25 March 2009

The Future is Bright For Some, But Not All Will Get It….

As I sat on the main stage Friday at REtechSouth in Atlanta, one of the show organizers, Brad Nix, asked me what I thought about some of the statistics in NAR’s 2008 Profile of Home Buyers and Sellers Survey. What he was referring to specifically was the fact that 85% of the consumers surveyed said they would definitely or probably use the same real estate agent they transacted with again. On the  surface one might think that is a good number, but when you pair it with the fact that only  26% of sellers and only 18% of buyers actually do, it is frightening. Could there be a bigger disconnect? And why?

Well, as it is turning out, this is just one of the problems our industry, in its current state, is faced with and one of the opportunities technology will help us solve. If we let it.

I remember sitting in front of a group of agents not so long ago who let me know that they would not allow their databases to be placed into a company controlled CRM platform for fear the company would “steal” their contacts. They felt they could do a better job at keeping in touch with their past, present and future clients and ensured me they would be successful in retaining their customers for life. After all, they were the ones who had built the relationship. There is a big difference between building a relationship and maintaining a relationship as it turns out. And most agents on their own are ill equipped to manage a large database of contacts effectively.

The result is a sad example of “what is” vs. “what could have been”.  The other side of the coin is of course the other extreme of salaried agents who accept all of their business from a brokerage who spends a lot of advertising dollars capturing potential customers and keeping in touch with them using a sophisticated CRM solution. The agents are held highly accountable to successfully turn leads into firm sales, but the relationship piece is missing. Let’s face it, this industry as a whole, for the most part, has done a dismal job at adopting the whole “customer for life” program. We just haven’t figured it out.  The numbers don’t lie.

So which of the two models will prevail in the months and years to come? I am going to suggest a hybrid. And I say this for several reasons. Let’s first acknowledge that we need significant change. The consumers driving our business for the next 30 years (the 70M “Echo Boomers”) are demanding it. The agents entering the business now are demanding it. But you can’t change an entire industry overnight. And you can’t discount the fact that in the same NAR survey, while 87% of the consumers surveyed used the Internet to search for a home, 85% used an agent to search for a home as well. That speaks  to the fact that the relationship between the consumer and agent is equally as important as technology.  And those percentages remain consistent in each age group.  So both are here to stay.

Other industries have faced similar challenges and have been pulled kicking and screaming into the 21st century (the automotive industry comes to mind) only to find out that partnering with technology does make sense. They find it helps retain clients, which in turn makes the dealer (or the broker owner) and salespeople more money.

And so the race is on.  As some companies and brands are spending time playing with what a storefront office should look like, others are working behind the scenes to develop an actual business model that will work.

The change won’t happen overnight, but the horse has certainly left the gate.

9 thoughts on “The Future is Bright For Some, But Not All Will Get It….

  1. The thing about surveys is…it’s all about what you ask and how you ask. The thing about statistics is…it’s about how the numbers are arranged to tell the tale. Both of these tools have limitations in their predictive ability, but they can be helpful in assessing and identifying important trends.

    I look at the numbers and it’s clear that technology will continue to be a significant factor in the real estate transaction. Today’s emerging homebuyer has been utilizing technology to maintain relationships for decades. The problem is that the average agent still views technology as a tool…not as a means to facilitate the normal human interactions which we all know are necessary to connect with other people.

    When brokers begin to think in relational terms and help their agents to understand what this looks like…it won’t be merely a shift…it will be a seismic event.

  2. I know exactly what you are talking about. HomeQuest is the software we use, and it is amazing for keeping up with large databases of contacts and auto emailing them the listings they want, but I have met some agents who dont ever put their contacts into a digital format because they dont want them “stolen” by the company, brokerage, or even the service provider itself.

  3. Excellent points here about the industry. (I know the study came out and said that 18% of buyers actually used the same agent again, but I’ve heard that number lower in different surveys including one at about 6%.)

    I have too many times been witness to the “you’re going to steal my data” perception. In my experience if the individuals have that little trust for their broker, then the broker/agent relationship might not be the best, and maybe it’s time for that agent to move on.

    I do believe that the salary based Realtor can have a great experience with their agents. Look at many stock brokerages. Many are salaried based plus bonuses, but their clients do enjoy working with their particular broker. In this scenario you have teams of people to assist in ensuring follow up. Other teams that do nothing but interact online (much in the way Southwest Airlines and Ford have dedicated social media managers.)

    But I do also believe there is plenty of room for independent contractors as well, just as there is in the financial service industry. There is not a one size fits all answer. The beauty is in the change, because it will bring the best agents to the top, yield greater profits for brokerages, and build more trust and transparency with clients.

    1. I am liking the fact you think there is room for both Eric, the best agents are already getting it and brokers are embracing new models. The interesting thing is that the state of the economy is helping make it happen more quickly. This will be an interesting case study some day.

  4. Our office is our homes, cars and public places. We do not have an office. A virtual office is there with all the the things a sticks and stones office offers. Saves the broker money and pays extra well.
    Most consumers are onthe net so that is awhere we should be. My whole focus is to learn it as I am way behind. I think agents who try to do “like we did before” will not be here in 5 years if not sooner. Great blog post!

  5. I’ll never forget my first time on phones as a new agent. We have a sheet that we are to record information from all floor calls. I was meticulous with all the details– name of caller, interest, outcome, contact information. I was darned near clobbered by other agents who saw my sheet the next day as it was distrubuted. WARNING— we don’t do that? The reason– someone might take the potential client. WOW! I was surprised. I thought we were all there for the TOWNSEND Team. To me, that information was a company asset and had so much value to us all, if used properly.

    Now, I understand the Independent Agent aspect – and I find the agents on my team to be extremely respectful of the proprietary right to a client — and I see systems in place to keep us from being tempted. So– we have a relatively respectful agent culture– but not a great client culture and certainly very squandered opportunities to build relationship with client as a firm.

    Just this week i was thinking that IF I were a broker of a firm I owned, company wide Contact management system would be an absolute must — and I would serve the clients of our firm by offering them constant value and connection, while providing a huge support service to my agent team. And, there would be accountability on leads or how else can we guarantee client satisfaction.

    Yet– as an agent– I acknowledge that while I crave that kind of support and professionalism— I resist the notion because I want to have an integral say in what “MY” clients receive and when. The hardest job I have is to get people in my community to know that they are to Call TOWNSEND REAL ESTATE (that part comes easy as we are powerfully branded and rspected) but it’s CALL TRE– AND—- ASK FOR DONNA LLOYD! That’s the tag my advertising has to have and the firm doesn’t think to provide that.

    I so agree with the post. We lose so much of our power by maintaining our protectionism.

  6. Sherry, you present some very interesting statistics. I’d be curious to see these statistics over the past 5 or 10 years to see if there is any discernible trend.

    Technology is revolutionizing the business in many ways; the amount of information on the web limits the value of an agent, while at the same time social media sites and blogs allow agents to better maintain relationships with their clients. I think both of these facts have a profound impact on whether or not a consumer decides to use the same agent.

    p.s. The new theme looks great, it’s very crisp and clean. It really conveys the BHG real estate brand.

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