So, I've been running my mouth about this word called ::Transparency:: for a few years now. When you wax philosophic on a topic for so long, watching it manifest in the main stream elicits redemptive emotions.
What is Transparency? The word has a far reaching and fascinating taxonomy depending on what the corresponding topic is. Generally, its a noun that suggests that the given topic can be seen and understood clearly with little left to the imagination. Transparency fosters a greater sense of awareness around a given topic. Most people will say that greater transparency regarding a given topic is generally a good thing.
So, is Transparency a good thing for business?
On paper, as an ideology, Transparency represents practices performed in a more truthful, enlightened and thus positive light.
In practice, in real life, Transparency tends to compromise established industry's, institutions and individuals ability to continue to function as they traditionally have, more often than not with extreme deleterious consequences to a rigid status-quo.
You can't handle the truth! - Colonel Nathan Jessup.
Copious amounts of raw disseminateable data, a byproduct of our progression into the The Information Age, has catalyzed the virility of Transparency creating fast moving paradigm shifts that corporations and industry stalwarts are simply unprepared to handle. Transparency exacerbates underlying 'issues' and causes rapid disintermediation to legacy industries like ::wait for it:: real estate (and mortgage).
The writing has been on the wall for years now:
- From 1997, Clayton Christensen's The Innovators Dilemma articulates that a 'successful company with established products will get pushed aside unless managers know when to abandon traditional business practices.'
- From 1999 Blown to Bits states that "the Internet and other technological innovations are changing the basic structures of most industries and simply destroying the remainder." and "Increasingly, your customers will have rich access to a universe of alternatives, your suppliers will exploit direct access to your customers, and your competitors will pick off the most profitable parts of your value chain. Your competitive advantage is up for grabs."
Transparency has brought many an industry to its knees. While it seemed like a good idea at the time, it's clear today that the money that was printed to create the Mortgage Backed Security Market created a bubble that popped. Consequentially bubble based business models are taking it on the chin, drawing out the knee jerk reaction of indiscriminate cost cutting. As a business, trimming unnecessary fat is very prudent right about now, but what shouldn't be ignored is investing in the type of innovation required to compete for future discerning consumers (and agents).
Today, more than ever, its time to 'abandon traditional business practices' if you want to stay in business much less maintain a competitive advantage.
Back in late 2007, I quickly rambled about three topics that represent vanguard of the future of real estate:
- Compensation reformation or divorcing real estate commissions is coming, since inter-broker compensation can be handled outside of the traditional MLS...A different version of the same thing isn't a viable solution and mass adoption of isn't probable considering the openness of the technology landscape, 2007-08 forward.
- Zillow and Trulia aren't it either...Both well funded 3rd party destination real estate information websites business models revolve around advertising. Advertisers pay money to players like Z & T because consumers are carousing their sites, not an agents or brokerage, so it would seem fair to say that both entities would like to keep the consumer there. This isn't a knock against either company, they do what they do and make no bones about it, however their respective agendas don't line up with the individual agent...
- An application (technology, widget, et al.) that allows for a real estate professional to 'share' their valuable information and market their services to others within similar spheres, while insuring an acceptable assurance of reciprocity has yet to be identified...though it should involve a strategy that implements an open Social Networking Optimization framework that allows birds of a feather to flock and fly together...
1) Compensation reform (initially) on the Broker to agent level (CGI splits, desk fees) is manifesting out of brute downward pressures on the market: depressive home values, heavy inventory and lack of credit. These conditions are pushing many agents out of the industry and causing the best agents to become rather brand or franchise agnostic, perpetually asking: What have you done for me lately? Loyalty means little in a Bear market. Broad compensation reform between agent and consumer is an inevitability.
2) My overall point that the agendas of the Zillow's and Trulia's of the world don't line up with the individual agent brokerage is shared and expounded on (far better than I could) by my very smart friend Rob Hahn. How long is it before a critical mass of the best agents adapt to open their own (very virtual) brokerages, adopt these types of sites as primary marketing channels, utilize their superior products and services in place of the expense of affiliating with a broker-franchise-brand that provides diminishing, even negative value?
