Real Estate Joins Club Crushing Competition! Big Time!
Upon being questioned by a member of the audience concerning slipping commissions, I drew a rueful laugh when I snippily retorted, "Get over it." I added, "Be thankful for how long your Monopoly lasted, and when you do hold your Weeping Party, don't invite Stockbrokers—their fee structure means they can hardly afford Cab Fare to your whinging party, so the sympathy will doubtless be in short supply."
Truth is, I had a ball during my 90th and Last seminar of the year—to the Very Progressive ... Houston Association of Realtors. Texans are fun to be around to begin with, and I as usual got a great kick out of dealing with yet another Profession coming ... Under Direct Siege. After years of an almost guaranteed 6% commission ... The Web Has Arrived. I spent hours patrolling the likes of LendingTree.com, ZipRealty.com, ServiceMagic.com, HomeLoanCenter.com, HouseValues.com, forsalebyowner.com and homedepot.com. The array of online services, advisory to turnkey, is staggering ... and growing daily-exponentially. (And attracting aggressive players like Barry Diller and Cendant.)
Some 70% of prospective RE residential purchasers now start their search for home & agent on the Web; those who so utilize the Web spend on average 1.9 weeks with a live Realtor, vs 7.1 weeks for the non-Webbies. Realtors pay 25% or so—a Big Deal—of their fee for on-line generated leads from 3rd-party providers, and commissions in general are more like 4.5% than 6% these days and headed for the Rio Grande. Talk about trauma-for-traditionalists! (The industry, including Houston, sports a, shall we say, sizeable share of Gray Hairs.)
The Houston Association of Realtors, typically considered best-in-breed nationally, has its own brilliant & aggressive & high-investment Web site, HAR.com. Unlike many of its sister associations, HAR is urging members to progressively live with and take advantage of the changes; other associations are following the futile "genie-back-in-the-bottle" approach, and frequently using their formidable local political clout to shut down public-listing sites in their locales. Talk about baying at the moon! Eventually, the courts will stop the silliness, but not before the Luddites lose another few years playing defense.
My Tom-message was fourfold: (1) The Web is here to stay/You ain't seen nothin' yet. (2) Make the Web and the New Services your allies & partners, make them work for you, not vice versa. (3) The old commission structure is DOA—get on with life. (4) Respond to competition by Leaping Up the Value-added Chain ... and offering Irresistible Experiences of the Cirque du Soleil variety.
As some of you know, I just returned from England where I participated with Saatchi's Kevin Roberts in a Microsoft Webinar on KR's powerful-profound Lovemarks idea. I hawked it like crazy yesterday, as I did with Lawyers a few weeks ago. I demanded (Can a consultant "demand" anything?) that my Newfound Houston Realtor Pals begin 2005 by responding to my 2 questions: (1) WHAT'S THE "DREAM" THAT YOU OFFER? (2) How do you become a ... LOVEMARK?
I insisted I was not "talking at" my Clients, but "with" them. Hey, I, too, am caught in exactly the same pincer movement: (1) On the high end, the "guru market" supply-side is outpacing the demand-side. (A recent Variety story claimed there are 150 speakers priced at or above $40,000 a pop—up from 1 when I effectively invented the "guru industry" 20 or so years ago.) On the other/lower end of the-my market-spectrum, eLearning is eclipsing classroom training at an extraordinary rate. All fine with me! I well know that I must work night & day—including this Blogging—on my Lovemark!
Welcome to 2005, Realtors. (And Lawyers.) (And "management gurus.") (And just about everybody, including the hundreds of thousands in the "I've Been Outsourced2005 Ranks.")
Come in, Houston!
Become a Lovemark!
NB: Houston/HAR, thanks for making my Grand Finale2004 a Peak Experience! And being such gracious Hosts!
NB2: For those interested in this market, see the Wall Street Journal (12.06.2004) piece "It Will Still Take Time, But Net Is Modernizing Home Buying, Selling."