Real estate brokers and agents are caught in a tug of war, each manning the rope of their own issues. They’ve become blind to all that really matters, blind to the fans who sat on the sidelines — the consumers. The tighter each side pulls, the more rigid the rope. No slack. No give. No resolve. Every once in a while, one side gains a slight advantage. So what, you’re both not in the game anymore. You’re losing viewers. The consumer may be focused on a different game.
Someday the rope will tear. Both sides will fall back and tumble. From the dust, more new business models will emerge.
Two real estate industries
If you employ agents of varying degrees of expertise — each charge the same commission, subscribe to alternating ethics, market using individual brands, carry an inconsistent message different from the brokerage, and are housed in franchised locations that all look different from each other and believe that real estate data should be guarded from the public — then you are part of a prehistoric matrix fighting to survive alongside the emerging new models.
Essentially, a second real estate industry is emerging alongside the traditional train track. We call them new models. They’re replete with upscale services built on a new pro-consumer practice. They come across as real and truthful. Traditionalists can argue about the merits of their pro-consumer tradition but the facts don’t support that claim. Let’s compare.
On the Internet, the traditional real estate train is graffiti-laden by virtue of vanity, lead-capture traps, limited listing options, properties with little to no photos, no virtual tours, no mapping, no neighborhood data, few contact options and superfluous links to useless content. By comparison, the “new model” track builds instant loyalty among consumers by doing none of this the same way.
Terrestrially, the differences are striking. Take Real Living’s revolutionary approach to branding; the powerful culture this company has flows from the top down like lava to all its franchise locations. They have an identity. Killer technology. Locations are cohesive. Their brand is their most valued equity and highly enforced. When they enter a new market, the consumer notices. They see and feel the differences. Real Living’s market share proves this point.
Other new models such as Redfin specialize in cultivating specific demographics they define as “their” customer. The customer subscribes to it because these new models connect on a far deeper level than just sales. They connect culturally, spiritually and emotionally.
Traditionalists try to throw their net around everyone. As a result, they own no one. The problem is that the “everyone” they appeal to is traditional and part of a declining market. Is it any wonder then why they are short on walk-ins, experiencing declining Web traffic, and seeing more new models emerge? The Internet customer finds their proposition degrading, offensive and dare I say, questionable regarding the value of those services.
No truth in advertising
The real estate consumer has no brand loyalty today. They hire the first agent that calls or e-mails them. Without remorse they replace that agent at whim. And for all the money large companies spend to define themselves, the consumer is hard pressed to find local service people who match that national message. The new consumer today doesn’t want to be “sold” anything. They want truth, consistency, uniformity, transparency. The old models do not appear to deliver this at all.
C21’s TV commercial tells us what humble servants their agents are. They race to airports to meet foreign clients. They learn salutations in other languages practiced precisely for that event. The purpose of that commercial is to make us believe that this agent can be found in every C21 cubicle in America. How accurate is that?
The National Association of Realtors sells ethics. They tell us all Realtors are ethical. “Trust a Realtor,” they say. It’s the one hook they hang their pin on. But then the commercial ends and the “Million Dollar Listing” show comes back on and we wonder what ethics they are talking about.
Dazed and confused
At what pace can a trillion-dollar industry sustain disregard for the iPod, MySpace, YouTube, Starbucks, “Trading Up,” text messaging, brand-conscious consumer hurling towards it. These consumers view real estate with a big question mark and wonder why it operates so far outside of the conventional box of business. And instead of changing, members of our industry waste time blogging about new models and trying to protect its data when the data is already out there along with the new models speeding down the track in a silver bullet.
Traditional arguments don’t hold water. I know agents are independent. I know franchises have a hard time controlling what their individual franchisees do. But then what’s the point of being a national brand if you can’t get the holders to uphold advertised services? New models know this. They’re chipping away at that proposition every day.
How to build a new real estate model
So you want to build a new model? Or remodel the one you have? It’s easy.
Step 1: Find a large gathering room big enough to house 30 people comprised of three groups: your executive team, your agents, invited consumers. All you need is a facilitator and nine whiteboards (three per group).
Step 2: Each group is given three one-hour assignments as follows:
As an agent, create the perfect company to work for. Define what it would it look like: the culture, the facility — inside and out — the split to you the agent, its service proposition to the customer, its fee structure, how many agents you would want working there, and the package of benefits you’d like.
As an owner, create the perfect real estate company: it’s mission statement, it’s fee structure, it’s agent compensation package, it’s technology, it’s culture, it’s value proposition, it’s facility, it’s location, what you would name this company.
As a consumer, create the perfect real estate company and agent you would want to hire. Define the value proposition, their service promise, their technology, your expectations — before, during and after purchase, the fee you would want to pay, and the aftermarket care you would want to receive.
Step 3: At the end of each hour post the agreed-upon results on the white board and move to the next question. All three groups tackle all three tasks.
Wisdom of the crowd
Step 4: At the end of three hours, don’t feed the agents. That’s old school. Just observe the cross-section of results. Remove the redundancies. I guarantee that all three will be dramatically different from what all of you currently work with. I can also guarantee that what you may have created will be a new model company.
Imagine working for one. Imagine owning one. Imagine hiring one. Or simply just imagine.
Marc Davison is vice president of OnBoard, a real estate data provider based in New York. Davison previously served as vice president of VREO, a provider of electronic signature and Web site software for the real estate industry.