By Bill Miles
RISMEDIA, September 10, 2007–The long term viability of the agent, as a group or individual, is going to turn on their ability to deliver value to the real estate consumer. While there is great momentum in our society in favor of using a real estate professional when buying or selling a home, that momentum will slowly erode if the professional fails to deliver value to the transaction.
Consumers, in the absence of any agent value, will initially refuse to pay as much as in the past for the agent’s services and eventually move away from the agent all together. Although this is beginning to happen now, we are still a long way from the disappearance of the real estate professional. Nevertheless, agents should not let any more time pass before identifying and creating value they can deliver time and time again to real estate buyers and sellers.
The challenge facing the industry, as in many industries, is that the “value” delivered in the past is no longer considered “value” today, thus forcing the real estate professional to create new value. Before the Internet, the primary reason to work with an agent was to gain access to the MLS.
As a buyer, you needed to see what homes were for sale and then access those homes to view the interior. As a seller, you had to list your home on the MLS in order to market it effectively. Real estate professionals were the gate keepers. Consumers now however, with the help of technology, are storming those gates and are just about inside the castle. Active listing data is widely available on the web. Consumers can list and market their homes on the MLS with the help of discount brokers or on non-MLS associated real estate portals, such as ZillowTM, Trulia® or GoogleTM.
In another few years, consumers and agents will stand on equal footing with respect to access to and marketing of homes for sale. In addition, the real estate process is no longer a mystery. Much of the documentation is available online or from low cost providers. If a consumer is willing, there are few barriers to complete a transaction without a real estate agent.
In this environment, the viability of the real estate agent turns on their ability to find new and unique areas of value. So where is the value going to come from?
Answer: Developing an expertise.
Find a niche in which you can develop an expertise and translate that knowledge into consumer value in the real estate transaction. I have identified a number of interesting areas agents are focusing on today to add value to the transaction. Scanning other articles and blogs, there are literally thousands of niches to focus on and dominate. Here are a few:
Technology savvy consumers
Clients who speak English as a second language
Comparing the real estate industry to others that have been impacted by the proliferation of industry data on the Internet, can help us see the future. Ten years ago, when consumers gained access to booking their own flights, cars and hotels, many predicted travel agents were doomed.
While many travel agents did change careers, still many others developed specialties and niches of expertise. This came through education and the development of an enhanced service. For example, when you look for travel agents today, you might find specialists offering company sales trips, “all inclusive” family trips or African safaris. However, you find very few that will make a business flight for an executive to Chicago. That market is gone. Those that have developed an expertise are being paid well and will have long careers. They deliver value beyond the traditional areas of service: scheduling the trip and making reservations.
A second example is the stock broker. Over the past 10 years, the Internet has enabled consumers to buy and sell almost any financial product offered in the market. Yet stock brokers have not disappeared. They have focused on financial planning or developed an expertise in certain financial products or industries. In addition, similar to real estate, buying and selling financial products is a complex activity. Consumers will always need experienced, educated advice in this area. As such, stock brokers still exist, but with new value to offer.
I believe the real estate industry will follow a similar path. This puts a premium on education and converting that education to consumer value. Real estate professionals who rely on traditional areas of value, such as MLS access and knowledge of the process and documentation, will disappear. Agents who have intimate knowledge of a neighborhood or senior housing options for example, will become invaluable, and will be viewed more like consultants. More and more real estate professionals will market themselves as Certified Neighborhood Specialists, or as catering to Spanish speaking first-time home buyers. Many successful agents are doing this now, while others are holding onto the traditional areas of value, not sure what to do next.
In 10 years, will consumers be doing their own transactions without a real estate agent involved? I doubt it. Will the requirements of a successful real estate agent change? Certainly, they already have.
About the Author
Bill Miles is EVP of Connecting Neighbors, a division of Reply! Inc. Contact Bill at firstname.lastname@example.org.