What does 2010 hold for the real estate brokerage industry? While I don’t own a crystal ball, here are my 10 best predictions about what to expect in 2010.
1. ‘Economic Slim Fast’ or sunshine on the horizon?
Higher unemployment and additional tax increases translate into fewer spendable dollars for housing. This means people can afford less resulting in more downward pressure on prices. On the flip side, sales in California and Florida have been on the rise. Real estate has usually led the way out of past recessions. Furthermore, some economists believe massive congressional spending will likely result in inflation. During inflationary times, hard assets such as gold and real estate are usually the best hedges.
Prediction: Provided the new health care bill and additional congressional spending doesn’t completely sink the economy, expect to see an increase in the number of sales, price stabilization, and even increases in the first-time-buyer price range. On the other hand, look for a reduced number of Realtors who can afford to stay in the business if they face additional taxes plus possible mandatory payments for health insurance.
2. Sales training makes a comeback
The strong seller’s market that ended with a crash in 2007 resulted in a whole new generation of Realtors who were order-takers rather than salespeople. The market downturn also resulted in the elimination of most brokerage in-house training programs. Consequently, it comes as no surprise that the median age of Realtors is climbing as the younger agents who lack strong sales skills are being forced out of the industry.
Prediction: Companies who move into "constant training mode" and specifically recruit and train younger agents will be the big winners in terms of market share for many years to come.
3. Digital rubbernecking: Big Brother is everywhere
Have you ever played a Facebook game? Are you using Google Voice, Gmail or Google Docs? Did you know that using these sites could jeopardize your privacy and that of your clients? Many online games and applications have a hidden purpose: to access your private data, harvest it, and sell it to other vendors. This practice is called "data mining" and it’s a major business.
For example, assume that you have "friended" one of your clients on Facebook. You then decide to play a Facebook game. The game application harvests information about each of your "friends" without them ever knowing or agreeing to provide access.
Prediction: Rules governing brokerage and agent obligations with respect to client privacy must be addressed now. Otherwise, look for an increasing number of lawsuits related to privacy issues.
4. Alternative business models continue to thrive
The days of palatial real estate offices will soon be a distant memory. Numerous brokers are experimenting with new models that range from having no office whatsoever to having a small condo-style office where the agents pay for the space they want.
Prediction: High costs will force major brands to scale back on office space as well as the number of agents they maintain on their rosters. If brokerages have to provide health insurance for Realtor "employees," look for an immediate purging of nonproductive agents from company rosters.
5. Public grading of Realtors
An increasing number of consumers (especially those in Gen X and Gen Y) search for reviews of virtually everything online. Sites such as AngiesList.com, TripAdvisor.com and Yelp.com continue to grow in popularity as resources for third-party reviews of services.
Prediction: Consumer demand will drive more companies and associations to implement online rating systems for their agents. Look for the search engines to give higher ranking to agents and companies who receive endorsements on third-party sites. …CONTINUED
6. The shadow inventory comes out of the shadows
Some sources estimate there are 1.7 million properties that have been foreclosed upon but not yet placed back on the market. If too much of this "shadow" inventory hits the market at once, it would kill the recovery and cause another dip in prices. The result could be another major round of foreclosures. The lending institutions do not want more foreclosures nor does the government. Under the circumstances, a controlled release of the inventory will help lenders to recoup a larger percentage of their losses.
Prediction: Look for online auctions and other creative ways to speed up the "shadow inventory" liquidation process.
7. More efficiency, less cost
One of the most notable current trends is consolidation of services. For example, there are at least two new platforms launching in the first quarter of 2010 that will allow agents and brokers to consolidate their social networking activities in one place designed specifically for Realtors.
Prediction: Look for consolidation of MLS platforms and integration of syndication and other services into single-vendor platforms.
8. Lifestyle search transforms how consumers search for listings
Early in 2010, a new search product will hit the market that allows people to search on variables such as bus stops, schools, places of worship, etc. Web site visitors will be able to search on multiple variables simultaneously and immediately identify which homes meet their lifestyle.
Prediction: Look for lifestyle search to transform how agents market property in the future including using more video, pictures, as well as better descriptors about the amenities in a particular area.
9. The upcoming real estate video revolution
According to the National Association of Realtors (NAR), only 1 percent of all agents are using video to market their listings, yet 73 percent of the sellers would hire an agent who provides video services. Videos can be used for marketing, lead generation, lead conversion, as well as to maintain contact with your referral database.
Prediction: Look for an explosion of video products for the real estate industry including video applications for cell phones.
10. Houselogic.com is the real game-changer, not RPR
In November 2009, NAR launched two new initiatives, RPR (Realtors Property Resource) and Houselogic.com. RPR is a national property database that aggregates property data including public records in one place. Only Realtors will be able to access RPR. While the buzz has been about RPR perhaps being a national "MLS," the truth of the matter is that Realtor.com and most major companies have been providing national listing data for years.
In contrast, Houselogic.com is consumer-facing. It provides a wealth of information about issues relating to living in your home as opposed to just sale or purchase issues. Visitors register to access the functionality on the site. This process allows NAR to start gathering consumer contact information.
Prediction: Look for the beginnings of a national MLS in 2010. Also, expect NAR to use Houselogic.com to dramatically increase its ability to lobby Congress with feedback from both agents and consumers.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books. You can reach her at Bernice@RealEstateCoach.com and find her on Twitter: @bross.
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