Before beginning in earnest, let me take a shot of addressing what surely will be the first comments made concerning disintermediation. Have there been instances of this happening in other industries? Sure — the ‘go to’ is almost always travel agents. I maintain the average person still uses travel agents when arranging anything more involved than visiting Grandma or a business trip. How many of us will arrange a two week tour of Europe on our own? Not me. You?
The point remains — any industry requiring real expertise and which must produce results of real value to their customers/clients, will not — cannot — be replaced by the mere act of clicking. The concept is absurd on its face.
Of course, the jury is out on whether or not I’m in the minority or majority. Opinions are just that. Certainly my opinion isn’t taken from Divine Inspiration. Empirical evidence drives me to my conclusions here. The marketplace has decided, at least so far, the experienced agent producing consistently excellent results by way of superior expertise is the dominate choice of buyers and sellers of real estate.
Click that.
Russ Shaw and I must be the last remains of the species long thought to be extinct — Trirealasaurus Rex. Apparently we just don’t get it, and are on our way out. Everyone’s eatin’ our lunch, or soon will be. Techno-Geeks who could study what Russell does for a year and still not know what he’s forgotten, insist their way, (whatever the hell that is — they argue among themselves) will eliminate him just like the meteor crashing into earth wiped out dinosaurs.
Last time I checked, he’s not feeling very threatened.
Every time I read something telling me how I’m on the verge of extinction, I consciously avoid going into Dad’s default mode, which was to extend his favorite finger in the direction of the offender. 🙂 I’d rather learn what the smartest guys in the room have to teach. They’ve taught me how to apply their Geekinology to my Old School ways. I’ve been walking that talk now for quite awhile, coming up on two years. I blog, have a website, am fairly computer literate (kinda sorta), and employ as much technology as my brain can assimilate. This includes marketing, both Old School and 2.0.
It’s the intelligent combining of the tried and true with the new and improved that has produced for me. I’ve yet to meet a commissioned real estate agent who makes seven figures yearly exclusively from traveling the 2.0 Geekinology Freeway. Yet those same geeks deserve our utmost respect and rapt attention, ‘cuz they’re showin’ us new tools, many of which actually produce results. What we now are learning is that the machine still needs a human operator.
Click that.
Disintermediation in real estate is a great conversation generator, but not much else.
I’ve been hearing for over three decades how the discount broker was gonna rule the real estate world. We’re all still waiting. And yes, in the spirit of transparency (another overrated and much abused concept), I’m about to roll out a new business model here in San Diego which will in effect lump me with the discount guys. I won’t be disintermidiating anybody.
Even with my new approach, investors will choose to hire me for two basic reasons — Results and Expertise. And yes, my experience is a significant factor, as it should be. It’s the same reason Phoenix home owners choose Russ over the myriad other agents on their list. They went to him in the good times, and they’re still choosing him now, in the worst of times. The first three reasons folks list their homes with agents like Russ is: 1. He’ll sell their home. 2. He’ll sell their home. 3. He’ll sell their home.
Not only does he sell it, but more quickly than his competition. Go figure.
Results and Expertise will not be disintermediated.
Segue to what works.
Isn’t real estate brokerage like every other business since the concept of commerce hit mankind thousands of years ago? The more things change the more they stay the same.
MLS books no longer exist, they’re online. 50 years ago real estate brokers charged 5-7% to sell a property. Go to any city and tell me that’s changed. It hasn’t, and it won’t any time in the near future. Will niches rise up and take a share of the market, charging less than 5-7%? You bet. They won’t disintermediate anyone. The changes in our business have been mind boggling. You and I could make a long list of incredible differences between now and even 10 years ago.
Yet, the agent still goes to the house, makes a presentation, whips out the contract, and lists the home. It still calls for a 5-7% commission way more times than not. And for the record? The seller would have to move up two rungs on the ‘I care’ ladder to even be apathetic about whether their agent double-ends his home or not.
He wants to see results.
I’ll speak for myself now.
Whenever possible I incorporate new concepts into my company’s operation. As mentioned above, I’m trashing how I used to charge, at least on the listing side. Ironically it means my San Diego clients won’t pay 5-7% commission. But it’ll be for a wholly different reason than you think. They only get to pay a discount commission on the listing side when they’ve agreed beforehand to become an investment client, exchanging tax deferred under my guidance, out of California.
They’ll be going for results their current agent just can’t deliver because they don’t have the expertise to produce the kind of results my firm can, and does. In the end, they won’t hire me ‘cuz of the reduced listing side fee. They’ll hire me ‘cuz they’ll retire sooner and with more income.
