their willingness to make another move limited. Certainly, the retirement trend will continue to push Boomers to sell and buy “one more time” but it will be a segment of highly risk-averse, commission-sensitive sales. Boomers are going to demand super-low commissions because they have no equity left to spare in their home segments; and no extra income to cover the costs, because, after all, they are retiring.
The growth segments for this business – and for any brokerage and agents who plan on being in the business beyond the Boomers’ Last Hurrah – is the move-up and first-time consumer market.
These are the new income-earners, whose families are expanding, and whose lifestyle needs are already creating pent-up pressures to make moves as early as possible. Remember that 43% of buyers bought last year because “it was just the right time” and 30% bought homes because of family situation, jobs and large-space needs. Only 3% bought to “downsize” last year, which may bounce up in the next five years, but certainly not apace with the Gen X / Gen Y trends.
And now, the problem: While nearly all of the current (not just future) real estate consumer population 
uses social networking sites every day, most real estate professionals barely know what social networking is. Not that social nets are new phenomenon: there are hundreds of millions of ordinary people worldwide on MySpace, LinkedIn and Facebook. So it’s not a secret technology, or a fad. And it’s not going away.
According to the 2008 National Association of REALTORS Technology Survey, as of July 2008, daily REALTOR participation in social networking looks like this:
- 10% on Facebook
- 11% on MySpace
- 15% on LinkedIn
There is a little activity on RealTown and Activerain, but these are largely blogging sites, not really social networks in the same sense as FaceBook or LinkedIn. They are also heavily slanted toward agent-to-agent interaction, whereas MySpace and Facebook are more heavily agent-to-consumer-sphere oriented. The broadest measurement in the survey found that 60% of REALTORS did not engage social networking sites or blogs for business (with an additional 7% “not sure” if they did or not).
At the same time, 61% of REALTORS said they were “dissatisfied to very dissatisfied” with their experiences on these social network sites. Whatever that really means, it probably boils down to “I don’t get easy leads or sales” from them.
Of course.
If we’re wondering why the industry is struggling – and why the downward spiral isn’t entirely the economy’s fault – there’s only one way to make sense of the research: A new REALTOR-Consumer gap has emerged. It’s larger than the chasm the industry crossed when it moved from printed MLS books to online inventory. It affects much more than how homes are marketed, bought and sold. And it makes a mockery of the cliche that “my local market is different.”
When social networking moved online, the primary mechanism by which consumers meet people and create relationships moved with it. Real estate is a sales business. It depends upon meeting people and building relationships. It requires sales people to chase customers, not the other way around. And by the looks of the numbers, it means that the industry’s woes are only just beginning. When consumers have moved to an entirely virtual country club, it should be little wonder why REALTORS aren’t getting any leads from their postcard golf carts.
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Excellent information, and a bit scary. I’m in a small market in Ontario Canada, and while I have a tremendous web presence – I am finding it difficult to tap into social networking – finding the balance between telling people what I had for dinner and bringing up the fact that I’m a real estate guy.
Is there a resource or template for deveolping this part of my business ??
At the moment I am 1 of about 12 people within my market (80,000) that are on twitter …
Where do we look???
Cheers from the Great White North
Dave
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Hi Dave:
Thanks for your comments.
First, I’d recommend you focus more on Facebook and LinkedIn than Twitter; if you really want to know what is passing through someone’s mind every few seconds, then Twitter is for you. If you want to do some “networking” in the same kind of “friends but not connected by a cord” way, then Facebook and LinkedIn are “just right.” You can update your status one time a day, without being too focused on minutae; and in the meantime, you can reach out and specifically interact with people in your sphere in both a group- and 1-1 manner.
Hope that helps!
Matthew
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Matthew,
This is a timely article. Since I have actually read NAR’s 2008 profile of Homebuyers and Sellers; and better still, my local board commissioned NAR to conduct and publish a regional (our MLS) profile I am in total agreement with your thesis…A real question for me though, is the conflict between a social setting and business setting. As I read through Facebook, I am frequently “defriending” people who do little but advertise their wares…I am a bit more tolerant on Linkedin as I think that site was created to more formally “link” business interest together…My personal view is that social networking (via the Internet) is simply the logical extension of meeting friends and customers for dinner, a drink or at a sporting event…The benefits are obvious: you stay in touch, your costs plummet and you can “socialize” far more often and touch far more people than you could ever dream of in the same time span…Am I off base here, or should I try to incorporate more advertising into the correspondence…All of my “friends” know what I do for a living and would “help” me if they could…at least that is my expectation…some may have other Realtor friends, but I would be in the mix.
