Tag: realtors

5 Big Problems with the Residential Real Estate Business in 2017

After spending the last 2+ decades of my life as an intelligence analyst, data scientist, software engineer and cybersecurity specialist for the U.S. Intelligence Community, Department of Defense and the private sector, I made the move to real estate.

Sort of.

About two years ago, my wife (and business partner) and I moved on from our 3rd technology firm. We fully intended to take some time off after a string of startups and a major acquisition of one of our firms. A string of bad real estate experiences buying and selling residential homes and investment properties would change all that.

Frustrated with the issues, we started itemizing all the things we saw as problematic in our home buying and selling experiences. Very quickly, a list began to take shape of problems we’d seen and overcome before in our intelligence community work and in our eCommerce efforts.

In 2014, we crafted the idea of HomePocket (www.homepocket.com) to start helping over time with some of the problems we found in our own real estate experiences. So, that same year, we started a real estate brokerage in Florida to gather data, learn and experience actually being real estate professionals.

To say the least, we’ve put together lots of interesting data and observations about what’s right and what’s going wrong with real estate today. Here are a few of the major issues.

1 – A generation of Realtors isn’t changing hands

According to the National Association of Realtors, their average member is a white female in her mid-50s. From my own experience, this number is actually a bit low – and, oddly, it’s trending higher. Most successful, professional (i.e. full-time) real estate agents are Baby Boomers and upper-end Generation X.

As our world globalizes (and hyper-localizes) via things like social media, mobile technology, and instant access to data just to name a few, time and technology advances march the newer generations faster and faster out in front of the older ones.

For real estate, that means the older generations who preside over the vast majority of the career field and consumer-facing services are increasingly out of date and out of touch with the needs of their fastest-growing customer base – and their own market.

This is not only an issue for the consumer, but for leading companies and real estate franchises trying to evolve and keep pace. They struggle not only to keep up with their buyers but to maintain “backwards compatibility” with their own employee base.

How big of a problem is all this on a business scale? Just think about the entire publishing and newspaper industry. Or Polaroid, Xerox or Blockbuster.

And I won’t even bring up the “M” word here. With $41 Trillion set to change hands to the Millennials by 2052, there’s a looming communication gap between real estate buyers and their agents the size of the Grand Canyon.

 

2 – Adoption and application of technology is very inconsistent

As a consumer. everywhere you turn in real estate there’s a website, an app, a drone video or a 360º virtual walk-thru. Technology is having a big impact on the real estate market, but not necessarily in the ways, you may think.

As consumers, we’ve all become accustomed to using Amazon to get stuff at our doorstep overnight or apps like Letgo to sell the Bowflex you never use in less than an hour to someone down the road from you. We now prefer communicating via Snapchat or GroupMe to phone calls and even text. I can buy a car (and have many times) completely online.

This all works because technology development, design, and usage are very focused and consistent. It’s also based on standards in and between businesses, as well as between businesses and consumers. Most importantly, good products are easy to use by all maker-buyer-seller sides. Thus, the best offerings rise to the top based on the value they add while poorer products fall away.

In real estate, the technology landscape is a confusing, inconsistent mess for Realtors and buyers. And what technology is there can’t even effectively be used.

Why?

From my own personal experience in real estate over the last two years, the majority of professional realtors are not technically savvy. And that’s putting it nicely.

In fact, with most being in the older Generation X range and Baby Boomer generation, reluctance to keep pace with new tools and apps and services has not only impacted their own advancement, but the ability of the market to develop and offer new tools for them to use (or not, in this case).

On the consumer side, well, the market is mostly noise. Lots and lots of noise.

The landscape is filled with user unfriendly websites, limited apps that are not well-maintained, massive data inconsistencies and not a single “killer app” that all consumers can make a part of their lives. Even the big sites like Zillow and its Trulia brand are not monolithic in the market with big numbers of lovers and haters – especially on the Realtor side.

3 – You can’t really buy a house online yet?!?!

The last three car purchases I’ve made have transacted without me ever meeting the salesperson until I picked up the car. I have not contacted a travel or an insurance agent since the late 90s. I file my taxes electronically. I renew my tags online. The last house I financed? I never met or actually spoke to anyone. You can even complete most all the bits of an adoption online.

