Bonzai Real Estate Blog

What happens when the smoke clears in the real estate industry, after the prices have been adjusted, after the foreclosures have made their way through the system and after the lenders have assessed the damages? Back to business as usual? It doesn't seem so. The structure of the RE industry has been revealed and found wanting, and online real estate companies have just begun to change the way homes are marketed.

There has been talk of agents leaving the industry, but I haven't seen any hard numbers. I also wonder how many new agents will be coming into the industry. Will quality of service suffer compounding the problem? Will there be resistance to the 6% model once prices start rising again? How will brokerages react to RE 2.0?

More and more agents are embracing RE 2.0, and I am one of them, but I don't like the feeling of being led when I don't know the intentions of the leaders and how I'll be affected as an agent. This Land of The Free in RE 2.0 is great for consumers, but how will it be for agents. I know we all say "Oh, don't worry, agents will be needed for a long time; we'll just have to adjust and be a part of 2.0." What does this mean? What will motivate consumers to continue paying in the Land of The Free?

They'll need our guidance, our expertise, our hands on services. Well, some of this might be made free also, and what isn't will be seen as not worth the 6% model. Another couple of steps puts RE sites in a position to provide consumers with all the information they need to make RE transactions between themselves. And if these RE sites can make their profit from advertising, what need do they have for agents and how will it hurt their reputation if they ally with agents? I personally think advertsing alone will not be enough for RE sites, but some believe it will be and if it is then I don't see where agents fit in.

NAR is busy attempting to make agents useful by force, but that won't work in the new world of RE --we will be successful by attraction not promotion -- not because people HAVE to use agents, but because they WANT to. You can't close off avenues and force consumers to us, we'll have to create services and open avenues that attract consumers to us. How will this be accomplished in the new world -- what kind of Phoenix will rise from the ashes of the downturn?

While the new online model of Free is constantly innovating, what are we doing to earn our keep? Personalization and context and lower prices for service? That's what I've argued, but how is that value to be transferred to consumers when bigger players with more clout are growing bigger everyday and capturing the consumer's imagination while we sit around being driven further into the darkness by old policies of exclusion and manipulation? The handful of agents trying to do something different is a small answer to a gargantuan problem.

Where is the real estate industry's online Google? Without the prospect of a RE Google, a company on the cutting edge of online RE, we're at a serous disadvantage. So far Zillow and Trulia and the rest have proven to be advertising companies outside our specific interests. I like them and don't see them as a threat, but I don't see them as useful to what we'll need to accomplish to secure a place in the future, at least now I don't see that. It was inevitable that listings and RE information would flood the internet -- it's too bad the RE industry didn't take the lead. It's a wonderful development that consumers have free access to RE information -- that's the new world. Now, take all that wonderful free information and give me 6% to sell your home. On a $250,000 home that's $15,000. Now before you start breaking it all down and talking about marketing costs and the value of service and expertise, let's look at it from the consumer's perception.

The consumer is now being formed by companies who don't understand RE as we understand RE, and although these RE companies are not anti-RE agent, their subtle message to consumers, unintentionally, is that the consumer can do-it-themselves for the most part, with only a cursory suggestion that an agent might be helpful. The prevailing message from the collective of RE 2.0 is that the industry is out-dated and over-priced. The consumers hear "free" and "do-it-yourself", and if you HAVE to go through a listing agent, beat 'em down on commission since the consumer is doing it mostly themselves. The agent is becoming an obstacle to circumvent, not a value-added part of the process. When the consumer thinks they have the necessary information, gathered online, and then make the comparison between "free" and $15,000, it continously puts us in the position of highway robbers in the Land of The Free.

Where is our online kingdom in the Land of The Free? Our future needs an online company greater than Zillow, Trulia, Realtor.com or all the rest. The individual efforts of agents with their websites and blogs and networks are insufficient. It helps, but it's not near enough at this point -- it could be, but with a lot of co-ordinated effort. We, the connected agents, watch in amazement as Zillow ad Homegain and Redfin innovate, but where are we in the process? Where are the leaders and innovators on a large scale? We take what they give us, and if we aren't proactive, we suffer from what they choose to not give us -- we become dependent, cursing NAR and trying to shake the image of highway robbers. If not careful, we become reactionaries in a progressive change, spending all our energy justifying a failing model. 

This is not an attack on RE sites, it's my questions of where we'll fit, what we'll do to be players in our own right, to guide our destinies, to innovate and join the efforts to lower prices for service, to find that value-added position that captures the consumer's imagination in the Land of The Free and makes us leaders, not anxious, apologetic followers.

More later.