After attending a conference like Inman Real Estate Connect in San Francisco, for so many years, you become somewhat numb to the goings on of the event. So when I received these Inman notes from a first time attender, I found it interesting as to what the take-away was for this person. The person has asked to remain unknown, but allowed me to share their thoughts. I feel it's an excellent review and lets me know that I am still on track.
One thing for sure, the information comes flying at you like a firehose shoved in your mouth.
Inman Real Estate Connect Notes - San Francisco - 2008
A. Overview
Inman conferences started in 1996 at Brad Inman's home with
a few key people in the Information Technology and Real Estate space and wife,
Veronica. Brad, a reporter, wanted to publish all the related technology
trends. This has evolved into a conference where key people (founders and
leaders from companies such as: Realtor.com, HouseValues, Craigslist,
Yahoo!Realty, Zillow, Google, Virtual Earth (MS), NAR, and many others, make up
panels and talk to the audience in a relaxed, casual manner. The Inman website
gets 12 Billion
page views per month... now that's
impressive!
The audience is a mix of techies, innovative Broker/Agents,
and traditional Broker/Agents (Brokers own offices, Agents work for Brokers).
The overwhelming RE product discussed is residential, all others are virtually ignored. The audience is largely
US-based, with good representation from Canada, and just a few
International people.
The attendance was about 1,500, with 160 of these actually
being speakers. This is a very high ratio of speakers, and they were made
accessible to the attendees. The mix
appeared about 1/3 each of Techie, Broker, and Agent. A guesstimate of 40%
female, an average attendee age about 45 to 50, surprisingly old for new trendy
techie stuff. The majority of attendees expressed an "utter acceptance" of new
technology as the path to the future. Questions were direct (no fluff!). A buzz
of excitement surrounded all events. It was very inspirational to hear of many
successes. Stage production (out of New York) was excellent.
Noticeably absent were the "Traditional Realtors",
"Traditional Franchises", and "Traditional MLSs". Why? One reason could be that
Inman is all about openness, honesty, "tell-it-like-it is", sharing, giving the
client what they want, progress, change, offering service, and being helpful. They
believe the pie is large and want
to share. The "Traditionalists" have been all about empires, hoarding,
protectionism, self-serving, "what's in it for me?" my brand is better than
your brand, we are wonderful, and PUFFING, as a business model. They believe
the pie
is small and they don't want anyone else to
have any pie but them. (Note: ALL Empires have fallen!)
Inman is about using technology to offer superior services
to serve client (Consumer) needs. The expectations of consumers are changing
and being changed by technology. It's our job to stay current if we wish to be
successful. If we do not follow our clients and fulfill their wishes, they will
go around us. Many already are. (NAR, are you awake and listening or still
snoozing?)
B. Historical Trends
In the 1960s, it was all about Brokerage Firms. They control
the data, the Agents, the clients and the legal framework - a Good Ol' Boy's
Club. By the 1990s the Brokers are in control of the Agents and the Clients,
due to efforts of Dave Liniger (thanks Dave!). State regulators control the
laws, due to abuses of the general public. By 2000, Metro Brokers had set the
pace for Independent Agents to be in total control of how they ran their own
business and responded to their client's needs. Now the stage is set for
Independent Agents to embrace technology, be innovative, implement new
technologies, cut overhead costs, and deliver more to their clients.
What's coming next, you ask? Too late... it's already here!
CONSUMERS are in control and they are seeking fast-response, honest,
knowledgeable local experts who can assist them in achieving their financial goals. Real estate is part
of their financial plan, no longer just: "I want to buy a home". Yep, I missed
it too!
C. Real Estate Trends
1. Real Estate is DYNAMIC
- There are too many new technologies available, (it's a moving target) and the
rapid pace of change is expected to continue. Knowing which "generation" your
client is in, and their expectations, will be a key to providing acceptable
services and getting future referrals. Agents with only one "style" will be
reduced to working only with that (small) niche market who likes their "style".
