In my last post, I made the case that many of today’s old school brokers are Dead Dinosaurs Walking.
In the last couple of days, two things have happened that have me questioning that theory and its keeping me up at night:
- I learned that a intelligent guy I know, a programmer who actually works for Rent O Meter (a RE tech start up), bought his first house last week. He used an agent who was referred to him. He did not use the Web in his search process at all. He told the agent what he wanted and what he could afford and had no problem when every listing the agent showed him just happened to belong to the agent’s brokerage.
He bought one of those listings, the broker scored a 6% double whammy, our programmer friend could not be happier, he loves his agent and actually referred him to me. To add insult to injury, the broker’s Web site is really just awful. This transaction is straight out of 1983:
- Another friend, who is not connected to the business, read the post and pointed out that the asteroid that hit the Yucatan, blocking the sun and causing firestorms on a planetary scale, probably killed most of the dinosaurs in less than a year. If the widespread use of the Web is the asteroid that hit Real Estate, then the impact happened around Y2K. Its 8 years later and lots of business-as-usual brokers are still standing.
How is it that brokers who refuse to evolve can tough it out for 8 years while Tyrannosaurus Rex was well on his way to being a skeleton in the Peabody Museum within 12 months?
The first comment on that post said, “If I’ve heard ‘I’ve sold hundreds of houses this way and there is no reason for me to change now’ once, I’ve heard it 100 times.”
What if that is right? That somehow, despite all the evidence to the contrary (this Blog being Exhibit A), Real Estate is immune, or shielded somehow, from what the Internet has done and is doing to businesses as diverse as Travel and Music? I mean, I know it sounds crazy, but there ARE dinosaurs walking among us. Can they just refuse to die?
Maybe Real Estate isn’t Oz. Maybe its the Land of the Lost.
Todd says:
Shaky analogy – What is described as an “instant” mass extinction event ( asteroid that hit the Yucatan ) is measured in 10,000 year units. The dinosaurs did go extinct after the asteroid but that took thousands and thousands of years, but in paleontology terms that is “instant”.
So fear not extinction is in high gear. The asteroid already hit in 2005 ( Zillow, blogs, consumer DSL availability at %80, etc. ) the dust hasn’t settled just yet.
July 16, 2008 — 8:38 am
John Rowles says:
Yes, its shaky. How shaky depends on whether you come down on the side of the “intrinsic gradualists” who think the event took thousands of years or the “extrinsic catastrophists” who think it happened a lot faster.
To really beat it to death, some argue that it was multiple impacts over a couple of years. Maybe that is what’s going on. I do feel better. Thanks!
And someone emailed me privately to point out that, “If your friend is like the programmers I know, he may be programming smart but not common sense smart. Would you dress like a programmer?”
Also a good point. Glad I put it out there. I will sleep better tonight.
July 16, 2008 — 8:55 am
scott bridwell says:
Sure, I believe that the internet is the best thing to happen to Real Estate since dirt. But let me put my swami hat on for a moment and predict that these old dino’s will not die.
How many people do you know that still have 8-tracks (me)or vinyl records? Are they as popular as mp3’s? No…but some people are still huge fans.
Another example would be offices going paperless. Not going to happen! Most people like the security of a paper file.
The same will be the case with the old Dino’s. Instead of going extinct they will just pass on their traditions to their next generation and the only changes they will make will be the ones they are forced to make.
July 16, 2008 — 9:12 am
Chris Johnson says:
This reminds me of the Real Estate bonus tour that a friend of mine went on. He got the MLS sheets, and assumed till I corrected him that “EVERY” house had a $2500 or better bonus attatched to it.
He bought the third house I showed him, and the first two were superior to anything he saw.
July 16, 2008 — 9:13 am
Gary Frimann says:
As long as Realtors provide their services for free to buyers, and people will prefer to live indoors, I believe as a Realtor, I will always have a job.
Suppose a Plaintiff’s lawyer charged up front fees for their work, rather than contingency, the court houses may be empty, and we might be living in an unjust world.
People use the services of Realtors to buy. We “give” them our service for free, with the expectation of compensation coming if and when the transaction closes.
We must cooperate with our competition (how often does that happen in real life?) and we cannot be negligent in any manner.
My point is, I guess, that since most people have never hired an agent for anything, they just do not know or understand what we do… Example, we are not there to clean the house they just bought, or offer down payment assistance, or pay for repairs.
