Residential Real Estate Market Trends for 2007: How They Impact You and What to Do

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Services for Real Estate Pros with RealEstate Planet powered by TourFactory

by Debra Pestrak

Advertising, marketing, and the media's assault on the consumer has lead to a change in consumer's expectations and tolerance levels. Real estate media?exposure led to increased consumer activity.

Tivo, Moxi, DVRs, "Do Not Call" lists, iPods, and spam filters are sending a message to the advertisers that consumers want the option of not hearing from them, and they are becoming more discriminate about what they listen to and watch.

N.A.R. states that 50% of all listings failed to meet the consumer's expectations. With 77% of consumers on-line, they have a lot more knowledge and therefore are expecting more from agents.

The consumer is wondering why agents are getting such a high fee.

We are in a transition period that requires both on-line and off-line advertising.

Unless, you have decided your target market are people who exclusively use either on-line or off-line for their buying decisions, there are not too many that fall into just one of those categories. This has made marketing, which most agents don't do very well, even more complicated. Marketing is being re-defined, which is leading to some new innovative ways to reach the consumer.

Many agents continue to use a 1990's model of marketing. This has caused their marketing to become less and less effective. More time and money is being spent in on-line advertising - up to 52% of the marketing budget. Signs, riders, marketing tools like voice response systems and "talking house" technology are becoming more and more important as consumers are looking for ways to get information without having to actually talk to an agent.

The bottom line is how do I reach my target market? Where are they, what do they want, and how can I deliver it to them in the most cost effective manner.

In one year, the fixation for on-line video and social networking created the most changes and opened up more new opportunities to the marketing world than anything else since the birth of the internet. As broadband abilities continue to grow, so will on-line video, which will lead to more content-on-demand opportunities. Change is accelerating, and new innovations are changing traditional rules overnight.

Existing brokers clinging to old business models will struggle in the future and find their market share eroding.

Gen Y's are turning 30-40 and represent 30% of the work force. They grew up with the internet, it plays a part in their day-to-day life, and they expect newer approaches and processes that are integrated into that technology. They are buying younger, and want something different, just like every other generation.

Internet buyers vs. traditional buyers - 77% of buyers are using the internet. According to C.A.R they use the internet: 75% to identify a specific home they want their agent to show them, 62% neighborhood information.

Google lists real estate as its top search category-2 billion searches a year. Static websites won't do it for much longer. People want interactivity, and almost expect it.

Consumers are demanding more and more information. Because most of the agents had no real, consistent marketing plans, many have found themselves with little business. With many agents only doing a few deals a year, they were not able or didn't stay up on the latest market trends and were not providing their clients with the best service or knowledge. This has had an impact on the buyers and sellers looking for and demanding better service and greater levels of knowledge.

In 2006, we expect to see an 8% growth in the number of Realtors and yet transactions declined by 8%. This has the Realtors scrambling for business and in some areas there can be 20 agents vying for business for one house sale. This requires the agents to work harder, be better positioned, and it makes it more important than ever to figure out how to differentiate yourself in the market. Unfortunately, some agents don't get it.

The market has had the third year in a row of record sales, the opportunities are there if you're looking for them. By having great market knowledge and having effective marketing you can clearly stand out from the rest.

Agents that are willing to make changes, get educated, and acquire the necessary skills will be the winners.

The key to keeping up is to embrace change because it is going to happen whether you like it or not. Stay on top of what is impacting this market, be willing to adapt new strategies, take advantage of the technologies that will simplify your business, and think about how you can do business with your clients for life.

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Rainer
9,640
Maureen Graziano
Third Eye Home Staging - West Islip, NY

Hi David - Very intersting post.  I am not a realtor, however, I have always followed the market closely and recently had my home listed for sale.  I totally agree with your points.  If realtors are still doing business as usual, they will not prosper in this current market.  It is definately important to try new and inovative techniques to reach the young homebuyers today. 

