Orlando Regional REALTOR® Association

Current Trends That Are Impacting the Market and Transaction

Strategic Planning MeetingTuesday, October 30, 2012Dubsdread Country Club

The most significant force impacting today’s American real estate marketplace is arising from the fact that despite the fact that the “market” has returned a number of other factors have come into play creating a new market environment.

How are these forces playing out?

The North American real estate industry is at a turning point. The level of tension and anxiety is high. Things that can’t happen in the marketplace yet are happening in the

association environment.

Quebec

CREA Today

Toronto

Las Vegas

Chicago

The Pinnacle Group Project

An unprecedented level of AE terminations with clerical replacements

The Why of Today

The American real estate marketplace, industry and transaction is currently being

impacted by a number of demographic, generational, economic, technology and

informational forces.

While there is adequate evidence to document the current impact of these forces

no consensus has emerged with respect to when they will generate sufficient

momentum to force a fundamental change in the traditional industry.

As the monitoring of these forces continues and the intensity of the conversation

increases it is essential to keep in mind that it takes 24 - 36 months to introduce and

implement meaningful institutional change

The Brokerage Conundrum

What Do We Know Today

• The consumer is in command• The average broker is 63 years old• Agents are not transitioning into the new reality• Third party Internet firms are gaining ground• The consumer is being attracted by 3P• Brokerage profits from commissions are minimal• Brokerage values are lowest in years• There are no buyers for traditional brokerages• There is no plan in place, the Boomer brokers

are in denial

The success of your brokerage community moving forward is of

major concern

The elephant in the room

What’s happening out there …

The current market environment is marked by a growing level of disconnect between the traditional

agent and the contemporary consumer. Increasingly when Labarie and Connie get together the sparks fly and we don’t mean romantic sparks.

This situation can not be allowed to continue.

Who is the best agent around here …

Example #1:

Consumers want to know who the best agents are in terms of production and

neighborhoods. Way too many traditional brokerages are refusing to be transparent

“I want more information …”

Example #2The contemporary consumer has an insatiable appetite for very specific

inventory related data. By and large agents are refusing to provide it

What exactly do they want …

What about lifestyle information …

Example #3

Today’s consumer wants to talk about lifestyles and quality of life issues. The vast

majority of agents are only prepared to discuss bedrooms, baths and prices. This is

contributing to the growing gap between the contemporary consumer, especially within

generation “Y,” and brokerages.

What does lifestyle mean …

• What about the schools• Where is the nearest decent golf course• Do airplanes fly over here• Where can I find organic vegetables• Where is the nearest synagogue• Who lives in this neighborhood• Is this neighborhood “walkable”• Are there babysitters around here

Example #4

Today’s consumer (especially the 40% that will be forced by circumstances to live in a rental for the next few years) wants to talk

about issues and options that compare ownership and rental options. Too many agents see this discussion as a threat to home ownership and refuse to engage.

Where are they getting it …

They want TM …

Example #5

Many contemporary consumers want to enjoy the benefits of transaction management so

that they can track their transaction. Very few brokerages in each market offer this service.

What’s the big deal with TM …

During this presentation we will make the case that Transaction Management is the

single most important process in real estate today. It is and it will be the gateway to the

new brokerage business model

KWI does TM …

92% want TM …

I need to know now …

Example #6

More and more consumers are asking that communications with their agent occur using

smart phones, i-Pads and other mobile devices with messages being delivered now.

Too many agents are responding that they will call after their regular day is over.

Is there a problem …

What’s the problem here?

Could it be generational …

Some experts suggest that what is happening here is that boomer agents

believe that they can control the marketplace by not accommodating the

unique and well identified expectations and demands of Generation “Y”

Wow! Big difference …

Could it be …

Other’s suggest that there a sense within the brokerage community that its future rests

with the aging agent population rather than the contemporary consumer?

How is Labarie doing …

• He wants to be the center of the transaction• He wants to sell not connect• He thinks lifestyle is for girls• He doesn’t want TM to let Connie know he

screwed up• He hates the idea of agent rating• He doesn’t believe Connie needs to know

everything.• He doesn’t believe that real agents do rentals• Communication is not his priority• What in the heck is a consumer experience?

Orrie the REALTOR®

What happened to Connie …

Not to worry about Connie, she found what she was looking for

Connie the consumer …

Whose on line …

The Rapidly Transitioning Real Estate Internet Space: Brokerage Ally , Business Distractor or

Skillful Competitor?

Let’s start by examining how the new breed of Internet based real estate companies are

doing with the consumer demands and expectations discussed above.

I want to know which agents are good …

On the subject of agent rating

Trulia does agent rating …

Yelp does agent rating …

Zip Realty does agent rating …

Redfin does agent rating …

Zillow does agent rating …

What about transaction management?

What’s the big deal with TM …

During this presentation we will make the case that Transaction Management is the

single most important process in real estate today. It is and it will be the gateway to the

new brokerage business model

Redfin does TM …

KWI does TM …

What about advanced inventory information?

Remember what they want …

NuHabitat has it …

NuHabitat has it …

Zillow has it …

Sawbuck has HomeSnap …

Where to get rental info …

On the subject of rental vs. ownership lifestyles

Information on the decision …

The Zillow breakeven …

The Zillow rental app …

Trulia Market Watch

Where can I live my life …

Lifestyle information

Zillow can help …

Street Advisor knows the good stuff …

Where can we walk …

What about Zillow …

Lets take a closer look at Zillow

They got listings …

They got rentals …

All the rentals …

They have agent reviews …

They have lots of consumer information …

Zillow television ads …

They are recruiting agents …

They are providing valuable agent benefits …

Lets try it again, Zillow is recruiting …

Zillow has recruited 26,800

REALTORS®

So what is the big deal …

Do you know what Zillow is doing with your agents?• They are taking a big piece of the commission• They are directing your agents to their consumers• They are setting standards for your agents• They are establishing a national system of

transaction coaches who will work with your agents every week

• They are telling your customers that they are better

Most ridiculous of all, your agents who refuse to cooperate with your efforts to

create systems and consumer experiences are now blindly following Zillow’s.

What does all this mean …

What is happening here?

Here is the bottom line …

Let’s talk about reinvention …

Capital redefines Professionalism: The Brokerage Success Formula Moving Forward

The story of the past five years …

Reason # 4 …

Because the recession happen to coincide with social, demographic, and technical developments. When the going got tough the traditional business

model couldn’t get going.

Why traditional business models don’t create value in the new environment

• Inability to respond to current social and demographic circumstances

• Lack of management controls• Failure to employ metrics and

benchmarking• Costs of labor• Lack of accountability• Failure to be consumer centric

How are we coping …

What is the basic challenge …

A business model is a method for creating value. When a model fails to

create value it must be replaced

The traditional brokerage business model is not creating value for …

• Consumers

• Agents

• Owners

• Investors

Here is the moment of truth …

It is time to reengineer the brokerage business model!

Enter a new player in our industry …Welcome the investor.

What will investors require in order to provide funding for a brokerage.

• Turn key systems• Universal accountability• Effective management control over key

processes• Agent stability• Strong consumer connections• Strong business metrics and benchmarking• Appropriate market share

The other side of the story …

As your brokerage community searches around the industry for friends and allies it

may be surprised to discover that those that it thought it could depend on may not be

there. Most franchisors are not in a position to assist with the development of new

solutions. They are either without sufficient funding, imagination or they have committed to global development.

The REALTOR® association can be part of the solution. It has the resources, the staff and

the guts to get you there. Just add leadership

Give it some thought

Where from here …