Is the Real Problem With the Real Estate Industry the Clients? Maybe

I was asked again last week to contribute a response at Inman News to a provocative article from Brad Inman.  Last time, he wrote about the potential disruption of the broker-agent relationship from online portals, in the way that Uber has disrupted the traditional limousine industry’s relationship with drivers.  And in my response, I challenged the idea that technology might be as disruptive as people think it’s going to be, but then argued that if it does happen, it’s the brokerage industry’s fault for not creating a better experience for our clients.

This time, Brad suggests that the industry has been too focused on marketing and customer acquisition at the expense of a concentration on improving the customer service experience, and that technology startups might be a driver toward changing that experience:

But the current discussion should not be about revenue models, it is about who can fundamentally change the old ways of doing business. For now, everyone is focused on marketing and customer acquisition, including Zillow, Trulia, realtor.com, Homes.com, etc., not the overall consumer flow from home search to closing. Regrettably, the identity and the reality of the industry has always been about marketing, sales, recruiting and advertising. The old-school model continues to win, with the portals playing a role in the cabal.

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But more change is needed, and opportunity and lighter technology will drive it. The company that offers a complete and superior consumer platform will have valuations more like Uber and Airbnb — $10 billion today and rising.

The winner will present an integrated combination of a stellar front end with a robust CRM and transaction management system on the back end, offering a connected, elegant and easy-to-use online place for buyers and sellers as they go through the rigorous 90-day workout.

The challenge in responding to this argument is that I essentially agree with it — I’ve been saying for years that the industry needs to be more client-oriented, that we need to change our focus from our own needs (lead acquisition) toward providing them with a better experience.  So I basically agree with him.

So my response took a bit of an angle on his argument, pointing out that the problem is not the technology — which I think already exists at some companies. Rather, the problem is that we don’t have enough good agents to implement that technology, and the reason for that is that the clients are just not choosy enough!  That is, clients are willing to work with lousy agents, and because of that they create all the wrong incentives — agents put money and time into marketing because they see clients respond to that, clients who would be better off doing a more rigorous vetting process to find a great agent, but who simply work with whoever answers their internet lead, the phone on their incoming inquiry, or sits the open house when they’re at the right point in their purchasing process.

Having read the piece now that it’s out, I’m a little concerned that people will  think I’m letting the brokerage industry off the hook. I’m not.  Basically, I think that we are the ones who have created the consumer perception that all agents are the same, that they’re all salespeople, and that they don’t need to be selective in choosing one. It’s really our fault.

It’s kind of a self-reinforcing loop: we do a bad job of differentiating our services, leading to commodification; clients see us as a commodity, so they believe all are the same and don’t feel they need to be selective; and agents see how clients respond to marketing and lead generation techniques, rather than performance and track record, and invest their time and energies accordingly.

Take a look, and if you have comments feel free to make them on the Inman piece.

If Technology Disrupts the Real Estate Business, We Only Have Ourselves to Blame

I have not been writing much recently on this blog, but Brad Inman contacted me this week asking me to contribute a response to a piece that he wrote for Inman News entitled “Real Estate Disruption May Not Be What You Think it is.”

In his piece, Brad questions suggests that disruption in the industry might not come at the expense of the agent — i.e., a for-sale-by-owner model that actually works and eliminates the agent from the transaction.  Rather, he thinks that the online portals (Zillow, Trulia, Realtor.com, or one still to be launched) could disrupt the agent-broker relationship, displacing the broker but retaining the agent at the center of the transaction.

It’s an interesting and provocative argument, and Brad asked me to respond because he wanted to see what a broker had to say about it.

You can read my response, “No One Can Disrupt our Industry Without Our Permission,”  at Inman News, where I argue that if the real estate brokerage industry is disrupted, it’s our own fault for not refining the value proposition that we give to agents.  But I point out that technology might not be the disruptive force that technophiles might think it is, and that even if the industry is disrupted, it’s likely to come at the expense of companies that shouldn’t be in the business in the first place.

