Peter Drucker noted that when the general perception of a situation switches from “the glass is half full” to the “glass is half-empty,” major innovative opportunities were possible. The change in perception usually starts with the consumer, not the industry. It rarely reflects a real change in the facts, more than what the facts have come to mean to the consumers. For example, today represents the best time in fifty years to purchase a home. The stars are perfectly aligned to purchase low, borrow low and maintain low monthly costs. Most consumers would be long-term winners with a real estate purchase today. Yet the perception of real estate in general has become “half empty” in the minds of both buyers and sellers. Consumers no longer associate real estate with happy thoughts, even if they recognize it as a sound financial investment. That perception change is profound. And it’s keeping them on the sidelines. What can the real estate industry do, then, when even if we lead the consumer to half-empty glasses of water, we cannot make them drink?

There is an opportunity here, but it’s beyond the “now is a good time to buy” argument. Consumers, for whatever reason, are numb to that slogan to hear it. Maybe its the recession, maybe not. While the indices for “bad” markets still up over 100 points in real terms since 2000 (the baseline), consumer perception is no longer interested in financial hair-splitting. Even $8,000 in free Fedferal money isn’t creating a stampede.

Real estate brokers need to understasnd that, especially for Gen X and Gen Y consumers, perceptions are the reality. So identifying the perceptions that are holding customers back will be the key to uncovering the market opportunities. . Most likely, they will not be found amongst the knee-jerk, obvious solutions – like selling consumers cheap foreclosures. A flea market only attracts fleas.

The major change in consumer perception is more subtle, and more powerful. Which perceptions matter, then? Is it their attitude shift away from risk? Their desire for safety? A generational slide from trusting to skeptical. Maybe it’s something much simpler:

Most consumers no longer see real estate as “fun.”

Certainly, it was fun when everyone was buying and selling, wheeling and dealing, making crazy money for no apparent reason. That fun is certainly gone from the market today. But there are plenty of smiles and cheers when buyers close on a home today. There are just so many fewer closings.

And right now, there are fewer buyers because nobody is having fun when it comes to real estate. Sellers, who are also buyers, aren’t playing much better.

Buying a home today has become anything but fun. Consumer’s perception of the process is a swirling morass of half-answers and guesstimates, from bankers, politicians and REALTORS. Nobody knows anything; few answers are clear; and it’s one double-speak press release after another. Every other day the market is up, or down, a disaster or recovering. Taking a calculated risk has become foreboding. Not fun.

Today’s real estate business has become all about “stress.” A short list of ways the fun has left for buyers includes:

• The constant frantic wide-eyed panic on the faces of media announcers whose daily contradictions are filled with half-truths and statistical artifacts.
• The frustrating presentation of homes online, such as broker sites requiring registration, public sites devoid of quality information and photos, and too many sites without “all” of the inventory. Consumers have to bookmark too many spots – for REALTORS, for-sale-by-owners, bank and government owned homes. It’s not information overload, but information anarchy.
• The annoying service experience just trying to reach a real estate agent . Mostly ignored online, mostly ill-treated on the phone, unable to learn more without “coming into the office.” Eben ready buyers are frequently kidnapped by agent’s who forced them to preview homes that do not fit their criteria (usually the agent’s own listings, for a double-dip commission). Listing presentations are like being held hostage in your own home while an agent drones on with their printouts and sticky notes, before becoming argumentative over pricing.
• The mountain of confusion they must climb to even approach a mortgage, including conflicting and impenetrable government programs, increasingly opaque lending requirements and surly seven-dollar-an-hour phone representatives who cannot tell them the status of their application because it’s not in their script.
• The hours of worry after making offers, because the REO-broker won’t call them back.
• The bizarre message of real estate ads and television commercials, focused on the egos of agents, their Twitter-readiness or some other irrelevant industry-centric fact.

Mostly, the real estate experience for consumers still sucks. Perhaps even worse than the heady days when anti-consumer practices could be defended in the flush face of multiple overpriced offers. But during the recession, there is no excuse.

Herein lies the opportunity. And some companies already see it. A few seconds on hold calling one of our clients today is all it takes. Their on-hold music hit the opportunity right on: Real estate can be more daunting than ever. We can make life easy again. Let us help you make sense of it all. We can make real estate fun once again.

Stop focusing on making real estate more financially palatable, and focus instead on the customer’s experience. Maybe the internet hasn’t actually made it all that all easy for consumers. Maybe that’s a conceit for why we want to do less work. Or it’s simply just insufficient to leave it to the internet, and hope buyers will jump back into the market. Maybe the internet-driven experience itself sucks so bad, that by the time they get half-baked email replies from agents, they prefer to disconnect.

Entirely from the market.

A simple example is flying right over our heads. Anyone who has flown recently has noticed that first-class seats are booked full, even during the recession. The reason is simple: the general flying experience is so awful, so stressful, so dirty, unappealing, annoying and distasteful that consumers who must travel will spend anything to make it marginally better. It’s no longer a question of finding the best price (both airline tickets and house prices are bargain-basement low already) but seeking the best experience. a few more inches of legroom and a personal entertainment system may make the difference. Sitting apart from screaming children and angry flight attendants is worth every upgrade penny consumers can find.

This is the opportunity real estate companies must take seriously. They must engineer a “first class” experience for consumers, focused on “half-full” services, not half-priced homes. No more inward, listing-pricing-marketing-recruiting mentality. Everythign must focus on the consumer’s experience with your website, your phone attendant, the agents at your open houses. Encounters that treat them as guests, not “consumers” and certainly not “prospects.” Long term relationships as the goal, not how fast we can processing their email, hustle them off the phone or into an offer. Answers that are as easy to access as calling a concierge line. Trained staff and agents whose every interaction is designed to make consumers feel safe, welcome, wanted and valued.

To make real estate less daunting, and make life easy again.

Too many brokerages operate like airlines who assume most travellers are too dumb to fasten their own seat belts. It’s old school thinking that comes from a time when consumers flew infrequently enough to remember how to buckle up. Once flying became the norm, delivering the seat belt speech says, “We are just going through the motions. We really don’t care.”

The same is true for the real estate industry. Most consumers understand more about the real estate process than ever before. The majority of Baby Boomers have bought and sold nearly four times. They get the process, but still hate it. Younger buyers may not have experienced it yet, but they have perceptions from stories their parents told them, or they read online. Too many ill-trained and unsupervised agents make it impossible for the industry to to create a Ritz-Carlton perception of the real estate experience. We’re all one big Howard Johnson’s these days. (No offense, Ho-Jos).

Maybe this is the reason why millions of well-priced homes, packaged in government tax credits and low-cost lending, have not crated a buyer stampede. It’s no longer a matter of price. Snazzy web marketing can’t close the bad-experience-perception gap. When “just the thought” of real estate becomes so scary, so confusing and so unpleasant that consumers would rather not try, more marketing and lower prices won’t create more opportunity for the industry. Easy, it is, to sell foreclosures and redesign web sites. Harder, though, is the work of changing consumers’ perceptions of what it means to actually work with a REALTOR.

One of the two, ultimately, will define the turning point in the future of most real estate professionals.

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PS: After this blog posting appeared, one of our regular readers, Jim Flanagan of Coldwell Banker Flanagan Realty posted this video “response” which is just great! Jim has done exactly what we’re always suggesting brokers to do: Get the message together, make it simple, and communicate it in a friendly way to consumers. So Jim used YouTube – great job! Hope others get inspired by this kind of “let’s make change” attitude!

- M