“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.