The real estate business
“If anything will make you the best in your careers, live your life with these words: and then some.”
The nature of the property industry is changing. The need to build relationships and apply focused efforts is more important than ever.
How it worked previously
1880-1970s: the real estate broker-centric era Growth depended to a large extent on growth of home ownership. The broker owned the office, listings and signs, did the advertising and generated the sales leads. Brokers provided agents with tools and workspaces. A 50:50 agent’s split was the norm, after taking off any office fees.
1980-2000s: the agent-centric era: Many believed that agents were doing the majority of the work while brokers collected most of the profits. In addition to shifting brokerage commission dollars to the agents, brokers also shifted the desk/office rent/administrative fees to the agents. So property professionals had more power and profits but also more financial responsibility. They also had to undertake their own advertising and generate their own leads.
How it works now
2000s: the consumer-centric era: Technology means consumers can access the internet anytime, anywhere. It has been so impactful in such a short space of time that it has quickly pushed us into the next era. Millennials are the next big demographic of home buyers – these hyper-connected consumers are changing the real estate landscape. In 1964, 40% of buyers searched the newspapers when searching for homes. The purpose of the ad was to spark interest and importantly, to connect the agent with the consumer so the agent could provide more details.
In 2015, close to 90% of US home buyers started their search online. Listing portals provide consumers with incredible information online, not only about property but also about the neighbourhood. It’s about agents learning to provide value in this age of information and embracing these changes in technology.
When we search the web, book a vacation or buy from the grocery store, data is stored and later analysed. This is used to reveal patterns, trends and associations relating to human behaviour and interactions. It’s the basis for business intelligence, which is about taking information and turning it into data about consumers. In real estate, this translates as using information to create the whole consumer picture: to find out who buys what, where and why. And who will sell a house when, where and how. Yes, a knowledgeable consumer still has power but in brokerages today, those who use the data intelligently see the real benefits. Consequently, it will become harder for agents who ignore or fear emerging technology to work within this industry.
My global exposure provides a unique perspective: no two countries are alike when it comes to the practice of real estate. I always get asked the same question while travelling: as technology continues to shape our industry, will the role of the real estate agent become obsolete? My answer is no. In 2015, about 5-million homes were sold in the US. Of those, 90% were sold with a realtor member of the National Association of Realtors (NAR) and 5% by other real estate professionals (those who don’t subscribe to NAR’s code of ethics). The remaining 5% were those who sold their own homes. In the US, the trust factor in real estate professionals is high. Top real estate companies won’t lose their control over the market anytime soon.
And then some
But they need to work at it. Average people do what is expected of them. So an average person goes to work from 9am to 5pm and does a good job. On a sports team, average people do what is expected of them for the time expected of them. In relationships, average people remember birthdays and anniversaries – they do what is expected of them. But great people do what’s expected of them. And then some. The person in your company who is the best probably does a little bit more, whether it’s more phone calls or marketing. That sports team, those Olympics kids, they practice more than anybody else. That’s how they became the best. And in relationships, the best ones don’t wait for birthdays, anniversaries and holidays. They are doing great things all year round. As agents, the things you do in your communities, you do out of your heart. That’s who real estate people are and that is what they do. There has never been a profession where I’ve seen more people do more for their communities. If anything will make you the best in your careers, live your life with these words: and then some.
The relationship difference
Real estate continues to be and will always be a relationship-centric business. Practitioners should never underestimate the human factor in the transaction. That’s where we need to master our skills. For instance, drastic cuts on commissions aren’t enough to maintain business. Technology is changing the way everyone lives and we cannot continue operating our business by acting as if it’s not. We need to continuously update our knowledge and adapt our business models to serve new demands. As agents, you have to earn trust. At NAR we spend $40m on consumer advertising a year, educating US consumers about why a realtor offers a competitive advantage. Maybe on a national level, the South African property industry needs to spend time explaining to consumers why their ethics are better than average. And I’ve always said to agents: if your broker isn’t doing that for you then do it yourself. Try to market yourself as an agent and explain why you are the best at what you do.
What is NAR?
Tom Salomone is the 2016 president of NAR, America’s largest trade association. NAR has 1,2-million members and headquarters in Chicago. Members are residential and commercial realtors including brokers, salespeople, appraisers and property managers. NAR distinguishes between a realtor and a real estate professional. By their definition, only a member of NAR can be called a realtor in the US. Through their code of ethics, members commit to protect and promote the interests of their clients.
Words: Tom Salomone
Images: iStock by Getty Images, supplied