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Time for Realtor Reinvention

There is no question that the real estate market fiasco (loaning money to people who couldn’t pay it back) was a prime cause of the current Great Recession. The banks have become the villains in this mess and they surely deserve a lot of the blame but are they the only cause? Through recent experience and some follow up research, my conclusion is the real estate brokers and their agents deserve some of the blame and it is time for reinvention.

Warren Buffet has been quoted as saying, “It’s only when the tide goes out that you learn who’s been swimming naked.” When there are more buyers than sellers everyone can appear to be a superstar. When there are, for any reason, more sellers than buyers (the current situation in most markets) then being that superstar is critical.

It is not news that the agent represents, well, themselves. There are as many buyer beware as seller beware warnings. What has come as new learning to me is how broken the real estate buying/selling system is. Let’s start with a personal experience. Recently I tried to sell a property in Florida. After 9 months with less than a dozen showings and no offers we have taken the property off the market. As the MLS listing expired we were bombarded with (really pushy) phone calls and mail wanting to relist our home.

What got me thinking was why have we gotten ten times more calls to relist than we had showings? Where were these “superstars” when the property was on the market? I even received calls and or mail from two or three agents with the same broker who did not even know one another. While I know that the broker holds an overall license to sell real estate and the agents are really just independents who forfeit part of their commissions to be affiliated with the broker, shouldn’t they at least know one another?. When I asked the agents what they would do different to sell my property it was like a recording. Oh, we are the top advertisers. We work hard to be sure your property gets maximum Internet visibility. We place ads in all the home magazines.

Here are some things which were not said. Not one broker that called sold the value of their agency. Not one agent talked about working with other agents not just in their firm but in other firms. Not one agent had a plan to identify prime prospects for our property. When asked why we had pulled the listing, the first thing I said was the market did not seem to have buyers or at least our agent had not found the right ones. The response I got was, oh it is a really tough market and it will probably take 3 to 5 years to come back. So as I followed up with, so what would you do differently or better, the response was ads in home magazines and Internet presence.

This personal experience led me to do some Internet research on real estate companies and their “marketing”. It was shocking how insulated people in this industry are to consumer needs and service that they are supposed to be offering. They clearly have not gotten the, it is the consumer stupid, message. It is unclear what their idea of marketing is because ever site is a carbon copy of the next. They have not gotten the message that listings are not a competitive advantage. Generating listings does not in and of itself build the business and they do nothing to build brand value.

All of this led me to a conclusion that there is a real opportunity for some one to reinvent how real estate is bought and sold. When you think about it, while you can name a number of national real estate umbrellas, you have a much harder (impossible) time knowing what their stated positioning or desired competitive advantage is. What benefit will they deliver to the consumer? When an industry allows itself to become commoditized it screams opportunity.

If the current model is agents versus employees, what if it were the other way around? Many industries grew via the franchise model and learned that real growth, profitability and brand strength came only when they bought back the business from the franchisees. If the current model is transactional, what if it became a team approach where the selling team worked with the seller community and the buyer team was solely focused on “owning” the buyer community but they worked together?

There are many examples of companies and industries that have built profitable businesses by improving the buying experience and not accepting the status quo. Reinventing what turns the consumer off, adding value by developing a twist on the familiar. For example, CarMax built a business model that made buying a preowned car easier, more empowering and less risky. The first step was a stop at a computer terminal to enter your needs (how much you drive, uses, brand and type preferences) and then like a Google search all the vehicles that meet your needs and where they are located on the lot appear. How consumer friendly! No sales person standing over your shoulder unless you wanted one.

When we worked with in the boat business we found that segmenting and better understanding the consumer made targeting the selling effort far more efficient and profitable for the company and satisfying for the customer. In this case we developed a simple screening device to be sure that a sales person was showing the consumer boats and talking about features that met their specific needs whether it was price, how they would or could use the boat to financing. By not wasting time and focusing on the consumer the better shopping experience delivered more sales.

Segmentation, consumer engagement and relationship building with your consumer is not by any means new but all three appear to be relatively nonexistent to realtors. Maybe it is time for a reinvention Coldwell Banker, ReMax or Century 21?

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