Now someone tell me who is gonna disintermediate that?
Who is gonna disintermediate Russ?
For folks to believe Russ and I will be replaced by the new real estate Geekinology, they’ll have to buy into the concept that home owners and investors will decide en masse to forgo factoring in expertise and results in their decision making equation.
Not frickin’ likely.
David Stejkowski says:
I’ll admit that I don’t use a travel agent for anything unless I have to (e.g., cheaper fares to haul my big butt across the Pacific in biz class. That does not mean I do a better job though: I just enjoy it. I did it today in fact. But it is also not large dollars we’re talking either.
But some things can never be disintermediated, at least not for anyone with savvy. Just because I know how to look at property and due diligence files and anything else on a computer is NO substitute for experience and expertise, plain and simple. And you are talking about more than a few hundred dollars.
If you want to have a fool for a client, then do it all yourself. If you want results, call guys like Jeff and Russ. Enough said.
April 5, 2008 — 7:14 pm
Bob says:
First it was the boom that was going to sound the death nell, then the bust.
Yawn.
April 5, 2008 — 7:56 pm
Bawldguy Talking says:
David — I know what you mean about traveling. The little stuff we can just click to our heart’s content. Even then I use The Boss as my personal travel agent. 🙂
A trip to South America including flights and a cruise ship? Don’t think I’m gonna click that one.
I shoulda used the ‘fool for a client’ example myself. Oh well, next time. You bring to mind a picture of a defendant in court during trial. He’s sitting next to a giant computer mouse. Click! Objection your Honor! 🙂
April 5, 2008 — 7:58 pm
Bawldguy Talking says:
Bob — Man, there’s another point I should’ve made. Thanks for the help, Bob. You’re so right.
April 5, 2008 — 8:22 pm
Louis Cammarosano says:
Jeff
I think that people are willing to use a “disintermediator” when they neither have the:
time
inclination
resources
nor expertise to pursue the activity on their own.
AND it is cost effective for them to employ the disintermediator.
The fact that one CAN perform the task themselves does not mean that they should.
This is why people still use realtors to sell their homes and realtors still use Homegain to help them find prospects.
April 5, 2008 — 9:05 pm
Bawldguy Talking says:
Louis — 🙂
April 5, 2008 — 9:19 pm
Russell Shaw says:
LOL.
I swear I did not pay Jeff to write this. In the interest of transparency I will make all of my email and phone records available to prove that. My income DID go down last year (compared to the year before) to the tune of about 400k. For me, 400k off the top is 400k off the bottom, as well. I am still eating well. Any recent photos will prove that.
The reason it looked like the discount folks (the we do nothing for less crowd) had made meaningful inroads into our business was there has never been (nor will there be again in our lifetimes) a seller’s market that lasted as long as this last one. We have the Wall Street crooks to thank for a “natural” seller’s market getting turbo charged when it should have simply ended. The limited service model “works” (quite well actually) in a sellers market. It does not work quite so well in a buyer’s market. As Jeff has pointed out before, it is a buyer’s market about 2/3 of the time and a seller’s market about 1/3 of the time.
April 5, 2008 — 9:44 pm
Bawldguy Talking says:
Thought you’d get a kick out of it. 🙂
Speaking of crooks (read: liars) here’s some weekend fun.
http://www.bawldguy.com/infomercials-get-rich-quick-seminars-and-0-down-nonsense-tired-of-being-lied-to-abandoned/
April 5, 2008 — 10:47 pm
JeffX says:
No disrespect guys in my following statements, so don’t go all flippant on me.
How old are you? How old are your clients? My guess, and I may be wrong, is that a majority of them are within 10 years of your age…and you will always have a place in your business because of this.
Thats why marketers take the time to flesh out demographics.
Disintermediation doesn’t correlate directly with putting someone out of business immediately as many like to spin it.
‘Look! Everyones talking about disintermediation and I’m still standing!’.
My mom still uses a stock broker, travel agent, goes to the dealership to buy her Lexus from Mary, to my knowledge she has never bought anything online.
I manage my own portfolio, book and plan all my vacations, and bought my last 2 cars on eBay.
A tale of two different era’s.
If my mom was in the market for a house in Russell’s area or in need of relative tax/investment advice, I’d send her to either of you guys in a heartbeat.
Disintermediation is the removal of intermediaries in the supply chain. The real estate professional is still at the top of that chain in their community.
At the top of the food chain you have choices: adapt, adopt or find yourself in a position of diminishing value. Disintermediation in real estate isn’t a light switch dynamic, no one is going to flip a switch and the lights go out. It’s more like a slow dimmer.
