Editor’s note: This guest essay is a part of the Roadmap to Recovery editorial project, which focuses on the future of the real estate industry. Essays should be 400 words or less and should detail your views on how to reinvent the industry and revive the housing market. Authors of essays published in full will get a free pass to the upcoming Real Estate Connect conference (for new registrants only), and the author of the top essay will receive $500. Send your essays to firstname.lastname@example.org.
By JAY TERESI
You would think that after the tumultuous drop in real estate values and sales, the influx of national lead aggregators, and the negative view of agents by consumers, that something would change in the real estate model.
Unfortunately, several factors have led to the status quo.
First, there is the agent-broker mindset that listing information is private property. This (mindset also extends to) the local multiple listing service, since it is made up of regional broker groups. And this fundamental mistake opened the door to many of the industry’s current troubles. The consumer became angry over the protectionism and began looking for other sources of information.
Entrepreneurs saw this gap and sought ways to provide the information for free and ultimately capture leads to sell as a revenue source. Do you see where this has led? Consumers saw less value in professional agents, which led to lower commissions, and broker gross revenues deteriorated due to referral fees to national lead aggregators.
Second, agent control of the brokerage business has led to higher splits (in favor of agents), lack of brand consistency, and falling profitability. Much like the current situation with U.S. carmakers, why would you continue to prop up a failing business model? Who works for whom, anyway? The reality is that this never-ending downward spiral of brokers’ fear of losing agents vs. reduced income and profits does not allow for restructuring and investing in the future of the business.
The other tenet of this point is that agent education in the use and value of new technology and the understanding that this will increase their productivity is vital in getting them on board and working as a team under a local brand.
Third, and no doubt in sequence to the previous two points, brokers have failed to adapt to the consumer demand for access to free information — specifically in the technology realm. We all know the National Association of Realtors estimates that upward of 86 percent of consumers begin their home-search online.
Yet only the lead aggregators as a whole have utilized the available technology for lead capture, contact management, and ultimately, some customer loyalty.
Many industry leaders point to the real estate office of the future as a more virtual model. Maybe so, but most definitely the incorporation of Web-based, consumer-friendly platforms with back-office lead management and monitoring will be the backbone of any future model.
Brokers who see the value of this retooling will reap the benefits of cost controls, budgeting efficiencies, and to the extent possible more predictable results. As I have read many times and believe, anything you can measure you can manage.
New focus on these efforts by brokers will build consistency in brand representation, agent activities and consumer interaction. Done properly this will be paramount to regaining profitability and adding value to the transaction, which the consumer may find welcoming.
Jay Teresi is broker-owner at FWT Realty LLC in New York and is former director of regional development for Weichert Real Estate Affiliates, a national real estate franchise company.
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