I think traditional open houses are going to go the way of the dinosaur.  Since only 2% of homes ever sell this way, it is time to try something new.  I think the future of open house will be done on the internet.  If the agent gives a guided tour of the home, the prospective buyers can watch the whole tour on the computer, and then call to physically see the listing if interested.  This would be a great timesaver.  Realtors would not have to give up their weekends sitting in empty houses in the hopes that someone might come to see the listing.  The people that would call after seeing the virtual open house would be serious buyers, and not lookers and nosy neighbors.

As for realtors who do not keep up, the realtor I listed my home with was horrible.  She did nothing to market my house (she promised she would, of course)  She seemed clueless as to how to keep up in this slowing market.  She actually said, "houses just aren't selling now".  Give me a break.  I'm sure she will not stay in business for very long.  Good for you that you realize the major shift in the real estate business and are willing to try to learn new ways to be competitive.

Much success to you

 

Mar 16, 2007 10:57 AM #1
Anonymous
Jim

Dave:

I think that the future of real estate agents is telling the seller the truth about the value of the homes they are listing. Open houses should be done away simply because open house only get buyers for agents that end buying other homes. Price is KING no matter what product anyone sells. Unrealistic prices and marketing plans that promise to sell homes only lead to frustrated sellers created by lying real estate agents. Now you have a new wave of real estate agents selling short sales, the sellers were the buyers that used the very same agents to purchase these homes that are in default with their mortgage. The American Dream for these buyers has become the American Nightmare. The agents got their commissions on those deals, which many agents knew that the buyers where getting bad loans. In other instances, the supposed real estate expert didn't know what kind of loan the buyers were getting and many times the real estate agents didn't care, so long as the deal closed. The big commission at the close of escrow was the only real concern many of these agents ever had. Now they are trying to get another commission selling short sales, it doesn't matter if their clients credit is damaged for years to come.  When real estate agents began to use the truth as the basis for their business and really care about their clients and stop relying upon technology as the savior of the business. We all should demand be realistic with all aspects of our business.

 

Mar 16, 2007 12:53 PM #2
Rainer
99,657
Christopher Smith
TREGO REALTY - Cedar Rapids, IA
Awesome post and I could not agree with you more.  I'm sure glad I got on the tech bandwagon a long time ago.  It's just now starting to pay off with my website leads.
Mar 16, 2007 02:16 PM #3
Rainer
35,464
Terry McDonald The McDonald Group
TerryMcDonaldRealEstate.com, LLC - Charlotte, NC
Brokers NC/ SC

All good points, but I think the shift may be larger than you state... technology is a great new tool, but it is what buyers can do with it that matters. For years in real estate, forever actually, power rested with the sellers and the listing agents who controlled their information.  What's really happenning is the power is shifting overwhelmingly to the buyer, because that is where power traditionally lies in most sales transactions(he who has the gold rules).  Except in a few select markets around the country where demand far exceeds supply, buyers can shop, compare and be be kept informed about their choices anywhere they can connect to the Internet, and make decisons quickly.

The best example of this was last year, I do a lot of pay per click and two online customers, one from Georgia and one from Maryland,  found the same water community close out, independently, within 48 hours of each other.  The first customer asked me about Water Tree Landing, mentioned that there was a lot of home (Square feet for the money) on these three listings.  I checked, found they'd lowered their prices from the competitive 590's to the 570's, 3 days before to sell the last three.  So, first purchaser, who is now working here in Charlotte, decides to buy and we make an appointment for Thursday.  On Wednesday, purchaser from Maryland calls and asks, what do you know about Watertree Landing? She also has a husband working in the area, gets him to go look that day, and they wind up writing a contract Thursday afternoon.

I'd like to take credit for this but can't, it was the information in the hands of informed buyers (they had been looking online for 6 months and visited once, purchaser one was in a short term apartment here) that sold these properties.

Thankfully, according the the NAR 2003 Buyer study, those using the internet are more likely to use agents!  But the power is going where it belongs... to the buyer and any broker that ignores that could go the way of the horse and buggy makers from 100 years ago. It's that large of a sea change.

Mar 17, 2007 01:23 AM #4
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David Brayton

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