An all Carrot and no Stick Industry
The National Association of Real Estate, NAR, has “power”… no, let’s restate that…NAR has “authority”…hmm, still not right…NAR has “opportunity,” there, that’s it…just right. NAR has opportunity.
NAR’s historical imperative has been, admittedly, “stick-like.” In fact, that’s been our industry’s posture with respect to its delivery of property information services to consumers. But now, as everyone scurries for solutions, NAR has perhaps its greatest opportunity…EVER! It’s our opportunity to move from consumer control (stick) to consumer advocacy (carrot). After all, wouldn’t we all admit that the carrot motivates us in ways antithetical to the stick?
Death to the Stick
For decades our real estate business models have attempted to poke, prod, stick, gouge and direct the consumer in ways that create the perception (remember, perception is everything) that control is at the core of our relationship. We designed and operated our business models with ourselves at the center and the consumer revolving around our local associations.
Consumers were granted access to information because we existed, because we allowed them the privilege to know…but, they always had to come to us, to our agents, to our buildings, to our open houses, indeed to our market…this was our STICK.
This is what REALonomics has referred to as the Broker-Centric ERA or, the First Economic Wave of our industry’s development.
The Broker-Centric Era gave way to the Agent-Centric ERA, the Second Economic Wave of the real estate industry. But this era was nothing more than the transfer of the stick into new hands with a corresponding transfer of economic control via high commissions.
NAR represents the interest of the real estate industry, its broker/owners, agents and advocates. A “No Stick - All Carrot” approach to property information is not only possible, it’s imperative and the logical next step in the fulfillment of the business requirements of a Consumer-Centric ERA, the Third Economic Wave of the real estate industry.
The “Stick” has been rejected by the boomers, by generation “X” and there is no way this side of rational thinking that generation “X” is going to opt-in to a system that controls information. We will not prevail against iPods, iPhones and blackberries. We are witnessing the Democratization of Real Estate. what will happen to us when we suddenly wake up and 2+2 no longer equates to four and instead 2+2=5.439 or some other economic resultant.
Carrots, Carrots and More Carrots
Carrots are good for you…so said my mother…that alone makes “carroting” right! The Democratization of Real Estate demands the “carrotization” (is that a word?) of the models we use in a universal market where the consumer dictates profitability based upon freedom of access.
The real estate industry is being redefined and the profitability equation is being rewritten by the consumer whose hand is on the joystick of profitability. “Do it our way, or die,” is the subtle but real high stakes game we now play.
Stick and carrot examples:
STICK: Property information controlled by local associations.
CARROT: Universal property data accessible by all consumers.
STICK: Direct Seller-Buyer dialogue prohibited by agency advocates.
CARROT: Local blogs delivering local Seller/Buyer conversations.
STICK: Local MLS systems as the sole means of property information.
CARROT: Multiple portals allowing national consumer listing services
STICK: Broker controlled access to real estate transaction forms and technology.
CARROT: Online paperless transaction models with universal data management.
STICK: Inhibiting consumer access by creation of artificial market borders.
CARROT: Implementation of a new set of common rules for market access.
STICK: Broker/Owner territorialism defined by franchisors to owner detriment.
CARROT: Open market models that foster horizontal development.
STICK: Time consuming, awkword and expensive transaction closing models.
CARROT: Fast, 24/7/365, universal access to paperless transaction details.
STICK: Mortgage and title services that require extensive paperwork.
CARROT: Fully transparent lending models that foster ultimate disclosures.
STICK: “Listing services that are property and place specific.”
CARROT: “Universal listing plans that guarantee the sale of all property for life.”
STICK: (go ahead…fill in the blank…what stick do you see in the industry?)
CARROT: (got a carrot…stick it in this slot…go ahead!)
NAR is much like a large governmental body…an entity empowered by the real estate industry to act on its behalf and in its best interest. NAR has the opportunity to help us shift our model from a stick mentality to a carrot technology…can it? Can we? Will we? Will it? They are us, we are them.
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[...] Update: Realonomics has an excellent post today on a similar vein: An All Carrot and No Stick Industry. [...]
Would you like to go one step more and tell us how we get paid?
Mike Parker
Mike. Thanks! Yes, let’s go a step further and ask ourselves how we get paid, how we should get paid and how we might be paid in the “New Real Estate Economy.” As an agent myself, a property owner and a consumer, there is nothing more powerful than information transparency. As real estate professionals we will still have to take listings, show property, qualify both sellers and buyers, negotiate transaction and service the closing…this is how we get paid. However, what we are now struggling with is the new economic models that can produce better profits from an unimaginable array of sources. But we are going to have to get ourselves out of the traditional rut and meet the consumer on neutral territory. Companies like Zillow, Trulia, e-Partner, CityBlogUSA and others are making money within the industry by providing better models that are more appealing to the needs of the consumer. Thanks for the input! >>REALonomics.
Your point is well taken, but let’s gets real for a second.
Zillow and all the other companies you mention have millions of dollars from the corporate world and all they want to do is to get the agent out of the way. If the agent is out of the way, they have the opportunity to have their way with the consumer, not in the consumer’s best interest.
I agree that the process needs a little work done to it, but completely disagree that it should be completely re-vamp like you are talking. Sounds to me like the corporate world talking.
What I am hearing from you is I will make pennies on the dollar compare to a decent living. I by no means have become rich from selling real estate, but I do live a middle class lifestyle. My consumers are extremely well taken care of; they are informed and have all the current tools of the trade available to them. You are asking me to provide all the current tools of the trade at a fracture of the price. Not Gonna Happen!
Thanks, Mike. Unlike travel agents, real estate professionals will not be replaced in the transaction process. Earning “pennies on the dollar” is the exact opposite of our position. REALonomics is one of the few sources that actually believes real estate revenues can increase with better and more numerous value propositions that are delivered, not in the cumbersome way we now deliver them, but in new streamlined and more effective ways. REALonomics is dedicated to the survival of the industry, not its demise and REALonomics is not a proponent of Zillow or Trulia, just realists, who ask the question, why aren’t we doing this? Why are industry outsiders (what we call “non-brokers”) creating the innovative models? A model like http://www.CityBlogUSA.com combines transparent resident blogging with exclusive agent presence in every city of the country, including your community at http://www.KentuckyBlogPage.com. Hundreds of agents are jumping into CityBlogUSA because it is an innovative, consumer-centric means to expanding their local business. Best of all it was created by an agent! Thanks for the great thinking and comments…REALonomics.