ORLANDO, Fla.–After receiving the National Homeownership Award from RIS Media last week, Home Services CEO Ron Peltier made a post-election crack about “four more years.” He quipped that he was looking forward to a re-run of the last 48 months.
It was not only an election illusion as much as a reference to four more years of a booming real estate market.
Surprisingly, record housing market conditions did not create a mood of visible giddiness at the National Association of Realtors show in Orlando this past week like it did at the NAR confab in San Francisco last year.
The mood was more hesitant and more subdued. The industry’s disposition is not merely a hangover from the elation or the disappointment about the election outcome.
Real estate is on the cusp of deep change that began years ago, but whose consequences are just being felt today – forcing the industry to become sober, more contemplative and more serious about what is next. The changes are weighty, even if some choose to ignore them.
A slow and steady transformation is being caused by the freeing up of real estate information, triggered by the Web and the consequent consumer demand for it. It is shaking to the very core an industry that held onto its information methodically and stubbornly for 100 years.
Of course, real estate is not unique in this cataclysm. The widespread distribution of music, the ubiquity of the airline reservation system and everywhere stock market quotes has challenged other industries.
In real estate, MLS data sits at the apex of the change, specifically the MLS information that is pushed to the Internet every minute of the day. In most cases, this data migration ironically is endorsed by the industry, but it also has ignited distrust and deep angst in a business that was congenial for decades.
The industry has made strategic mistakes in the mad scramble to quickly publish the data on the one hand, but at the same time try and control it. The Internet inherently frowns on the idea of control.
The Homestore saga was partly due to a confusing strategy of both keeping control of the data while letting go of the information. Despite an assertive and ethical new management team, the company is still struggling with its past. NAR’s restrictions on the control of the data contributes to the quandary for Homestore.
Actions to control the MLS information have brought on new scrutiny from state and federal regulators, raising the specter of anti-competitive and antitrust allegations against the industry. This past weekend, the NAR’s chief legal counsel reported on early concerns about a Department of Justice inquiry into NAR rules about online listings.
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Distrust among MLS partners has never been higher. A system that was built on cooperation is littered with lawsuits, appropriations, successions and privatization.
Beyond industry macerations, the market place is poised to change in more dramatic ways.
This epic information transcendence has given birth to a new generation of real estate consumers who expect current, active and illustrated listings. Consumers increasingly need listings to be competitive in a seller’s market in which the Web is a dynamic marketing powerhouse for every property.
This in turn has unleashed innovation and enterprise by many companies who are relentless to serve this overwhelming demand for real estate information on the Web. Despite its woes, Homestore is the leader of this bunch.
A raft of business models have challenged how real estate services are delivered, how fees are charged and collected and who pays for what.
Real estate agency relationships also are being challenged in new ways. The Internet is the de facto buy side real estate agent, driving more and more consumers directly to the property listing, increasing the odds of dual agency but challenging the delicate balance between the buy side and the sell side.
This trend, along with a listings shortage and an explosion of agents, is confronting the case for a 6 percent commission, which in the last two years is disappearing nearly as fast as the $18.99 music CD.
Technology has also brought on another profound change. With the Internet doing more of the house marketing, the agent’s value shifts to interpreting information, delivering technology tools and providing access to data.
Which brings me back to the Orlando show. The profile of the successful agent is evolving with these changes. Glamour, silly marketing tricks and cool and expensive collaterals will not capture the imagination of a consumer as much as an efficient IDX service with pictures, maps, virtual tours and tools for home buyers and sellers to interact with the agent and their information.
Smart agents are scrambling to adopt technology that helps them more methodically adjust to this changing demand for instant and credible information.
Smart agents are front and center on the Web to capture the consumer with more exacting methods. They are shifting their focus from wild and crazy marketing schemes to a more precise approach to customer acquisition. Then, they must manage the lead through closing with a methodical technology-driven system.
This makes the industry a little nerdier and more serious, but agents and companies begin to do a better job of measuring ROI, margins and predictability, and also at managing IT and marketing spends.
This explains why the exhibit hall in Orlando had less pomp and hype and more exacting tools to perform essential front-end and back-end services.
Of course, the fun and corny stuff was still evident. Anyone who sets their happiness scale to Realtors becoming IBM salesmen clones will be gravely disappointed.
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