Let’s get down to some serious industry transformation discussions regarding the “Four Bs.” The Four Bs are the fundamental building blocks that heretofore drove the real estate industry’s models with respect to consumer relationships and Broker/Owner profitability.
Brokers, Boards, Books and Buildings remain the economic blocks that continue to drive our brokerage profit models. Three of the four are still alive and kicking. What are the Four Bs, how do they function and what, if anything, do they mean to us now? More importantly, how do they meet contemporary consumer expectations?
Broker/Owners are literally the financial backbone of the real estate industry. e-Partner and this blog, REALonomics, support the importance of sustaining the roll Broker/Owners play in perpetuating real estate transactions and indeed propping up the industry at large. It is Broker/Owners who literally guarantee the financial stability of the industry. They are real estate’s preeminent risk-takers.
They are almost always the sole guarantors of market presence and it is they who take most of the personal financial risk for the real estate organizations operating within thousands of communities.
Fact: Broker/Owners are losing their ability to produce and sustain profit for their local brokerage firms. The risks now out weigh the rewards, as many are discovering. TWe are facing the financial collapse of many Broker/Owners.
As a real estate industry change agent, Jeff Corbett certainly ranks high on the mortgage list. His blog, The XBroker, is a quality diatribe that weaves a clear picture of the confusion and chaos that exists within the mortgage industry and its relationship with the consumer.
Good change agents have an edge to them, typically a sharp edge. Exceptional change agents have a sharp, well informed and analytical edge to them that will cut ones mind open so that it soaks in the message of transformational change. Jeff is a sharp, well informed, analytical agent of change. He is on the march against predatory lending and other kinds of mortgage lending practices that have contributed to a large degree to the current financial state of the union.
Jeff wants transparency in all things related to mortgage. When we spoke recently, we briefly discussed our respective efforts within the industry but digressed almost immediately to his “RateSpeed” widget for the mortgage industry.
As is usually the case within our industry, disclosure is at the core of RateSpeed. The RateSpeed widget spews out mortgage pricing analysis and its resultant solutions are the kind of transparency that sets the consumer at ease with a sense of “complete” knowledge about the financial ramifications of a mortgage commitment.
Although the RE industry and its biological twin, the mortgage wing, need a dose of RateSpeed widgetry, what we need more than widgets, good as they are, is a dose of the mentality and leadership behind the widgets. Jeff’s widget stems from a mental image of what the mortgage industry’s business model should look like, what it can deliver to the customers in this, our Third Economic Wave, the Consumer-Centric Era.
To REALonomics, RateSpeed is not a widget…the widget is the expression of a kind of business model…of course, that’s what REALonomics thinks about day and night…MODELS.
Behind Jeff Corbett’s RateSpeed widget is a business blueprint and behind the blueprint is a design that delivers a solution to the industry and the consumer. BRAVO!
ENTER “RATESPEED RESISTANCE“
REALonomics admittedly knows less about the fundamental practices of the mortgage industry than it does those of the real estate brokerage industry. But there is an initial and fundamental response to our mutual calls for transformation and transparency…resistance.
Moving from corporate hierarchy models to cooperative and collaborative platforms that embrace complete disclosure will always be met with initial skeptical cynicism and resistance. Nevertheless, the Jeff Corbett’s of this industry are to be recognized for thrusting their widgets into our faces, forcing us to think about transforming a now very sick industry into a new, vibrant and fully fluid, consumer-centric delivery model that our clients love…yes, “LOVE” is what I said.
REALonomics applauds Jeff and all of the rest of the Jeff-like transformers who are inching us forward in our “Qwest for Model Perfect.”
Try RateSpeed. Visit The XBroker.
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REALonomics understands the real estate industry, both its abstract side and its empirical dimensions.
We have been inside, outside and throughout the industry for quite some time. Our vantage point has changed, enabling us to see what we heretofore could not. In the world of business development and economic analysis one’s vantage point can bring the kind of insight that frankly, changes one’s faulty fundamental assumptions while confirming sound precept.
REALonomics now realizes, without further equivocation, analysis or debate, that our industry’s real estate genie has been released from its bottle and is fresh out of wishes!
Pushing the Vapor Back into the Leaky Bottle
From here on out, all attempts to capture the vapor, return it to its confines and cork the RE bottle will fail.
The Genie that once belonged to us, obeyed us, served us and made us what we once were is loose and fresh out of wishes.
The bottle is tarnished. Rubbing the bottle produces nothing. Our Genie is loose and now serving multiple masters simultaneously, none of whom, save one, the consumer, has sway over the Genie’s capacity to grant new wishes.
It’s impossible to bottle this kind of vapor; its seepage passes through the tiniest of spaces, spilling into the open atmosphere, moving where it wills to go. Where does the Genie go? It ALWAYS takes the path of least resistance, shunning confines, rejecting control and moving to open expanse where it finds its ultimate economic freedom.
Bottling the vapor no longer creates reliable “RE Economic Tonic” for the industry. The vapor is meant to be breathed, not bottled.
RGB, NGB and NGCs
Retail Generation Brokerage (RGB) used the bottle to control the Genie in vertical markets where the consumer was required to submit to the model in order to invest in real estate. Net Generation Brokerage (NGB) is the post 2000 freedom model where horizontal peer collaboration is replacing hierarchal control models.
