Very interesting observations, Barret — thank you.

Really quick, since I don’t have a ton of time right now, your observation about “Vertical Communities” brings to mind the whole Long Tail scenario. It also brings to mind specialized practices in areas like law and finance. So while the topic deserves far more detailed discussion, it seems to me that the key then will be figuring out (a) the verticals that are remunerative enough in and of themselves to sustain a business, and (b) pricing models differentiated upon the specialization.

(a) goes to the Long Tail problem where producers in the Long Tail make no money; only the aggregators do. (b) goes to the problem of incentives: if brain surgeons got paid the same as general practitioners, why would anyone want to take on the additional schooling, training, and residency requirements of becoming a brain surgeon?

More later.

-rsh

The first thing I tell a new broker is “you may start out doing everything in sight. But as time goes by, you will find yourself working more with a certain subset, say retirees.” No one brand, and no one technology is a one size fits all.

Therefore, what we are more likely to see are two things:
1) Real-Estate as a service
2) Real-Estate vertical communities

Let’s look at “Real-Estate as a Service” first. More and more do it yourself consumers will want the REAL Home Depot option. That of getting the tools and materials I need from Home Depot so I can do it myself. This means, I may want to pick up a “Listing Service”, a “Staging Service”, a “Negotiate On My Behalf” service, and so on. Firm’s agents will offer these services for fees. The number and type of service is endless. Use your imagination.

The second is “Vertical Communities”. We already have some of this today. Just look at Commercial vs. Residential. Then drill down a little more and you have potential verticals like “First Time Buyers”, “Luxury Buyers”, and “Retirees”. Drilling down even further, you might have “Half-Backs” as a vertical community. Half-Backs are retirees who sold their homes up North, moved to Florida, and now want to move half way back to say North Carolina. Think about the needs of this one segment, Half-Backs. If someone were to create an online community where this group could congregate to share stories, talk about their problems selling their home in Florida and get advice or info from other community members. Then have their Floridian property (listed in a local MLS) be shared on websites of markets for potential buyers (in this case, we know buyers of Floridian properties are in England, Germany, and Australia).

So the tools and technologies will be verticalized by the regional stakeholders in those vertical markets. But no one company or technology will prevail. It will be MANY vertical companies with customized Google Social type technologies who will prevail and be the real winners.

Hey, thanks for the comment Joe. Great to have your insights here.

I should clarify that I don’t completely disagree with your conclusion, in the sense that… IF the Big Brokerages don’t step up, then the only real alternative is for Big Technology to do so.

Your point #1 about teams/small groups being the future because they can leverage technology better is true. But it also relies upon those ASP/browser based technology being available in the first place. That can happen only because someone invested millions of dollars in creating it.

My take right now is that Big Brokerage is best positioned, and best incentivized, to make that investment and to create the next generation of technology tools. But they might not do so. Real Estate Technology — still a very nascent industry, with few players who are making big dollars — might mature and eventually take over that technology provider role.

If it does, then that spells the end for Big Brokerage as we know it, IMHO, in the same way that technology spelled the end (more or less) for Big Travel.

As for #2… I think that deserves far more explication and exploration than available in a comment. But generally, I wholly agree. Technology, however, will have dramatically different impacts.

-rsh

I agree with many of your points and some of your basic reasoning, but my conclusions are different. For example, I think that teams will continue to be a big part of the picture. Here is why:

1. Many are able to leverage technology better than big organizations. They can obtain it and deploy it faster because they are smaller and because ASP/browser based technology is so accessible(and inexpensive for them to deploy).
2. Real Estate is a personal service, just like a Dr, an attorney, a financial planner, etc. People will continue to choose agents based on personal referrals and other factors, not just by brand. Very, very few people call up a broker or franchise some due to their brand. The brand adds to their comfort, but is almost never the driver. I can watch 100 C21 or CB ads, but as soon as I step outside my house and see four yard signs in my neighborhood for an agent (independent or otherwise) and ask my neighbors if they like her (and they do), guess who I’m going to list with?

More later…

Cheers,

JK

They key point that I found was your examination of the RE 2.0 companies vs. the big outfits like Century 21, who you know I represent. I believe the big boys are here to stay. The online brokerage models may gain some momentum by offering discount services, but I don’t believe that a significant percentage of consumers – of any age – are going to be comfortable transacting what for many is the largest single financial transaction of a lifetime via an online interface. I know I want to be able to reach out and touch my real estate agent, to share my thoughts in person about their performance.

Well before I get too long-winded, that’s my .02.

Keep up the thought leadership R.O.B., but please offer a cliff notes section. I only have 30 minutes for lunch.

Sender – Channel – Message – Receiver

From the front lines,

Matt Gentile

Coming from the marketing side of things as well, it’s interesting to see the differing perceptions between an agent and marketer…now if you could only get a major real estate CEO to chime in, we might be able to see the whole picture.

Thanks for writing this, it certainly is giving me a lot to think about.