Computers offer information. Real estate agents use that information. We probably analyze it better than most non-real estate professionals, as they really do not know what to look for.
Buying a house is not like buying a cheap commodity, especially if we do not know anything about a neighborhod, school district (although I don’t advise but defer on that one), etc.
July 16, 2008 — 10:52 am
Bawldguy Talking says:
John — How ’bout this?
Dinosaurs will exist right up ’till the day they can’t get themselves belly to belly with suspects/prospects at will, without going online.
When I first darkened a real estate office door, you could literally spend the weekend calling FSBO’s and not get to all of them. That eventually evaporated. I then found alternatives to getting in front of prospects.
The real irony here IMHO, is calling these agents dinosaurs in the first place. Their money doesn’t have pictures of dead cavemen, right? 🙂 Until you impact their bank accounts by getting to their prospects before and/or better than they can, they’ll keep succeeding.
Just one dinosaur’s opinion.
July 16, 2008 — 11:06 am
Judy Orr says:
I keep thinking the same way and I also refer to those kinds of brokerages/agents as dinosaurs. In fact, the top agent at the brokerage I left 4 years ago after 22 years with them probably still doesn’t use e-mail yet she isn’t slowing down.
She continues because she has a huge referral base and you even mentioned that your friend was referred to the brokerage he used. She does keep up with her database although it isn’t by using a computer. She uses her handwritten records and one of those follow-up systems that she pays for after a closing (that sends a couple magazines and cards over the next 5 years).
I’m assuming she must keep this going for a fee after the 5 years are up because I know she doesn’t send anything else.
The rest of her business comes from calls off her signs and floor time she takes. Still works for her.
July 16, 2008 — 11:31 am
John Rowles says:
Gary wrote “Computers offer information. Real estate agents use that information.”
Except that the information that computers make available now is far more complete than consumers had access to, and these days, computers offer interaction via the Web (like what we are doing now), and every demographic study I read plus my own experience tells me that Gen X and Gen Y and lots of other people prefer communicating this way.
The dinosaurs (which are not 100% of brokers, I get that) refuse to change in response to this evolutionary pressure. Instead, they try to graft the old onto the new: Web sites that look like brochures with the search function hidden 2 layers deep (if your Web site has a “Search” button on the homepage instead of a search interface, I mean you), abbreviation-laden useless content sucked out of the old MLS database and plastered across the web without a keyword in sight, withholding addresses in the hopes that it will force people to contact Realtors, the list goes on.
THAT’s why, when one of my own, a Gen X Programmer Guy, tells me he just executed a transaction using the 1983 playbook, it makes me wonder if Bawldguy is on to something: They aren’t evolving b/c, somehow, the old playbook is still putting dollars in the bank.
The question is how long can that last? Can it last? Can they just refuse to die? My gut says no, but I still see Dinos cashing checks.
July 16, 2008 — 11:42 am
Bawldguy Talking says:
John — How long have we been hearing about cars powered by source other than gas? Since I was in 3rd grade watching films about future in 1959. 🙂
Where are they? Well, almost half a century later we have hybrids rolling of the lines of major auto manufacturers. Are non-hybrids still selling? Uh, yeah.
I don’t think it’ll take that long, but my guess is my 27 year old son will have kids in school before the dinosaurs are forced online. And he’s not even goin’ steady yet. 🙂
July 16, 2008 — 11:55 am
Todd says:
“…The dinosaurs refuse to change in response to this evolutionary pressure. Instead, they try to graft the old onto the new: Web sites that look like brochures with the search function hidden 2 layers deep, abbreviation-laden useless content sucked out of the old MLS database and plastered across the web without a keyword in sight, withholding addresses in the hopes that it will force people to contact Realtors.”
Bravo!
A semi-related related example, while reading the comments for this post, I got a message from the server at Price Line informing me that my bid of $79 a night for a hotel room has been accepted – at the Hyatt Regency, which retails at $295.00 a night!
No dinosaur [ human ] travel agents were harmed in the booking of this hotel room or the writing of this comment. 😉
July 16, 2008 — 12:01 pm
Bawldguy Talking says:
People, I has a question.
If ‘John’ is ultra hip, a 100% online agent, and banks $200,000 in commissions before taxes, and ‘Jim’ a local dinosaur can barely spell computer if you spot him the compute, makes $200,000 in commission before taxes — who makes more money?