The real estate industry is now the most vulnerable mainline industry to peer-to-peer models where the consumer and the Genie meet up for property inventory data exchanges and local community collaboration. The context is different and the conversation is different. Both the Genie (property and community information) and the consumer have reached agreement…FREEDOM Rules, open space ROCKS!
Vertical (retail, local style bricks and mortar) real estate brokerage models are being quickly replaced with a viral model, spread by a Genie on the loose and fresh out of wishes.
Two dangers to the industry and its economic models occur in this environment. First, there is the danger of complacency, of not re-tooling our economic ship so that it can operate fluidly in a viral, horizontal world where profitability is defined by open, collaborative peer models facilitated by the real estate industry.
Secondly, and perhaps more importantly, there are now signs of the emergence of what REALonomics calls “self brokering” whereby and wherein the consumer creates their own economic reality, ignores real estate professionals, only calling on them if they must and when they so desire for services they define for themselves.
The next generation of “consumer-buyers-sellers-clients” that will fuel the recovery and beyond will be Next Generation Consumer (NGCs) whose informational points of reference are alltogether dissimilar to old line retail brokerages.
Great News and More Great News!
Great news! The Genie, once our beckoned servant, existing only to accomplishing our economic wishes, rather than rejecting us, invites us to follow into new the new economic space of opportunity…to collaborate, to join the viral horizontal world of the consumer with new approaches to property information management and peer-to-peer community information services.
More great news! Never before has the industry and its adherents been afforded the opportunity to engage in a kind of real estate information alchemy, where our old lead bottle can be turned to a golden horizontal field of freedom for both us and our partner, the consumer.
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Wikinomics is a book by Don Tapscott and Anthony Williams. If you haven’t read it yet, do yourself a favor and get it. It is a good interesting read on how the Web is no longer about idly surfing and passively reading or watching, but how it has evolved into a new dynamic form of community and creative expression, one of sharing, socializing, collaborating and creating communities.
Participation has, according to a Wikinomics, reached a tipping point where new forms of mass collaboration are changing how goods and services and invented, produced, marketed, and distributed on a global basis. Now the perfect storm of technology, demographics and global economics is an unrelenting force for change and innovation.
They pinpoint 2006 has been the year when the programmable Web eclipse the static Web, on every level. For example:
- Flickr beat out webshots
- Wikipedia beat out Britannica
- Blogger beat out CNN
- Epinions beat out Consumer Reports
- Google Maps beat out MapQuest
- MySpace beat out Friendster
- Craigslist beat out Monster
The losers were websites. The winners were communities.
Wikinomics believes that profound changes in the world of technology are giving rise to power new tools based on community and collaboration. We are a new economy Ã¢â‚¬â€œ a vast global network of connected people that swap and exchanging ideas, information and an endless list of other services.
And from where I stand I can see it happening to our industry as well. The real estate industry is changing and the thousands of blogs, social networks and the wikis are already laying the foundation for the new world. New business models are already being born, new paths already being charted and new leaders already being groomed.
Real estate over the next decade will change forever and Wikinomics may shed some light as to the path.
Below are a couple of examples of social networking in action:
As firmly as IBM ruled mainframe computing and Microsoft the personal computer age for many years, so currently Google today rules the Internet. Originally nicknamed “BackRub” in 1998 by Stanford University buddies, Serge Brin and Larry Page, Google has not only become one of the most admired companies of the modern day but has found itself into our every day language, with the verb Ã¢â‚¬Å“googleÃ¢â‚¬Â being added to the Oxford dictionary in 2006.
The stock price rocketed after its initial public offering price of $85 dollars in August of 2004 to over $720 in November 2007. At that time only Exxon Mobil Corp., General Electric Co., Microsoft Corp. and AT&T Inc. had a higher market capitalization among U.S. companies. Today at around $470, nearly 40% from its high, Google still commands a market capitalization of over $110 billion and continues to battle with giants such as News Corp. and Microsoft.
Google, with its network composed of hundreds of thousands of servers, Google’s system never ages. When its individual pieces die, engineers just pluck them out and replace them with new, faster boxes. This means the Ã¢â‚¬Å“Google cloudÃ¢â‚¬Â regenerates as it grows, almost like a living organism.
At the same time Google at some accounts has become the gatekeeper of all information. Google also advises us that Ã¢â‚¬Å“real estateÃ¢â‚¬Â is the most searched category on the Web – with the 2000-05 housing boom and the subsequent sub-prime and foreclosure catastrophe, this is maybe not that all surprising. But let’s look beyond that for a second.
With some 141 million individually identified pieces of property in the U.S., real estate is at the very center of the American way of life Ã¢â‚¬â€œ whether living, working, sport or entertainment. As Google conducts more real estate searches it aggregates more real estate information. Potentially with each new property search, each new listing added to its Ã¢â‚¬Å“deep searchÃ¢â‚¬Â database, each virtual street tour completed, each foreclosure filed, and so on Google gains more knowledge of the real estate industry.
It actually is becoming increasingly harder to wrap your mind around just what exactly Google is Ã¢â‚¬â€œ and more importantly what it may become.
Could Google become the best advertising vehicle of all time to find and to market a house for sale?
And if it does, could that reduce the need for various traditional real estate brokerage services?
And if yes, to what extent and in what way, could Google influence the fundamental re-engineering of one of the oldest sales professions?
What are your thoughts?
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