Evolution is predicated as much by the community as the individual and the real estate community is turning over…to survive you must turn with it.
It’s all about how fast one can process how much information. People in the 18-24 demographic can process more information faster than the generation before them…and they don’t value expertise and service they feel they can get by Googling the same. Right, wrong or otherwise (find myself saying that often nowadays)…
The lights are getting dimmer as your community demographic shrinks…but they’re still on.
April 6, 2008 — 10:32 am
Sean Purcell says:
Great post Jeff,
When disintermediation first became popular (again) about two years ago I found it interesting because we were, as Russell Shaw pointed out, in a seller’s market. But the truth of the matter is, disintermediation has little to do with technology and everything to do with value. Technology is simply a tool; it can increase your value or highlight the fact that you do not bring value. But it rarely replaces value. So those that get removed from the food chain, the conclusion of disintermediation, are those that constrict or confine simply to benefit themselves. (Can anyone in California say “broker”?)
BTW, it is a great confidence builder when your income takes a hit to see that people like Russell Shaw feel the same pressure and have the same losses… well, the same as long as we employ a base 10 factor 🙂
April 6, 2008 — 11:42 am
Bawldguy Talking says:
Sean — As usual, you make the central salient points.
Russell’s income loss makes our point, doesn’t it? His decrease in income didn’t slow him down a bit, yet that number is about 8-10 times more than the average full time agent out there.
Click that. 🙂
April 6, 2008 — 11:49 am
louis cammarosano says:
jeffx
your points are well taken.the internet however is not new and the value that a realtor brings has not been diminished over the last ten years the way the cd or travel agent has.
young and old, alike still use realtors to help them buy and sell homes
April 6, 2008 — 12:29 pm
Bawldguy Talking says:
JeffX — You make very solid points, most of with which I find myself agreeing. Here’s a question.
You said — It’s all about how fast one can process how much information. People in the 18-24 demographic can process more information faster than the generation before them…and they don’t value expertise and service they feel they can get by Googling the same.
I get emails, blog comments, and phone calls almost weekly from 20-somethings who feel the same way. I haven’t kept numbers on this, but my sense is the 80/20 rule applies — 80% of them found I was giving them answers they hadn’t known to Google.
BawldGuy Axiom: You can’t process answers/information you don’t know that you don’t know. You can’t search for answers to questions you simply don’t know to ask.
And that’s what many of the 20% are finding out now, as they strive to turn their financial lives right side up again. They’ve done to themselves what they thought they were doing to me — they ‘disintermediated’ their net worth.
One of my A-List agenda items is to learn how to better communicate with the younger, highly educated, mostly brilliant generation. Fortunately, the ‘other’ Brown in the company name is a 27 year old college grad, who is smarter than his partner. 🙂 He’s helped immensely.
Finally, I’m wondering about the ‘word of mouth’ in the X & Y Generations as it relates to some of the financial reversals they’re facing these days, due to their insistence on disintermedating experience, expertise, and wisdom of all kinds. It’s been my observation their age groups acquired more than their share of 100% financed investment properties — investments they’re leaving in their rearview mirrors by the thousands.
Any thoughts or help you can offer me, JeffX, will be gratefully received. I’m not proud, and will take whatever you have to offer to heart. Thanks
April 6, 2008 — 12:41 pm
louis cammarosano says:
buying a home is a long process (see greg’s post above about how a “fast”sale still took a few days) so I am not sure what disadvantage it would be for a fifty year old realtor if he/she did not process information as fast as a 24 year old even if his/her client was a 24 year old
April 6, 2008 — 12:49 pm
JeffX says:
Not implying that those who try and go it alone are better off, many times they make such a mess they end up needing a qualified human being 2x as bad to help clean it all up…
I consider you, like Brian Brady, an anomaly in this space, one who utilizes technology along side their expertise with great success.
As far as processing more information faster, it’s an acquired skill most anyone can learn, the younger demographic has been brought up this way so they are ‘conditioned’ to it almost out of the womb.
I liked your post, just thought you were a little too dismissive of how disintermediation effects these industries 🙂
April 6, 2008 — 3:32 pm
Bawldguy Talking says:
JeffX — I get what you mean, and don’t disagree for the most part. I’m pretty sure I don’t belong in the same sentence as Brian, though.
As a Trirealasaurus Rex I tend to dismiss how disintermediation has affected other industries a little quickly sometimes. Guilty as charged.
April 6, 2008 — 6:57 pm