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To Dave’s point, a big thing to remember, and is often forgotten by businesses trying to “sell” on social network sites, is that the participants in these sites often couldn’t care less what you do for a living… at first, anyway. Most Gen X/Y social net users are so deluged by daily advertising that they can spot it coming from many miles away. These social network sites represent an escape to more personal and meaningful interactions. If you immediately try to “sell” a new social network contact on your services you will likely lose them forever simply because your intention for the relationship will be transparent to them.
What agents should be doing to build consumer relationships is engaging people based on commons interests that often have nothing to do with real estate. It’s counter-intuitive to many who grew up in the advertising age where businesses speak “at” consumers; the social network age is about speaking “with” consumers and building on a dialogue. Example – in a Facebook profile, everything you enter in your interests turns into a searchable link that, when clicked, returns all the results in your network with that same interest. It’s a conversation starter; I like “x”, you also like “x”, so maybe we can talk about “x” and a relationship will follow based on our mutual interest. Same for LinkedIn’s “Amazon Reading List” application. Books are often good conversation starters because you can usually recommend related books the other person may not have read. Build a personal relationship based on mutual interests… and here’s the key… build TRUST first, then the business relationships will follow in a more natural way down the road.
It takes more time than buying billboards and sending spam, but it’s both more rewarding in the long run and builds much stronger customer relationships.
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Paul:
I think you are right ON target here. Social networking is just a new method for maintaining and growing your Sphere of Influence, which is how people select a service provider. In fact 64% of sellers used an agent they previously used or were REFERRED to by a FRIEND. So it’s all about sphere…
Social networks have definitely CULTURES and it’s important to understand how to participate properly. One thing too many REALTORS are doing WRONG is simply using them to “post their listings” or “promote themselves.” That’s just not how it is done – ESPECIALLY in Facebook.
It’s about building RELATIONSHIPS; you can “show off” your expertise simply by interacting – and not every interaction has to be “about your service or your ego”. Likewise, you should “rarely” be posting your actual listings in these sites. If you want to update your status to say “You just took another listing and are helping new clients sell their home!” that’s cool; but it’s not a “new classifieds” area. Every time agents just post their “stuff” out there, they look cheap, desperate and most certainly like they “don’t get it.”
And, it’s totally UNNATURAL. Would you go to a cocktail party and only talk about your listings? Would you go play golf and spread your listings sheets around? Duh!
Even on LinkedIn, which is admittedly more “business” oriented, nobody in other industries is promoting their “inventory” like REALTORS do. Do you see the insurance guy posting his latest prices or the computer sales guys posting their latest laptop specs and prices online. No. And that’s where REALTORS are just not catching on. Partly, because they think selling is all about “HERE”S MY STUFF” rather than, “Hi! Nice to meet you. How are you? Glad to know you….” building relationships over time.
Glad you mentioned this; I think I’ll do a full blog on it shortly….
- Matthew
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Mike:
Exactly. It’s NETWORKING, not “inventory sales”. Relationships take time.
It gets worse, too: Think of all the REALTOR time WASTED in the “realtor-to-realtor” networks where they preach to each other…. I think there’s a lot of missed opportunity out there.
- Matthew
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Matt – “Likewise, you should
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I have had m eyes opened by all that others have had to say. I must re-set my mind and get out of the old way of doing things. Very true there are a great deal of missed oppertunity. I need to focus on a better way to grab as much as possible.
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The networking is awesome in this generation and for those of us who have been uncomfortable with the technology – it’s time to face the reality. I personally have very few leads from my networking sites as of yet, but I am still learning how to capitalize by using SEO and linking techniques. It’s a work in progress, and I am seeing the progression.
What I value more than anything is the opportunity to learn from other more experienced business leaders in the industry. It’s great to feed ideas off eachother. I’m very glad that I have ‘caught on’ so to speak and just know that I am positioning myself for the success we all hope to acheive!
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I appreciate all of this discussion because I have been on Linked In for about 1 year and Facebook for two weeks. I’ve really been trying to evaluate whether all of this networking is worth it. A friend in the teaching/writing/blogging industry has advised me that in business, I need to be on 3-4 additional social networks. I took a brief look at them and simply felt overwhelmed! I have been in real estate for about 26 years and work hard at trying to keep up to date. But it really looks to me that I could spend my whole day on these sites with no time for networking at the coffee shop, grocery store, etc. I’ve made only a stab at a blog and am overwhelmed with technical errors in getting things working. Basically I need a 20 something to help me with this stuff. Anywyay I really appreciate Mike Cutlip’s view and Matt Ferrerra’s response to Paul. Response being -just allow yourself to have fun with it and enjoy meeting new people-the rest will come in time.
