Real Estate’s Best Days are Ahead
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• Posted by Matthew Ferrara on July 1, 2009 |
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“Reports of my death are greatly exaggerated,” So quipped Mark Twain after hearing his demise had been published in the New York Times. The same might be said today about the real estate industry. A lot of hullabaloo has been making its way through the web these days – the end of brands, numbered days for independent agents, consumers ready to do it on their own. Trouble is, it’s mostly punditry that supports these assertions. Certainly, real estate brokerage is under a lot of pressure to produce profits, cut costs and improve customer satisfaction these days. Even more likely is the potential for the industry to further downsize, eliminate waste and fracture away from grossly inefficient organizational structures and innovative models. But dead? Methinks some people doth protest too much.
When any industry undergoes a lot of changes, there’s a tendency to want to throw the baby out with the bathwater. “Remember the travel agents!” is heard more than “Remember the Alamo!” these days. Some brokers may indeed feel surrounded. But trapped, with no option than surrender? Not likely.
Anyone who knows REALTORS understands that they are masters of transformation. Not always gracefully – as twenty years of our experience has proven. Yet even the worst feature of the business – that 60% leave the industry every 18 months – is also its saving grace. Fresh faces mean a greater opportunity to create try fresh practices during changing times.
The real estate industry is transforming, not dying. In fact, while it seems to be changing daily, many aspects of the business are likely to stay the same for years, maybe decades. Separating what will change from what will remain the same is important. It can show why the industry isn’t about to collapse, at least not the same way typewriters disappeared when computers came along. Such comparisons like travel agents or typewriters fail, because they don’t account for the “sales” aspect of the real estate business.
Commodity sales industries still need sales people. Perhaps now more than ever.
Consumer goods don’t need salespeople. So it makes sense to buy discrete, limited-information-required items like groceries, airline tickets and iPods completely online. Technology displacement of “retail” sales is just another form of production efficiency. But real estate sales is information-imperfect; there are too many variables for any technology to account for. In fact, it’s a technology-using generation that’s going to save real estate from collapse – while still transforming it into a better mousetrap.
As long as the real estate process remains complex much of what we call the industry today will still be present.
The industry would be doomed if houses could sell themselves. But that would equate the products with the process of selling them. Books, computers and music can sell itself online because its value can be readily understood by the consumer. All that’s left then is fulfillment. Not so with complex information items. WebMD didn’t put doctor’s out of business; but it did alter the way they do it.
Actually, the process of real estate is extremely stable; it’s still sales, no matter how you look at it. Mostly, the tools used to sell are doing the most changing. And as long as the sales process is implemented by people who can learn and adapt to new tools, the best days in real estate are still ahead.
So what’s staying the same in real estate, even in these chaotic times?
- The largest source of listing business still comes from past clients and referrals, not random consumers caught from a search engine.
- Buyers continue to work with a real estate agent almost 9 out of 10 times, even though they have more information than ever.
- Most home owners find themselves unable to sell homes more effectively than professionals can, despite nearly equitable technology access.
- Consumers show every indication of preferring convenience over price when it comes to these transactions. Plenty of price sensitive models have not disrupted much more than industry niches.
- Real estate information transparency has not proven to lower complexity for the consumer, but actually to increase it.
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Very insightful and optimistic piece. Thanks for writing it. While it is certainly true that technology is the way of the future…it is also true that the real estate industry will also continue to need the same creative professionals to put that technology into action. The real estate industry, and it’s professionals, will most certainly adapt to this brave new future.
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Excellent as always …btw – I still have spools of thread from my great uncles thread mill….
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Thanks Matt…….I always enjoy your commentaries and appreciate your willingness to share.
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Very well written article and very optimistic. However, in the meantime we have considerably fewer buyers than sellers and this is probably not going to change for two or three years. So old techniques-new techniques may not matter. And regardless of our business flexibility and adaptability, many of us will be going around singing “Brother can you spare a dime” or “Trailer for sale…”
George from Tucson
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Very insightful and timely article. Thank you!
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Thanks Matt! You are right on target as usual!
It is up to us as Realtors to continue to work in the best interests of our clients. In doing just that, we will continue to be of value as professionals to the public and our industry will florish.
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Very interesting! I am not new to sales but am new to real estate sales (first year). In this market, I think that may help me because I don’t know anything else. I don’t have outdated practices and don’t know any better. I see experienced agents struggling but that is all I have known. Your post makes me feel better because this is a great career and I don’t want it to go away. I will keep trying to innovate. Thanks!
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Thanks everyone, for your comments.
Patty – you will have a unique advantage as a new REALTOR but someone not-new to sales. Go for it!
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This is a great article. We have been in the business 28 years, and one of the things that drives us is the change that is always needed in the business. The basics remain the same, but the methods and response change. Learning new things help stimulate us personally as well as professionally; we love it. Thank you for this well written article.
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Excellent! I appreciate all you do for our industry and keeping us focused.
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Thanks, Debbie! Glad to help.
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BRILLIANT!
Thanks for sharing!
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Great article. I have been in the business for 32 years and the fact that the business changes continually keeps us on our toes. This is one career where you will never get bored. I agree the best is yet to come.
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Encouraging article! I agree the fundamentals of real estate are still the same but the tools are changing. I am so excited about what is happening after spending the entire day in a Social Networking class taught by Donnis Palmer. We have an opportunity to be soo creative with our marketing at 1/3 of what it used to cost us. We just need to get on board. It really is going to be a great time for Realtors who take the time to learn about Generation x & y. I look forward to learning from you!
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Oh, that was up-lifting, right on, and timely for me. Just had an office meeting this a.m. with all my agents on much the same topic, trying to determine what’s of value to them , to consumers, and how we reinvent ourselves and come out the stronger as the market tupurns. We concurred we can “get ‘er done” despite current challenges! But it helps to have confirmation from your post, Matthew. Thanks.
~Ninah
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