The Second Economic Wave in the development of the real estate industry began in the mid 1970′s and continued until approximately 1993-94.
There are three primary events in Second Economic Wave, which I refer to as the Agent-Centric Era. These three factors fueled this era and gave impetus to the beginning of the most rapid set of changes to occur in the real estate industry. The events are:
- The introduction of the real estate franchise concept to the industry;
- The first computerized Multiple Listing Service;
- The advent of the personal computer;
Since the real estate industry is the primary service provider used by consumers to buy and sell property, an examination and understanding of the economic history of this industry is not only fascinating, it is paramount to the development of a consumer-centric business strategy that is model perfect.
The evolution and development of the real estate industry’s business model can be divided into three distinct economic waves or eras, each with its own feature-set, culture and ROI potential.
- First Economic Wave: The Broker-Centric Era (1776-1976)
- Second Economic Wave: The Agent-Centric Era (1976-1994)
- Third Economic Wave: The Consumer-Centric Era (1994-??)
This democratization is the logical consequence of the overpowering influence of technology and the Internet over traditional real estate business models that seek to control the consumer’s access to information and thus extract a desired behavioral response. Will those who sit in the seats of political power be able to adopt and adapt to a populous, street-level demand fueled by a consumer with a voracious appetite for free information?
During the First Economic Wave, the broker-centric era, and for most of the Second Economic Wave, the agent-centric era, business models were predicated on old, predictable model math, where 2+2 produced four. In the current climate, where the consumer has control over the “economic joystick,” we are forced to pose the question; what if 2+2 no longer equates to four?
Why do we as owners of real estate companies do what we do, when we don’t have to do what we do? Why is this industry awash in paper, for example, when it doesn’t have to be?
Why have we continued to perpetuate old operating models that resemble giant defunct and non-profitable retail establishments when we don’t have to do so, it costs too much money and the consumers couldn’t care less?