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Q: How will the real estate industry be different when we recover from the current downturn?
A: I think that when we recover, and as we recover, we’ll see a return to quality after years of mediocrity. This will happen primarily because a more educated consumer base will demand better service from the industry and real estate agents in particular.
Advances in technology and sites such as Zillow have driven traditional real estate brokerages to share more and more information via the Internet. For many years, a part of the real estate agent’s perceived value was the possession and dissemination of raw data to the consumer.
That same consumer now has the opportunity to find an abundance of information online before ever contacting an agent. This movement toward more information being available and more use of the Internet will gain a great deal of momentum during the downturn, as people are more and more likely to research online before making any type of decision regarding real estate purchases or sales.
They’re also more likely to research their agents online, meaning that the industry will become more and more dependant on the Internet to thrive. These changes in consumer attitudes and behavior, put in place during the downturn, will likely remain after the recovery, leaving us with higher-quality standards for the industry in the long term.
One thing that I don’t anticipate that we’ll see, at least during the downturn, is a large difference in transaction costs. As we’ve seen already, people are more willing to pay a commission when they see the value in what they are receiving. Buying or selling a home is a complex process involving the coordination of multiple parties and careful negotiations.
Q: How will the business model or business practices of the title, brokerage or lending industries change in the future?
A: I think the lending industry in particular will see some drastic changes in the level of professionalism and experience required for loan officers. We’ve already seen movement toward higher qualifications, and I think that will continue as we move forward so that when the market recovers there will be much more stringent qualifications to be a loan officer and the consumer will hopefully have a better idea of who they can go to for a reasonable, appropriate loan at a reasonable rate.
Q: Will the industry be regulated differently in the future? If so, how?
A: I think as we’ve seen already, we will continue to see more strict educational guidelines, both in lending and real estate agency. This is obviously of great benefit to the consumer and helps to further "weed out" unqualified professionals who have been doing business to the detriment of the consumer. In Washington state, regulations have been changed to require more education and qualifications for loan officers, which resulted in a large percentage of presumably unqualified individuals leaving the business. The same will soon be true in the real estate agency sector in Washington, as agents will be required to complete substantially more training and be held under more scrutiny by their brokers as of 2010.
It is not unlikely to expect that we will see this trend continue on a national level as a protection for the consumer as we move towards more regulation, particularly in the lending sector.
Q: What must the industry do now to prepare for this new direction?
A: I don’t think I can overstate the importance of continuing education throughout the real estate industry. As technologies change, as the economy changes, and as the consumer’s habits and desires change, we as an industry need to be constantly on top of new information, trends, and technologies if we are to retain our value to the consumer and our success in business. The greatest preparation for the challenges that lie ahead is information, so those agents who want to be successful will be constantly working to expand their knowledge and therefore their value to the consumer.
Q: What technology trends will change the industry in the future?
A: I think the industry will see substantial change due to Web 2.0 technologies. Blogging and social networking sites are changing the way we get and do business, and I think we’ll see an even larger impact because of these technologies in the years to come. More information available to the consumer and increased efficiency in creating and maintaining relationships with larger numbers of people means that the agents doing the bulk of the business will be the ones with extensive presences online.
If we look at what social media technology does to communication, we get a better idea of how the industry has changed and will continue to change in the future. Social media does two things: increase communication and increase transparency, both of which are drastic changes to the real estate agency business model of the past and hold the agent to a higher standard of quality than ever before.
Blogs disseminating information, social networking sites where buyers and sellers can talk to each other as well as agents, and technologies like Twitter and Facebook that instantly connect people are all departures from the traditional offline business model. With consumers able to better connect with each other and share reviews, advice and specific information about their neighborhoods, they have more access to more information and are likely to hold the agent to a higher standard than ever before.
Social media also gives agents better tools to communicate with the consumer through information-rich blogs, status updates via Twitter, and networking using sites like Facebook. Agents can connect directly with consumers and showcase their knowledge, allowing consumers to make an educated decision about who is the best agent for them. This will hold agents to a higher-quality standard as more and more agents and consumers embrace the technology. Web 2.0 allows our instant-gratification culture an opportunity to find and select professionals to work with who give them the information and services they want 24/7 — a stark departure from the restricted lines of information and communication of the past.
Kirsten Mohan is a Seattle-area real estate marketing specialist and a residential real estate agent with John L. Scott Real Estate.
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