3) The 'open web' proliferated by the likes of Facebook Connect and Google Friend Connect offer the 'open Social Networking Optimization framework' described above on highly scalable and cost effective levels. Aggregating and sharing granular information has never been faster, easier or cheaper with free communication syndication platforms like blogs, Twitter, FriendFeed and FeedFuze. Agents that have learned to harness these tools and services don't need to work for a major brand to succeed. They are becoming the brand.
Instead of dismissing these thought threads and seemingly diminutive products and services, real estate Franchises and Brokers would be wise to listen, adapt and adopt before they trip the line irrelevant. Over the past couple years a new position within the social spheres of the online real estate industry has popped up: Director of Social Media. It's a fancy name for someone who knows how to communicate online using the products and services mentioned above. Broker-Franchises should also seek 'Social Media Directors' and promote them from within their current contingencies. They represent a worthy investment as these folks have learned how to leverage information and create conversation around themselves and/or their business far more effectively than traditionally expensive marketing campaigns...they represent the future of real estate.
The generation that will pull this recession up from the depths knows nothing but the internet and how to communicate with the world using its cornucopia of social products and services. Tech savvy consumers will only connect with similarly tech savvy real estate professionals.
To tie this all together, I don't believe the real estate market will simply correct without major Transparent changes from and by the people who serve it. With money continuously being printed and infused into our economy, when things do turn inflation will be hard to control. Real estate is usually a sound hedge against inflation, as real assets typically rise in value in relative correlation with inflation percentages. These aren't 'usual' times. When real estate values do stabilize (aka bottom out), monetary inflation will likely increase at a hefty tick, further diminishing the buying and borrowing power of most people. Tough times are still ahead, there is no quick fix. Consumers will demand (and need) great service for less cost, or they simply won't buy.
The agent and business who ends up succeeding in this market will be the one who kept one eye on cutting costs and the other on investing in innovative resources, specifically industry relative content syndication applications like the examples mentioned above, and other similar technologies that promulgate Transparency. On the upside, these tools and technologies are rolling out cheaper and better than their predecessors...evaluate, adapt and adopt...or start looking for a new career.
::Done Rambling::
Definitely one of the best 'reads' I've come across on AR in a very long time. We are not very far away from total Internet immersion. Embracing and implementing technology/social media is no longer an option for success.
A mouthful but well worth the entire read. Getting "up to speed" on blogging and having a website has been a long, arduous journey, but entirely worth it. I now feel ready to deal with Twitter and beyond. I am not ready to lay down and die as a real estate agent and so I will continue to do what it takes to prosper in even this economy.
Great post. Why isn't it featured?
This is very interesting... as in several reads prior to full absorption.I think the first read through is yielding a happiness to be on A|R...
Thx Rich :)
@Fran: I don't know why it isn't featured, tough crowd ;)
Jeff, awesome read. For those that still think in "opaque" or "translucent"----they are in deep doo in a "transparent" world that is headed toward being even more so.
Hi Jeff, Very nicely organized and presented. Many will note that those on the cutting edge tend to see the world through an impatient lens. While many groups have embraced new technologies at a breathtaking pace there is a substantial market sector who look first for the comforting face to face dialogue typical of real estate marketing over the last - well, a long time. In its' hurry to adapt/adopt any new business model our profession should remember that every transaction must recognize the inherent human value system we seek to satisfy.
Jeff, this was the most amazing post on the future of the real estate business I have ever read! We are thinking along the same lines and i have this conversation with my bf every week. WE talk about Inflation, commissions, brand, cutting costs, innovative online marketing, open mls!! WOW!