Everyone always says, “But real estate is different. Buying a home is different.” I say, for a consumer that’s increasingly behaving the way I do nowadays, is it? Not anymore.

Yet buying and selling real estate remains an overly (or improperly) regulated, decentralized and inconsistent activity governed at all levels from local, to state, to federal and the private sector. Until all this changes, real estate will remain a slow-developing “civilization” that really should be further along.

It’s kinda like, say, Brazil.

 

4 – Low barrier of entry for the career field

There are many, many real estate pros I respect. Hell, my wife and son are licensed agents. But they’re a perfect example of exactly how low the barrier to entry actually is for this career field.

When we started our brokerage to really learn the ropes of real estate so we could develop www.homepocket.com, they both went from unlicensed and inexperienced to full-blown agents in less than 3 weeks. For many states, it takes even less time.

How is this a bad thing, you may ask?

For starters, the ranks of real estate sales is growing. In some states, it’s even doubling over the last decade. But the majority of these new agents never work in real estate full-time as what’s called a “professional” real estate agent. They’re referred to by the pros as “weekend warriors.”

That means your odds of getting a part-time, inexperienced and low-tech Realtor are pretty good.

Imagine the majority of financial planners, EMTs, lawyers or those hazardous materials truck drivers next to you on the highway saying “Trust me. I just started doing this 3 weeks ago.” Yet, from a risk perspective, buying and selling real estate is one of the top activities you can engage in most likely to land you in serious trouble and/or out a whole lot of money.

 

5 – The real estate data epidemic

There are so many issues with real estate data it’s hard to know where to start. The heart of the issue lies with what’s called the Multiple Listing Service, or “MLS.” The MLS is a decentralized, locally-run set of over 1400 data registries created back in the 1800s where real estate professionals enter the listings for homes they’re selling.

If you don’t see potential issues from just this info alone, keep reading.

Each MLS charges the Realtors anywhere from a few hundred to a few thousand dollars a year to take their listings and then make them available to services, sites, and apps that want to display them. They also charge each service, site or app to use or display the listings.

The MLS offices in a given city or state are independently run, so policies and fees vary widely from office to office. Many times, there’s more than one MLS covering listings a single area too.

As well, there’s no single, authoritative data standard for home listings and no single aggregation of all the data in one place. I’ll repeat the first part as it bears, well, repeating:

there’s no single, authoritative data standard.

That means listings vary from city to city, state to state. Sometimes in very big and important ways.

The result?

It’s hard to access and consume listing data in a reliable, consistent way and you must go MLS by MLS. You know those little bar codes on products that let you check out at the store? Imagine if all of those were different in each city. Think about that for a moment and where we’d all be right now as consumers.

This is all both a contributor to – and one of the reasons for – the technology problems pervasive in real estate. It hampers tool and app development, creates and increases consumer confusion, makes governance and legal controls tougher and at least a dozen other major impacts. On the whole, it acts like a drag chute on a race car for real estate as a whole.

For a wide variety of reasons, the real estate game simply isn’t changing with the times quickly enough. Perhaps it’s been the overarching “real estate is different” mindset that’s persisted for so long with governments, buyers, sellers and real estate pros. Maybe it’s been the stranglehold held by a few major associations and the many state-by-state laws that technology, litigation, and antitrust legislation is only beginning to wear down. Whatever the many causes, these are interesting times. In fact, the next few years will likely be a period of big changes in how you and I buy and sell real estate.

For now, it’s still too soon to see it really starting to take place.

Real Estate Pros: Millennials Start Shaping Your Job in 2017

It’s Thanksgiving 2016 and we as a nation are collectively waking up to face a new dawn in our nation’s history. Change is all around us. Whether you voted for president-elect Donald Trump or not, there’s simply no denying things are gonna be, well, let’s say “dynamic” for some time to come in this country.

Apart from just the presidency, we can expect some serious changes in 2017 all across our financial markets, immigration policies, health care and, of course, real estate.

Right in the middle of all this, there’s also a generation starting to change hands as Millennials begin to assume much of the wealth their parents and grandparents built and enter the consumer markets as major players.

