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A house divided will fall… Real Estate 2.0 vs. Tradition

I just finished watching Allan Dalton (CEO Realtor.com) and Gregg Kelman (CEO Redfin) argue it out over the pros and cons of the Real Estate 2.0 movement at Inman’s NYC Connect Conference last January. For those of you who have not seen it, I would highly suggest you watch it.

What the debate clearly emphasizes is the growing division between the new Real Estate 2.0 model (web-based Real Estate) and the traditional, Realtor sensitive, model; and more specifically, the clear division between those agents who will work for less than 5-6% and those who wont.

In a perfect world, such a division wouldn’t be a cause for concern. Traditional and “web-based agents” would simply agree to disagree and go about their separate ways of consummating sales. And this would certainly seem appropriate given that there are buyers and sellers whom prefer both types of agents and systems. This, however, is not the case.

The current rift has sparked outrageous debate and attempted degradation of the opposition’s system and fee structures. Traditional agents claim that this new breed of agent “cheapens” both the industry and a traditional agent’s value, and leaves the general public open to exploitation given lack of proper representation. “Web agents” claim that the traditional model is plagued by market inefficiencies and inflated commission structures, and subsequently swindles the general public out of hard earned equity.

I’m not here to present a case for either side. In fact, I think that both sides make very legitimate points. The travesty is our response to change. While the public view of our industry is hitting all-time lows, all that we can think to do is argue with each other over whose system is better. It’s like watching children argue at the dinner table. The adults at the table are left disgusted, with disregard and contempt for both sides.

The general public is rational, and smarter than given credit for. And they know what they like. Some prefer an al a carte, discounted program. Some prefer the no-hassle, full commission program. This is America, people. It’s capitalism. The industry is changing… accept it! And be smart enough to realize that you, nor the “opposition” knows exactly where it is going to settle.

Darwin’s Buggy Whip and a Realtor Drawn Carriage

In September of 1908, Henry Ford released the first production Model-T automobile. Previous to the release of this car, horse-drawn carriage was the preferred mode of transportation. From 1908 into the late 1920’s, carriage and buggy companies worked furiously to improve their product in order to compete with the expanding automobile industry. Luxury seating and amenities were added, aerodynamics were improved and even a better buggy whip (used to whip the horses) was created. Despite their best efforts, the majority of buggy and carriage companies found themselves out of business by the early 1930’s.

The carriage industry’s failure wasn’t due to lack of effort or ingenuity in the field but to its failure to adapt. Ford had created a superior and more efficient mode of transportation, and while Chrysler and GM recognized the changing tide and progressed, Buggy inc. fought tooth and nail to reverse the natural progression by improving upon an inferior system.

My father told me this story a long time ago as a lesson in business. “No matter what industry you find yourself in”, he said, “always be aware of the writing on the wall, and ALAWYS be ready to adapt on a moment’s notice”.

Today, I find myself in the Real Estate Industry, and am shocked by its pending failure to adapt to the changing technological landscape.

The Internet has created a medium by which people (buyers and sellers, that is) can freely and openly communicate. People are using this ability to communicate buying and selling needs on an individual basis. They no longer need agents every step of the way. This is the natural progression of our industry, whether we like it or not; and while our various associations spend our dues on high priced lobbyists hell-bent on protecting our monopolistic control of MLS systems, in effect creating only a “better buggy whip”, outside companies are spending billions paving the new road by which people will buy and sell homes. I refuse to be an agent drawing the outdated carriage on an unfamiliar road.

I, for one, am adapting. I am a proud agent who believes in the service we provide, but can read the writing on the wall very clearly. In preparation, I have created my own website (www.buyerhunt.com); it’s new, fresh and totally untested. Perfect!

I am sure that some of you reading this will accuse me of treason. To those critics: I wish you the best in your struggle against imminent change

Darwin wrote that in the long run, only those who can adapt and remain “fit” in a changing landscape survive. I think it’s about time that we stop trying to improve upon an inferior system, and start adapting. If not, I fear we might find ourselves doomed to the fate of our beloved buggy whip.    

To the Realtors... Friends = Business

With 1M Realtors out there at any given moment, it’s a wonder any one agent can flourish. Well, at least it would seem that way, right?

I’ve been in the business six years now, and with no arrogance intended, have been quite successful. Yes, even in this “down” market.

Chalk it up to whatever you’d like… my website, advertising, good farming techniques (which will be the subject of my next Blog)… I do it all. And these are the ways by which most agents go about establishing a clientele base because it’s how we were taught to do it from the beginning.

