Agent Trends

Ummels Talk – You Decide

This is a follow-up to our post “Ummel VS ReMax” on January 25, 2008. REALonomics analyzed this interview, not to determine the accuracy of the claim but rather, to get inside Ms. Ummel’s head and ascertain the mentality behind the suit from a consumer’s standpoint. Admittedly, getting inside someone’s cranium is an illusive art form, but in this case we are simply looking for attitude, motive, emotional state and other factors that may serve as a consumer’s motive for such an action.

We are trailblazers…we want to change the industry. We feel we were misled…we do feel angry…we hired our agent because he was a real estate professional, he was expected to do the due diligence…and they (agents) have a code of ethics where they must put the buyer’s first…I think he just wanted to go ahead with the sale and make his commission…he was not concerned about our best interests. We feel that the appraisal was manipulated…we feel that the agent had something to do with that…

Source: Today on MSNBC.msn.com

Red Flags Signal Final Flattening

REALonomics is seeing red. Our extensive and ongoing analysis of the real estate industry’s business models has produced red flags that signal the final flattening of the real estate industry. In this case red will ultimately prove good.

The flattening of the industry’s topographical map is leveling the playing field between consumers in the democratization of real estate.

We have many red flags flapping in the howling, bone chilling economic wind. Our common sense is being numbed as we attempt to hike through the arctic blast, unable to see what is in front of us, unable to return to our point of origin, unable to read a compass long since frosted over and unable to find warmth in the sub-zero atmosphere of rapid economic change.

The Red Flag of Information

There are three great inventions that have changed the world. Guttenberg’s press, television and the personal computer (PC). Each of these accelerated the dissemination of information, contributing to a breakdown in traditional institutional control models.

The general speed and specific quantities of information available to anyone and everyone has finally redefined the real estate industry, its markets and the means by which it delivers its services. Information packaging is our economic challenge and the assemblage, packaging and delivery of collated information will become our “economic widget” in the New Real Estate Economy. It’s no longer just about a real estate, mortgage or title office.

Massive dumping of unassembled information into the consumer causeways necessitates and will provide opportunity for the new models. Unbridled info-dumping creates consumer insecurity and retards the decision-making process, producing lethargic markets. Hesitation redefines the revenue capture rate in an already sick market.

We have no traditional place to hide and the info terabytes being swallowed by the masses like so much candy only cause them to demand more from us, flattening our craggy economic models in favor of a smooth, friction-free relationship with those serve. This is good.

The Red Flag of Brand Mash-Up

The powerful historical brokerage, mortgage and title brands we heretofore have relied upon may not be the new delivery channels in a flattened environment. REALonomics believes we will see what we are now terming “brand mash-up” or, the crushing of the potatoes which will change our brand predispositions and assumptions from baked to mashed.

Still, with few exceptions, the industry brands are of our own making and we have said many times that consumers are fickle about pledging allegiance to brands that lack true measurable economic and service distinctions. The reckless pledge of loyalty to a single inside the box brand is a violation of our “Tenth Commandment of the New Real Estate Economy.”

Since the brands are already mashed in the mind of the consumer (as they see little distinction) we will be led to a new form of economic amalgamation where traditional brand matters less and packaged services matter more.

The Red Flag of Market Supremacy

We are learning the hard way about market madness. The notion that we can indefinitely create, sustain and bend markets to our liking is insane. Markets are living, breathing, five-sensed phenomenon that impacts an industry’s ability to control economic outcomes, try as it may. The market is king…long live the king!

But the market is also Frankenstein, a monster we engineer in a dark, damp laboratory that eventually rises from its table to escape into a world where it wreaks its havoc. Here we are in 2008 wondering how to re-capture and strap our market monster to the surgical table.

What we have previously defined as “market” is the worn and extreme notion of local Territorialism (note the “ism”) as the primary component of an economic model.

The new reality is your market is mine and all markets impact all markets because the economic forces influencing them are becoming more universal. We’ve known this for many decades to a lesser degree. Now, with the information deluge, the distinction between Dallas and Denver, Cleveland and Carlsbad is being blurred.

