Notorious R.O.B. – Conversations on Marketing, Technology, Real Estate

Image: Barack Obama, on Flickr

Starting a few years ago, I’ve been hearing a lot about how the Gen-Y or Millenials (people aged anywhere from 18 to 30 today) are going to change everything — but particularly in real estate.

A random sampling of opinions about how the Millenials will affect real estate, from a Google search I just ran, turned up these recent posts and articles:

MILLENNIALS – The New Face of Real Estate:

Text messaging, email, IPods, Facebook and being mobile as ever is a part of the new generation, the Millennial.  The Millennial are the young workers ranging in age between 21 to 29 years old.  They have the potential to create a lasting change in the real estate workplace because of the way they live, communicate and more importantly, the way they view their jobs.

80 Million Reasons to start changing your marketing….Millennials.

What do you think , will typical marketing work to attract someone that is buried in a laptop, ipod, FB, Twitter etc.. and values friendship more than work?

Hear Them Roar: Millennials make up almost a third of the U.S. population, and they will fundamentally change how you do business.

“Real estate agents may wonder why they should care about the Generation Y age group, ages 18 to 30,” Jessica Lautz, a senior research analyst at the National Association of Realtors, wrote on the organization’s website in 2008. “These unique home buyers are the youngest of the home buying segment and are the most likely to purchase a home in the next two years in comparison to any other age group.”

Sustainability, Urbanity, and You: How Millenials will Change the World (and Architecture)

Millennials grew up in suburbia; bland environments dependent on others for mobility. They are entering the adulthood seeking lifestyle: vitality, diversity, and community. But, Millennials are not the only ones who will be driving this sea change from suburban to high quality urban environments. Baby Boomers will soon be retiring by the boat load. Retirement communities in their current form resemble warehouses more than they do the most desirable of retirement “villages”—real communities where retirees can be independent and empowered, such as the Upper East Side and Key West.

And so on and so forth.  If you cared to, I’m sure you can find dozens, hundreds of other musings on the Millenials and how they force real estate professionals to be ever more online, ever more sensitive to these 80 million strong “Generation We” people who care more about walkability and lifestyle than large colonials on three acres, and so on.

The whole drive towards social media’s ascendancy in real estate was fueled in part by the insight — as is clear in the ActiveRain post above — that these Millenials are the FaceBook generation who are natives of the digital realm.

But a couple of recent articles make me wonder just how the Millenials will impact real estate; it may be rather different than what we imagine today.

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There is a viral YouTube video going around right now, a “parody/spoof” of Jay-Z’s “Empire State of Mind” with Alicia Keys.  Here it is, in case you haven’t seen it:

I understand that the people behind the video, one Pantless Knights, were making a parody.  I hope to God that they’re ridiculing the people being held up as examples of successful entrepreneurs by the media.  The intro in the sidebar hints that may be the case:

This is a Pantless Knights tribute to our favorite entrepreneurs (who are all “new dorks”). It’s a spoof of Jay-Z and Alicia Keys’ “Empire State of Mind,” from the guys behind Grasshopper.com (thank you!). We made it because there’s a new type of dork that is cooler than ever. Look at tech entrepreneurs, hipsters, Computer Science Barbie – they’re all super popular new dorks! Don’t forget to rate, comment and subscribe!

Trouble is, even if Pantless Knights were ridiculing the hipsters and Computer Science Barbies who flock to the latest get-rich-quick schemes that make up so much of the “Web 2.0/social media” world, there are entirely too many slackoisies in that industry making fools of themselves and cheapening the word “entrepreneur”.

Let me rage properly at these fools.

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On November 6th, at roughly 3:15PM Eastern Standard Time, the National Association of REALTORS declared war on the rest of the real estate industry.  To be fair, NAR probably did not realize that it did so.  Judging by the initial responses, it doesn’t appear to me that most people see what I saw.  But, probably because of my twisted nature and my penchant for focusing on the dark side of human nature, I am predicting nothing short of civil war in the real estate industry going forward unless REALTORS Property Resource (or RPR) in its current form is immediately scrapped.

What brings forth such hyperbole?

RPR, or REALTORS Property Resource, was a project shrouded in secrecy.  Brian Larson’s post of October 19th, 2009 is a pretty good pre-unveiling summary of the questions and concerns around RPR.  Brian Boero’s initial take is a very decent summary of the post-unveiling.  But since Brian is a much nicer, much sunnier, much more positive guy than I am, I believe what you’ll get from Brian is the “Glass Half Full” vision.

