Our Greatest Fear

By
Real Estate Agent with Fathom Realty West Sound WA State 52404
https://activerain.com/droplet/5c55

I posted the following question this past week in the NAR (National Association of REALTORS®) Facebook group:

 

"What is the one main issue confronting our industry that has you the most concerned?"


The responses ran the full gamut from the lack of affordable housing and inventory, to the evils of Zillow. But what became readily apparent and almost palpable was the sentiment that many people within the rank and file of our industry are living in fear - fear of change, fear of disruption, fear of disintermediation, fear of emerging technology and new models.

 

And, as human nature would dictate, people are desperate to put a name and face to their fears. They need a tangible target to vent their concerns and frustrations. Hence, companies like Zillow and Redfin unjustly bear the brunt of their anxieties, worries, and angst.

 

In a world plagued with fake news, the amount of false, misleading information surrounding both companies is equally staggering.

 

Zillow is constantly accused of 'stealing' listing data and secretly planning to launch their own real estate brokerage. On the contrary, the listing data feeds are authorized by the respective brokerages themselves who hold those listings. And, since agents and brokers comprise the majority of Zillow's revenue stream, why would they do anything to adversely affect and upset their primary customers?

 

Redfin, a real estate brokerage, bears the unfortunate constant barrage of criticism on social media by other licensed agents and brokers. Labels such as 'lazy' 'inept' or 'poorly-trained' are constantly thrown around, along with more harsh terms like 'whores.' Founded in 2004, the company went public in 2017, closed the first day of trading at $21.72, giving it a market capitalization of $1.73 billion dollars.

 

As we move forward, into the future of our industry, I believe there will be three market segments for brokers and agents:

 

1) The Luxury Market

2) The 'Discount' Market

3) The Middle Market

 

The Luxury Market: The Luxury Market will be relatively unaffected by any changes or disruptions. Agents and brokers who understand this segment and effectively cater to its demands will continue to enjoy growth and success.

 

The Discount Market: Understand, that when I use the term 'discount,' I am not referring to your grandfather's discount brokerages - the ones that would pop up sporadically during a fast market, effectively attracting bottom-feeders, then, once the market softened, disappear as quickly as they came. While some of these operations still surface from time to time, the 'discount' market I am referring to here is significantly different. These are well-funded, tech-savvy companies, full of really smart people, laser-focused on understanding consumer demands and effectively satisfying those demands. While many of these start-ups will not survive, a good number of them will. They will gain traction and enjoy significant market share, most notably on the listing side. And they most definitely will not disappear when there is a market downturn.

 

The Middle Market: The Middle Market is comprised of everyone else that is left. This is the segment that will be the most adversely affected by change and disruption in the days ahead. This will be especially true for the more traditional 'brick & mortar' brokerages who rely heavily upon agent/broker 'caps' and commission splits to fund operational overhead.

 

In order to survive and thrive in the middle, brokerages will have to creatively adapt, and foundationally change the way they do business. They will need to determine efficient ways to empower their agents and brokers to remain competitive and profitable. Virtual brokerages will become a more popular and prevalent option, especially those who offer low, transactional-based fees, as opposed to caps or splits, yet still provide their agents and brokers full support services, technology, tools, and training.

 

While the future is always filled with uncertainty, it is also always full of exciting opportunities for those willing to embrace change.

 

What are you doing now to anticipate and prepare for the coming changes to our industry?

Posted by

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Rich Jacobson is a District Director for Fathom Realty and a licensed REALTOR®; an avid Crab Hunter, Clam Digger, and Oyster Shucker, He is the Social Media Evangelist for Life on the Kitsap Peninsula & The Western Puget Sound in scenic WA State.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Jason Kardos 04/30/2018 06:11 PM
Topic:
Real Estate Industry
Groups:
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The Lounge at Active Rain
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Tags:
luxury real estate
zillow
competition
redfin
disintermediation
fear
survival
future of real estate
discount models

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Rainmaker
111,159
Elizabeth Straessle, MRP
All American Home Source Realty, LLC - Corpus Christi, TX
~Military Spouse~ AllAmericanHomeSourceRealty.co

Great thoughts and observations Rich! When I opened my brokerage I decided to have a virtual office. My niche is military and most of the time they are house hunting from afar so I didn't see the need for a physical office. 

Apr 30, 2018 06:02 PM #16
Rainmaker
280,068
Jeanne Gregory
RE/MAX Southwest - Sugar Land, TX
The most important home I sell is YOURS!

I remember back when everyone was incredibly worried that the internet was going to do away with Realtors.  Guess I've seen issues come and seen them go.  I'm not too concerned about the brokerages.  More concerned about too many low producting agents who don't know what they are doing. 