With over 30 trillion dollars to transfer to Gen X and Millennials going forward, what does that mean for Realtors (and FSBOs too!) when it comes to selling to this generation?

 

Get a Technology Upgrade and Some New Skills – Fast

 

With Millennials poised to make up over 30% of consumer spending, it’s safe to say they will soon be a big part of your customer demographic when it comes to buying and selling homes. For real estate professionals, this generation presents several major challenges, the biggest of which has to do with technology.

Why? Well, despite what’s on the surface, real estate is still a very traditional, person-to-person activity.

Sure, websites and apps abound, but the majority of real estate professionals that make up America’s largest human sales force were not born into the wired age. In fact, for almost all Realtors working today, cell phones, laptops, selfies, Snapchat, GroupMe and AirBNB are all things that didn’t exist for most of their lives. That means – no pun intended – there’s a major disconnect.

Millennials, though, love technology. It’s virtually a part of their DNA. They love the convenience it brings and they love the “remote” interactivity if affords without the muss and fuss of, well, interacting face-to-face. Wired online magazine recently offered a great summary of just how Millennials use technology. The big takeaways?

  • Millennials love mobile, in fact they prefer it almost completely to desktop
  • Millennials prefer “do-it-yourself” and “self-service” via apps that let them avoid traditional processes
  • Millennials use search to start every process – they don’t use “big brand” sites as much as prior generations
  • Millennials email when they have to, but prefer interactive chat apps when possible
  • For Millennials, consumer research means checking social media such as Twitter and online reviews
  • Millennials don’t tolerate those who are not tech-savvy very well
  • Millennials prefer speed and automated processes over in-depth info
  • When it comes to existing apps and websites, if you use it they probably don’t

So, what does this all mean for the average real estate pro?

Well, for starters, it means you need to get tech savvy to stay competitive or you will be “upgraded” out of a job in favor of someone who is. To help the Millennial customer (and even their Gen X parents too!), you have to learn and adapt:

  • Upgrade your phone to the latest iPhone or Android models
  • Grab one of your kids and have them start teaching you to use your phone they way they do
  • Learn to communicate via chat and text instead of email and phone calls
  • Establish a presence on social media and get your voice out there – regularly
  • Learn how to (really) market your home listings on mobile and social media without noise
  • Emphasize home posting platforms that are mobile-centric
  • Don’t rely on MLS to get your home seen the way it should be
  • Automate existing processes as much as you can and emphasize speed, simplicity in all things
  • Start getting on board with the next generation of real estate apps and sites

To stay competitive in your business and serve the coming generation, you must learn new skills and embrace change. The good news is, there’s time to catch up. Plus, it’s not really that hard to do. A good general rule? Think about what you would do to sell or find a home, then ask someone 18-30 what they’d do to get started.

Learn More: Real Estate Trends for 2017 from MarketWatch

Will Real Estate Go The Way of Travel Agencies?

Just a couple of decades ago, travel agencies could be spotted on virtually every corner in cities big and small. It was just the way you did it for those big family trips to Disney, the business trips to Detroit or that bucket list European tour for the church choir.

Then the web happened. Then quickly after, the meteor that is mobile struck our planet. Travel agencies went the way of the dinosaur seemingly overnight. Now, only a few relics remain.

But why?

For the most part, the answer is simple to understand.

 

Consumers Now Prefer DIY, Convenience and Demand to Deal Direct

When people started selling on the internet and then the web made it to the phones we carry around with us everywhere, it changed our habits as buyers. At the same time, it changed the way successful businesses offer goods and services for us all to consume. Think Amazon, Autotrader, Zappos, LendingTree, SelectQuote and eBay.

We very quickly became buyers who expect:

  • The control afforded by “do-it-yourself” searching, browsing and buying.
  • As few middlemen (and women) as possible.
  • The cost savings of going as directly as possible to the source or a major seller with buying power.
  • To decide for ourselves – and only for ourselves – what we want.
  • More speed! Better time management and less time wasted on unnecessary processes.
  • To engage assistance only when it is needed or wanted.
  • More choice. Period.
  • More private transactions.