2. Real Estate is LOCAL -
this is the correct view to take when looking at the "product". It is unique,
it can't be moved, and people are attracted to it for those unique qualities. Listing
agents need to be EXPERTS in their AOI (Area of Expertise) and POI (Product of
Interest). Knowledge of local regulations, growth, schools, transportation, and
such, are an absolute must for agents to represent properties (factuality, not
"puffing").
3. Real Estate is GLOBAL
- when we are considering the "people" who transact real estate as part of their financial plan.
Location is stationary and fixed... but, the people are becoming more and more
mobile as the Internet brings far away locations only a few clicks away. Thus
agents would be well advised to be knowledgeable about the global reach of
their listings. The globalization of the financial markets has already
happened, real estate is slow to catch up, but this trend is now accelerating.
Foreign investors don't know what "Coldwell Banker" or "Re/Max"
is, and they don't care, either! They also don't know what a Zip Code is... we
need to update our expectations for foreign Buyers and be more receptive and
respectful of their needs. They would rather deal with a local agent who is an expert in a particular local
area where they want to live. This gives a an advantage to Independent Brokers,
such as Metro Brokers. Yes, it does help to speak their language, but it is not
essential. Find a translator.
4. Real Estate is FINANCIAL - Clients are more educated now through financial classes, CDs, and
books, than ever in the past. Using their home as a financial stepping stone is
more common than in the past. Agents should be taking financial classes to keep
abreast of what their Client's needs are. Understanding the Client's hobbies, special
needs, ages of children, and where they want to go to college will go along way
to making suggestions for the second home market, for example.
5. US
Real Estate - represents excellent values for
foreign investors (low US $ and deflated prices) combined with the safety and
stability of the region. (Hmmmm? We are still stable... are we not?) These
investors are usually CA$H buyers, no problem with tight credit in Financial
markets. Because some questionable funds are being "laundered" in the US & Canada,
Canada
has imposed new restrictions. Will the US follow? Note - Strongly recommended
that you deal only with large banks that maintain offices in the country of
your Buyers.
6. Real Estate is HOT -
where? In Brazil, India, Russia,
Eastern Europe, and China
where the Nuevo Riche upper middle class of society has excess cash to invest. Is
there anyplace hotter than Dubai?
7. Sticky Prices - when
prices come down, the new construction and the over-extended investors will
quickly lower their prices to cut their losses. This is typically in new
construction. Private owners in the re-sale market are slower to lower their
prices. Often the best deals for investors are in new construction areas where
they have over built, rather than well-established areas.
8. Client Anonymity -
Users are getting more and more for less and less, especially for less personal
contact information. Early on, users would submit to filling in an email, name,
or phone number in exchange for some useful information (like the old MLSs used
to do!). Today, Users will NOT give up anything unless they want something
specific in return. Thus lead collectors are having a tough time. Users will
search out and select an agent they want, rather than give up info to have an
unknown stranger (Agent) contact them. This may be a driving force in how real
estate companies can no longer "solicit". Instead they will have to "prove
themselves worthy" so they may be selected by the client. This is quite a
reversal in the real estate industry.
9. The Press - (are idiots!)
They keep talking about negatives and ignore positives in order to sell
advertising. They refer to "National" and "State" averages statistically and
ignore those local areas where prices have not declined, foreclosures are not
high, and the bottom has already passed. They fail to point out that for
investors with cash; this is an excellent opportunity to buy in the depressed
areas and invest now at great values.
D. Economic Trends
There is no Crystal Ball! At present we have many things in
motion that are causing concerns from various market sectors and political
corners. Even the "experts" can't forecast the current markets. The best the
Inman experts could do was coin a new term: "Sloppy
Bottom". It means slight up and down movements
for sometime to come, with no rebound for many months at the very earliest.
1. US Dollar - The
devaluation of the US Dollar on International markets should mean people with
strong currencies (Euros, AUS & CDN $) will obtain their best values in the
US
markets. Usually this is as second homes (snow, water, or attractions) or as
investment properties (near colleges, or new shopping areas with growing
populations).
2. US
Elections - Two very poor candidates can't be
good for the country... can it? Doh!
3. Iranian Nukes -
Although the current administration was successful in: a) ridding the world of
three of the four "Axis of Evil" powers (Iraq, Libya, & North Korea), b) ridding
Iraq of terrorists, and c) preventing another 9/11 for seven years... the fourth Evil
Axis remains a threat to world stability. This continued political instability
causes everyone concern.
