NEW YORK — The real estate industry is at a crossroads of change. All the latest home sales forecasts point to steady change in market conditions; a new generation of consumers are entering the market; and with each day a new real estate technology, Web site or business is born.

Many well-versed industry veterans see the changes taking place as an opportunity to create a more efficient and innovative business.

“Every generation has its own values and preferences,” John Ansbach, vice president of RECON Intelligence Services, told a crowd at RISMedia’s Real Estate Leadership Conference in New York on Wednesday. Real estate brokers need to understand generational differences when dealing with consumers today because it will dictate how they want to be treated, he said.

For instance, baby boomers value dedication and hard work, while Generation Xers value independence and Generation Y values praise, he said. The diversity of real estate consumers creates challenges for brokers, but Ansbach said tailoring to each group is a profitability tool and those who ignore these differences will miss out.

Along with consumers, business models in real estate have changed a lot with the Internet, said Steve Ozonian, CEO of discount brokerage Help-U-Sell. A lot of people expect newer business models to bust when the housing market gets tough, Ozonian said, “but I think this time will be different.” The Internet has changed the way people approach buying and selling and also the run-up in home prices has created a rising disparity between the cost of a home and the price being charged to sell it, he said.

“This is not to say that the traditional model is wrong,” Ozonian said, but many traditional companies are trying new things and those that aren’t looking to change are the ones that may be in trouble.

Another issue that came up in a discussion about industry change was that consumers still don’t understand what they are paying for in many cases or the value the agent brings to the transaction. Allan Dalton, president of, a Web site with more than 2 million home listings from around the country, said that the Realtor’s value is the part that’s missing from a lot of newspaper articles about real estate.

If an agent charges a 6 percent commission on a million-dollar home sale, the consumer wonders whether it really costs that much to sell the home. “The consumer has every right to pose this question to a Realtor,” Dalton said.

But in answering that question is where the industry fails itself. Dalton said that referring to the process as “listing” rather than “marketing” and always emphasizing that consumers are paying for “service” rather than “skills” is damaging the industry and creating a need for change.

“The remedy is not to allow people to minimalistically define what Realtors do … that’s when we become vulnerable,” he said. The industry has difficulty defining its value and therefore gets caught up in “ethereal vague nonsense,” he said.

The industry has to evolve its emphasis from listing to marketing and from service to skill, Dalton said, “and I believe now is a great time to do it.”

“We have to elevate our industry – understand there is a difference, go far beyond the service focus,” he said.

Ozonian also pointed out the failure of being able to define what the consumer is getting for the commission. “The consumer wants a breakdown in the $60,000 commission on a million-dollar listing and that is where the agent fails miserably. That’s where the model is broken,” he said.

Terry Morris, president of GMAC Company-Owned Real Estate, said the brokerage office model is broken. He said the extraordinary rise in real estate commission volume in the last few years conceals the trend of eroding commission rates. The former 6 percent commission has decreased to below 5 percent on average nationally in the last five years.

“While the average agent income increased, much of it came at the expense of the broker,” he said. “A reduction in revenue in the transactions hits an industry that was already marginally challenged.”

Also, there are too many agents chasing too few transactions, he said. “Consumers simply don’t see the value in what we do.”

As for business models, Morris said he feels the low-service models do not serve the best interests of the consumer. He said he also believes that new entrants who aren’t aligned with established brands are at a disadvantage.

Tom Kunz, president and CEO of Century 21 Real Estate, said brokers need to adapt to changing market conditions to survive. He said change is more about globalization than the market “normalization” that everyone talks about.

“We have to understand that every single piece of our business is going to change … otherwise we’ll miss the mark,” Kunz said.

“What we need to look at is not normalization, but change and how we adapt to change in every part of our business.”

Scott Anderson, vice president and senior economist at Wells Fargo, said he still sees strong long-term fundamentals in real estate. The good news, he said, is that interest rates appear to have hit their peak.

He said he expects existing-home sales to drop about 17 percent from peak to trough, with home starts declining about 25 percent from top to bottom. He noted that bad press about market conditions “affects the psychology of the market.”

Other changes the industry faces stem from problems at multiple listing services and figuring out how to fit with new online entrances such as Google Base, an Internet listing service that enables people to upload their own listings information into a searchable database at Google.

Google processes roughly 2 billion real estate searches a year, said Justin McCarthy, senior sales manager at Google. These consumers are looking for listings information, home value comparisons and brokers and agents, he said, but the search company had a hard time finding that information because the industry is so regionalized and fractionalized.

“We realized we needed to reach out to those people who were searching,” he said.

David Charron, president and CEO of MRIS, one of the largest MLSs in the nation, talked about challenges that real estate organizations face, including technology challenges and the danger of not changing with the times.

“From an MLS perspective, I think we need to start acting as if there is a choice in the market,” he said.

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