As 2009 draws to an end, I can’t help but think how incredible this year has been for me, personally. It was only May when I launched my own business, and also this year I started writing this column. I’ve met fantastic new people and made some incredible new friends.
At the same time, 2009 was something of a sleepy year for the real estate industry … until November, when the National Association of Realtors introduced RPR to the world. The innovations this year seemed to me to be few and far between. The conferences were fun, as usual, but in my opinion mostly lacking in energy and buzz, and flat was the new up for most practitioners.
Inman asked if I could don my Nostradamus hat and gaze into the future. Since I am particularly horrible at doing this — as my football picks this year will attest — I’m nearly certain that most of these will be dead wrong. But hey, what the heck!
Here goes nothing:
RPR will reinvent itself
The biggest news of 2009 was, I think, the introduction of Realtor Property Resource (RPR) by NAR. While rumors of a national property database had been swirling for years, the actual RPR program was a thunderbolt on the industry.
There were two features of RPR that were surprising to me:
- The jaw-dropping user interface application that RPR introduced; it is quite simply the best multiple listing service interface in the market today.
- The business model that did not contemplate any downstream revenue share to participating MLSs or brokerages. The first feature threatened the MLSs despite all protestations by RPR to the contrary, and the second feature made people wonder why they should participate at all.
The initial response from the larger MLSs and brokerages — both of which RPR will need if it is to be successful — has been cautious at best and downright hostile in some cases. That nearly a month has gone by since unveiling RPR without any announcement of a major deal is, I think, significant and suggests an uphill climb for the RPR team.
In 2010, I predict that the RPR team gets the message loud and clear. RPR will be reinvented to address the twin concerns of participating MLSs and brokerages. Downstream revenue share is all but inevitable if the big brokerages and big MLSs are to participate.
The user-interface front-end will be shared in ways to minimize the threat to MLSs — either at the source-code level or via license.
Social media will divide between e-commerce (can prove return on investment) and public relations (cannot prove ROI)
The hype around social media in 2009 was enough to remind veterans of the Internet of the go-go days of the first dot-com years. Back then, we had heard from visionaries and dreamers who claimed that the unleashed power of the Internet could do everything from ending all wars to finally have the Red Sox win the World Series.
And a number of sober-minded folks thought that this Internet thing was an interesting phenomenon, but one ultimately limited to geeks in their parents’ basements. The early dot-com collapse only seemed to confirm the skeptics’ beliefs about the Web.
Amidst the loudmouths who were yelling about the "New Economy" and such, however, a number of companies were making enormous sums of money simply selling stuff online.
The e-commerce guys were among the first to truly embrace and understand the metrics for banner advertising as it related to customer acquisition costs, even as the New Media folks were spending venture capital dollars on advertising and marketing to “generate mindshare” and “take first-move advantage.”
I think we’re at that point with social media. The e-commerce guys, who actually sell stuff on their Web sites, will devise and figure out ways to track the ROI of social media activities. They will be able to say with certainty that “our Twitter channel produces $45 million in incremental sales every quarter.”
In contrast, the folks who are using social media as PR — “it’s social branding, Jim!” — will be unable to prove ROI in anything other than buzz metrics. Which might be fine for some people, since what they want is buzz.
And both of them will have missed the point, in some way. The division will, nonetheless, happen in 2010.
A major brokerage company will hand the reins to an executive under 40
A major brokerage company — let’s say one of the top 20 by sales — will name someone under 40 as its CEO in 2010. With the growing importance of technology generally, and the Web specifically, a major brokerage will take a chance on a young, tech-savvy executive who understands real estate.
Many of the wisest leaders in real estate have been saying for a couple of years that the next generation of leaders is coming, as the baby boomers start to retire and hand over responsibility to the Gen-Xers. I think 2010 is the year when we see the first of such transfers of power from one generation to the next. …CONTINUED
Google becomes a real player in real estate
The industry has been worrying for years about what Google might do in real estate search, given its total dominance of search. Google is, for all intents and purposes, the gateway to the Internet. Its past efforts, however, with things like Google Base, have been substandard at best.
