Real estate sales is a very big industry. That it is so big, is part of it’s problem, but if it can recognise its shortcomings and begin to make real and tangible changes to alter its course, that same area of the real estate industry, the sales department, can make a very substantial and positive impact on the lives of hundreds of thousands of people, and also, it can survive.
The main problem arising from being so big and constantly growing is that it believes it cannot fail. (This week there are hundreds of people attending licensing registration courses around the country.) Thinks it cannot fail, like a big bank, like a big banking industry. Like Lehmann Brothers and the US banking industry failed.
If you’re reading this you’re not living under a rock on a desert island you’ve met the word Disruption.
Disruption is a technical term as used by academics, behavioural scientists and anthropologists who study human behaviour and productivity. Make no mistake, we are living in unbelievably Disruptive times.
Please don’t get me wrong, I’m not a horse and cart driving, homespun wearing Amish type person who refuses to use technology. The new tools available to us are great! As tools, they have the ability to greatly assist many of the actions we need to undertake on a daily or even hourly basis. However most agents (indeed most people) are yet to learn how to truly utilise the power available to them. Most computers are still only being used as clever typewriters. Compounding this is the distraction capacity the new tools bring that we as a society have only just begun to deal with. The distraction coupled with ineffective use of computer automation has diverted the sales process. I feel deeply for agents who are swimming against this disruptive tide, who are trying to come to grips with it, to learn it and use it, and who are often are drowning in it. But it’s hard and it’s time consuming and it’s costing listings. It’s costing listings because it has, like so many promises offered up before by history’s New Sirens of Temptation, lured good people into believing it will save them work and make them their fortune.
It won’t. The only thing that will make you a fortune, is you. Nothing works unless you do. It’s The 3rd Law.
In 2015 I’ve been back in the real estate business again for about a decade. Having been in, then had an outsiders view and then an active participants insider view again, gives me a unique clarity in observing where we’re going wrong. I love the real estate business and I feel it’s an enormous privilege to be offered the opportunity to participate in people’s lives at a time of such importance. To be the lynch pin in the actions and outcome that can have such an enormous effect on a clients life is truly rewarding. OK, sometimes challenging, but very rewarding.
Disruption is what the taxi industry is feeling with Uber. Not since the horse and carriage were overtaken by the horseless carriage has the industry of personal transport felt such disruption, and the truth is, that the introduction of cars in the early 20th century was really only a minor change; the driver just changed vehicles. Uber have changed the driver.
People are saying that the Uber type change is unique. It’s not. Ask your chemist about the processing of film, digital and the correlation to the demise of Kodak. If you want to confirm that everyone is a photographer with a digital camera in their pocket, just ask any celebrity who finds themselves in a public space. Ten years ago to be captured and publicly outed there needed to be a camera nearby, a real one, now everyone carries one, usually right in his or her hand.
Don’t ask Encyclopedia Britannica about disruption, and while your not asking them never mention that the most successful Encyclopedia product ever produced is now constructed, curated and provided to the entire world completely free by collaborative contributors. Wikipedia. Of course, don’t mention AirBnB to anybody in the hospitality industry.
Disruption happens. It happens to really big industries. It can happen to real estate. It could happen to 50,000 agents in the back yards of Australia, New Zealand and South Africa overnight. It could affect 15-20 million homeowners and their potential buyers. It could bring down the Lehmann Bros of real estate like Ray White, LJ Hooker, Harcourts or McGrath. Smash their sales businesses to the ground overnight. I sincerely hope not.
I know I’m not the only one talking about this, but my gift and curse is that I frequently see trends developing further out, clearly and early. Maybe it’s the Petrie Dish town I grew up in that is so famously Adelaide, which helped create it in me. That little city is renowned as a test market, early adopter and starter of future trends, like Columbus, Ohio in the USA. If an entrepreneur thinks their idea is a worker, these two cities regularly prove them right or wrong. If it works there, it’ll usually work just about anywhere.
Having experienced a personal 40 year ride in real estate that began in Adelaide in the 1970’s, that had been piggy backed onto a previous 80 year ride undertaken by my parents and grandparents, has given me a unique view. Now as I observe the Australian real estate landscape from the top of the Sydney Harbour Bridge on a cold clear winters day, it is both thrilling and chilling.
My grandparents were large property speculators in rural Australia, and my parents residential property speculators in three Australian States. My own journey from a labourer, to designer, to builder, to selling agent, auctioneer, trainer and licensee, to being outside the real estate bubble and back again has given me a unique view of this industry landscape, enabling me to see clearly our strengths and potentially catastrophic weaknesses.
