Consumerism, REALonomics, Technology in RE
The Democratization of Real Estate
November 21, 2006 by REALonomics · Leave a Comment
We are on the outskirts of what I will now call the Democratization of Real Estate; a real estate where all things are transparent and all things known by the consumer in a consumer-centric era.
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?
Democratization means the remodeling of our enterprise into an open, free-flowing, information intensive model that empowers the consumer with the streamlined tools, macro opportunities and lastly, the requisite access to universal property knowledge.
This street-level democratization of real estate is challenging the real estate industry’s historical vertical approach to real estate.
What is the contrast between traditionalism and the potential model produced by the consumer’s demand for democratization? On the traditional side it is simply the building of a company on the traditional premises of bricks and mortar operating within limited geographic perimeters accompanied by information control processes favoring insiders.
On the democratization side of the coin, the model-perfect is an open consumer-centric, street level, horizontal business model characterized by one or more of the following:
- Increased government challenges to the real estate industry’s property blockade;
- Emergence of Non-Broker entities who will feed consumer appetite for alternatives;
- Re-Invention of real estate brokerage operating models in order to sustain ROI.
Let’s address each of these in their respective order.
The Property Blockade
During a former era all property information was under the exclusive control of Brokers and their local boards (now associations), a kind of blockade. Consumers interacted with the real estate industry whose topography was Brokers, Boards, Books and Buildings.
This “4B” quadrangle formed the blockade and empowered broker/owners in their control of property information. This is now being challenged on almost every front.
The Non-Brokers
I have written elsewhere about the Non-Brokers, entities who have no vital historical connection to the underpinnings of the real estate industry but who seek a slice of the vast financial pie available via consumer loyalty.
There has never been true brand dominance in real estate, one in which the consumer openly pledged total allegiance to a particular franchise or independent firm.
The Non-Brokers are devising and implementing new approaches that will empower them to create loyalty and predisposition among vast numbers of consumers.
The Re-Invention
We are hearing the clarion call for new models within the industry. However, many organizations simply refuse or cannot make the leap from fixed-base, bricks-and-mortar operating models to streamlined, cost effective models with redefined methods for producing suitable ROI. This is new confrontation with reality…can we change and can we change fasts enough?
These factors, among others, are creating a climate suitable for the Democratization of Real Estate, a kind of populous uprising fueled by competing factions and refereed by none other than the Justice Department.
This will become the potting soil for the rooting of the consumer and the growth and development of a new culture where everyone has a vote.
The battle will not be over whether there will be an uprising, it will be over who controls the rules governing the Democratization of Real Estate.
What will this new climate, or culture, look like? For starters it will include some of the following:
- Open access to horizontal property information with little industry control;
- Dramatic reductions in marketing costs per transaction;
- A preference for the direct connection of sellers with buyers;
- The effective and perhaps complete erosion of local control over property information.
The Democratization of Real Estate creates the empowerment of the consumer at its core and the rapid development and deployment of new strategic technology and Internet tools which will redesign the real estate industry’s operating model, like it or not.
The great thing about the Democratization of Real Estate is the opportunity owners have to participate and actually control the rules that will be brought to bear on their markets. The quick adoption of horizontal business models, such as e-Partner, can position broker/owners for the re-invention of their profitability blueprint.
Owners, NAR, franchisors and other industry insiders must become the true innovators within local and cyber markets, creating and adopting new REALonomics to guide them.
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