ORLANDO, Fla.–With 105 million users worldwide, eBay is one of the greatest technology-driven business models, according to real estate visionary Richard Mendenhall, a partner of WM Works Consulting and a past president of the National Association of Realtors.
EBay, the world’s online auction place, has 12 sales categories that exceed $1 billion, and is the eleventh largest retailer in the United States. Mendenhall believes eBay’s success is due to the customer experience, and said the real estate industry should be paying attention to that value.
“Forget this stupid talk about IDX and VOWs–that’s not where the conversation should be,” Mendenhall said during a panel discussion on technology-driven business models at NAR’s 2004 Convention & Expo. The industry should be focusing on customer relationship management.
Home buyers take an average 16.4 months to find a home, Mendenhall said, and first-time buyers take an average 20.5 months. “We’re not prepared for that,” he said.
“There’s often a disconnect between us and the consumer…we only want the buyers who want to buy now. So we allow people to capture those buyers then turn around and sell them to us,” he said.
When agents receive online leads, less than half are answered and less than 2 percent are converted into immediate transactions. The average response time to answer e-mails in real estate is 54 hours, and today’s consumers who are used to the instant gratification the Web gives them don’t have the patience to wait that long so they make another inquiry with another inquiry.
Creative entrepreneurs will drive new technology and new business models, in Mendenhall’s view. But additional forces such as state, local and federal government laws and agency rules and regulations also drive change in the Internet.
About six years ago, the city government in Mendenhall’s Minnesota town installed a fiber-optic ring around the town so it could offer residents free access to high-speed Internet. Shortly after the installation, a phone company successfully lobbied for a law to make it illegal for the city to do that, Mendenhall said.
Chip Roach of Prudential Fox & Roach discussed successful technology-driven business in terms of how companies turn inquiries into cash. In the business model quandary of traditional versus Internet brokerage, he stressed the importance of considering success records, continuing to adapt to changing conditions and using the industry’s strengths and power as well as established partners like Realtor.com.
Roach also stressed the importance of moving advertising budgets from print to online. “If you’re going to change, you need to stop spending money on the print advertising and move to digital,” he said.
Russell Capper, VP of Prudential Properties and founder of one of the first virtual office Web site-driven real estate business models, eRealty (now owned by Prudential Real Estate Affiliates), said the real estate industry is far behind its consumers. The rest of the business world has totally embraced the Internet, built and enhanced market exchanges and increased the decision-making information that’s offered to consumers.
While the traditional real estate industry as a group has lagged in Web innovation, the industry already has an effective market exchange: the multiple listing service. To succeed in the future, the industry has to “sync up” with today’s consumer, and enhance and extend the MLS rather than treat it as a business model.
Jim Crawford of RE/MAX of Greater Atlanta also stressed the critical importance of companies adapting to change. The number of agents in his market has grown from 8,000 just a few years ago to 28,000 today. Adapting to change will play a key role in survival there.
A real estate survivor will set trends through niches, because if everyone focuses on the same thing, people will be out of business, according to Crawford.
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