But in 2009, Google quietly released Real Estate Place Pages. Most of the industry yawned. By the end of 2010, few people will be yawning.
Google has been much more aggressive of late in promoting Google Maps right on the main search-results page. Check out this search for a nightclub in NYC as an example.
Note how prominently the Google Maps result is displayed, with the link to the club right there. The second result is the club’s own Web site, followed by Yelp, nymag.com and clubplanet.com. Replace Yelp, NYMag.com and Clubplanet.com with Realtor.com, Zillow and Trulia and you have what the consumer may be seeing by the end of 2010 when they search for "New York homes for sale."
Combine Google’s new interest in providing a better real estate search with the real estate industry’s taste for syndicating everywhere, and I predict that Google will emerge as a major player by the end of 2010.
Keep watching Google — there’s a real possibility that by 2011 we could see the end of IDX (Internet Data Exchange, the broker-to-broker data-sharing standard) thanks to Google’s actions in real estate search.
Housing market will be worse in 2010 than it was in 2009
A number of experts believe that the housing market will recover in 2010. Lawrence Yun, chief economist of NAR, recently said that the real estate market will rebound in the spring and summer of 2010. Strong sales numbers in the third and fourth quarters of 2009 have a lot of real estate people thinking that we have hit bottom, and that the market will rebound in 2010.
I don’t believe it. Jonathan Miller of Miller Samuel recently presented at a meeting of Lucky Strikes Social Media Club, and suggested that the strong third-quarter numbers were the result of time-shifting of second-quarter demand, spurred on mostly by the first-time homebuyer tax credit program.
Add to that notion the fact that unemployment still remains high, with no sign of recovery on that front, at least from a private sector that is bracing for higher taxes, more regulation, a national health care plan, and the possibility of carbon tax. The extension of the homebuyer tax credit is surely a positive for the housing market, but unless the employment picture improves I can’t see the market rebounding in a real way.
And some knowledgeable folks (including the aforementioned Miller) believe that there are some 2 million-plus housing units in foreclosure that have simply not been released to the market yet for a variety of reasons such as moratoriums, overwhelmed staff at banks, and reluctance to write down the asset value. Maybe not all of that inventory will hit in 2010, but banks can’t keep deluding themselves and us.
So I’m predicting that 2010 will be actually worse than 2009 was. Call me a pessimist, and hope that I’m wrong.
The New York Jets will once again not win a Super Bowl in 2010
Of all of my predictions, this is the one I’d take to the bank if I were you. Despite improving dramatically under Mark Sanchez and Rex Ryan’s sophomore season, and making the playoffs comfortably as the American Football Conference East division champs with a 12-4 record, the Jets will lose a heartbreaker in the first round of the playoffs as the nervous young quarterback throws four interceptions and fumbles twice. …CONTINUED
At least one of the major national real estate search Web sites will no longer be around as an independent company
In a sense, this prediction is connected with the prediction about Google above, but I can’t see the world needing so many third-party vertical search engines for real estate.
As we close 2009, we have Realtor.com, Trulia, Zillow, HomeGain, FrontDoor, Roost, Homes.com, RealEstate.com, and probably a few I’m forgetting, not to mention the big national franchise Web sites such as those operated by RE/MAX, Coldwell Banker, Century 21 and Keller Williams.
Then you have the brokerage Web sites, followed by agent Web sites and consumer Web sites of major MLSs, like the Houston Association of Realtors’ HAR.com.
Almost every single one of these national search sites depends on Google for traffic, and that traffic allows them to make money using whatever business model they are using. Depending on what Google does in real estate, that herd will be thinned out.
But even if nothing much happens with Google in 2010, I can’t see all of them surviving to the end of 2010. At least one will close its doors or be bought out by a competitor.
Real Estate BarCamp events will become more like conventional conferences, and vice versa
RE BarCamp began in 2008 when Todd Carpenter, Brad Coy and Andy Kauffman brought the BarCamp concept to real estate. But it really took off in 2009. The energy, the camaraderie and the unusual topics that are of interest to attendees all combined to create a unique event for real estate people.