4. Oil Prices - are
supposed to be a free market system. With no one able to explain the current
price rises and falls, and many experts giving different answers, what IS going
on? (No answer here!) But clearly the cost of this essential economic lubricant
is a key factor in determining spending traits for consumers, types of homes
they purchase, location relative to commute distance, and price range.
5. Sub-Prime Debacle -
the Credit Crunch - effectively four trillion dollars has been removed from the
mortgage industry. This is an immediate brake on Buyer's ability to purchase
homes and investment properties. The FDIC currently has 90 banks on their
"watch" list. This IS serious!
6. Sales Drop - What was
a $ 6+ Billion dollar real estate industry in the past, they are now forecasting
a $ 4.5 Billion market in 2008, which represents a huge downsizing of the
industry. We can expect many agents to leave the business and many brokerages
to close as a result.
7. House (Congress) Bill
- will help a little but not much. It is important for Agents to understand the
$ 7,500 credit for first time buyers must be repaid over ten years. Not great,
but where else can you get an interest-free loan for $ 7,500? Advise your
clients to take it... after they talk to their financial advisor, of course.
8. Unemployment - one of
the more knowledgeable numbers guys, said that he's watching the unemployment
figures, If unemployment rises, we are going to be in a full blown depression
and it will be around at least a decade. That was the scariest of the economic
comments.
E. Technology Trends
1. Paper to Web - Brokerages
who made the change to a paperless office, and moving from print advertising to
Internet advertising consistently praised their transition. The transition was
not without problems and challenges. Many Traditional Agents had difficulty
making the technology transition, but in the end, those who did liked the
changes and were pleased. Shifting advertising dollars to the Internet is NOT
being done overnight. Rather, it is recommended that a transition to move these
dollars should occur over a 3 to 4 year period.
The NY Times representative (in Research) pointed out that
display ads were more effective than ever for reaching the International market
with the Multi-Million dollar trophy properties. On average these buyers spend
$ 1.7 million. They are primarily seeking the "safety and stability" of the US
markets. Real estate was still a great investment compared to whatever else was
out there.
2. Blogging - This was
the "Hot New" topic for Inman this year. The benefits are agents can attract an
audience where they can become the "local expert", show their interests and personality,
and attract compatible Buyers and Sellers. The down side is mainly with the
time it consumes to set up, educate, maintain, and grow your audience. Several
presenters pointed to actual sales occurring directly as a result of their
blogging efforts. Successful bloggers are those who focus on a geographic area
or have a niche, or possibly even a hobby, which their clients can identify
with (ski, sail, golf, hunt, etc.) "Nicheiness" (another new word) is good, and
Agents should do this now.
3. Empty Office (?) - As
more Agents and clients go "on-line" to do their real estate business, the need
for a Brick & Mortar office is greatly reduced. Starbucks has become the
place for casual meetings with Clients and Agents. The Title office is the
Closing office. More communication with Agents on-line eliminates the need for
the conference room. All-digital transactions eliminate the need for paper file
cabinets and are replaced by simple CD storage in a closet or a basement.
4. National MLS - a
heated discussion as these "data silos of proprietary data" are the last
bastion of the traditional real estate "empires". Many disadvantages of these
silos were uncovered. It was difficult to find anyone to state exactly what the
benefit was, except to the "King or Queen" of the realm. A past President of NAR, Bill Chee, spoke
briefly to describe his efforts to have a National MLS. Clients want it, Agents
want it, and technology providers want it... when will it happen? MLSs currently
have a gaping hole of 25 to 30% of sold homes that are not in their data bases.
One obstacle is that the Traditional Agents who rely on
their "proprietary data" will have to make the transition to providing a customer service
based on performance. This transition to
openness will make it the end of the Traditional Real Estate as we knew it.
Realtor.com said they expected to start supplying MLS "sold"
data. That will be a key factor for enabling clients to perform their own
valuations, something many old-timers relied on for business. They currently have
4.7 million listings at Realtor.com.