Apr 30, 2018 06:07 PM #17
Ambassador
2,167,411
Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

My office is a full service brokerage and very successful. For me, remaining in touch with past clients is most important to stay in front of them, maintaining their trust now and in the future no matter what happens. Discount brokerages have come and gone in our area because they depend on high volume to stay open. The main reason that Z & T are still going strong online is because agents pay their way! Not this one.

Apr 30, 2018 06:11 PM #18
Rainer
86,414
Mike Kelly,CRS,CIPS
The MJKelly Team - Santa Rosa, CA
"One of Sonoma County's Natural Resources"

Considering the average person sells their home every 10 years, we'll be constantly in demand to explain the procedure. Tech based companies and those who flock to Inman Connect are tech centered folk. It's the whole "coast" thing. They get tech but there is a whole country who could care less. 

  You have a very naive idea of Zillow's plans. Redfin had to lower their rebates as they couldn't afford it.  You pays your money and takes your choice. 

Apr 30, 2018 06:15 PM #19
Anonymous
John kilroy

What is low transaction-based fees?

Apr 30, 2018 06:25 PM #20
Rainer
389,243
Anna Hatridge
Goodson Realty - Farmington, MO
Missouri Realtor with Goodson Realty

Congratulations on the feature.  This is indeed an interesting topic for discussion and for each of us.  My business is focused upon how mobile our society has become.  I serve an area of about a 50 mile radius of where I live. I am often asked why I am willing to travel an hour to list or sell.  The answer is simple: These are the areas I know and travel often to meet with family, friends and shopping.  If I will go the distance to spend why would I not travel there to earn a living.  

Apr 30, 2018 06:39 PM #21
Rainer
486,298
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Rich,

Tomorrow will not be the same as yesterday, that is for sure.

Apr 30, 2018 07:25 PM #22
Rainer
23,041
James Grant
Asheville, NC

Hello Rich, Very interesting topic. In my opinion, we must consider to embrace change. It's because of all our equipment already improved and technology too. We also need to enhance our techniques and strategy to give a better service to our client. 

May 01, 2018 12:43 AM #23
Rainmaker
247,123
Lesley Wilson-VanGoethem
Innovative Realty Solutions Group - Winter Springs, FL
Residential Real Estate Broker Associate

What a great analogy of times to come..
Agree it willbe those 3 classifications , and agents/brokers will have to pick the model they primarily will b working with/as.

The Discount market will increase dramatically, and actually will allow the industry to self regulate the # of agents joining the industy as the "glamor " of income will be lessened. This niche is all about volu

 

 

 

May 01, 2018 03:54 AM #24
Anonymous
Kelly Cantwell

I read your article because it speaks directly to how I have been feeling. Our market is so tight right now with very low inventory. I don't really worry about Zillow & Redfin, but I'm trying to figure out how to adapt to our changing industry... or exit stage left ; )

May 01, 2018 05:25 AM #25
Rainmaker
195,748
Ben Yost - 303-587-4297
First Time Home Buyer, Mortgage Rates, Pre-Approval - Denver, CO
FHA, VA, Conventional - Mortgage Loans in De

Great Post! Well thought out. The Internet is changing everything.

May 01, 2018 05:20 PM #26
Rainmaker
493,362
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Interesting post and I agree with you!  Change is inevitable.  These next ten years will bring massive changes to our profession

May 01, 2018 06:49 PM #27
Rainer
468,560
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

If you're a knowledgeable professional, you should always remain fearless and aware of the changes occurring or trends that may lead to adaption and adoption of technology or rules and regulations affecting your industry. 

The three market segments IMO have always been in our industry and IMO will not change. What will change is how information is used to drive consumers to buy or sell.

Real estate unlike other products purchased from the Internet doesn't have a return policy and cost tens or hundreds of thousands dollars, so, agents or advisers IMO will always be necessary to help buyers or sellers.

May 02, 2018 12:49 PM #28
Rainmaker
964,051
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Interesting times lie ahead for sure.  I'm thinking that market niches will also be even more important, hence my niche in energy efficiency.  Discounts don't apply when sellers are working to get extra vallue for the thousands they've spent adding energy efficient improvements to their home and they are looking to gain as much value as possible.  They'll look to those with the most knowledge.  

May 02, 2018 11:26 PM #29
Rainmaker
486,281
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Wow---This is a great example of those agents who like to put their heads in the sand and allow the likes of the Zillows and Redfins of the world to plow them over! Not only that, you also are the sort to jump on the the discount wagon, claiming that the future of real estate is "the change" that is occurring and we are all going to have to swallow it and get on with it! Who are you kidding??

