Industry

Real estate normal is increasingly strange

Author
Brian Boero
No.
612
Please excuse the mess. This page is currently under construction.

The real estate market is still weak in most places. And it may stay that way for a while. The political scene is getting weird and we’ve got another decade’s worth of foreclosures to sweat off.

Nonetheless, this year I’ve been picking up a sense from those who survived the very worst of the housing crash that things may be headed “back to normal.”

But getting back to that normal – the one with the same recruiting system, the same business model, the same under-qualified people doing the same things – is nothing to celebrate.

It’s insane.

Why? Here’s a taste:

Airbnb has been valued at one billion dollars. This is a company that enables people with apartments, a spare room, or simply a couch to rent those spaces out. It’s post-hotel travel.

There are 200 million iOS devices out there in the world; many run apps that connect people who want to buy things with people who want to sell things. Directly.

There are at least a half-dozen good e-signature apps for the iPad. Last year, I bought a $2,000 computer by signing with my finger. Paper shufflers are going the way of the typing pool.

A new wave of apps sitting at the intersection of mobile, local and social are designed to help people get questions about places answered. By anyone.

As I write, commerce, social intercourse, learning and knowing are being swirled in a beaker by forces moving too fast to grasp.

Yet the vast majority of brokers have no answer for these things. No capacity for adaptation. No strategy. No nothing.

That’s not good.

Compounding this is a complacency fed by perceived victories over other demons.

Take FSBO’s, for example:

Over the last 15 years, amid incessant proclamations of “revolutionary” technologies and “empowered” consumers, the percentage of people who sell their own home has remained more of less the same. In fact, according to the NAR, the number declined from 11% to 9% of the market last year.

Sure, I get that when the market got tough, people became more apprehensive about selling on their own. That makes sense.

But it does not seem quite so sensible to me that an industry chronically deficient in public esteem, bloated by part-timers, bruised by market turmoil and suffocated by government intervention can always remain immune to the virus of disruption. I’ve felt this for years.

Same thing with discounters.

Ten years ago, the commission freak-out was widespread. Today, ZipRealty is imploding and Redfin is co-opting agents from traditional brokers through its partner program.

Commissions are solid, right?

To me, that seems like a foolish assumption.

If I ran a real estate company that survived the real estate market cataclysm, I’d celebrate that fact – but I’d be restless for reinvention.

Vulnerability

There are points of weakness in any system. You can mostly ignore them. Until the day you can’t. The average real estate operation is loaded with these.

So, if I ran a real estate shop:

I’d hack my physical footprint down to its core. Yes, that’s an old saw. But just because it’s played out at industry conferences doesn’t mean it’s any less important.

It seems to me that there was a moment a few years ago when every broker was talking about closing offices – and many did, either deliberately or through necessity. Then the market exited its free-fall and the office-closing fervor subsided.

I think it’s time to keep cutting. Apple’s iCloud augurs a near future where everything we need to work, play, discover and connect is available anywhere, anytime, effortlessly.

The inventory brokers sell isn’t in an office. The people they are selling it to don’t need or want to come to an office. The information they want isn’t in a file cabinet. They have it, where they are, now.

I’d get my sales force out of the office and out there with them.

Then I’d start leveraging the collective media producing power of my agents.

That sounds farcical, right? Yes and no. Realtors sell real estate. But if they are able to view their brokerage as a publishing platform, a local media channel, then they can also become creators.

Here’s one example:

If you haven’t downloaded one of fotopedia’s iPad apps, you should. They are stunning visual explorations of places – national parks, world heritage sites and far-flung locales.

I’d create something like this for my market (though it would be an HTML 5 app – broader reach and more cost-effective). My agents – who carry 5 megapixel smart phone cameras into every nook and neighborhood in which I operate – would supply the photos. It would be updated continually – a living visual resource for buyers.

Of course, I couldn’t just let agents throw any old photo into this experience. Winging it in full view of customers isn’t a good idea. There would be an editorial function. My editorial function.

Get publishing. Create media. Everyone else is.

To this you may say: “You’re detached from reality – I need to offer recruits a desk and there’s no way my people can ‘create media’ as you say.”

Right. But my brokerage would not recruit like a stoner inhaling Pringles.

Because I’d know that with every company dollar I could squeeze from the loins of a newbie or part-timer I’d compromise something more valuable: my capacity to innovate, build a brand that means something, and overcome my competitors.

In other words, an expensive office full of knuckleheads without the right skills is a very vulnerable place these days.

And it’s certainly not the sort of “normal” the rest of the world is heading towards.