Traditional Real Estate Dead By 2020?
I recently read an article entitled "Will Traditional Real Estate Exist in 5 Years?" by Anthony Caciopo. In it, the author cites his extensive experience in real estate (25 years), 5 of which have been involved extensively in auctions. It was his opinion that within just a few years, much like Ireland, Australia, and New Zealand; auctions would be "the more dominant method of real estate sales."
While I am no fortuneteller, I can assure you, there is no fear of a "Web 3.0 World" for the Investing Realtor®. In fact, I would go so far as to say that auctions will be anything but the "norm" for American residential resales. While auctions, and "auction-style" selling is nothing new, it is highly unlikely that the Realtor® will be replaced by computer keys.
While it is true, over 90% of homebuyers begin their search on the Internet, it is quite a different matter to obtain a home. If you have sold real estate for more than a week, you know that getting a contract signed, is a long way from the closing table.
The Changing Role of the Realtor®
I won't belabor the advantages of using a Realtor® to buy a home or using an Investing Agent to sell your home fast. I think we call can agree that Realtors® can bring a lot to the table when it comes to buying, investing, or selling real estate.
What is important to remember however, is the method by which Realtors® help customers or clients. I say the method because the methodology that an agent can use to help a customer can change due to technology; but the "Agent-Principal" model will doubtless remain the primary method by which Realtors® will help their clients.
Depending on the market, the Agent can be called to act as a Buyers agent, a Listing agent, Dual Agent, or even as Principal to the Transaction.
Although the Realtors® role can be varied in the transaction, do not be misled. The Realtors® position in the middle of most transactions is fairly secure. There are many reasons for this, as evidenced by the repeated attempts of discount brokerages, flat fee companies, as well as companies such as Redfin who have tried to eliminate the "commission" aspect from the sales process. Despite their numerous attempts, the majority of consumers still use full service brokerages.
Evolve, or Die.
When I got into the business in 1996, I remember very clearly the older "veteran agents" complaining about this new "Internet-thing" and how it was going to "run us all out of business". As of the date of this post, I am STILL in business.
However, those same agents who refused to evolve with the times, were quickly overtaken and retired. The agents who learned, strived, and continued to grow not only grew, but prospered. In the heyday of the market in 1999-2010, if you were fairly decent with a computer, you could do some pretty amazing things. We got to enjoy the excesses of the 2000 market because we were able to evolve with the technological changes.
With the market collapse in 2010, and the subsequent exodus from the Real Estate market, successful Realtors® had to make a market shift again to stay relevant in a post boom world. The rebirth of the REO, Short Sale, and Distress sale specialists came to the fore as each agent clawed their way to find a niche market that they could call their own.
While in the final analysis, no matter what the disruption of the market, the axiom of "those who list, last" still rings in my ear. Whether it is the introduction of the AOL Internet dial up disk in the 1990's or Auction.com, Trulia/Zillow or Realtor.com; the method of introduction to our customer is changed, much like our services must change.
Time To "Make The Donuts."
What many people may or may not know is that Michael Vale; best known as "Fred the Baker" from the "Time to Make the Donuts" campaign (Dunkin Donuts ran successfully for 15 years) is a great example of what we as an industry need to consider.
Although I categorically hate the phrase "Paradigm Shift"; it is truly what is required from our Industry. In my opinion, the National Association of Realtors®, while a good intentioned body, has unfortunately led many of the public to view Realtors® in only one way.
As we view our services through the eyes of the public (through commercials placed by the NAR) ; Realtors® are the perfect vessels of service for buying a home but rarely as a Listing Agent. Certainly NEVER as an Investing Agent/Buyer.
And, what does this have to do with donuts?
What if I told you that Dunkin Donuts, as of 2012, sold more drinks than donuts? A full 58% of their income came from selling beverages like Starbucks, instead of donuts.
In other words, if a company universally known for selling DONUTS.... who's name is Dunkin DONUTS... sells more beverages than donuts, than Realtors® can apply the same strategy to their business as well.
Going Off the Deep End
If the author of the orginal article, Mr. Caciopo, is correct in his assertion that in 5 years, residential real estate will be still available, if only as a quaint memory "a vinyl record at a garage sale, come home and play it on my phonograph." Then that is of no consequence to the Investing Realtor®.
To truly play on a larger scale, thinking more "Entrepreneurially" than that of a traditional "Listing or Buying" agent; I recommend instead to "pull a Dunkin Donunts" and sell more on your own behalf.
Although I seriously doubt modern Residential Real estate is in any serious danger from the likes of auctions, or discount brokerages, I do feel that there is a shift in the winds.
Through my podcast on "The Red Pill Investor" and my blog TenMinuteSkill, I have found and heard from more and more "Fred the Bakers" in Real Estate. Endlessly waking up early... saying "Time to make the donuts..." when they are truly yearning to be free.
Freedom With Real Estate
One of the largest problems I see is agents not knowing how they can flip properties without cash. Other times, it's a question of knowing if they can assign properties for a profit legally.
One of the larger problems for the evolving Realtor® is the lack of training and a lack of a "Business Plan for Investing Realtors®". However, once they get scripts, and most of the frequently asked questions handled; then the practictioner is in a completely different mindset.
Instead of a lead being something to be "sold", the Realtor®/Investor is now in a more dynamic position in the sales equation... That of a Principal. As a principal to the transaction, the Realtor® now has significant, and undeniable advantages.
Evolve Your Business Model
Think about it. If Dunkin' Donuts can completely change their business model to where it is now 58% a beverage business (because it is immensely more profitable); while still selling donuts, why can't you do the same in YOUR business?
Part of our scripts for Realtors® who wholesale indicates that wholesaling investing is "only a part of what I do". Thereby leaving the practitioner the leverage you need to get either the listing (if they do not like your price) or the contract (if they do!)
The tides are turning my Realtor® friends. You have access to the best deals, the best transactions, and the best people. Consider using that access to your own investing advantage to once again move with the market (commensurate with disclosure laws of course). If not for yourself, then certainly for your clients who are looking for the best deals in your town!
Become the local "person in the know" about the best deals in your town. Consider hosting short webinars on popular topics like "How to Find Cheap Property" in your town. Instead of being the source of information on topics they already can find (another boring auto-search, ho hum... are you still reading?)
Instead of Realtors® being eclipsed by auctions, virtual transactions, and other forms of "economic incursion" by the various other industries including banks; I predict the modern Realtor® will become increasingly more resiliant, as well as entreprenurial in nature.
I'd be interested to hear what YOU think!
Comments(2)