Take a look. If you have any thoughts or comments, feel free to make them at Inman.

The Real Estate Broker of the Future?

I was at a conference this week and one of the issues we discussed was the “Real Estate Brokerage of the Future,” a topic that has come up a lot in discussions at industry conferences in the past year. Unfortunately, much of the discussion drifted, as it tends to do, to a simple application of technology, particularly the effect of technology on facilities. The idea is that the brokerage of the future tends to be perceived as a less office-intensive enterprise, leveraging technology to free agents from an office, or at least from a specific desk in the office.

I have no particular problem with this thought. My company has 23 offices, with 23 leases, and hundreds if not thousands of desks, phones, copiers, etc. Any sort of evolution in the industry that allows us to reduce our cost footprint without impacting the services we give to agents or clients would be a good thing.

But I do think that I’ve been part of that “broker of the future” discussion a half-dozen times now, and it seems we always end up talking about facilities. Every single time. It’s sort of like a framing limitation to the discussion, that all anyone can think about is how brokers of the future will be freed from their obligations to pay for office space.

It seems to me that the “broker of the future” issue is larger than that, that facilities are but a small part of it. Indeed, I think technology is a relatively small part of it, and that people tend to overestimate the effect of technology on the industry. Of course, the internet and mobile technology has had a significant impact on the real estate industry, just like all other industries. Consumers are more empowered with information, and do most of their shopping online rather than in person. And agents have myriad more tools to market properties and attract clients than they did ten years ago. But all that technology hasn’t really changed the dynamic of the industry. People still list with brokers, they still go out with agents to look at properties. Agents now market properties on the internet, rather than the newspaper, but the basic methodology is just an improvement on the old process, not a whole new process.

Will that change? Maybe. Certainly, lots of people are spending lots of money and going to lots of conferences to talk about how the industry is doomed (i.e., the travel agent example), but those people have been saying that for a long time. I’d be curious to pull out an Inman conference agenda from, say, 2002, and look at the list of presenters who predicted the death of the traditional brokerage industry back then, and how many of those presenters are still working for that same company and whether that company still exists. They were wrong then, but it may just be a matter of time before these predictions of inevitable decline play out. Maybe.

That said, I do in fact believe that the industry will change, and that technology will have its impact. But if I were to guess what the “Real Estate Broker of the Future” would look like, I am less interested in talking about the superficialities of facilities, website display, commission models, or agent compensation models. If there is going to be a transformative moment, I think it is going to be something more foundational and simple:

Essentially, I think that the real estate broker of the future is going to be the brokerage that finds a way to deliver a better experience for the client, and a way to add value to the transaction.

It’s that simple, and that hard. I have no idea what the broker of the future will look like, whether it will be a virtual office or a single big office with 200 desks and no private offices or a broker that essentially acts as a landlord for agents rather than a partner. All those things are possible. But what I think it inevitable is that the only real estate brokers who will thrive in the next ten years are those that find ways to go beyond the traditional service offerings of the industry.

There’s not a company in the country that doesn’t pay lip service to service through various platitudes and slogans, but there’s also not a company in the country that I’ve seen successfully implement a service ethic that creates a different experience for the client. Better information. Better care. Better communication. Right now, brokers do not differentiate themselves on the actual service experience they give.

Why? Because they haven’t had to. Clients are just not that choosy. They pick the agent they meet at an open house, or answers their call on a sign, or responds to their internet inquiry. Some choose an agent by referral, or work with the agent who helped them last time, but even to this day a plurality, if not majority, of agents are not particularly choosy in selecting an agent. And because of that, they end up with the experience they bargained for: sometimes good, sometimes not so good.

That’s going to change. One thing that’s going to happen in the next few years is that clients are going to be more selective about their agents, and one of the selection methods they’re going to use is the experience of past clients, and the statistical performance of the agents. Agents who burn their clients, who are good at prospecting but not at delivering service, are going to find that a difficult transition. Agents who take a lot of listings, and never sell them, are going to find this a challenge.