However, I see RE Barcamps becoming more like traditional conferences in 2010 as the attendees begin to split into those who are tech-savvy and those who are still new to the social media game.
Some people have attended more than a dozen RE Barcamps in 2008 and 2009; they’re not going to be excited about attending yet another session on how to use Facebook. At the same time, people who are attending an RE BarCamp for the first time in 2010 will be absolutely overwhelmed.
The result is that, more and more, RE BarCamps will start to offer "beginner tracks" with preselected presenters and speakers — much like conventional conferences do.
At the same time, traditional conferences will start to move towards the RE BarCamp model of active audience participation, open dialogue and informal engagement.
The recent NAR annual conference was, without a doubt, the most boring conference I have ever attended — in large part because of the format: speakers sitting high above a ginormous audience who are trying to stay awake while the speakers drone through their PowerPoint decks.
Therefore, I predict that while RE BarCamps become more "conventional," the conventional conventions will become more unconventional and embrace the energy and excitement of a RE BarCamp-style open forum, to the betterment of both. …CONTINUED
A wave of consolidation will start in 2010 within the MLS industry
The MLS industry has been sort of a quiet backwater of real estate. It is to the real estate tech boom what electric utilities were to the dot-com boom. Without the MLS, almost none of the well-known real estate technology ventures can even get off the ground, and demand for MLS services has grown over the past few years.
What started out as a bunch of brokers getting together to share listings is now often a full-blown data and technology operation that powers an entire industry. Once in awhile, an issue like Google-as-scraper hits the awareness of the industry at large, and people pay attention to the MLS — similar to how folks simply don’t think about electricity and the power grid until the lights go out.
Like utilities, the MLS industry has been happy to snooze along for years in what are all but monopolies in most markets. But change is coming. Part of it will be spurred on by the first real threat to the MLS in decades: the RPR.
Part of it will be spurred on by the declining real estate market, and the slow erosion of value in the MLS. But another part of it will be spurred on by the opportunity that RPR revealed: economies of scale in data operations.
Whatever the cause, I believe 2010 will be the start of a wave of consolidation within the MLS industry as larger, better-run MLSs start to take over the small, underfunded and poorly run operations.
These larger MLSs will take advantage of economies of scale and provide a higher level of service to an industry that relies on the MLS to provide the backbone infrastructure on which it can build ever-more-fanciful consumer and agent tools.
Real estate enterprise customer relationship management will finally make its appearance and start to create competitive advantage for those who have it
Finally, 2010 will be the year when integrated real estate CRM finally becomes mainstream. The driver of this particular revolution could be, I think, Tribus — a fledgling startup by Eric Stegemann.
He’s winning business with what amounts to a homebuilt solution put together with elbow grease, ingenuity and duct tape.
As national franchisors and large brokerage firms start to lose highly productive companies and agent teams to Tribus, or companies like it, they will wake up to the need for a truly enterprise CRM system simply to keep what they have today.
Integrated, enterprise CRM is the killer app of real estate. Lost in all of the hoopla about Web site lead generation and search-engine optimization and social media is the fact that real estate agents end up with six or seven different systems that do not talk to each other, which results in poor follow-up and follow-through, and leaves huge numbers of leads simply unanswered.
Brokerages and franchisors have little knowledge of what’s actually going on in the business, since they can’t generate any useful reports from all of the activity, and agents end up working three months with a family only to have them go elsewhere when it’s time to sell.
I believe 2010 is the year when companies start to take CRM very seriously indeed, or risk extinction. In fact, I’d venture that my prediction for a major brokerage company hiring a young, techie exec will go hand-in-hand with this one: that exec will be the first to implement a true enterprise CRM platform and process for her brokerage.
Robert Hahn is managing partner of 7DS Associates, a marketing, technology and strategy consultancy focusing on the real estate industry. He is also founder of The Notorious R.O.B. blog. You can reach him on Twitter at @robhahn.
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