NEW YORK — Many real estate markets across the country are already feeling the sting of change. Property inventories are high and home sales and prices are dropping from last year’s record highs.
But it’s not just market conditions that are changing. The industry is facing a drastically changing consumer demographic, and the Internet has started to mature and allow more consumer-facing services to step in. Plus, a large portion of agents today have never worked in a level market where buyers and sellers are on even footing, or in markets where buyers have the upper hand.
Industry executives say they’re pushing for a shift back to basics, with a renewed focus on marketing and training agents to be top-notch specialists. They’re also focusing on reaching out to new consumer groups — including younger Generation X and Y buyers and immigrants with diverse backgrounds — and tailoring their communication methods to meet new challenges in connecting with these groups.
Dottie Herman, president and CEO of Prudential Douglas Elliman in New York, said it’s time for the industry to re-evaluate its role and treat the client relationship as more than just a home sale. “I think it’s (real estate purchases) a very strong piece of a financial package,” Herman told a crowd at RISMedia’s Real Estate Leadership Conference in Manhattan on Thursday. “I think a lot of people see real estate as not only a place to live, but as an investment,” and the industry needs to look at the customer not as a sale, but as a client for life, she said.
The real estate industry should be giving clients all the information they need to make informed decisions, rather than holding it back, Herman said. “The more information we can give out the more control we can take back,” she said. While newspapers are reporting negative news about market conditions, agents should be giving clients historical market reports that can help them gain a big picture view of housing trends.
In trying to reach younger buyers, John Reinhardt, president of Brooklyn, N.Y.-based Fillmore Real Estate, said his company has embraced technology that will give prospective buyers instant information on a property they drive by. The company will soon release a program that will enable consumers to dial an 800 number on the for-sale sign and receive a quick description of the property, he said. Meanwhile, the agent gets a text message alerting them that someone is looking at the property.
“We try to embrace technology and we also learned that the younger consumer doesn’t really read a newspaper as much anymore,” Reinhardt said. “We try to sell that right upfront that print is not the way to go … we’ve gone from inks to links.”
Reinhardt said one of his agents has been using craigslist.org to advertise properties for sale instead of newspaper ads and he’s spending about $2,000 less and closing deals. He also said that some of his agents have successfully been using the social networking site, MySpace.com, to find buyers for listings.
“Now we have company MySpace sites and agent MySpace sites and it is free — it costs us nothing,” he said.
The company also reaches out to consumers of diverse cultural backgrounds by taking part in community events like the Puerto Rican parade in New York City, as well as various Asian and Russian events. Fillmore agents speak a total of 41 languages — “42 if you count Brooklynese,” he said, and there are usually sign-in sheets in at least three different languages at open houses.
John Featherston, CEO and publisher of RISMedia, noted the real estate industry’s reluctance to change. “It takes younger generations six months to adapt to change — to move from sites like MySpace to Facebook,” he said, but the industry takes much longer to catch up.
“That’s a real problem in our industry,” Prudential Douglas Elliman’s Dottie Herman said. “The average age of a Realtor is about 52 years old,” she said. “You used to be able to write a five-year business plan, but now you can’t do that because the world is too fast.”
Herman said she has always followed a piece of advice given to her a long time ago: “There’s no such thing as staying the same. Staying the same is going backwards.” The industry should instead embrace change and understand it, she said.
Lennox Scott, chairman and CEO of John L. Scott Real Estate in Washington state, said that his company has developed a heavy focus on individual agent training. They hold regular training sessions with agents that are designed to be more engaging conversations. “It’s now Lennox unplugged at our meetings — no more Power Points; it’s conversations,” he said.
Scott’s company is emphasizing a shift from “agents” to “specialists” and is helping agents implement a system for keeping in contact with consumers on a regular basis.
Sherry Chris, chief operating officer of Prudential CA/NV/TX Realty, said it’s time to consider the value the agent brings to a transaction. “It’s in negotiating and it’s in historical information — the knowledge the agent has and negotiating skills (he or she) brings to the transaction,” she said.
Chris thinks that agents continue to sink advertising dollars into bus and bench ads because no one is helping them to do anything else. Brokers need to step in and provide alternatives. “Let’s take our advertising dollars, cut them back and shift more to online,” she said.
But it’s not about pulling the plug entirely from print advertising, Chris added. It’s more about the combination of print and online. “Agents tell us that if you pull completely out of print you’re out of business,” she said.
Greg Robertson, executive vice president of sales and marketing at eNeighborhoods, said that in a changing market agents will need to do more to sell properties “and we’re seeing an increasing usage in all of our products.” ENeighborhoods provides marketing tools to real estate agents.
However, Robertson noted that when the company surveyed its agent clients who had dropped their subscriptions to eNeighborhoods products after a year, 90 percent of those who had cancelled after one year said their reason for canceling was because they never installed the applications on their computers.
During the two-day real estate conference, executives also discussed changes in consumer behavior and what they are demanding in real estate information. Sami Inkinen, chief operating officer of Trulia, a real estate search site, gave his point of view as someone from the Gen X group of consumers.
“When we hire someone at Trulia, we go online; if I have to find a dentist, I go online … we do everything online,” he said. “I’m just one person, but I’m trying to say that if you want to get my business it’s not going to be from a newspaper or television ad.”
Inkinen said Trulia surveyed people visiting open houses and found that nine out of 10 heard about the open house from the Internet, while only one was coming from a newspaper ad. “I understand there’s a challenge in communicating this to agents and home sellers, but the facts are very powerful.”
He noted the success of Google, eBay and Amazon — three of the largest companies on the Internet today — none of which relied on TV ads to become successful. Instead, they emphasized product and the real estate industry can also use this approach. “You can actually leverage listings as interesting content to drive traffic to your site,” he said.
Jorrit Van der Meulen, vice president of partner relations with Zillow, a national home-value-estimate Web site, said consumers have a lot of pent-up demand for real estate information, as evidenced by the enormous interest in Zillow.com when it launched in February. “The response we got was so overwhelming … We get about 4 million people coming (to the site) each month,” he said.
Zillow offers home-value information derived from county records and uses a formula to calculate an estimate of the property value. The company was the first site to offer this information for free to anyone and without asking for an e-mail address or contact information in return.
Van der Meulen also noted broker Web sites that are feeding into this demand with the advancements in mapping applications, especially in the Pacific Northwest, where Zillow is headquartered.
“Consumer demand is definitely rabid,” he said.