The Summer of Peace & Love at Real Estate Connect

Real Estate Connect wrapped up on Friday. It was a very different conference from previous Connects. The first harbinger of something different was the opening theme song from Scott McKenzie, "If You Come toSan Francisco." All the references to peace, love, and gentle people was hardly the tenor of previous Connects where the fear about new business models, commission compression, and disintermediation filled the air.

Blogging and social networking dominated virtually every conversation. As we look ahead and see the on-coming tidal wave of buyers’ market resulting from a credit crunch, lax lending requirements, and an exhuberance that the appreciation party would never end, traditional brokers have finally recognized that the so-called new business models may be our only safe haven in the up-coming “perfect storm.”

Those of us who endured previous downturns know how brutal things can be. The subprime fiasco is just the tip of the iceberg. The tightening of credit means less money in a time where 9 million adjustable rate mortgages will be readjusting. It also means that skittish buyers will have an even more difficult time qualifying. A full one point increase in interest rates also means that affordability has gone down by 17 percent. This places additional downward pressure on prices because borrowers have less purchasing power.

Bottom line—if this market mirrors past buyers' markets from the Eighties and Nineties, only the strongest companies and the best trained agents and brokers will survive. Major players may be forced into massive downsizing to survive, provided they even manage to stay in the game. The business will see a much-needed shake out. Sadly, this will be two-edged sword. Many experienced agents who know how to survive in a slowing market lack the necessary technology skills to keep up with the fast pace of change. Many younger agents have never acquired the negotiation skills required to navigate foreclosures, short sales, and a massive shift in the lending market. 

Collaboration is the key to weathering the upcoming storm. For the first time at Connect, it felt as if the industry has finally understood the necessity of making the shift. New technologies including blogging and social networking, where users generate content and solutions, are the lighthouse of hope in what may prove to be a very stormy sea. Like it or not, we’re all in this boat together.

Posted by Bernice Ross

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