So the brokerage of the future, to me, is the one that actually finds ways to improve the qualify of the service experience delivered by its agents. I don’t care how that happens, whether its technology or compensation or commission or whatever, but the companies that create better client experiences are going to thrive as brokerages of the future. And the companies who ignore the client experience are going to become brokerages of the past.

Five Things to Stop Doing in 2010

This past week, I gave a presentation at the Inman Connect Conference in New York with the great Steve Harney on “10 Things” real estate agents should do in 2010. My feeling was that agents are already doing too much, so I decided to talk about five things that agents should STOP doing.

Given that the conference is largely about technology, and that one of my main points was that agents should stop embracing technology, I thought it went rather well….

There’s also a short clip of Camilla Sullivan of Better Homes and Gardens Real Estate interviewing me about the Five Things to Stop Doing in 2010 here.

1. Stop Annoying People, Start Helping Them.
Stop annoying people on social media like Facebook and Twitter. In the last year, real estate agents (and other salespeople) got into social media in a big way, on the theory that this new frontier of networked communications would help them break through the barriers that clients have put on phones, email, or direct mail marketing. But all that agents have managed to do is provoke their contacts to create those same barriers in social networks, the same barriers that people put up to emails of listings they’re not interested in, or phone calls. They are deleting (or even worse blocking) your emails, and they’re using call screening to avoid your calls, because they don’t see the value in what you’re offering — random listings that they don’t care about. No one cares about your new listing that you posted on Facebook, any more than they cared about it when you emailed it around. All you’re doing is annoying people, who are now blocking you or using new tools to screen you out. If you want to be effective in social media, listen to people and respond to them, and provide them with information they actually need. Don’t barrage them with marketing nonsense they could care less about.

So what should you do instead?
• Get the real estate agents out of your Facebook account. If you need to, set up two Facebook accounts, or master the new techniques they’ve created to provide different “faces” to the world.
• Read what your clients are saying, and respond to it. People like it when you post comments on their postings.
• Post minimally, and only when you have something people would want to read.

2. Stop thinking about sales, and start thinking about service.
How many people here would list their home with more than 50% of the agents in your market? That’s amazing. We’re in a business where even the sales professionals don’t have a high regard for the people in the industry. It’s amazing to me that sales training is still so focused on sales techniques that were developed 50 years ago or longer. Sales training should be all about service training. We all need to do a better job for our clients, because in the future clients are going to choose us based on the service experience of our past clients, not based on our marketing pitch or our ability to talk fast and use personal power to influence them. If you do a great job for your clients, you’ll be rewarded. If you do a lousy job for your clients, all the sales tricks in the world aren’t going to save you.

How do you get there? Establish a set of bedrock best practices for how you will run your business, everything from a checklist for what you need to do when you get a listing to a set of protocols for how to communicate with clients. And apply that to not just your transactional clients, but your sphere. Everyone needs a great real estate agent, even when they’re not buying and selling.

So what should you do instead?

• Set expectations for your clients, and then meet those expectations.
• Find out what your clients want, figure out how to give it to them, then execute.
• Look for opportunities to “Bring the Wow” to your clients – opportunities to blow them away with one particular bit of service attention.

3. Stop talking, start listening
Whether you’re online on Facebook, or sitting in someone’s living room, you need to stop talking. Natural salespeople like to talk, because they’re good at it. But we all need to listen more. The biggest complaint I hear from sellers is about agents who come in with a canned presentation and talk for 45 minutes without stopping for a breath. The first thing you should say to every client you meet is, “tell me about yourself, and what you would like me to do for you.” Just like you enjoy talking, so do they, and there is nothing more flattering or engaging than a person who asks you about yourself. Stop thinking about your client meetings as “presentations” and start thinking of them as “consultations” in which you’re going to ask questions, and they’re going to tell you what it is they want. The more they talk, the more they confide in you, the more you’ll naturally build credibility with them. You can’t manufacture “rapport” – it comes naturally by showing a genuine interest in people and what their concerns are.

