By Stephanie Andre
RISMEDIA, June 3, 2008-”Those in the industry that move to accommodate the language and cultural nuances today will be the ones to win out both from a market share, profitability and recruiting perspective because they will have the infrastructure and the marketing know-how to service the new home buyer that is yielding a formidable ‘buying power stick’,” explains Oscar Gonzales, Ph.D., founder and managing partner of The Gonzales Group.
It’s for this reason that Gonzales and his managing partners, Antonio Valdez and Dan Carrillo, founded The Gonzales Group, a business consulting and research firm in the field of multicultural markets for the real estate and financial services industries. Here, Gonzales delves into the origins of his company, the passion he and his colleagues show for their work and why real estate professionals need to evolve and embrace multicultural home buyers-and fast.
Real Estate: When and why was the Gonzales Group formed?
Oscar Gonzales, Ph.D.: The Gonzales Group was formed in 2003, simply out of the demand from brokers, lenders, and title companies desperately seeking a “sound business solution and strategy” to targeting the multicultural consumer base. We personally have been tracking the demographic trends for at least a decade and knew that it was going to impact the industry sooner than later.
We saw an opportunity to fill that gap with strategic solutions for the industry. The industry is really behind when it comes to the multicultural consumer base. The automobile, insurance, and personal products industry have about 10 years on real estate. Our industry sells the product that is the “American dream,” yet we do a poor job of getting it into the hands of the end user. We want to help players on both sides of the equation: the real estate professional and the multicultural home buyer.
More importantly, our own personal experience is a big motivator. All of the partners come from very humble beginnings and seeing our own parents struggle with language and cultural barriers is something you don’t easily forget. It shouldn’t have to be that difficult for a family.
RE: Is the Gonzales Group a marketing firm? What does the company do to educate industry professionals on how to best serve multicultural segments of the buying/selling community?
OG: Marketing is just one variable in the suite of services we provide. We provide business solutions on various levels, including multicultural recruiting and retention of productive sales associates, strategic planning and development, training for brokers, managers and agents, and interpretation of multicultural trends to establish the business case, followed by tactical strategies for deploying a sound multicultural initiative, such as marketing and website development.
Our approach is profitability-driven, but with an emphasis on building the critical “emotional equity” that leads to “economic equity.” At the end of the day, it’s about closed transactions in this market segment.
RE: We have all seen the stats about the exploding multicultural population growth. Where do you see the real estate industry in four to five years on this?
OG: Since 2000, we have seen a significant shift in the profile of consumers. The multicultural consumer has grown both in population size and in buying power. The buying power among multicultural consumers will grow exponentially and the market share claimed by this targeted group of consumers is important because the higher their market share, the lower the average cost of reaching a potential buyer in the group.
At the same time this is taking place, the U.S. “Baby Boomer” population is leaving the workforce and seeking the next home buyer for their home. For example, the new prospect of diminished skills in the future workforce and a reduced middle class could undermine the continued growth in home prices. Retirees will transition from being net taxpayers to net recipients of health and pension benefits, and they will be supported by a smaller workforce that is struggling to meet its own needs. Seniors are also net home sellers and that leaves one critical segment of the population to fill the gap: multicultural consumers.
Keep in mind that the multicultural population is a young group, with nearly 50% of Hispanics and Asians under the age of 24. In the next four to five years, we will see that group move into the home-buying pipeline in exponential numbers compared to the traditional white, non-Hispanic home buyer who we’re used to seeing.
Those in the industry who move to accommodate the language and cultural nuances today will be the ones to win out both from a market share, profitability, and recruiting perspective because they will have the infrastructure and the marketing know-how to service the new home buyer that is yielding a formidable “buying power stick.”
Those in the industry who choose to ignore the change and the multicultural consumer, for whatever reason, have a very short shelf life.
RE: How has the industry adapted to the growing segment of multicultural buyers/sellers?
OG: We have been fortunate to have had a real estate boom that went way beyond traditional cycles. The industry was so busy and caught up in the selling frenzy that they tended to ignore new and growing segments of the home-buying population: the majority of that ignored populous were multicultural consumers.
The industry simply did not take the time to educate this new home buyer about the process, which is a critical cultural step to reaching this burgeoning consumer base and may now be the consumer base that keeps the industry afloat in current economic conditions.
RE: What are the biggest myths that real estate professionals have about multicultural consumers?
OG: That one size fits all. This new home buyer is not receptive to existing sales techniques and traditional marketing approaches. These traditional methods do little in bringing the multicultural consumer into the home-buying process.
RE: How much does culture really play a factor in garnering multicultural consumers’ business?
OG: This is one of the most frequently asked questions we get from people that want to know: “What makes these customers so different from the general market?” It is not an “us-against-them” dynamic, but more of the fear of the home-buying process, no point of reference to property or homeownership from their country of origin, humility, and language.
Culture plays a significant role in the home-buying process. Studies have shown that most multicultural home buyers turn first to family and friends for advice before approaching a real estate professional, even those who are first and second generation. The experience of others in the community can strongly influence their decisions, which is sometimes difficult for real estate professionals to understand.
The family as a whole, not just the buyer, makes decisions, including which home or lending product to buy or utilize. There is a cultural reason why 20 Hispanics or Asians show up to a real estate closing or open house.
RE: How does the Gonzales Group educate practitioners about multicultural home buyers?
OG: What is critically important to the multicultural consumer is having someone as their trusted advisor. The industry has moved away from agents being counselors and trusted advisors to transaction-generating machines.
You cannot build relational equity with just brochures and a website. It involves building a relationship that extends beyond the duration of the transaction and takes into account language and cultural nuances and establishing yourself as a trusted advisor with the best interest of the multicultural family and community in mind.
RE: Have you seen changes in the business practices of players in the industry? Isn’t it expensive to change strategy to cater to different types of consumers?
OG: There is a lot of awareness and discussion about the topic, but no one has really stepped up to the plate. Although, when we present the business case for such an initiative, you do see the lights go on.
It is important to understand that a multicultural initiative does not require an expensive, resource draining, revamping of your business. Instead, you build on the infrastructure you have in place and leverage it to reach a consumer base that has been ignored for so long and now has the buying power and the numbers to allow real estate professionals to grow their market share and profitability, even in today’s economic environment. RE
For more information, visit www.thegonzalesgroup.com.
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