Obviously you have not read about nor been affected by Zillow and their activities over the last 10 years. Those "wonderful" characters are the same bunch that founded Expedia and put all travel agencies out of business before they sold that for big $$ and went on to begin Zillow. They also had a stated goal in the very beginning of putting All brokerages out of business--Then they realized they didn't have the right tools to do that in that they were "Scraping" listings off brokerage websites and that "copy and paste" technique does not pull SEO on Google, since algorithms like original, high quality content in order to show up on the first pages. So they got agents to pay them and give them their content--not too smart on the part of the agents but brilliant on the part of Zillow!! I remember ALL of this as it was happening--and I spoke out! I have been watching them in their efforts to do the deed they swore they would do to all brokerages--not such an easy job since our work is much more multi-faceted than the travel business. But the Zillow bunch went to the heads of companies, sold them all a bill of goods and before you know it, they were getting all the participation the needed from most of them. Tie that in with the agents who were only thinking of getting leads with no work, "just pay to play" and there you have it!

Those are the facts--accurate and informed facts!!!  Go to http://www.realestate.com  and see who comes up! They even have the nerve to say "Go to a local agent and get a CMA done on your property--that will give you all the information you will need as you sell your own property"!!

 

May 06, 2018 02:36 PM #30
Rainmaker
486,281
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

BTW, Zillow now owns the Hampton local MLS, realnet (our internal website for all Hamptons brokerages) and Streeteasy, another local website for the Hamptons---they own ALL of it!! All leads go to the agent who pays the most money--one agent in my office spent $40k last year. She is suffering right now because the market softened and she was getting nothing from Zillow!! She will be lucky if she does not go bankrupt from what she is contracted to pay Zillow....

May 06, 2018 02:44 PM #31
Rainer
53,812
HOMEiZ.COM HOMEiZGROUP
HOMEiZ.COM - Los Angeles, CA
THE REAL ESTATE SOCIAL NETWORK-COMING SOON

A strong fear creates denial.I believe that many real estate agents live in a denial since that, the fear is stronger than them and they just simply can't resist it.The average real estate agent in the U.S is 56 years old.This generation was not born with Google, Amazon, Ebay, texting, iphones etc,,.This generation has different pictures in their brains.I believe that some of them would love to go back to the printed MLS era. But instead of thinking negative on technology and companies like Z R, in reality technology made their life easier and faster to make money. Homes prices are 3 times more than they were 15 years ago and that means, real estate agents make more money today than they did 15 years ago.What`s wrong having your buyer showing you the property he/she wants to buy and asking you just to make an offer. You as an agent do not need to take your car and drive 4 hours to show houses.Life is a flower. If someone would have told you 30 years ago that in the future, you will be able to see the person you speak with on the phone, or texting, you would probably think that this person needs to see a shrink. A strong online presence is very much needed to survive nowadays in a jungle full of lions.

BTW: I am 57 years old. (: 

May 07, 2018 09:20 PM #33
Rainer
53,812
HOMEiZ.COM HOMEiZGROUP
HOMEiZ.COM - Los Angeles, CA
THE REAL ESTATE SOCIAL NETWORK-COMING SOON

Dear Paula Hathaway. I have read your entire comments and I can feel your frustration with Zillow.I have read many comments and met many real estate agents, who feel the same as you are, regarding Zillow.I respect any business model because, I know I have the freedom to choose if I want to use the business model or, I do not want to use their services.With all the frustration of many agents have with Zillow, I have a question to all those frustrated agents:Why your listings are on Zillow? Yes, many are saying that their broker choose to feed the listings to Zillow.Is it the same case with you? I know one thing,  If my broker would feed my listing anywhere I don't want them to be, I would leave that brokerage. Very simple. If I think that Zillow hurts my future as a real estate agent, I would leave my broker and find one who is not feeding listings to Zillow.Now if your answer will be that your sellers want their listings on Zillow, so you can not complain. You are in a business of giving service and your fiduciary is #1 in this business. There is conflict of interest between brokers and their agents.From a broker point of view, he/she likes the idea that their agents buy Zip codes to get leads. Why? Because the amount of non listing agents is greater than the amount of listing agents.So, that means Zillow is working for those brokers who want to keep those agents who have no listings, to keep paying them some desk fees.From an agent point of view, Zillow is trying to eliminate the agent.My grandfather used to say: the first 100 years are always hard. (:

May 08, 2018 06:33 PM #34
Ambassador
2,341,339
Fred Griffin presently on Leave of Absence
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

 Hi, Rich.   There is much food for thought in your post!

Jun 10, 2018 12:32 PM #35
Rainmaker
486,281
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Rich: FYI, you won't have any business by the time this is over---You have turned your back on facts! Those facts are those that I stated above in my comment--I don't need to state them again. Most agents get it and do not consider it "fear-mongering" as you call it--

Jun 10, 2018 04:29 PM #36
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