The following is an Inman News Q&A with Marty Frame, general manager of Cyberhomes:

Q: How will the real estate industry be different when we recover from the current downturn?

A: The institutions in the industry will have been almost completely reorganized. This will not have been driven by either the consumer or by technology, but instead by capital. Ownership will change; the largest firms will metastasize, divest, consolidate, or all of the above. Many of the big names will have new names. But underneath it all, much will remain the same — the best agents will keep doing what they do and a whole new crop of folks will look in from the outside trying to figure out how to do it better.

Editor’s note: Inman News is seeking input for our Roadmap to Recovery editorial project, which focuses on the future of the real estate industry. This article features responses by Marty Frame of Cyberhomes to a set of forward-thinking questions posed by Inman News. You can view this list of questions at: Inman.com/Reinventing — if we publish your responses you win a free pass to the upcoming Real Estate Connect conference (for new registrants only).

The following is an Inman News Q&A with Marty Frame, general manager of Cyberhomes:

Q: How will the real estate industry be different when we recover from the current downturn?

A: The institutions in the industry will have been almost completely reorganized. This will not have been driven by either the consumer or by technology, but instead by capital. Ownership will change; the largest firms will metastasize, divest, consolidate, or all of the above. Many of the big names will have new names. But underneath it all, much will remain the same — the best agents will keep doing what they do and a whole new crop of folks will look in from the outside trying to figure out how to do it better.

Q: How will the business model or business practices of the title, brokerage or lending industries change in the future?

A: One of the important shifts will be created by the need to operate within new regulatory frameworks. Some big winners in the current downturn will be banks, which will find themselves to be the proud new owners of real estate companies. This, of course, comes with a whole new level of regulation, which is only being increased as a result of the current environment. And new licensing and underwriting requirements in both the title and mortgage industries will change the tactics, if not the fundamentals, of how these professionals operate. So basically, it will be rules, rules, everywhere you look — which sounds stark, but it will keep the riff-raff out.

Q: What must the industry do now to prepare for this new direction?

A: Everybody always gets this wrong, but we all keep saying it anyway: You want to grow in times of turmoil, and pull back your investments in the good times, when business flows to market share. Now companies are essentializing operations: consolidating branches; shrinking the office footprint; getting out of non-core competencies like technology; and turning off investments in products that don’t work or are duplicated all over the place. You should be spending this time getting set up for the next cycle. Companies have the luxury to act decisively right now.

Q: What technology trends will change the industry in the future?

A: If there is anything to be grateful for on the technology side of our industry it is that Internet lead-generation models of dubious value will finally die or be commoditized to their rightful place in the food chain. Nothing concentrates instinct like austerity. So when you wake up and realize that spending to get buyer leads when you never made money from buyers anyway, and even more so now — you will have the courage to turn that off and the wisdom to perceive that it doesn’t make a bit of difference.

Q: What will evolve to take the place of the current, second generation of online innovation?

A: First: real, predictive experiences online that allow the consumer to enjoy doing what they do, which is to look around for the most part without intention, while repositioning the practitioner inside the experience, instead of as a sniper waiting to take a shot from the periphery somewhere. And second: the introduction of some (I’d love to say most, or all — but alas) of the transaction processing technology, which runs behind the scenes, now bolted in pieces into the consumer experience online. A little savings here, some transparency to the process there — but all-in-all a bit less friction and mystery in how the consumer finds the right deal.

Q: What skills will the real estate agent of the future require?

A: Farming, farming and the insight to translate what they do online into the fundamentals of farming. One of the advantages that agents must promote is integration — their ability to convene each of the parties required in the deal quickly and cost-effectively. That has always been the hypothetical promise of the Internet. Now is the time for agents to vote with their wallets to support only those technology services that can extend their ability to represent the whole package to the consumer.

Q: How will real estate advertising dollars be spent in the future? How will real estate marketing be different?

A: The notion of an offline-to-online shift of advertising dollars has never had a basis in reality. The two forms of media engage consumers at different levels and stages of the experience. Of course it’s possible to reallocate capital from offline advertising to other uses, including the Internet, but no one should confuse the two. Instead, focus on business development, personal promotion and activities that extend your sphere of influence. In short, and again: farm. Don’t pay one dollar for online classified advertising, and concentrate on promoting yourself and your network of services.

Q: Will sales activity in your local housing market contract or expand in 2009? Will national sales activity contract or expand?

A: Beginning on the West Coast, where the market has entered a distress-induced equilibrium, sales will continue to grind along at their historical rate of absorption, driven by further price declines and moderated only by fluctuations in the credit market. But as you move east, inventory remains oversaturated and overpriced so we will see a commensurate lag in the positive trends that are developing in the West until that inventory is removed from the market.

Q: Will local home prices decrease, increase or remain stable in 2009? 2010? Will national home prices fall, rise or remain flat in 2009? In 2010?

A: House prices will continue to fall nationally through 2010. Entry-level segments of the market may show the most resiliency after historic absorption rates are restored, as distressed pricing pushes closer to affordability, but that will produce stabilizing — not increasing — prices. The higher-end segments of the market will start to show more weakness than they have in the first two years of the downturn.

Marty Frame is general manager of Cyberhomes, a subsidiary of Fidelity National Financial Inc. Click here for more information about the Roadmap to Recovery project.

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