The market is macro, not micro. Our industry models are finally coming to grips with how small the market really is and the fact that what one niche does can impact others.

Reinvention and the transformation of any industry is a very daunting assignment, even when there us compliance on the part of the transformee. Our industry is still kicking, bucking, lashing out and resisting the inevitable. We are mud wrestling with Grizzly bears, unnecessarily.

Thomas L. Friedman wrote about global flattening in his book The World is Flat. Like the world, the distinctions of its smaller components are being leveled. The real estate, mortgage and title industries are being flattened by the forces of property democratization, Internet technologies and an ever demanding hyper-savvy consumer who just doesn’t care about the same things we care about and who is no longer impressed with the images that continue to impress all of us.

Like all business, the one thing that will finally grab us by the throat and command our attention will be our inability to simply operate with any degree of predictable profit. The red flags signal the final flattening of the terrain, enabling us to implement more effective business models with our new business partner, the consumer.

Demons & True Marketing

In the advertising piece The Demon of Marketing that introduced UniversalMLS.com to the world, I stated that: “the Demon of Marketing is the personification of a concept demonstrating that within a marketplace the pool of sellers and buyers will gravitate toward the most beneficial services offered.  Just as stockbrokers and travel agents received this rude awakening a few years ago and changed how we all buy stocks and arrange our travel, the The Demon of Marketing is now hovering over the real estate industry.”

Whether you believe the industry is changing very rapidly, or will gradually and incrementally adopt new technologies with brokers having little to worry about, your goal should be to truly understand the wants and needs of your market and how you will meet these needs better than the competition.  So please explore with me now how you do this, and what true marketing is all about.

Understanding the Wants & Needs of the Market

You have two major tasks to complete before your can really understand the wants and needs of your market, and then determine how best to meet them.  First, try to erase all that you know about real estate, the MLS, being a broker, and your concerns of being paid.  In other words, be a typical home seller sitting in their kitchen trying to make sense of real estate and the internet, and weighing their options in light of everything the marketplace now offers.  You’ve got to scrape your brain and think selfishly as a seller would.  This is not a negative comment.  Every one of us thinks “selfishly” and in our own best interest when making purchase decisions.  This is good—it’s how free enterprise operates.  Once you acknowledge this, you are in a better position to understand your market.  Whew, that was the most difficult of the two tasks—done.  Let’s jump to number two.

To understand how best to meet the wants and needs of the market, you have to define what they are.  This is what true marketing is all about.  Marketing is not the ads you see when watching the Super Bowl, junk mail relentlessly blasted at you, or a broker’s post card with their dog all done up for a glamour shot.  Marketing, real marketing, is understanding what a tightly defined market truly wants and needs, figuring out how you will meet those needs better than your competition, and doing it at a profit.

So what does the typical seller really want?  That’s very easy to define.  They want their home sold quickly, for the price they know it’s worth, 24/7 full-service from a broker, no inconvenience of any kind, and to pay a $500 commission.  Am I wrong?  Honestly, I don’t think so.  So that’s the first part of true marketing: understanding what your market wants.  If you meet those needs right this minute, you will be inundated with business.  However, let’s look at the rest of the definition of marketing, “…figuring out how you will meet those needs better than your competition, and do it at a profit”.

Creating a Profitable Market System

Can you create a system to exactly meet the market’s defined needs in enough volume to make a profit?  If so, you are now rock’n.  If not, you will need to adjust your system until an equilibrium is reached between what the market wants, and what you can do while making enough profit to stay in business.  All the while, do not forget about the competition and what they are offering; your sellers certainly are not.

Whether the real estate industry changes in a flash, or incrementally adopts new technologies over time, you must remain focused on your market’s wants and needs, constantly monitor what the competition is offering whether it’s the newest tech option or just your regular brokers offering some new tools and services, and determine how you can meet the market’s need better than your competition.

The Selfish Watching Market

The market will perpetually be watching for the offerings that best meet their needs.  They will selfishly and relentlessly gravitate toward what they perceive to be the best option for them.  You have the choice to help create those options, or hang in there hoping you’ll be able to always make a living doing just what you have done for the last decade.  So how did you buy your last airline ticket or hotel room?

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