Technology talk used to be the dominant topic of conversation at real estate conferences over the last few years but these days there has been a noticeable shift to discussions on brands and brand building. I think we are talking about brands more because our industry has become so fractured that it is tougher and more expensive for agents to succeed.
Consider this, in the early days of real estate sales, agents worked for a neighbourhood brokerage who fielded calls and handed out leads. Upon successful completion of a transaction, the brokerage would keep a substantial portion of the earned commission. In return, the brokerage office was responsible for advertising listings and managing day-to-day operations. When independent contractor status came out agents assumed more responsibility for the sales function thus opening the doors for new brokerage models. Now take a look at what is happening now.
In Toronto we are closing in on 40,000 agents who are all competing for a piece of the 90,000 sales that happen each year. The sharp increase in the number of agents in our market has caused significant shifts in the real estate industry. The first is a downward pressure on commissions, and the second is the rise in popularity of the “discount brokerage”, a model that relies on fees rather than commissions. Both of these shifts have benefited the consumer in some way but have also put pressure on the traditional real estate brokerage model.
Now agents are faced with a new dilemma. Their competitive advantage is no longer their ability to offer lower commissions. They need to create a lot more value for the consumer. That may come in the form of neighborhood videos, access to a research department, market and/or neighbourhood reports, rich demographic information, media coverage, websites with killer SEO, and, least we not forget… training. For the average new agent coming into the business with nothing more than a few hundred dollars in their pocket and a dream, it is next to impossible to shoulder the costs of these tools. For the savvy brokerage, it is clear that an opportunity exists to share their offerings and create a new competitive advantage with their agents …at a cost.
For further clarification and a hint of what is to come, it is worthwhile to look south for additional trends. Following a catastrophic real estate collapse, the US market is finally returning to health. But something happened along the way. The primary objective to staying in business moved from saving money to creating an experience for the client. Several companies that operated VOWs in the past are now embracing bricks and mortar models. Others are moving away from the fee based systems and returning to traditional brokerage business models. Take a look at these great videos from Go Realty in North Carolina or Red Oak Realty in California. They are creating an experience for the consumer who may have come to the realization that buying and selling real estate doesn’t work in a virtual environment.
This is not to say that a virtual office or fee-based brokerage can’t succeed. I am all in favour of consumer choice but from where I sit it is clear that the full-service real estate model is about to make a giant come back.
As the old expression goes…what comes around goes around. Years ago independent contractor status destroyed the big brand but just like the circle of life, the independent contractor status is bringing the concept of brand back.
The opinion expressed here are the opinions of Mark Mclean and don’t represent the opinions of Bosley Real Estate.
Last year I had the opportunity to attend the National Association of Realtors convention in Orlando. Now I don’t know if this has ever happened to you but my experience is that when I attend the same conference the following year, I am always let down. Sometimes you get the same boring old speakers, sometimes the organization falls flat or maybe the energy just isn’t there. Well I did’t get that impression this year. The 2013 NAR convention in San Francisco was a stand out. To read the full report on NAR 2012 you can read my blog about it here.
So what was so good about this year’s event? Where last Year’s NAR was all about finding new ways to connect and engage with consumers, this year the buzz word was predictive marketing. It was about suspending your belief in the way we are used to working and believe in the science of real estate.
What is predictive marketing anyway? Consider this; We send out real estate flyers to a neighbourhood, often at great expense. What if technology could tell you the names and addresses of the three people in the neighbourhood that are planning to move this year. Take a look at this video on SMART TARGETING. So you are probably thinking…Yes, I want this now! Well don’t hold your breath. Privacy issues may prevent smart targeting in Canada but the technology exists already. In the U.S. data sites like Realtor.com, Zillow and Trulia have advanced metrics on who is looking at properties. Mr. Jones, from 123 Main St. looked at a house 6 months ago. Now he is looking at several houses a day. That has to mean something. Since these sites are for profit they can sell that data to the highest bidder. Not as easy in Canada but can you think of metrics that exist now, in our market, that could help you predict who is going to sell in the next few weeks or months? I suppose that is the challenge we face.
The idea behind predictive marketing has been around for a long time. You just need to look at Netflix for a perfect example. Do you ever see that message?….people who rented this movie also watched… OR we think you may also like this….
How about home depot? They see that you bought deck stain. Humm, that must mean that you are finishing off that deck…so they make available a gift certificate for a BBQ. But perhaps the best example has to be Target’s Customer Tracking Technology. Based on the products that a high school age girl was looking at, Target sent her coupons for maternity clothing and nursery furniture. The girl’s dad was furious at the store manager but as it turned out, the girl was pregnant, and Target was the first to know.
So now that you know this technology is out there, how can you make it work for you? Google analytics can get you part of the way there. Any other ideas?
Several weeks ago a conducted a little audience participation at my morning meeting. We were approaching the tail end of a rather crummy summer, weather wise at least, and I asked every person in the group to come up with one thing, just one little thing, that they would do over the next three weeks that would go towards getting more business for the fall. Simple task right? Check out the list we came up with.
Following the meeting I put all the “jobs” into a spread sheet with agents names on the opposite axis. I posted the list on my office window and encouraged agents to check off as many jobs as possible. In the end, we had pretty good success. Sure, there were a few agents who opted out of the checklist but for each that chose not to participate there was another who made it a mission to get through the whole list. Congratulations. You know who you are!
This was a simple office meeting exercise designed to spark ideas in agents to help them build a great client list. More importantly it should have demonstrated the point that the job of prospecting is something we must do everyday and not three weeks before the busy fall market. There should not be a start date to prospecting especially if you’ve been working in the real estate field for any length of time. It is a full-time endeavour.
Here’s the thing. During our meeting we managed to list off 24 ways to build future business. I’m sure that after you review the list you might want to add something to it. The reality is that I wouldn’t expect anyone to do everything on the list. If you aren’t doing anything then this will give you a base to start. You may be in a position where you are doing somethings but have the time to do a few others. Time to pick from the suggestions.
Got any suggestions for further blogs? I’m just a tweet away.