Strap in for the darker vision.

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Holy Bloggers, Batman!

Greetings from Las Vegas — I’m not sure what time it is, even though I’ve been fully awake for, oh, a few hours.  But some of the discussions at REBlogWorld 2009 have been so great that I wanted to get something posted now.

One of the more interesting sessions for me personally was the Branding in the Social Age session with luminaries like Jeff Turner (@respres), David Armano (@armano), Todd Carpenter (@tcar), and Ian Lurie (@portentint), moderated by a luminary herself, Nicole Nicolay (@nik_nik).  I thought the insights were interesting, and the brainpower on that panel was impressive.

There was one point, however, which I suppose yours truly raised, that could use some elaboration and explication: multiple brand layers and how they function in social media.  I was genuinely curious what branding experts, especially those from outside our industry, like David and Ian, had to say about the issue — and I don’t know that they understood the issue.  Plus, the inimitable Bill Lublin (@billlublin) had his views on the matter, but I’m uncertain that he understood the context.  So the fault is mine for failing to set the stage adequately and explain precisely what I meant, and why I think this is an issue.

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Okay, so with the comic book discussion sure to be going on (who knew there were so many comics geeks in the RE.net?), let me turn to something I think could be very interesting.  First, view this video:

This is a music video by the trance dance group OceanLab.  But it was edited from videos submitted by OceanLab’s fans.  From the YouTube description:

In November last year Above & Beyond launched a competition offering fans the chance to create the next OceanLab music video for “On A Good Day”. Jono, Tony & Paavo were overwhelmed with the quality and creativity of the entries and the official video has been made using the highlights from the best entries.

The resulting video is beguiling.  Of course, it doesn’t hurt that the track itself is haunting and beautiful.

Where my mind goes wandering is… is this sort of community-created marketing possible, especially in real estate?

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At last.

We have arrived at the destination of this series.  (See parts 1, 2, 3, and 4).

In Part 2 of this series, I spoke at length about institutional CRM and why that can be an unbeatable competitive advantage when properly implemented and used. In Part 3, we examined whether an institutionalized brokerage could shift the grounds of competition in such a way as to obtain a competitive advantage.  In part 4, we looked at specialization in real estate.

The culmination of all of these factors is something I am calling “systemic brokerage”.   Systemic brokerage is the future of real estate.

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(Part 1, 2, and 3 of the Lessons from Counterinsurgency Series)

Final Thoughts from Gen. Petraeus

Finally, we always must strive to learn and adapt. The situation in Afghanistan has changed significantly in the past several years and it continues to evolve. This makes it incumbent on us to assess the situation continually and to adjust our plans, operations, and tactics as required. We should share good ideas and best practices, but we also should never forget that what works in an area today may not work there tomorrow, and that what works in one area may not work in another.

Honestly, this needs very little elaboration.

The American military is a huge organization.  It is not known for its friendliness to change.  If anything, the military tends to be conservative, holding onto its hallowed traditions.

Nonetheless, in a counterinsurgency, the doctrine is to continually assess the situation, learn, and adjust plans.

No matter how large a Big Brokerage may be, learning to adapt will be a key factor in whether they emerge victorious or fall by the wayside over the next few years.  CEO’s and other senior leaders must not only be prepared for rapid change but insist on organizational nimbleness across the board.  Bureaucratic barriers must be brought down; resistant personnel moved out; cumbersome processes reexamined to see if they are really necessary.

Senior leaders must also question some of their most hallowed, deeply held beliefs about how the industry works.  “Getting back to basics” may be fatal if the lessons from the last war you fought are completely inappropriate for the current counterinsurgency action.  Is having the greatest number of yard signs really the most important competitive advantage?  Really?  Don’t take the answer for granted: investigate it, and you may be surprised.

Finally, in the new business environment, I don’t believe that any answer remains the answer for long.  As Gen. Petraeus points out, what works in one area may not work in another; what works today may not work tomorrow.  Organizations must be remade, reforged, and retrained to deal with the fluid, ever-changing environment they face today.  Why?

Because the insurgents are constantly changing, constantly adapting, and constantly investigating how they can stay one step ahead of you.

-rsh

In part 1, I argued that we are living through a “post-middle” era as far as marketing is concerned, where consumers can be divided into either Thrift-minded, or Aspirational.  Then in part 2, I examined some ideas for how realtors might think about marketing homes for sale given that consumers are either driven by price or by lifestyle aspirations.

