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Posts tagged ‘VOWs’

3
Feb

The Return of the Real Estate Brand

return of the brandTechnology 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.

mark mclean

17
Jan

Report From Inman Connect NYC

I’m back. If you are a regular reader you probably noticed no new posts last week.  I was lucky enough to spend last week at a real estate and technology conference in New York City. (The picture in this post was taken on The Highline one evening). If you are a real estate agent and are serious about your career, The Inman Connect conference and Agent Reboot in NYC should be priorities. If you have ever been to a conference, you know that you are often pretty lucky to come away with a few “jewels” but this week was nothing but gold. Much of the focus was on utilizing tools to making the buying  or selling experience better for our clients. There is an upside to making the experience better too – you can make more money. Interesting concept don’t you think? I wanted to share my theory on why the U.S. is leading the way in the Real Estate field.

We all know that the U.S. real estate market has been challenging for many years so it is no surprise that when industries have their backs against a wall they have two choices….adapt or die. You just have to look at the American automotive industry for proof of that. I always owned a foreign car. Japanese, German and Swedish wheels were my particular favorites  partially because they were perceived as either luxury, or well-built, but today I drive GM. My Yukon Hybrid is the epitome of comfort and technology and the service, when needed, is amazing. Oh, by the way, I’m not being paid for that recommendation.

 Not surprisingly, organized real estate in the US has faced a massive public relations problem. Before the crash, many agents were making a great deal of money, now, the national average for a Realtor is less than $30,000 per year. There has been a tremendous amount of attrition. The best agents are still out there but don’t think for a moment that they aren’t hurting a little too. So faced with extinction there were some serious decisions to make and it seems that the two significant changes that have taken place both adapted advanced technology to drive their business.

 First, Virtual Office Websites, also known as VOWs are a development that, I believe, were born from necessity. As someone who has owned and set up a real estate office, I can tell you that one of the biggest operating costs are rent and staffing. VOWs aren’t confined to bricks and mortar and can utilize 3rd party services (virtual assistants) to do anything from answer phones to handle paperwork. These two significant cost savings have allowed them to invest in finding clients and recruit agents. Their virtual offices are growing because they provide an inexpensive sales alternative to the hundreds of thousands of home owners who are still under water and looking down the barrel of foreclosure or short sales. They are not out there to replace the job of a Realtor because you still need someone to do the paperwork. VOWs just believe you don’t need an office to run a business.  But one fundamental is missing; Camaraderie is an important part of keeping agents properly trained, engaged and held accountable.

 The second major change comes from the full service companies who are using Social Media to further establish themselves as market leaders. They are building relationships and showing that they are market leaders through Facebook, Twitter, Tumblr, Pintrest and 4 square. They are blogging a lot and reporting on the hyper local level. They are openly sharing information and providing a massive level of training to agents. They are upping the ante in the race to be the best.

The take away for me was simple. Technology is here to stay. It is not meant to replace the person to person relationship that should exist between an agent and their client. We are in an information society where Buyers and sellers know more about what’s out there so a Realtor’s role has shifted from source to trusted advisor. Over the next few weeks I hope to write a lot more on these topics so I hope you will continue to check in to my blog for more on my experiences with Inman Connect and Agent Reboot. I’m sitting at the airport in writing this and really looking forward to my Monday meeting where I will be conducting a panel discussion with 5 of the 13 agents from Toronto, who spent the week in NYC. Are you thinking what I’m thinking? Only 13 agents   from Toronto, including 5 from Bosley Real Estate, attended this very important conference. 13 out of 33,000. Crazy.Have a great week. Mark

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