Posted By Sean Fox, COO at Reply.com
Having been to Real Estate Connect for 10 years running, I’ve seen the show during both the boom and the bust. Regardless of the circumstances, you can always get an insider’s view as to what is going on in the market at this conference. Three major points jumped out at me in reflecting on my conversations at the show:
1. The Big Pullback. Many companies have pulled back dramatically on their online spend in response to the downturn this Fall. Real Estate has been tough for awhile now, but the end of Q3 and Q4 marked a new low for many companies that service the real estate market. And I am not just talking about real estate brokerages – a number of online companies that have built their whole business around their web presence have put paid search expenditures on hold. Also, I ran across – without much searching – several companies that had been forced to give up on or dramatically curtail their direct selling activities to agents or brokers because the return on investment was not there. The bottom line is that, even though the real estate market had been in a malaise for nearly two years, the events of the past six months caused a major pullback and Q1 does not look much better for many of those companies.
2. Lasting Change. The new reality is forcing everyone to look hard at their business model and find ways to improve the results. The tough times will no doubt cause fundamental changes in behavior that will persist long after the market recovers. One example that struck me was Alex Perriello’s (CEO of Realogy who always shows up with a cool head) comment that there are far too many real estate offices and that he expected a significant shift toward home-based operations for the real estate industry in the future. NRT (the largest real estate company in the US and owned by Realogy) recently rolled out a web-based transaction management platform that will help facilitate such a transition; so he, no doubt, has an incentive to emphasize this change in the real estate business. Regardless, I was struck by his candid assessment that “there is too much brick and mortar in the business,” and that the financial realities of the situation will accelerate the transition away from the traditional, office-based business model.
3. Time for Deals. Given the doom and gloom in the market, most leaders were actively searching out business deals that could help them weather the storm. In some cases, that meant reaching beyond the types of deals that would have gotten serious consideration in past years. When the markets are rolling along, leaders tend to focus on execution of their own game plan and are generally risk-averse when it comes to taking on new business partnerships. I found potential partners to be unusually open to exploring innovative business relationships and pushing beyond their historical comfort zone. I would not be surprised to see some interesting (maybe even shocking) business relationships be forged during the next 6-12 months, as we all figure out how to thrive in the new reality.
There has been a lot of good blogging done in follow-up to the show. Inman News pulled together a sampling of some interesting contributions that I recommend you check out, if you want to get a more holistic view of the show’s content: http://www.inman.com/blog/2009/01/14/bloggers-share-their-experiences-connect-nyc-09
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