Disruption 2.0: The Next Evolution Of The Real Estate Industry
This blog series explores the ongoing transformation in real estate, with a special emphasis on the interplay between agents and technology. There’s been a lot of change already, but there’s much more to come.
From Information Gatekeepers to Expert Guides
Technology is reshaping the real estate industry. That’s not news. Like many other serviceproviders – travel agents, telephone companies, news media — real estate agents face nimble new competitors and a wave of free tools and information that have eroded their traditional value proposition.
Your customers are asking – and with good reason – why should I pay you a 6 percent commission for something that seems so easy I could almost do it myself?
Luckily, your business isn’t like travel, where customers really can do it by themselves. Obviously, the price of a home is much higher than the price of a vacation, which raises the stakes considerably. But the price tag isn’t the only factor.
Many people manage their own retirement funds online through discount brokers. Mutual funds and airline tickets are highly commoditized and can be researched and bought online. Home sales are much more complex, emotional transactions. Real estate customers still value professional expertise.
It’s true that home buyers and sellers today have access to information that only brokers usedto have: inventory, comps, price history, neighborhood info (crimes, schools), taxes – it’s all online.
Anyone can easily find the home they want, or even list it, often for cut-rate commissions. The role of real estate agents is changing…you are no longer Information Gatekeepers.
The next wave of disruption in the industry will see a shakeout of those brokers that can’t adapt. The best real estate professionals will consolidate the business, while the average or below average brokers will see their business dwindle.
Successful agents will move beyond the era of Information Gatekeepers to the era of Local Real Estate Market Expert. How will they get there?
By emphasizing three things:
1) Using their expertise to get the best value for customers
2) Building trust by focusing on long-term relationships
3) Using new technology to serve their customers better
Good brokers are the experts in their neighborhoods, able to explain why the real selling price of a home will be different than the online home value estimates. Buyers and sellers need an aggregator of services that can manage the process smoothly, negotiate the best price and closing date, and solve problems that crop up during inspections and appraisals.
Too many agents are focused solely on the transaction and not the long-term relationships that drive repeat business. Bottom-tier brokers are often in survival mode and reluctant to cultivate customers that aren’t ready to buy or sell immediately.
Home ownership decisions are huge, emotional, life-changing events. Customers not only can tell when an agent is working for the transaction, they resent it. The successful brokers of the future are building teams of professionals ready to meet customer needs and providing free consultations and home evaluations.
Some brokerages offer free real estate classes or other services that help build a long-term relationship.
Technology is the multiplier that will make the top agents and brokers better and the bottom ones unemployed.
Those who have built the foundation of their businesses on providing value and earning trust can use technology to add value to a customer’s buying or selling process EXACTLY at the point they’re at.
They can use contextual clues to figure out what information their clients need at the time they need it…and earn trust and respect by doing so.
On the buying side, SEO, email marketing, and advertising on platforms like Zillow have helped top agents reach interested buyers looking for guidance and transactional support.
On the selling side, technologies like Flipt are helping agents and brokers build relationships with homeowners earlier in the sales process so they can guide them through all the necessary steps and win listings outside of their normal networks.
Unlike payphones and GPS receivers, modern technology can’t quite replace realtors…but consumers are frustrated with the home selling experience.
They don’t understand why they should pay tens of thousands of dollars in fees for something that seems to take a couple days of work. Today’s best brokers need to add more value and show that they have earned their pay.
What will you say when your next customer asks you to justify paying a 6 percent commission?