Hi Jeff, Not long ago I addressed a group of agents regarding the value and necessity of blogging and embracing new technologies. Everyone nodded his/her heard, said "Ya, this is a great idea." They all then went back to their desks and did business the same old way. In the same way, just try to start a discussion with agents here on AR about alternatives to commission, creative marketing advertising strategies, etc. The answer: "Oh, it will be a long time before those new business models will work." Here's the reality: NAR, the brokers and the agents all secretly hope the economy will miraculously repair itself, consumers will continue to pay huge commissions and that life will go back to "normal." Well, the future isn't what it used to be!
Jeff- In the spirit of transparency, I must admit, on first blush I thought this was too dauting a "read." However, some of the content must have made a subliminal imprint (or was it Rich's high praise ;-)) because instead of clicking off, I kept picking out bits and pieces to read. I finally started over, at the beginning and it was well worth the effort.
Interestingly, my company, Prudential CT Realty, has named a Director of Internet Strategy. She has been traveling from office to office, teaching Web 2.0. While she has been successful in getting agents to create blogs and enter their profiles on Facebook and LinkedIn, I have yet to see much activity as a result of these efforts.
Who knows? Their procrastination may give me enough time to figure out this social networking and blogging thing before the competition, in my market, heats up.
I do agree most traditional companies need to come to grips with social media and if they need to hire someone to hold their agents accountable so be it. I have taught many seminars on blogging, invite them here to begin to learn and read. The percentage is not high for those that actually do.
There is a traditional company in my area, that has started a company blog.....I hate to say it but mostly it is posts brought in from other news sources. But at least they are trying.I've thought about sending them some of Lenns posts.
I liked your ramblings :)
The only problem from promoting within is the person who gets promoted has to actively engage and feel open to communicating socially.....there very well could be an existing employee who would be Ready and willing to adapt and then find that there were able in doing so....but to convince the marketing director to become a social media marketing director- that in and of itself takes a consultant/advisor oftentimes. Even in the first scenario it can take an advisor.
In terms of the generation that will make a change to this economy....I hope that will be all generations working in this economy- R we not the melting pot? I don't forsee my mom retiring in the next 3 years, possibly not even 5 or more. I think change is more than a 1 generation effort and real estate is really being sold to 4 generations.
I like this statement from Bill Gilhespy,
In its' hurry to adapt/adopt any new business model our profession should remember that every transaction must recognize the inherent human value system we seek to satisfy.
Is the internet a viable tool? Yes. Is the internet convenient? Yes. Is the internet a gateway to make great relationships? Yes.
Are all relationships, regardless of their origin of contact important? Yes.
I will never replace the phone or face to face...not that you are saying that....but I do want to impress....some clients, of all generations, will just prefer that.
Enough of my blabbering......I did like this post.
Holy moly.. post is not rambling, but more along the lines of seeing the future, or just pure genious ! It will be interesting to see what happens, there will be a lot of change in the future... only time will tell for sure ! Great read : )
Right on! Great thoughts! But I do have a couple of observations.
With regard to compensation, the idea of getting paid for work we actually do has been developing, but slowly. There is a new designation (not approved by NAR yet but may be in the future) called ACRE, Accredited Consultant in Real Estate. The idea here is that we adopt the consultant model instead of the commission model. The consultant gets paid for work actually performed. The traditional commission model requires that the real estate agent accept all of the risk and gets paid only if the transaction closes. For more information see: http://www.acrealestate.info/
Another aspect of transparency in the real estate industry has to do with information about homes for sale. I work mostly as a buyer agent. In the past, buyers were limited by what their agent showed them. Now (with IDX websites showing the entire MLS for a particular area) buyers have access to all of what's on the market. The whole MLS is on real estate agent websites.
However, the role of the agent is still enhanced. The information about the purchase process in a particular state and/or interpretation of all of the information available, for example, still requires a real estate professional. A good agent will know the local market and be able to advise his/her client as to good investments for the long or short term. A buyer agent can help the first time home buyer through the transaction.