Psssssssstttt…. Here’s a secret for you… It’s much more simple.    

Two years ago, while running a client inventory list, I found that my greatest source of business over the past six years has come not from these typical avenues (not even combined) but rather, from my good nature. By that I mean, my relationships with (specifically) non-licensed people. Friends, ex-girlfriends, fellow alum, simple acquaintances, my hairdresser… you get the point. I found that by doing what comes naturally to me, making and keeping friends, I keep busy. 

Ask yourself why we do open houses. It’s not necessarily because we intend to sell the property we’re sitting, it’s because we’re hoping to meet our next client. Open houses are an effective and target specific way of meeting buyers and establishing relationships. Why not put the cart before the horse? Those very same people were buyers before they hit that open house. Wouldn’t it be nice if they had called you first? They might have had you established a friendly relationship first. Now you’re left competing against the five other agents sitting the five other open’s they will tour that day.

Would you truly like to be a “neighborhood specialist”? Then go and meet the neighbors. Want referrals? Go and make friends with people. There are millions of ways to do it: join clubs, coach little league teams and meet the parents, sit on your HOA board, walk your dog and wave to your neighbor (hopefully you can strike up a conversation the next time). Build relationships at every turn in your life and concentrate on keeping those relationships intact.

Remember… PEOPLE buy and sell homes. PEOPLE are social.  PEOPLE like having friends. PEOPLE like doing business with those they know and trust. Meet and befriend PEOPLE, and the rest will fall into place.

Sidenote: Some friends of mine just started up www.cardit.com. It is the only website that allows you to pay your mortgage online, with a credit card. It’s an unbelievable idea! Check it out.

Corey:  www.buyerhunt.com 

Buyer Biology 101

My father has made a habit of catching me off-guard with mind bogglingly open-ended questions. To which no answer i have ever given has been totally correct. Today was no different. As i was enjoying my morning coffee at my desk the question came. "Corey", he said, "what gets a homebuyer excited?". Ah-ha. I had him. In his old age he had slipped up and asked me a question to which i already knew the answer. In fact, we have spent days discussing this very question. How could he have forgotten? With all the confidence in the world I answered, "opportunity, dad". In the 26 previous years of my life, this might have sufficed. But today, this was not the case.

40 minutes later i had the true answer...the "Greg approved" answer. It's not necessarily opportunity that excites buyers, rather the perception of opportunity. And only those agents, systems, websites or real estate tools that can create real or perceived opportunity will be effective in accomplishing real estate transactions.

So here, today, i will humbly attempt to write a summation of his thoughts.   

Let's start with the obvious. Price. A well priced home creates an obvious opportunity for any buyer: instant equity.  But is that real opportunity? Actually, No. That equity cannot be realized until the home is re-sold, thus there is no guaranteed opportunity. Rather, the home's price in relation to the market created the perception of opportunity.

How about days on market? If there is one thing I have learned, it's that you will never have more interest in your home than in the first 15 days it's placed on the market. For buyers, that's prime opportunity time. They're feeling as though they are seeing something others have not had the chance to see, and that maybe they can snag it from someone who, if given the chance, would buy it instantly. Simple psychology has taught us that new is often good. But, something new, rare and wanted by the masses is even better. The real opportunity is in finding the home of your dreams and buying it before someone else does. However, it's limited time on the market has created the perception that an opportunity exists to buy something others would want if given the chance to see it.

I don't doubt that you have seen ads for homes that promise an incredibly low mortgage payment. In fact, the payment is often posted on the ad. Opportunity or Perception? One could argue that since that payment suddenly makes the home financially manageable, they're being given a real opportunity. They would be right. But that reduced payment wasn't the product of a reduced price. In fact, in 30 years they will have payed more for the house than a more qualified buyer would have. The perceived opportunity is affordability.

A staged home? Look at the statistics. A well staged home is more likely to sell, and more likely to sell faster. Why? It's going to look the same whether empty now or empty when the furniture is out. It's because the perceived opportunity is buying a more beautiful home.

So for the endlessly tired and hardworking agents out there...read and learn. It's not necessarily real opportunity that will sell that home, but the perception of opportunity. So forge on my whithered brothers and sisters, and get a little creative. Your buyer is out there, they just have to be convinced they're your buyer.

And in all fairness to you ever-so-prudent buyers out there...while sellers and agents work to create positive perception, please beware of looming deception.