Speaking of Wikipedia:
disintermediation : noun: reduction in the use of intermediaries between producers and consumers, for example by investing directly in the securities market rather than through a bank or broker.
Another example? Marketing and selling a property directly to buyers rather than through a real estate agent.
Further: simply wanting to reduce the interaction, the mediation between potential service providers because it’s not perceived as a valuable use of time. (Remember this)
The life threatening problems facing the industry are centred around the failure to demonstrate value to the real estate client. There are a couple of big words now used by the academic pro’s to describe what is happening. Disintermediation is one, and it’s a mouthful. Commoditisation doesn’t roll off the tongue much more easily but at least it’s a lot more familiar. That’s because we’re familiar with the term and the concept of commodity. We don’t ever want to be perceived as that, a commodity. If sugar and obesity and their ramifications are a disease threatening the western world, commoditisation is a disease that could make the real estate agent extinct, and do it in a generation.
There’s another way to look at the potential impact of the disruptive technology that is making these ‘human bypasses’ so possible, this disintermediation.
We could look at it as… a good thing.
Around 65 years ago the big department stores finally won the battle over the majority of smaller high-street shops. Seduced by their size, the quality and quantity of products available all in one place, the lights and the mirrors and the volumes of fawning attending staff, we made the move and we loved them. And then they blew it.
It had taken 100 years for the likes of Dunne’s in the UK, a once huge 150 + stores! but now gone, Eaton’s in Canada, also generationally huge and now gone, to David Jones and Myer in Australia, 100 years for them to become the leviathan’s of retail, but who in a generation have so seriously tested the patience of their customers that their faithful have said ‘enough is enough’ and they’ve taken their credit cards online to China.
People, us, have always been ready and willing to source out and pay for quality. But what is the ‘quality’ we’re talking about? The scales have always been heavy and ready to tip towards happiness when valuing the quality in service and relationship. Quality and value in the product must still be there, but we’ve always proven a strong disposition towards giving our money to people we like. Relationship. Human relationship. Especially if we’ve never had to apply any self-challenge that it was still the right place to go, specifically, that we haven’t been let down yet.
Where do you get your car serviced and why? Where do you get your hair ‘done’ and why? Get your coffee from the same place most of the time? People, we like people, and we’re happy to keep trusting them and giving them our custom as long as it’s smooth sailing and good value, high in ‘relationship’.
We’re also, now, quickly disappointed when people let us down, less so with the cost, more so with the quality of the humanity in the service, or lack of it.
The Internet is providing the platform for smaller online businesses that are able to bridge the gap between their ability to provide exactly what you want, coupled with a palpable sense of personalised, customised service and connection, and those businesses are reaping the rewards.
People like, People like Them. Sales Rapport #101.
It’s in our nature to commune and trade with each other, but we’ve become impatient.
The 2015 CoreLogic Survey of Real Estate Consumer Perceptions revealed that 38% of sellers appointed their agent after having interviewed … just that one agent. 38%!! Ten years ago that figure was under 5%. What will it be in five years time? 50%? Probably and possibly even higher.
That half of all real estate agents might be appointed unopposed is not the problem.
That, if it happened today, on average there would be 39 other agents available for that appointment, that don’t even get a look in, is the problem. That Virus is spreading.
Could it also be a blessing?
Like the implications of the Reserve Bank of Australia talking about the necessity of considering major structural changes to Negative Gearing and Capital Gains Tax, the possibility that the real estate industry might progressively starve to death half it’s agent workforce could be a good thing.
I’m really not a bloodthirsty mercenary bastard; I love real estate agents. But consider the implications of the necessity to increase the quality of the service delivery by the surviving agents, delivered to the level required to be considered as that one agent, the only one Invited In, 50% of the time.
From there we must progressively see a reduction in the numbers of available agents, as that other half, not good enough – or at least not perceived as good enough – at providing the best service will starve. We’ll also have to see, by the remaining agents, an increase in the quality of relationship and skill-value brought to the table. The kitchen table.
And remember where we place the Value emphasis on Quality?… in Service and Relationship.
A return to developing a deep, relationship based quality service will be the currency of the successful real estate agent of 2020.
And what a nice place to live that will be.
But how to become that, to become a thriving survivor?
Q: When is the best time to plant a tree?
A: 20 years ago. The next best time is today.
Q: What should a real estate agent be doing today, to ensure that come 2020, they are the only one INVITED IN!
A: Engage your future client with the number one relationship building and vendor teaching resource available.