The IDX website has also streamlined the home purchase process. Depending on what information the agent has provided, buyers can now do "drive-bys" and thus save agents lots of time and energy. The homes which internet-savvy buyers want to see are those which they've already previewed on line and potentially driven by. A great saving of time and energy for the agent. We end up showing only those "finalists" that the buyers have selected on the basis of viewing properties on line.
And even if people have purchased or sold a property previously, there are still advantages of having an agent. The agent will prepare a market analysis which Zillow and other internet resources can't compete with in terms of accuracy. The agent can also recommend lenders and other professionals who can facilitate the purchase or sale and make the whole process smoother.
The internet has enhanced the information available to both buyers and sellers, but both would be foolish to think that raw data tells the whole story. Our role as real estate professionals is to help interpret that data and advise our buyers and sellers as to the "real" situation. And with the changing market, increased foreclosures, the kind of information we (as informed professionals) can provide can only enhance our credibility and transparency.
I could not agree with you more. If I could only convenience my clients that. I do think however you'll see companies like Trulia continue to be a mainstream maketing resource for sometime.
I fully agree with you about transparency and the need to share knowledge. Real Estate is so hyper competitive and "closed". Agents that are only willing to share their knowledge if they get something in return will not be around for too long. We as industry professionals need to learn to work better together to help educate the buyers and sellers - conflicting information leads to confusion. Confusion leads to blame... and Realtors get blamed for a lot!
Jeff those that are out front right now and actively have a social media presence/strategy will be reaping the benefits as the online world continues to grow in popularity.
Jeff,
There is no question at all :
"...consumers will demand:...
If you are facing the consumer and listening, you have a chance: Brokers have to face agents, agents have to face buyers and sellers and buyers and sellers have to face the bank.
A fine ramble. Give us more!
Steven Stearns
Experienced Social Network Building
Content Creation For Commerce, Creatives and Citizens
shsworks@sbcglobal.net
920-691-6030
Social media and transparency in 2009 is essential! As Gary Vaynerchuk (@garyvee) of WineLibrary.com says “In 2009 it’s not an option to be involved in social media; it’s a necessity.”
Interesting timing...I just wrote a post late yesterday about today's real estate business models, pointing out some of the changes I am seeing and posing the question of what is next. It is clear to me that there will be significant changes as a result of this economic crisis. I like the idea of a Director of Social Media...I was the Director of Business Develoment for a firm in CA before moving to NC 3 years ago. Over the holidays I offered to help the agents of this CA firm with blogging and 21 agents signed up within 24 hours! While there has been little follow through clearly the agents see a need to learn even if they haven't yet embraced the change to a point where they are willing to invest the time to make it work for them.
JeffX -
Much love and respect, brotha. A classically great post.
I think the only thing I would differ with you on is the need for brokerage operations to have a "Social Media Director".
Over the past couple years a new position within the social spheres of the online real estate industry has popped up: Director of Social Media. It's a fancy name for someone who knows how to communicate online using the products and services mentioned above. Broker-Franchises should also seek 'Social Media Directors' and promote them from within their current contingencies. They represent a worthy investment as these folks have learned how to leverage information and create conversation around themselves and/or their business far more effectively than traditionally expensive marketing campaigns...they represent the future of real estate.
Broker-Franchises shouldn't have 'Social Media Directors'; they should fire their VP's of Marketing who don't get social media.
Having a 'Social Media Director' is like having a 'Director of Interactive Marketing' -- as if those are marketing ghettos to stick the nerdy kid who digs Twitter, while the "real" marketing is print/TV to be done by the people from ad agency backgrounds. That is pure delusional thinking.
Social media is interactive marketing is marketing. It's all marketing. And in fact, it's the most effective form of marketing today.
So why have some head of marketing who doesn't get it and needs to ghettoize it into some niche?
Change the head, and you'll change the body; change a finger, and it's likely to get chopped off in some internal turf-war.
-rsh
"So why have some head of marketing who doesn't get it and needs to ghettoize it into some niche?"
Change the head, as you say Rob...
Heads of traditional marketing departments must ghettoize Social Media...its a tactic of job security :)