Residential real estate – homes – are not only “sexy” to consumers, as evidenced by the fascination with HGTV, but also a magnet for financial services companies and other major corporations that have been drawn to our business over the years by what appears to be sizable commission revenue. Corporations ranging from Metropolitan Life and Prudential to GMAC and Meredith Corporation, however, have discovered that real estate is much more challenging than it may appear from the outside.
Because I’ve seen so many new models emerge that were expected to put real estate agents out of business — Zillow’s Instant Offers, Redfin Now, OpenDoor — I know that platforms designed to let homeowners sell their homes instantly are not a threat to the entire industry because all consumers are not alike. These models may appeal to sellers who value certainty and potential efficiency over financial return, but those sellers represent only a part of the market. Most sellers need and want the full return on their investment and will not be willing to sacrifice dollars.
I believe that these new offerings will add another dimension to the way all homes are bought and sold but will not create wholesale change. My experience is that so-called disruptors almost always make the industry better by forcing us to become more creative and adaptable. I prefer the phrase “alternative models” rather than “disruptors” because that’s really what they are — different choices for consumers and agents and brokers. “Disruptor” implies that the business is currently operated in only one way and that a new model will displace or replace the status quo. I don’t see that happening. There are already many different ways a broker and an agent can operate their businesses (traditional, low desk fee, teams, etc.), and there are choices for consumers as well (traditional commission-based services, FSBO, unbundled fee-for-services, etc.).
What complicates the real estate industry are not agents and brokers; it’s the transaction itself – the many parties involved, regulations that extend timing and add paperwork, different laws in different states for relocating buyers. If industry players can work together to mitigate these problems and provide more transparency to the consumer, all parties will benefit.
I’ve always believed that strong real estate professionals rise to the occasion, no matter the challenge. Agents are at the front lines seeing the changing needs of consumers. That’s part of why we’ve seen many new products and services that streamline the selling (and buying) process. The industry is responding to a changing economy where consumers are being shown that they can get everything quickly and easily. Services from Uber to Amazon Prime have streamlined other industries, and consumers expect this in all aspects of life.
The real lesson here is that more than ever before, today’s on-demand consumers require responsive services on their own terms. My real estate network, LeadingRE, has just completed a landmark research study that identifies distinct segments of consumers who have differing needs, wants, lifestyles or decision processes. This type of data is critical in matching services to the needs of different consumers, and I trust that real estate brokers and agents will do just that, with new products and service offerings that provide a broad range of choices.
The most creative and progressive professionals in our business will be winners in a big way. We know the market, we know the product, and we know consumers. But we have to be much more laser-targeted and create service bundles and pricing that appeal to different profiles, whether it’s demographics (i.e., single women buyers with certain needs regarding security, finance and socializing) or psychographics (i.e., the “Silicon Valley” young gun who wants it fast and easy and will pay the price)