It Ain't Over Til It's Over --- the Coming Real Estate Boom

I sometimes relish the position of being a prognosticator, plus I like typing words like "prognosticator". If there is anything to having prior lives, I think I used to be Rasputin.

My prediction is that we have a gigantic backlog of home lust and at the first economic opportunity there will be a frenzy of selling, moving and buying unlike anything we've seen so far in real estate.

I predict that lenders will have learned their lesson and this next home buying surge will be based on rational financing. What I see is people preparing for what I call designer living. The nattering nabobs of negativity in society have underestmated the wealth in this country. People now have the wherewithal to pick choice locations and design their living styles. The challenge to RE agents will be to understand this need and play a different game, which has more to do with buyer agent representation than with listing. The really, really, really good listing agents will do well, but most agents are going to have to provide sophisticated designer buyer services.

Understanding the needs of buyers and treating them in unique style as unique human beings will be key. Attempting to push them in a familiar direction that is comfortable for the agent will not work -- you won't get by that easily. Nope, you'll have to work, and expectations for excellent service will be higher than ever.

I think the attitude will be something like "Okay, agent, I've read the blogs, I understand the issues and I agree that a good agent is useful -- now, prove it!" Oh, I know all about the younger generation that wants to do-it-themselves and sometimes when reading the RE blogs I sense a schism between GenX and baby boomers with ideas forming on either side about the unique approach the future will demand. Having no use for a split mind I don't claim either side fully -- the future holds, as always, a little of this and a little of that, but for the foreseeable future, I'd recommend catering to baby boomers as a large part of any business plan.

A sophisticated approach based on the appealing qualities of honesty and authenticism will place someone who understands the finer points of service in a very advantageous position -- an expert concierge, a trusted confidante, a local guide with comprehensve local knowledge. The bar's been raised and the work is harder, but those who are prepared will be valuable.

One aspect is that the mass of information will need interpretation. It's a good thing that information is freely flowing, but it creates a situation where the agent has to continuously stay on top of it and know more than the consumer -- the danger for many agents is the consumer will know more and find little value in an agent who knows less. Analyzing information and coming up with creative, profitable interpretation is a nifty skill to have. The nuances of local information such as building plans, commercial development, shifting trends in neighborhoods, predictions of new employment opportunities, signs of growth, signs of decline, articulated clearly will place you in a position lazy agents will only glimpse from below, muttering about how the market is still bad and "buyers are liars" and "the internet is hokey" and on and on. Being knowledgable is not just a gimmick to get business, it's the sine qua non of being of use, being valuable.

It doesn't mean we'll have to become high-paid boot-lickers, because professional confidence allows a relationship of equality, and those who come from an angle of plenty can tell an unrealistic slave-driver to find a step'nfetchit waterboy, you're on the starting team. That's not arrogance, that's confidence and appropriate professional pride. The truth is that after the shakeout, excellent service will be in low supply against a higher demand.

This isn't to say, like I wrote above, that the excellent listing agent will have to change their models, it's just that I see a big void in buyer representation that needs to be filled and it will lucrative on a volume basis, requiring lower pricing for service on each transaction. The split in compensation where the buyer is responsible for compensating the buyer agent can't come soon enough -- I believe you will see compensation lowered to what would scare a struggling buyer agent right now, but with volume, it will all adjust. A good buyer agent and a well trained assistant in a decent size area can do a hundred transactions a year with a new model and more efficiency.

The key is efficiency so that systems allow that many transactions without going bonkers: good database systems, a network of referral sources, online automation of everything that can be automated, local networks of efficient vendors, time management systems, transaction management systems -- setting up an efficient structure that allows the agent to quickly find homes without a lot of wasted time riding around in circles.

Being knowledgeable and creating good systems will allow you to complete transactions with half the effort and time. The consumer saves money and you make it up on volume. Networks and systems are my goal this year -- networks and systems that work for me rather than me working for them.  

Mike from Savannah

Comments

[Rita]

What is going to happen to all of those who have lost their homes in your forecast?

I write a boomer consumer blog called The Survive and Thrive Boomer Guide at http://boomersurvive-thriveguide.typepad.com.

Rita

[Mike Farmer]

Although people losing their homes is a tragedy, when you compare the number of boomers who have lost their homes to the number of boomers who have kept their homes and are doing well, you see that statistically it doesn't effect the coming trends of movement.

Those who lost their homes will most likely rent for a while and increase the demand for rentals. It will not effect the movement, therefore having an effect on real estate markets where boomers are choosing to move.