REALonomics
The New Real Estate Economy
November 17, 2006 by REALonomics · 1 Comment
The real estate industry has entered a new era; a new real estate economy. This era is the “Third Wave of the Real Estate Economy” and it will bring changes to the industry that will eclipse the sum total of all of the transformations that have previously occured.
The First Economic Wave
The First Economic Wave of the Real Estate industry occured circa 1776 (the beginning of the nation) to 1976 (the introduction of franchising). No need for new math here; that’s 200 years of development and growth. And it is the deepest set of REALonomic roots in the development of the real estate industry’s money tree.
I characterize this first 200 year era with four words: Brokers, Boards, Books and Buildings.
Yes, I know, there wasn’t a Board of Realtors until 1908, the watershed year, when the entire Broker-Centric model took off nationally under what we no call the National Association of Realtors (NAR). The Broker-Centric era had one REALonomic factor going for it…broker controlled property information.
The economic quadrangle of Brokers, Boards, Books and Buildings empowered broker/owners with a local REALonomic model whereby no one, and I mean no one, could determine or have access to their complete asset base (aka, listing inventory). Please see the article entitle, The First Economic Wave for more detail.
The Second Economic Wave
A Second Economic Wave within the real estate industry began to emerge about the time RE/Max launched its franchise opportunity, circa 1976. This began what I, and others, have referred to as the "agent-centric" era.
From 1976 to 1994, there was a rapid deployment of mainstream franchising across the country that enabled brokers to "affiliate" with a "brand" that would link them to other members of the "brand" and give them national networking and marketing prowess.
Why haven’t I called this the franchise-centric era, rather than the agent-centric era. While REALonomics recongizes and will soon address the franchise phenomena, it prefers to focus upon the economic principles that emerge within an era that ultimately influence the ROI potential.
The franchise blitz, together with the modern PC and computerization of local multiple listing services created the opportunity for a shift of control over commission from Broker/Owners to agents, who could shop brands and models competing for their loyalty. Download and read The Second Economic Wave for the juicy details.
The Third Economic Wave
Many believe we are still operating in the "Agent-Centric Era"…we are, to a large degree. However, the agent-centric era is now giving way to the Third Economic Wave of the real estate industry.
This third economic era began, circa 1993-94, with the first online property listings being manually entered into a thing called a "web site" located on what we all new of at the time as "the information super highway" or, the World Wide Web (www).
The Third Economic Wave of the real estate industry has its own set of new mathematical and operting rules for business operation, continuity and ROI…aka REALonomics. We have left the broker-centric era, nearly passed through the agent-centric era to find ourselves full-on in the consumer-centric era.
We have entered a New Real Estate Economy!
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