Take yer time. 🙂
July 16, 2008 — 12:09 pm
Thomas Johnson says:
@ Todd: You still have to pick up the key at the front desk. As long as the dinosaurs wander the jungles of the Rotary, Lion’s Club, Chamber Mixers, Little League Grand Stands and Health Clubs, getting belly button to belly button with computer programmers, they (we) will still have clients.
July 16, 2008 — 12:15 pm
John Rowles says:
This is fascinating…Thanks everyone for commenting.
Bawldguy and others say they are dinos, and yet here they are on BHB — that’s like watching a dinosaur start a fire so he can get better light for the wheel project he’s working on.
I just re-read the post to make sure — No where did I suggest that I see this as an either/or proposition. As in, either the dinosaurs will be distintermediated by the web or they will walk the earth until kingdom come.
What I’ve found interesting lately is the *resistance* to change especially when that change will yield a competitive advantage over the dinosaurs that refuse to evolve.
Brokers are always telling me how competitive this industry is and how they are constantly looking for an edge, but when the rubber meets the road, many won’t do what it takes to engage the Web in a strategic manner and all signs point to THAT as being a big edge over the competition.
If a 30+ year old database marketing program works, why not augment that with a Web site that also works for the buyers you aren’t reaching the old way?
Why take the chance that, once the pipeline of Babyboomers you have built up over the years downsizes into that cute condo next to the golf course that you, or the company you may be leaving to your kids, will be unprepared to meet the next generation of consumers on their terms?
And to TJ’s point — yes there is still a human at the front desk and that human is providing the same service for $75 for which the Hyatt used to charge $295. Priceline’s Web technology and business model made it possible for the consumer to pay less than half of the traditional rate. Are you sure you want to go there?
July 16, 2008 — 12:35 pm
Bawldguy Talking says:
Busted!! Thought I had my cloaking device fixed. Damn. 🙂
July 16, 2008 — 12:45 pm
Greg Swann says:
We are extremely high-value-proposition listers. We work with buyers, too, of course, but we don’t market for buyers. The fact is, we have virtually no chance of listing for sellers unless they are paying very close attention to how real estate is sold. Sellers are much more serious than buyers about getting value for their money, but, even then, huge numbers of them don’t see the value in the things we do — don’t understand why strategy matters, don’t glom on to the subtle things we do to wrap our homes around buyers like a hungry cat, don’t see why anything should make any difference or why their sister-in-law or the guy who sponsors the little league team couldn’t do just as well.
That’s almost crazy-making, that the real estate industry has so successfully lowered expectations that many sellers can’t tell food from poison. But: That’s the way it is. We list for sellers who are paying attention. Our Days on Market are very low, and our List Price to Sales Price ratio is very high — as anyone doing math would expect. The better we get, the better we get, so, in the long run, all of our numbers will get better and better. But this will only matter to sellers who are paying attention. Sy Syms said, “An educated consumer is our best customer,” so this is a correctable nuisance in the long run. But it is what it is. We could make more money in the short run doing the same crap work everyone else does. In the long run, we are the dinosaur killers.
July 16, 2008 — 1:32 pm
Thomas Johnson says:
I think we should go there. How many millions of dollars did take to get Priceline to the point where you click instead of calling the manager of the Hyatt and asking for his best rate for that day? Is Priceline profitable and if not how long can Redfin, I mean Priceline last? Remember crocodiles and sharks are evolved dinosaurs, and they seem to be fairly high up the food chain.
I guess we are so focused on the either or proposition, that we tend to ignore that the right answer is the one that pleases clients and in so doing generates a profit which keeps the good guys around to fight the good fight.
July 16, 2008 — 3:48 pm
John Rowles says:
“How many millions of dollars did it take to get Priceline to the point where you click instead of calling the manager of the Hyatt and asking for his best rate for that day?”
That depends on what they pay Shatner.
And who is to say that you would get that same rate if you called the manager? That’s the beauty of Priceline, its transparent. Either they take your bid or they don’t.
“Is Priceline profitable and if not how long can Redfin, I mean Priceline last?”
It was big news in eCommerce land when Priceline turned a profit in 2002, and from what i can tell , they have been profitable ever since with big year-over-year gains last year.
