Yes in big trouble! There’s no sugar coating it, but don’t worry this isn’t all doom and gloom because any time there is any kind of “shift” in business, there is also enormous opportunity.
The future of the industry has been on my mind a lot lately. I see a good representation of what’s going on across the country so I want to spell out the big picture for you so you can be prepared.
My Prediction: The real estate industry, as we know it, will drastically change. Online home selling sites and discount brokerages will take larger market shares. Agents will continue to compete against one another by dropping rates and offering rebates. A select few traditional models will survive, but they will look much differently than they do today.
The Internet. Technology has created competition. The truth is that consumers don’t need us to find homes anymore. They need us to open the doors for the homes they find. Nearly every buyer I’ve worked with in the past 2 years finds properties as fast I do simply by having an account with Zillow.
Prior to the current real estate online search, consumers had to use a Realtor to find out about properties for sale, but not anymore.
Online Home Selling Services & Search Engines– It’s not hard to get listed on the MLS. A seller can find a flat fee service or just list by owner and reach almost the same amount of potential buyers that a licensed real estate agent can because nearly all MLS’s syndicate to the same feeds controlled by the big four search sites. As long as a seller is on the MLS they will get on all of these sites.
So What Now?
The Internet has innovated nearly all industries and it’s coming our way next (it’s already here).
Do you remember travel agents? What happened to them? You used to need a travel agent to plan a family vacation, but now you just go online to Expedia, Orbitz, or one of the other 90 travel booking sites.
Do you still see tons of used car lots in your area? What happened to them? Companies like CarMax completely revolutionized the playing field by offering car buying opportunities across the country by going online.
Do you remember Nokia? Once a mobile phone giant, but was bought out by Microsoft because they didn’t keep up with the evolving technology and demand for new features their customers wanted. Read article here.
In each of these examples, there were plenty of existing businesses that simply expired because they failed to adapt to the changes occurring in the market place.
I see the same situation occurring in amongst real estate agents and brokerages today.
Gary Vaynerchuk wrote a great article the other day, “Uber and AirBNB Never Should Have Happened The Way They Did“. His article is all about how these companies came into existence.
Gary states that Uber was only created because of the failure of the taxi industry to see where the market was headed. He blames Hilton and other hotel chains for not seeing the the opportunity AirBNB saw.
“The answer is simple: they innovated where traditional rivals didn’t”, Gary V.
It’s happening right now in the real estate industry and here’s proof:
Have you noticed a rise in for sale by owners in your market? I have in mine and it’s because they are successfully selling without an agent.
Look at all the flat fee brokerages in your market along with the rebate brokerages. They would not be around if the demand did not exist. Everyday competition like this diminishes the value a traditional real estate agent brings to the table in the eyes of consumers.
Have you seen Ten-x yet? This is an online company that was repositioned from Auction.com. It’s every Realtors worst nightmare and they are in test markets right now. You can check out their site right here.
Guess who is behind this? Yup, Google. We can’t compete against that or can we?
Their business model makes a lot of sense and I think it’s going to take off. In summary, its Auction.com for residential real estate.
Realtor.com I just heard has a for sale by owner option. I have not confirmed this yet but I did see chatter about it.
It’s coming people, just a matter of time.
OK, so now that I scared the living daylights out of you, lets talk about the opportunity this creates. You see, true entrepreneurs see innovation as an opportunity.
Let’s take Gary V’s advice and examine what we could do differently in the real estate industry.
Don’t get mad get BETTER!
We have to sit back and look at what we have that no gadget, software, or technology can take away.
Have you seen the Zestimates? How accurate are those? Regardless of what pops up next, you can never replace human intelligence, especially in real estate. Knowledge of the market will remain in demand by consumers because buying or selling real estate is a HUGE financial decision that the majority of people want advice on.
You need to know your local market in and out from values to the landmarks.
The real estate industry has a lot of bad agents. This is one of the largest threats because it could eat us alive. Consumers today tend to put all real estate agents in the same category. We know that’s not true, but Im telling you the average buyer or seller have no idea. They think that piece of paper we have (real estate license) makes us qualified to give them advice.
I 100% disagree. That piece of paper allows us to legally get paid selling houses, but that does not mean we know what we are doing. An agent’s true worth is the knowledge inside their head. That knowledge is worth way more than any savings a rebate broker could give any buyer.
