I’m honored to be asked to give the closing remarks at the Council of MLS conference in Chicago this year at the end of September/early October. Since I’m supposed to be wrapping up the discussions of those few days, I can’t actually prepare anything ahead of time. But I can sort of cheat by putting out to the industry some of the bigger issues/questions I’ve been thinking about, in the hopes that the speakers, panelists, and participants at CMLS this year might talk about some of these things.
These Seven Big Questions represent some of the really fundamental challenges facing the MLS industry as a whole. I do not (yet) pretend to have all the answers, or even any answer (at least, not in public, heh) but I did want to start posing them to my readers. For those attending CMLS, please give some consideration to thinking about these questions.
Few industries worship innovation as much as real estate does. It is perhaps the highest compliment to a company or to an individual in real estate to say, “You’re so innovative!”
Recently, I ran across a hilarious little parody website called ReallyRottenRealty.com. The site exposes some of the more compellingly awful business practices of some brokers and agents out there. Check it out, and be prepared to laugh while grimacing.
Turns out, the website is a marketing vehicle for a company called AgentHarvest, based in Dallas, TX. It’s basically a lead referral business, the likes of which we’ve seen before. But there are some interesting, unique things about AgentHarvest that make it worth discussing a bit.
If you’re responsible for real estate brokerage operations, you owe it to yourself and to your company to read this post by Glenn Kelman at Redfin. I have said for a while now that I believe Redfin to be one of few viable models for real estate brokerage of the future, and this post helps confirm that belief. It’s a long post, and worth reading in full, but here’s the money graf:
But outside of calling one agent after another, the CB CEO has no way of knowing what his agents are doing; most work as contractors, for franchises, recording their deals in spreadsheets and notepads. Redfin on the other hand has a system for scheduling home tours and writing offers, which means we also have a system for storing data about every tour & offer. Months before the numbers are recorded at county courthouses or by federal agencies, we know when bidding wars are back, or when tire-kickers have taken over the market. We can see the whole elephant, and we’re minutely sensitive to when he’s about to roll on top of us or stampede through the jungle. [Emphasis added]
Fact is, far too many real estate brokerages pay lip service to the importance of technology. Even the ones who do invest are putting money and resources towards marketing technology rather than information technology. In the long run, I think the companies that survive the Great Recession will be ones who invested in information technology, rather than just another pretty website. Read the rest of this entry »
In the comments to this post, I’m getting some rather interesting thoughts from a variety of real estate agents and brokers. The question I asked was, “Why should I, as a consumer, care if you’re tech-savvy or not?” The most popular answer was along the lines of, “Because tech-savvy agents have speed and ease of communications.”
This comment from Candice Donofrio was fairly typical of the responses:
Communication – ease and speed – are what make the tech savvy REALTOR the best choice from the beginning to end of the transaction:
Luddy’s transaction manager won’t be able to quell an emotional meltdown or provide a due diligence resource ‘off hours’ if Luddy’s not near the office phone–that client will have to wait for a return call ‘the next business day’. The client will DM Mara on Twitter, find her on 4SQ or simply text her to get an immediate response.
If one assumes that technology enables faster and more efficient communications, then the tech-savvy agent does indeed provide greater value to the consumer. Question is, what technology are we talking about here?
Or thought of another way, when you look at the innovations in the industry today — whether mobile apps, CRM technologies, social media, RPR, or whatever — you might ask, “What part of the industry does this innovation destroy?”
If the answer is “none”, then that thing, whatever it is, is not innovation. It is, rather, incremental improvement; a marginal gain in efficiency. It isn’t the automobile, but faster horses.
It seems to me that the corollary of “if it doesn’t destroy, it isn’t innovative” is that the degree of innovation is related to the degree of destructive potential.
So where would some of the recent much-discussed innovations rank on the “Shiva Scale” — the degree to which said innovation would destroy one or more parts of the real estate industry? Let’s say the Shiva Rank goes from 1 to 10 where 1 might be “as harmless as a baby bunny” and 10 might be “thermonuclear bombardment from orbit”. Where would some of the recent innovations rank?
We worship creativity. In describing a business, a leader, a product, or a service, I can think of no higher praise than to say it is creative, or visionary, or innovative. Whether in marketing, or technology, or business process, or a blogpost, all of us admire creativity, strive for creativity, and think about creativity.
The real estate industry in particular has a love-love relationship with creativity. NAR has its Game Changers, Inman has its Connect Create developer challenge, companies are lauded for their innovations, individuals praise for their creativity in using social media for real estate business (or whatever new creative thing they’re doing).
What I wonder about today is whether people truly worship creativity, or pay lip service to it. Do you really want innovation? Are you sure you’re prepared for what creativity means? Are you certain that you want creativity in your life, in your business?
The Hindu deity Shiva is often said to embody destruction and regeneration, like the forest fire that clears out the dead leaves and old growth to enable new shoots to emerge. To embrace creativity and innovation, then, is to embrace destruction. Are you ready?
This might be the most exciting technology I’ve run across in a while… maybe since I came across this mysterious “internet” thing back in 1988 in a computer lab at school. The post there goes into more of the technical details, which are completely over my head. But this promotional video from Verizon hints at the possibilities:
The key part of the video is the statement by Praveen Atreya that LTE achieves download speeds between 5Mbps and 12Mbps on average, and upload speeds of 2Mbps and 5Mbps on average. That’s over the air… not a wifi signal at a Starbucks or something, but from cell towers.
That is… just insane. By way of comparison, my Verizon FIOS service that has fiber to the house, gets about 19Mbps on the downlink and 5Mbps on the uplink.
Combine with cloud computing and Cisco’s advertising tagline, “The Network Is the Computer” is closer to reality than ever. We’ll be returning to the days of mainframe computing with huge computers and thin clients, but with the cloud replacing the supercomputer and wireless devices running LTE replacing thin clients.
The implications for real estate, I think, would be immense — since LTE would have enormous implications for society as a whole, and business in general.
In Part 1, I explored how large law firms and big brokerages are similar, based on the forthcoming paper by Glenn Reynolds, a law professor and blogging pioneer. Then in Part 2, we looked at how they’re different in some fundamental ways, particularly compensation models, that makes the size of Big Brokerage appear to be all of the disadvantages with none of the advantages.
In this Part 3, I would like to explore how size could be made relevant again. There are still areas where size does matter, even in real estate. And the future of the industry really depends on how big brokerages respond to the rapid changes in the social and economic marketplace. Up to this point, most have been extremely slow to react, believing that a strategy of evolutionary adaptation makes more sense than a risky revolutionary act. I no longer believe, if I ever did, that slow evolution will get the job done for the giants in our industry. The window of opportunity is closing, and quickly at that. Unless something fairly dramatic is done, and soon, I believe that by 2020, the large brokerage as we know it will be a thing of the past.
So, with that Cassandra moment out of the way, what are the areas where size still matters? And how might big brokerage respond to make size matter once again?
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