According to this USA Today article from last month, Redfin is “projected” to turn a profit this year. Unlike Priceline, Redfin is privately held, so there is less, ok no, real transparency there, so who knows?
The bigger issue, as I see it, is that as far as the consumer is concerned, they win. It’s hard to see the downside of getting a $295 room for $75 on Priceline, and from the testimonials, Redfin’s customer’s don’t see the downside to the money they think they saved, either.
Yes, I know the arguments about whether or not that is a “real” savings, or whether or not consumers are served as well as they would be by a traditional agent, but the perception of savings is more exciting to the average consumer than listening to a complex argument against something that feels good.
I guess what I’m saying is that if you are in the position of having to argue with consumers, you may have already lost the argument.
July 16, 2008 — 4:59 pm
Lori Gilmore says:
“That’s almost crazy-making, that the real estate industry has so successfully lowered expectations that many sellers can’t tell food from poison.”
Have the expectations become lower or has poison always been the norm and the only choice? Those partaking of the poison have no idea what a healthy diet would consist of and those peddling the poison are profitable, at least for now.
Will consumers demand better? Do consumers know better when they see and experience it?
Blazing a new trail isn’t easy, but in the end it puts you way ahead of those that are waiting for a paved street.
July 16, 2008 — 5:09 pm
Bawldguy Talking says:
Lori — Sellers, at least in my experience, have been excellent at discerning one thing — who produces results.
The rest is debate over how those results were produced. Interesting to us, but irrelevant for 80% or more of the beneficiaries of those results — sellers.
The ‘bar’ hasn’t changed during my stint in this business, just the ways we’ve learned to ‘skin the cat’. At the end of the day, those who pay us only wanna know how many cat skins are on the wall. The rest is trivia to them.
July 16, 2008 — 6:36 pm
Todd says:
“…I think we should go there. How many millions of dollars did take to get Priceline to the point where you click instead of calling the manager of the Hyatt and asking for his best rate for that day?”
Priceline.com, originally started business for less than one million dollars in 1998 and now has a market cap of 4.3 billion ( yeah, with a “B” ) dollars.
http://finance.yahoo.com/q/ks?s=PCLN
“…Now approaching it’s 10 year anniversary, the groundbreaking online discount travel site has one of the highest satisfaction rates for both consumer and stock holder.”
But dry public relation text aside, I used to call the front desk of hotels and ask for their “deal of the day” and all I ever got was either a polite “I’m sorry Sir?” or a hand-over-the-receiver stifled laugh.
After ten years, Priceline and Travelocity have re-written the rules for the travel services industry. Zillow and Trulia have only been around for three.
July 16, 2008 — 7:26 pm
Thomas Johnson says:
Another consideration: digital divide. Me: I’ll email it to you Seller/buyer we don’t do email. Me I’ll Bring you a fax machine. WE are now stockpiling fax machines so clients can do what they need to do. Saves a half a day of contract pingpong.
July 16, 2008 — 9:21 pm
Bawldguy Talking says:
Thomas — we do the same thing with scanners as required. Have run into the ‘we don’t do email’ in quite some time. Most just go buy the scanner, but we’ve offered to buy it for them many times.
July 16, 2008 — 9:27 pm
Geno Petro says:
Some dinos have ’25 years experience.’ Many more have the same 1 year (1983?) experience, 25 times. A few go on to make it big in cartoons and children shows. Of course, as Bawldguy would say, this is IMHO.
July 17, 2008 — 6:13 am
David Shafer says:
Perceptions rule the day. Take my neighbor. His real estate agent took some crap pictures and put it on the MLS. Canceled a Sunday afternoon open house without telling him, and did not much else. Now has the second contract on the house with a Aug. 1 close. If it closes it would have been on the market for 3 months and sell for close to asking price, which was high to begin with. He thinks she is great!
People flock to Wall Mart to buy cheaply made products that don’t last.
“That’”s almost crazy-making, that the real estate industry has so successfully lowered expectations that many sellers can’t tell food from poison.”
Yep, but it isn’t limited to real estate!
July 17, 2008 — 10:08 am
James Boyer says:
There are lots of these old time players around because there are so many people out there who still stick to the idea that all REALTORs are the same. I am in competition for a listing right now with a REALTOR who has been around for 30 years. That REALTOR has a chance only because of those 30 years, otherwise what he/she does for their sellers is a total joke.
July 17, 2008 — 2:42 pm