5. On-Line Data - Expect
More - Virtual Earth had a seminar and showed what is coming. Real rooftop
addresses, Bird's eye views, higher resolution, integration with county data, a
NIU (Natural User Interface), Falcon Eye, more done on same page, and more. This
gives more power to the CONSUMER!
6. Social Networking On-line (SNO) - is a buzz word that was overused. It is not yet clearly
defined as to whether or not blogging is included in SNO or not. The value of
SN was challenged by several people as they reminded agents their job was to
sell real estate and not spend all day socializing, network or not. Unless SN
leads to business, many recommended avoiding or downplaying it. Another said
that SNOs must be about Quality not Quantity. LinkedIn can be good or bad,
depending on who you get LinkedIn to, it is best to use caution, could be a
SNO-job?
In the past (and now, too) Agents worked on a "capitalist"
system where the consumer is nothing more that a statistic, a Buyer or Seller.
Today's consumers are tired of being treated like meat. They want control; they
want to do their own investigation. And now they are Capitalist, they just want
an agent to handle the transaction (what goes around comes around?). If Agents
want repeat business they must earn it by working the social side.
7. FSBOs - this was really
a new concept! If you are a consumer Buyer, why only make an offer on homes that
are listed by an agent? Through County Assessor records the same basic data
that MLS has is already available (but for ALL not just MLS data). So if you
find a home on a street you want to make an offer on, make an offer on all
homes of that style, square footage etc. to ALL OWNERS, listed or not! Why use
an agent at all?
8. Walking Score -
Totally new, a company is assessing a www.walkscore.com
to all homes based on public data. Thus environmentally focused Buyers, or
Buyers reducing gas purchases, can select those homes suitable for walking
convenience.
9. Video - Due to the
higher transfer rates offered by DSL, broadband, and wireless, it is now
capable of streaming video. Where before we were told consumers want more
photos of homes, we may be hearing soon that Buyers want video even better than
photos. This can be especially helpful when selling to International investors
who purchase remotely.
10. What's still to come?
- The merger of the cell phone or smart phone with the laptop is still the
missing piece to having a mobile business executive. Data and software can be
stored in "The Cloud", somewhere on the Internet. Companies like MS through
Virtual Earth have futuristic offerings in development now. We'll be connected
on-line all the time responding to Client needs. The new buzz word here is
"twitter", check it out. Sign of the future, or a dead end? Time will tell.
F. Observations
Agents will need to be more accountable - as there will be "no where to hide" on the Internet. For
example, there is already a site, http://www.rottenneighbor.org/, where you can rat out neighbors in your apartment building.
We should expect one called something like: http://www.rottenagent.org/. Be good, you're being watched all the time!
Best Success Story of show: Janet Choynowski was bored in Warsaw and looking for
something to do in 1997. On a whim, she started selling real estate (in Warsaw) to the English
speaking expatriate community. She expanded the business to other languages and
communities by hiring multi-lingual agents. Long story short - she sold out to
CRBE for unspecified millions in 2004. Janet claims she new nothing about Real
Estate when she started. The key was becoming a local expert giving her clients
whatever they wanted, with lots of long hours and hard work. BRILLIANT! Learn more: http://www.immobel.com/docs/new/our_story.html.
She earned it the old-fashioned way: LISTEN
TO YOUR CLIENT'S NEEDS, PRODUCE RESULTS!
Best Suggestion of show:
Jason Canter - We must ALL work at making the world a better place.
Best Bullshit of Show:
Ian (??) - House Values: I never considered our leads to be of poor quality;
they were just earlier in the selling cycle than most agents expected. (He had
a long nose, too!)
G. Conclusion
The Inman Conference shows us the future of Real Estate on a
global technology basis. The sooner you get involved, the sooner you can
achieve the GOALS in your PLAN. It is an EXCELLENT CONFERENCE!
No need to panic. Realistically all new trends, inventions,
and concepts have a lag to when they finally gain 50% of the market. This is
followed by a restructuring of the industry, including major consolidation, and
then it becomes a commodity, as 90% market penetration is achieved.
Inman is the "bleeding edge", you'll want to be one-step behind to stay on the "leading edge".
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