Before Jeff Detwiler joined Long and Foster Companies as then-President and COO in 2009 — he’s now the President and CEO — he spent most of his career in the financial services industry on Wall Street. “That’s one of the reasons I was selected for this role,” he explained. “I have deployed business models similar to what we deploy here at Long and Foster, where we have a core business and product, and we wrap around ancillary businesses that are of value to the customer.”
Detwiler will be talking about exactly how he does that with a special session about how to use mortgage, settlement and insurance segments to supplement your real estate business at Inman Connect New York, January 29 through February 1 at the Marriott Marquis Times Square. We talked to him about what brokerages should be focusing on and how the all-inclusive experience will change real estate.
Tell us a little more about your session. How will it address how the industry can embrace the shifting market?
It’s our belief that although there are different ways to access the real estate transaction, buying and selling your house or renting a place or whatever the case may be is still as complicated as ever, and there’s a multitude of moving pieces and activities that occur around almost every real estate transaction. I think the statistics prove out that the consumer is looking for an all-inclusive experience, referred to a lot as a one-stop shop. Our businesses are too sophisticated to liken it to one-stop shopping, so I liken it to an all-inclusive vacation. It’s not what everybody wants, but a lot of consumers want it because it delivers value and convenience and a customer experience that captures everything that’s happening.
You’re buying a house, financing a house, closing at a settlement company, insuring a house, moving household goods in and out — all of those things are also taking place on the sell side. The real estate agent is in the ultimate seat to coordinate the delivery of all of these products and services to a consumer. If you think about it, the ease of delivery comes from dealing with one person who can coordinate all of this for you instead of 12 people all coordinating their piece. The consumer wants and is asking for more of this all-inclusive experience around the buying and selling of real estate, and there will be companies like Long and Foster and others that do a superior job of delivering this all-inclusive experience, and the agent will be in the position to be the coordinator and the relationship manager with the consumer for all these products and services.
That agent will then be supported by content experts, but they’ll do the coordination. The real estate market is so big in terms of the number of units — we know it’s going to be 5.5 million transactions across the country, so there are a lot of people who need to be facilitated. Nobody needs it all, so building a business model that is really focused on delivering the all-inclusive experience will work for a Long and Foster or anybody else. That doesn’t preclude me from doing any single one of those activities involved in the all-inclusive if that’s all the consumer needs.
I think there’s an economic advantage to the consumer when they look at the all-inclusive model in the world of real estate. What happens now is that if you’ve got 10 business activities that have to occur and 10 companies that will deliver each one of those 10 activities, they have to look at the profitability of that product. The real estate company, the mortgage company, everyone has to look at their profit margin for each of them. If you’re delivering it all, you’re looking at the return on your customer, and if you have four or five or six activities, when I add it all up, it makes sense for the return I’m making on that customer. The customer in the all-inclusive experience gets a better price in the aggregate than they would otherwise.
If somebody wants the absolutely lowest cost on everything and they’re going to go out and shop every deal, they might get the lowest cost, but if they add up all the time and effort it takes to do that, I’m not sure they still have the lowest cost.
What do you think are the biggest opportunities to focus on in the real estate industry right now?
I think that there’s an opportunity to see the market as we do and see the real estate transaction as we do: We want to continue to build out our all-inclusive model. Adding other businesses that can deliver products and services that consumers need around the real estate transaction is a great opportunity for us, and we’re going to continue to do that.
The capture and control of data can be very valuable on behalf of the consumer in this real estate market. There’s a lot of capturing of consumer data as it relates to real estate, and what they’re trying to do is identify when a consumer is ready to transact; it gives me a leading indication of when to contact that consumer to do a transaction. I see the opportunity slightly differently; I believe that if the right organization captures the information about the property itself that’s being acquired on behalf of the buyer, then the owner, the kind of experience and benefits that a firm like ours can provide the consumer or homeowner is huge.