Just as with travel where Expedia, Kayak, Orbitz and a hundred more sites and apps make it possible to book for yourself, exercise more choice, save money and get more direct convenience, in real estate consumers are now pushing the industry toward a similar inflection point.

Learn more: Generation C: The Connected Consumer

Put simply, more and more consumers want to see all the homes available (not just the ones in MLS and pushed by one agency or another), they want to search and identify the homes themselves and they only want to engage an agent to complete a deal when they’re good and ready.

Increasingly, too, they’re questioning the cost of that last part of the process.

What does that mean? Well, it means that there’s an opportunity for businesses to more directly connect buyers and sellers by getting found better, faster on the web – like we’re doing here with HomePocket – and that the times ahead, well, they will be a-changin’. Guaranteed.

 

Real Estate Isn’t Evolving Quickly Enough

Real estate is the single largest human sales force in the world. But, much like travel agencies and local insurance companies, the same web and mobile-driven forces are acting on real estate too, shaping it each and every day.

The Increasing Power of Mobile Commerce

Despite some significant differences between the transactions involved in travel and those highly-regulated and legally complex transactions in real estate, consumer behaviors and tastes are pushing the industry ever-forward toward the same sorts of conveniences.

In short, buyers (and sellers too!) want the most choice-filled, direct, convenient, hassle-free and cost-effective transaction possible.

The problem is, real estate is fighting its own evolution in many ways intentionally and unintentionally.

For example, there’s a highly inefficient near-monopoly in the form of over 2500 local MLSes, or Multiple Listing Services, that controls home listing dissemination.

Despite just about every brokerage having a website and a mobile app, the whole de-centralized, fee-heavy MLS system acts to keep homeowners who are selling their own homes out, keep agents and brokers paying very high fees into the system for very little modern digital marketing in return and all but guarantees there’s always several middlemen between sellers and buyers looking for homes.

In short, it’s a highly inconsistent, closed-loop system that was founded – no lie – in the 1800s and that has evolved very little despite technology advances. It’s also very ill-equipped to keep up much longer with an economy increasingly driven by the kinds of consumer wants and needs the internet has fostered.

Because of this, the technical talent, expertise, and resources that have propelled other consumer sectors just are not drawn to real estate, so it languishes, stuck, at present, roughly in the early 1990s as far as technology goes.

What’s more, effective marketing strategies and technologies that are commonplace in eCommerce and retail companies (even your neighborhood shops) do not exist in the antiquated MLS community – and it’s falling behind more and more each year.

What effect does this have on home buyers and sellers? At present, real estate consumers are beginning to ask themselves the most dangerous of all questions in business: Why can’t I just ______?

In the case of real estate, typical questions these days are:

  • Why can’t I just see all homes for sale in a given area – FSBO, Pockets, and MLS – in one place?
  • Why can’t I list my own home and get great marketing exposure without having to pay MLS an arm and a leg?
  • I usually find my home anyway online, so why can’t I just contact the seller directly or an agent after Ive found what I want?
  • Why can’t we just pay to have an agent handle the paperwork and get a reduced commission?
  • And much more

The MLS example above is just one of many that shows just how much parts of the industry are stuck in the past. It also sheds a bright light on where this is all headed.

As consumers want more convenience, more directness in their real estate buying and selling, only the realtors and real estate firms that adapt, adopt and improve will survive the conditions after the meteor strikes.

What’s more?

Even realtors – who most certainly do provide a very valuable service and help keep us all out of very serious legal trouble by expertly handling state, federal and local laws for your deal – can benefit from the directness – it’s just most of them aren’t yet aware of how to do it. The real estate marketing world is confusing, noisy and expensive on purpose, so most realtors end up lost in the noise.

As the evolution happens, even now, most consumers buying big-ticket items prefer to do extensive research online and come to a decision before contacting a local seller (or agent). What does that mean?

Well, it means your digital presence in the places and ways consumers want to find you is more important than ever before. Direct, easy access where they expect to find you are now the key.

As a plus, having consumers find you more easily online, more conveniently and who come to your door with simpler transactions doesn’t mean you’ll suffer in the long run due to commissions, it means you’ll be able to do more deals faster.

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