Become an authority. You need to consistently let people know how good you are at what you do. You can do this through creating good content relevant to your area and expertise. It is your job to educate your database and your market of the difference between you and one of your competitors. You also need to educate them on the difference between you one of these “discount” selling options.
It’s never about price. It’s about proving your worth. Buyers and sellers may think saving money using one of these “discount” options is the way to go because that’s how people tend to think, but when they realize how not using an agent to buy a house could allow them to overpay 10-20k, they will think differently.
When they are selling a house, they might feel like they are saving money on commission, but in actuality if the home was “positioned” correctly they could have gotten 8%+ or more.
Why can I go to Super Cuts and get my haircut for $15 or I can go to one of the man salons and pay $35 for the same thing? The man salon rubs my neck, massages my head, and provides a much better experience. Depending on my mood that day I may go for the man salon because I like the experience better. It’s no different in your real estate business.
This is one of the most important skills that nobody talks about. Instead all the gurus tell you it’s more important to go door knocking and cold calling strangers. Nobody talks about what makes people want to work with you. Would you rather slime your way into a sale or have people call you directly wanting to work with you?
There’s no right or wrong answer, just a matter of preference, but I know which one I like better.
I got news for you. You are not in sales anymore. Or at least you will not be in the future.
You will be in the business of serving others with their house problems. The agents who will remain hard core salesmen will eventually be weeded out much like the car salesmen were prior to companies like Car Max.
People don’t want to be sold, they want to be served. If your marketing efforts started focusing on helping people with their housing problems and not how great you are, you will start attracting business vs. chasing it.
Your service consists of everything you do.
What are you doing other than popping a sign in the yard and listing the home on the MLS? Sellers can do this with a flat fee brokerage and you are going to have to do better. This is where you need to innovate.
Create a specific process or workflow for each buyer and seller you work with. You will need to provide a level of service that makes people want to do business with you. This includes small personal service touches like a “nice to meet you” gift to the closing gift you get your clients. Stop being so professional and focus on being more personable.
If you want to read a great book check out , The Customer Service Revolution, by John Di Julius. He is spot on and that book speaks directly to the real estate industry.
This also includes sharpening up your marketing skills. You must know how to really market a house for sale. If you don’t your broker should have a system in place for you. Things like using video, Facebook ads, direct mail, and blogging are just a few of the things you will need to learn.
Marketing skills are what sellers truly seek in a listing agent. Your job is to market the house and create a higher level of exposure than they can do on their own. It’s your fiduciary duty. A sign and a MLS listing is not a marketing plan.
Exceptional customer service can be defined as the way you interact with your prospects and clients, but it’s also part of your marketing expertise. Great customer service is marketing! Everything you do in your customer service should be marketing oriented to assist in creating referrals and repeat business. It’s this reason the need to become a marketer exists. Let me give you two examples:
- You are selling someone’s house and they hire you for the listing. Anyone today can find a flat fee service, put a home on the MLS, and a sign in the yard, but a true marketer is going to know how to position that home to the general public, apply different marketing strategies to it, and retrieve the seller a higher sales price than if they did it alone, making your commission justified. Your marketing skills are part of the service you provide.
- You are working with a buyer in a tight inventory market and you cannot find anything for sale. A typical Realtor will just wait for something to pop on the MLS, but a marketer will seek out a property for their client to buy that is off market. They will search FSBO’s, send out mailers, and target a property to purchase. You need marketing skills to do this, but it’s part of the service you offer. This is the extra value that no online information source can provide.
Have you ever watched The Profit on T.V.?
One of the things Marcus focuses on is People, Process, and Product. You are the person. The process needs to be streamlined and enhanced to build your brand. The product is the overall experience consumers have with you in regards to buying or selling real estate!
There is no doubt that something is happening within the real estate industry. Unfortunately, if you are going to compete you need to provide what no online company or discount brokerage can. I know its sounds like a very simple answer, but the way to compete is to provide is level of service that they cannot match.
Did you like this article? Please share it and get the word out. It is my goal to place a marketing dude in every real estate office and mortgage company across the country so tell your brokers and lenders about this. We can arm you with all the tools you need to compete!