In this next part, I’d like to look at how service providers — the real estate agents, the mortgage brokers, the appraisers, etc. — might think about marketing themselves.

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Brian Boero of 1000watt recounts a dinner conversation and throws down some challenging questions and assertions:

This particular debate centered on the following question:

“Have we reached the end of the real estate story now that FSBOs and discounting have lost their menace?”

As Brian puts it, there were two camps, comprised of him in one camp and everyone else in the other camp:

Methods have changed. Markets have changed. The balance of power between brokers and agents has shifted. Consumers have access to enough data to choke a horse.

But the basic structure of this business remains remarkably intact.

There are two possible conclusions to be taken from this:

A. Real estate is exceptional. The complexities and emotions that characterize the real estate transaction will forever shield it from structural change. Bill Gates, Barry Diller and about a billion dollars in VC have been thrown against the barricade with no transformative impact. The story is over.

B. We’re due for a cataclysm. The forces of change, of technological innovation, of inchoate consumer frustration, are stacked high against the dam of Real Estate As We Know It. It will not – it cannot – hold. The story is far from over.

My dinner pals were in the “A” camp. I argued for “B.”

Given that the whole thrust here is theoretical and futuristic, I can’t help but charge in foolishly where wiser men fear to trod.

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A really fun discussion on Twitter with Robin Greenbaum (@cobrokenation) led me to just do a very quick, very back-of-napkin, and likely very inaccurate comparison between two rental units.  As Robin pointed out, since comparisons are very difficult, depends on many factors, and the like, no matter what I come up with, this is likely to be wrong.

Nonetheless, I’m curious to see if we might see any interesting bits of data.

One unit is a 1BR at 22 River Terrace, a luxury rental building constructed in 2001:

22 River Terrace

Detailed info can be found here, but the vitals of the unit are:

Floorplan, 22 River Terrace

725 sq. ft., monthly rent of $2,880, 23rd floor but facing east (aka, no river views).  I know the floorplan is hard as heck to see, but it’s pretty standard fare for NYC apartments.

The second unit is located at The Verdesian, a LEED Platinum certified building located right by 22 River Place.  See the map here.

LEED Platinum certified, The Verdesian

The Verdesian is a newer building, built in 2006, and LEED Platinum is not given to just about anybody with a solar panel or two.  There was quite a lot of thought and technology devoted to the building.

The unit here is a 1BR as well:

Floorplan of 1BR at Verdesian

The vitals here are:

750 sq. ft, $3,065 per month, and east-facing on the 13th floor.  Clearly, the little alcovey “Den” area means a smaller living room, but the floorplan might be better for some, worse for others.  Who can say?

On a straight $$/sq.ft. basis, however, the difference is only $0.12 between the newer, eco-friendly unit and the older, non-green unit: $3.97/sq. ft. for 22 River Terrace vs. $4.09/sq. ft. for The Verdesian.  If we hold the square footage equal at 725, that means a monthly rental difference of $87.00.

To my untrained, unpracticed, and non-realtor eyes, this seems rather insignificant and would tilt the decision towards the Verdesian.  According to GreenbuildingsNYC.com, the Verdesian’s advanced systems, EnergyStar appliances, and various other design & architectural choices, means a 40% savings on electric bills for residents.

According to ConEdison, the average NYC resident can expect to pay $104.97 per month in electric bills.  A 40% savings on electricity alone is $41.99 per month.  Nearly half of the “green premium” (if that’s what it is) is taken care of simply from savings in electric bills.

Now add in the fact that The Verdesian is five years newer, and offers “Fresh filtered air, continuously humidified or dehumidified, depending on climate conditions” to every unit, and it isn’t clear to me that the green premium starts to head towards zero.

Again, comparing different units, different buildings, with slightly different amenities and the like is hazarding error.  But it does seem significant to me that the actual cost difference may be as low as $45 or so per month — less than the cost of a cup of Starbucks latte per day.

If this is true, then the green premium at least in the NYC rental market is heading towards zero, and renters really have to ask why they would go to a non-green building vs. a green building.

I for one would love to see some real comparisons by real professionals — realtors, appraisers, I summon thee!

-rsh

PS: Note that I am a heretic when it comes to anthropogenic global warming hype, so this has nothing to do with religious views on carbon footprints and such nonsense.