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While I’ve been around the block a few times in Real Estate technology over the past 13 years, I’m brand new on the sales side. As a new agent I get more leads and prospects from social networks (Facebook especially) than I do from anywhere else at this time. My sphere of influence is 95% built from internet social networks and I am pretty sure I will do more business with my Facebook friends this year than with perfect strangers met at open houses. Why? Because my social networks establish a rapport with people who want to communicate online, who have expectations of timely updates during their transaction and who know I’m not going anywhere after the transaction is closed. My social networks give me the opportunity to post market updates, mortgage and industry news, and I become a go-to source of information for people who may not be ready today, but could be ready in 6 months. The info I post there will “stick”, and can be referenced later without the need to save it in an already too-full email inbox. I may be a Realtor on Facebook, but I’m primarily Eloise-the-person-they-know. And that, folks, is why social networks work.
I am anticipating that satisfied first-time buyers and other customers will also spread the news widely across social networks as they enthusiastically talk about their move into a first home, post pictures, and do all the things that people do on Facebook these days. And if my name gets linked to all that excitement because I facilitated that transaction, that’s even better! The number of eye balls that will be following the progress of that transaction is amazing! It is not uncommon for my Facebook friends to have over 500 friends each, and who’s to say how many of those don’t know another Realtor? And the total cost of that exposure? $0.
And the best part: none of this means that I need to be strapped to a desk and a computer… I can update Facebook, receive notes and keep in touch with people right from my blackberry. I bet I am more reachable via technology than anyone could ever be by the more traditional ways of driving a car, playing phone tag, and trying to make an appointment with clients who simply don’t have the time to meet face-to-face anymore.
I’m a believer…
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Thanks, Matthew. I’m just getting started with LinkedIn, and your article underscores my perception that this is an important advantage for me as an agent.
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I loved the article Matthew and all the posts. I’ll be sharing it with my Broker husband as well. I am also an Agent on inactive status, but I will say I have found my passion in Coaching. I actually found this article through LinkedIn and a recent group I’ve joined. In building my new business, I am discovering and exploring networking in a multitude of forms. Twitter is hot, and may seem tedious, but it is what the X/Y’s are into and if we are going to keep up, it probably is one of the best ways.
Furthermore, digging a little deeper and taking a look at why it works. It’s real. The younger generation has something on us, I’m one of the last boomers, they want and demand transparency. Cut the crap, no selling, schmoozing, a@# kissing, keep it real. Facebook and LinkedIn provide this too, along with the forums to show our wares. But the daily connection reflects our humanness, our need for connection and expression. Expression that is real and transparent, unfiltered and pure. It boils down to the way we are being with each other, even over the computer.
Agents, salespeople and business leaders today can take note across the business spectrum, how we are in relationship with our peers, subordinates, superiors, customers, community, family etc., is the defining result, and that begins with you and how you are Being in the world. To this end, you’ll find plenty of books available from Covey, Goss, Campbell, Wind and Crook.
With today’s technology, social networking knows no boundaries or limits. We can only ask ourselves, “Do we take it on as a detrimental struggle or do we embrace it for it’s limitless possibilities?”
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Thansk, Laura, for your comments; I appreciate the well thought out perspectives. I particularly like your comments regarding the “daily connection” which becomes both sociological and business-oriented as the internet increasingly becomes the medium through which we “connect” to others in basic dialogue and advanced transactions (whether business or personal).
Most of all, it’s just the medium that has changed; unfortunately, one of the aspects of the internet most of us don’t yet understand is that while it can increase positive activity, it also MAGNIFIES bad behavior, too. That’s why social networking isn’t just another advertising platform.
Be well!
Matthew
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Hi Matthew. When it comes to social-networking it’s totally foreign to me. Perhaps I have been asleep like Rip van Winkle and have awakened to a whole new world that’s out there. The younger staff I work with are on their phones,constantly texting each other or I see that they are connecting with Facebook regularly. Help! I want to do better and build relationships with others and get a few houses sold along the way to those who want them. I get leads from the internet but they don’t seem to turn out. I know most is due to my dropping the ball and not making contact. I look around and I see people till buying and selling,so I’m not willing to throw in the towel yet. I would like to be smarter and wiser about how to be a Realtor in the world of today. Is Getting on the social networking and using it like learning a foreign language or like going to a new galaxy via Star Trek? Thanks for the blogs. A great way of being knocked upside the head.
