Matthew Ferrara, Philosopher
 

Numbers and Sense: Social Networking in Real Estate

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 industry 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 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 . 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.

  • Great! Thank you Matthew!

  • 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?

  • 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?

  • 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?

  • Matthew Ferrara

    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.”

  • Matthew Ferrara

    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.”

  • Matthew Ferrara

    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.”

  • 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

  • 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

  • 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

  • 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!

  • 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!

  • 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!

  • 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!

  • 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!

  • 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!

  • 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

  • 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

  • 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

  • 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

  • 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

  • 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

  • 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?

  • 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?

  • 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?

  • Matthew Ferrara

    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!

  • Matthew Ferrara

    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!

  • Matthew Ferrara

    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!