So what should you do instead?
• Approach any meeting with a client with questions, not statements. Stop presenting, start consulting.
• Anyone you meet, in any situation, find out what their needs are, and then figure out what you can do to help them.
• Post less, comment more.

4. Stop doing things that provide the false security of productivity without actual productivity
In real estate, we measure productivity by whether the activity has the tendency to generate opportunities for you to obtain a new client or better service an existing client. Business development activities are productive. Going to see the inventory is productive. Taking a class is productive. Reading a book that teaches you something about the business is productive. But blogging about your experiences as a real estate agents is not productive. It might be fun, and you might enjoy it, and you might be able to justify it because it gives you pleasure, which is fine, but don’t fool yourself that it’s productive. And stop telling yourself that you’re blogging about the joys and miseries of real estate because you might get referrals. If you work in Manhattan, or retirement communities in Arizona or Florida, you might generate referrals. But the chances of you writing about your real estate career in Des Moines, Iowa or Monroe, New York is going to generate a referral – the idea that someone reading your blog in Utah someplace is going to happen to have a client moving to Des Moines Iowa is just too remote to justify the time expenditure. Don’t do things that give you false senses of security – look how much I did today – without actual productivity. Agents talking to each other is not anymore productive when it’s online than when it’s in the coffee klatch.

I constantly hear from agents in my company who have this great idea of how to develop their business. They all have one thing in common: they eliminate the need for the agent to actually pick up the phone and call someone. Why? Because calling someone is uncomfortable, and hard, and people don’t want to do it. That’s fine. Accept the fact then that you don’t want to do anything hard to build your business. But don’t fool yourself that you can be successful in the real estate business without courting rejection. And don’t finish up your day feeling like you accomplished something when you didn’t do anything to generate a real opportunity to obtain a new client or service an existing client.

So what should you do instead?

• Identify the activities you engage in that actually generate new business for yourself, or help you service existing business.
• Lock in times in your schedule to engage in those activities. I don’t care if it’s an hour, or three hours, or whatever, but lock it into your schedule just as if it were an appointment with a client.

5. Stop embracing new technologies unless they help you do something you’re already doing.
New technologies are exciting and seductive, but they can also be massive time- and energy-suckers. Here’s the rule: if a new technology allows you to do something you were already doing, but to do it faster, cheaper, or easier, then it’s a great technology and you should learn how to use it in your business. Examples are voicemail, emails, facsimile, scanning, digital photography, GPS. All those things allowed us to do things we were already doing, but to do them better. So what’s a bad technology: one that seduces you into doing something that you never did before. You have to ask yourself – why is it that I never did this before. If you used to send out reports on the market that you’d write yourself, then blogging technology is probably great for you, because it allows you to do something you were already doing, but to do it better. But if you’re not a natural writer, if writing is hard, and if you’re not particularly good at it, then why all of a sudden are you blogging? Why are you using a new technology to do something that you never did before? The fact that the technology exists isn’t a good enough reason.

For example: Facebook. Facebook is a great way to connect with your network. But we’re already seeing people mis-use it , and my experience the bloom is already off the rose. You join, you link up with people you haven’t seen in years, you exchange some emails, but then you quickly realize why you lost touch with them, and now you don’t communicate anymore. A lot of fun, but if you’re making some massive time commitment to Facebook, you’re probably being seduced by a technology you shouldn’t be.

I know people hate it when trainers talk about getting back to basics, so I’m not going to say that. But we need to do a better job with the technologies we already have. We all know that most brokers do a TERRIBLE job marketing their listings just on the fundamentals: bad pictures, old pictures, not enough pictures, incomplete descriptions, abbreviations from the classified ad days, incomplete information. Put it this way, if you’re not writing good, solid, appealing descriptions of every one of your listings, you have no business spending time on Facebook.