Tsunami of Change

Trends in the Industry Will Shake Things Up - From predictive farming to succession planning, topics discussed at NAR’s annual meeting proved that big changes are coming to the industry. Here’s a recap:

The 2015 NAR Annual Meeting in New Orleans was, at many levels, a far different experience than any of its predecessors. There was a clear and consistent vibe that, after all of the years of talking about transition and disruption, that the long predicted tsunami of change had indeed arrived to create something far different. Moreover, that this far different thing was going to be broker-centric with a strong consumer flavor rather than consumer-centric with a strong broker flavor.

You could hear it in the presentations. You could sense it in conversations and hallway huddles. You could feel it in the demeanor of the late-night gatherings. Interestingly enough, one came to understand that those who were not receiving this vibe were also those who were probably never going to get it.

Perhaps it was the specter of the recent News Corp.-related purchase of Move.com. The realization that the industry demographic had expanded to include yet another team of powerful global experts for whom the industry’s traditions and legacies paled in comparison to its long denied financial potential. One could not help but feel the gaze of Rupert Murdock looking down on the trade show floor working a checklist of what was relevant and what was fluff.

Core Standards

There is no doubt that the vibe was driven by the influence of NAR’s association core standards program that has thousands of association junkies at the edge of their seats. It has become increasingly obvious that, like so many other powerful players, NAR’s vision of the future of Realtors® has moved significantly from its classic position. At the end of the meeting, the vibe was literally shot into the sky by the decision of the nearly 850-member NAR board of directors that approved policy recommendations directing NAR’s leadership team to create a new “Code of Excellence” educational requirement. It will make the current requirement to complete Realtor Code of Ethics training biennial instead of quadrennial. The yet-to-be-developed “Code of Excellence” appears to be the trade group’s latest effort to raise the bar of professionalism in the industry. These actions seemed to support the growing sense that the current role of the agent is not working for anyone.

Digital Disruption

Interestingly enough, in the middle of this confusion, Trey Garrison, writing for HousingWire, published an article entitled “Prediction: Realtors Almost Totally Unnecessary by 2025.” The article centered on the continuing world of digital disruption. One of the article’s more interesting quotes suggested that the gap between real estate services and market demands would continue to expand creating a vacuum that would demand to be filled. “Real estate traditionally changes slowly but these new emerging aggregators could revolutionize the market.”

Somehow this article generated a new round of the now-decade-old discussion regarding agent disintermediation. Politically motivated industry players once again rushed to the forefront to insist that real estate agents would always exist as if to say “don’t sweat the changes, you are irreplaceable.” Yes, there will probably always be humans involved in the real estate transaction. The real question is how far they will fall from the center of the transaction to an administrative runner.

Realty Alliance

Continuing the search for the origins of the vibe, one cannot underestimate the impact of the ongoing buzz within the large brokerage sector regarding the flawed conceptualization that is the Realty Alliance’s downstream project. How can it be that we refuse to recognize that the MLS challenge is not about technology? The act of melding over 70 of the most magnificent corporate cultures ever created by man will require an almost biblical act of leadership when it comes time for each to sacrifice individual uniqueness in favor of the common good. Is Solomon really waiting in the wings?

Continuing with the MLS theme, some observers might suggest that the vibe was impacted by the constant background buzz regarding the rapidly deteriorating MLS situation. Another round of seasonal MLS leadership meetings has, with the exception of CMLS Best Practices program, expended significant resources yet netted little or no substantial progress. In the meantime, the large brokerage sector has given transparency to a growing realization that far too many MLSs are little more than vigilantes manning strategic roadblocks designed to protect local village markets. It is clear that the industry will not allow this situation to continue. It is just a matter of who will rescue the industry from this unacceptable behavior.

Final Analysis

In the final analysis, if one were to convert this stream of consciousness into a “vibe causer” beauty contest, the clear winners might be two organizations—Realogy and Smartzip. During the meetings, Realogy announced its new Ascend program. While only time will tell whether this program has the potential to make a major contribution to both the mindset and procedures involved in the long-standing dilemma of succession planning within the real estate brokerage industry, the initial design looks promising.

The fact is that despite the major role that the “having the kids take over” fantasy has played in the industry over the years, and it has not been a successful play. The Realogy press release quotes the Family Business Institute as suggest-ing that only about 30 percent of family businesses made it through the second generation in 2012. Experience over the past two years will probably find that even this number has dropped due in part to the massive changes that are taking place in all industries. Daughters and sons who might have found their parent’s traditional business model attractive may not find the task of reinventing it and/or rehabilitating its dysfunctions equally attractive. The problem will not be improved by the fact that an ever-aging brokerage population will be seeking an escape from an invading technology sector, increased competition from new business models, a consumer who is now some 30 years younger and, most importantly, seeking a well-deserved retirement.

This program is a brilliant idea. Realogy is to be congratulated for addressing this major industry issue. Hopefully, they will be rewarded with many high-quality relationships with the next generation of brokers created through the Ascend program.

SmartZip

The second winner has to be SmartZip and its SmartTargeting product. This is not a new product. Instead, it’s a product whose time has arrived. The product places the extensive powers of “big data” and “predictive marketing” in the hands of the brokerage to deliver a farming system of which many agents only dream.

Brokers may purchase a marketing farm comprised of about 2,000 contiguous residential properties. Once this farm has been established, SmartZip will target its impressive big data resources on the residents living in that farm. Using a sophisticated logarithm, SmartZip can correlate certain residents with behaviors or actions that are consistent with a decision to buy or sell property. One can only imagine how many Rotary Club meetings would be required to match such a system’s momentary sweep. SmartZip’s product is just one example of how the agent function is being systematized and automated.

It’s clear that the industry has now fully engaged with a new era.

This article originally appeared in the December issue of the REAL Trends Newsletter and is reprinted with permission of REAL Trends Inc. Copyright 2014

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