There are 5.5 million homes that people are going to buy this year, and it’s almost like buying a used car. You get a used car and you really don’t know what kind of condition the car is in. And thinking about a house, you go in and you buy a house — most people sign their documents and they receive a deed and that’s the extent of what they receive. They don’t know what kind of appliances they have, what kind of HVAC system they have, the age of their roof. What we envision is almost delivering to the buyer of an existing home an owner’s manual that says “Here’s all the information about your house that the seller didn’t have and you probably don’t have, but we’ve acquired on your behalf.” We can give the age and condition of your roof, the mechanicals inside the house such as the sump pump and HVAC system, and give you the name and serial number of those appliances, when the appliance was purchased, the average life of the appliance. It gives you the necessary information already inventoried so you can start to anticipate potential maintenance programs.
You might have an idea when your refrigerator needs to be replaced, and what the real estate world is going to do is start delivering buying power to the individual consumer to buy refrigerators, washing machines, freezers. At Long and Foster, there are buyers moving into 40,000 homes a year, and how many of those people buy a fridge in the first year? How many buy washers and dryers or update their HVAC system? What kind of buying power could I pass through to my 40,000 consumers if I’m going to use my pricing power for 4,000 refrigerators instead of them buying one? This kind of buying power and the knowledge about the age of what I bought, the pieces of the house that I bought — if I have a better understanding of the condition of each one of those things and their age, then I can work through my real estate company to lever their buying power as I need to replace those things. If that’s an ongoing relationship that I have, it’s ongoing value for the consumer.
To stay competitive, agents, brokers and companies need to execute quickly. What do you feel are key areas where quick execution can vastly improve the customer experience?
I think around the transaction itself in the context of the all-inclusive experience, just by having these various activities coordinated and performed in a more synchronized fashion, it expedites the way things happen. You can go to a more paperless environment, all of those things become more conducive if you’re providing that all-inclusive experience. It’s hard to do paperless transactions if you’re just doing the mortgage or the settlement feature; it kind of defeats the purpose of a paperless mortgage if I have to go sign all kinds of documents at settlement. I think to expedite the individual transaction, if it’s more synchronized it happens faster, and you have an ability in this all-inclusive environment to perform in a digital or paperless way that will speed things up.
Today, what happens in the real estate market is the majority of transactions are going to occur whether Long and Foster or Re/Max or Coldwell Banker is there. If one of those firms is gone, that consumer wants to do a transaction — they’re going to just go next door. Agents and brokers are chasing the consumers that are already going to transact, trying to get there first. And then we transact that deal and then we start chasing the next transaction. What makes a higher-quality relationship is if you have an ongoing relationship with a consumer; I want to be able to continue to have a customer/vendor relationship with that consumer every year they’re in their house. I want to provide them with insurance, a mortgage, a maintenance plan if that’s what they want, buying power for a refrigerator or washing machine. So when it comes time to think about transacting again, they have that relationship with the real estate company; they don’t have to go out and start from scratch. It’s establishing this true customer for life scenario with your previous customers.
What are your hopes for the next 12 months, and what will you be working on?
I think in the real estate market, generally speaking, we’ve seen the top in this cycle and I think that over the next 12 months we’re going to see slowing, continue to see inventory challenges, we’re going to see fewer transactions that occur in the marketplace, slower price appreciation in most places. I’m hoping that we don’t see too much of an increase in rates because that will continue to depress the amount of inventory available and the number of interested buyers because affordability has become a real issue in a lot of urban and suburban markets; I’m concerned about affordability in hot markets, and I hope that rising rates don’t put too much pressure on that.
One priority is to continue to build out our all-inclusive customer experience, improving the general experience and adding additional services that the consumer wants. And we’re looking at our agent productivity system, and we’re going to be emphasizing even more heavily at Long and Foster for more of our agents to get onto the engaged productivity system. It creates the necessary sales discipline for agents to be more productive and more successful in a challenging real estate market, and the statistics on agents that are active users show that they absolutely have a greater increase in productivity than agents that are non-users, so we’re focused on increasing the utilization.
Discover the opportunities in a changing market at Inman Connect New York, January 29 – February 1. Jumpstart 2019 with tactical takeaways, unlimited networking and thought-provoking speakers. Learn more.
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