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GREAT ARTICLE…… Social Networking is a MUST for today’s successful real estate agents. With a click of the mouse you connect with people all around the world.
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Great! Thank you Matthew!
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Great article. I’ve been on facebook for about 3 months now and love being able to keep in touch with family. I love linkedin for buisiness.
I have found that people are much more casual and sarcastic on facebook. My friends and family would rather see photos of my children than the homes I’ve listed. I’d much rather separate the two-one (linkedin) for business, one (facebook) to keep in touch with friends and family.
The challenge with facebook is that your clients see you joke around with family and frends. Any suggestions?
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Joanne:
That’s not a challenge – it’s a BENEFIT. Facebook is “supposed” to be more “personable” than professional. If you want totally “buttoned-down” then use LinkedIn (or both!). But it’s ok to be more personal with your friends and family on Facebook.
I recommend NOT having too many CLIENTS on Facebook; push them to LinkedIn where you can still be connected but more professionally. Reserve your Facebook contacts for those who you feel more comfortable “showing your Hawaiian shirt.”
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Matt-
I enjoyed your article very much and I think you’re spot on. There is a huge new world to be conquered via these social networking sites and unfortunately many Gen’X'ers have been passed by by this phenomenon. My company is taking the static nature of LinkedIn and Facebook to a new dynamic level which I think may interest you. We are allowing users to search for collaboration partners based on parameters they define as well as allow them to trade leads between themselves. So lets say an agent has a new lead they are working with and they want to bring in the title company, lender, local banker, etc to work this deal end-to-end. I believe it helps close more business and will result in healtier collaboration between these parties going forward. If this interests you send me a note and we’ll show you what we’re up to….based on your article I think you’ll like it!
Regards,
Scott
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Great article! Just another sign that we have to change with the times. We can’t keep doing what we’ve always done and expect the same results. It’s important to know what’s going to work in TODAY’S MARKET, not stay stuck in the past. Interesting distinction between Facebook & LinkedIn…thank you!
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Wow, a whole new world out there, ready to expand our minds, thus our worlds .
Thanks for the info and tips to keep us streatching and growing.Thanks!
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Matt,
You nail it. In this age of technology. I wonder how any agent can survived without chasing the consumer. Real Estate Market today is a hussle business (online that it) part of the hussle is to be everywhere consumer can find you online.
The Gen Y today communicate by Social Network means. Thirten years ago when I started this business, we use to have a pager (LOL) imagine how bulky and stupid that was compare to today. The days of post cards, subdivision farming and mailing to your SOI are getting close to the end. Today’s technology is the wave of the future get on board Agents
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I think this is great advice. I do stuff at home but often get side tracked, especially on a couple of social networking sites. Although I make cahs from those I need to minimize my time on there unless it is more productive, way to go
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I have been on the social networking bandwagon for l.5 years, and keep doing what we are told…but when I heard the folllowing, it made me doubt the success of social networking. When a group like this would definitely be a good way of gauging the success, and their success is minimal, I am having serious second thoughts of the time I am putting in on this..
At the recent Cyberstars conference, social networking was responsible for less than 5% of business from all agents in the room. Most agents were getting huge business from their websites. One agent got over $300,000 in commissions from her website…
What do you say to that?
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Matthew Ferrara Reply:
February 9th, 2010 at 8:07 AM
Pat:
I don’t know the data/research quality of the Cyberstars conference. I also am not entirely sure how accurately each of those people tracked their business. But I have no reason to doubt it. However, I am confident that the research on buyers and sellers is fairly accurate (done by NAR) and significantly larger population pools than a group at a conference. Of course, there are lots of routes to success in the business, and I do know many agents who get lots of commissions from their websites (for example, that could be just one multi-million dollar home sold in Naples Florida – so that’s not such a big deal, really).
We DO know, though, from lots of research that MOST agents don’t make their money from their website; but they DO make it from working their sphere of influence. And Social networking makes that possible. it’s just PROSPECTING – and too many agents prefer NOT to do it – and just hope their website will do it for them. I’m not sure that’s the path to success in the future.
Thanks for your comments!
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