We are drowning in information but starved for knowledge.” quoted by John Naisbitt.
As RE Web 2.0 has evolved, there has been so much emphasis on the data, yet as we sit and evaluate the present solutions, consumers are still unclear how to interpret the information.
“Information is not knowledge.” quoted by Albert Einstein.
Buying and selling real estate isn’t all about the data – it’s about knowledge and expertise.
If knowledge is not information, what is knowledge?
According to Merriam-Webster online, knowledge is defined as the following:
Knowledge: (1): the fact or condition of knowing something with familiarity gained through experience or association (2): acquaintance with or understanding of a science, art, or technique b (1): the fact or condition of being aware of something (2): the range of one’s information or understanding <answered to the best of my knowledge> c: the circumstance or condition of apprehending truth or fact through reasoning : cognition d: the fact or condition of having information or of being learned <a person of unusual knowledge>
If consumers are to gain value from technology in the real estate arena, the solutions must be focused on the interpretation of the information. Interpretation of information is knowledge.
Who possesses knowledge in the real estate arena? Experienced Realtors, brokers, mortgage professionals, attorneys, title/escrow agents, property inspectors, experienced investors and others involved in the transaction. Experience gained over time, after executing a number of transactions.
The prevalent mindset is to reduce the cost of the transaction by reducing the commission paid to the real estate agent because technology delivers information more openly to the consumer – but what value has been created? Has true value been really created if more information has become available?
Reduced fee business models often focus on reducing the most value aspect of the transaction – the knowledge and expertise of the real estate professional. Granted, if the knowledge and expertise is not readily identifiable, it makes sense to pay less. I believe reduced fee models address the barrier to entry for new agents who may lack the knowledge and expertise more seasoned and experienced agents have gained over time.
Do you know how much your knowledge costs? How is your value being communicated to the consumer?
“If we value independence, if we are disturbed by the growing conformity of knowledge, of values, of attitudes, which our present system induces, then we may wish to set up conditions of learning which make for uniqueness, for self-direction, and for self-initiated learning.” quoted by Carl Rogers
The future direction of RE Web 3.0 technology solutions should be to exploit the unique expertise possessed by the professionals who “own” the knowledge.
More to howl about...
Richard Gold says:
OMG Thomas,
I totally agree with you, I work in the NYC metro area. The internet is a big part of it but knowledge and experience is a key element when it comes to Real Estate.
with that being said, lets not take from all the good quality sites out there. here is an upcoming Rating site. http://www.insiderater.com that can help brokers, clients and customers a little bit closer.
Best
Richard
December 26, 2008 — 7:24 pm
Brian Brady says:
Should you hit or stand on 16 when the dealer’s showing a 7 ?
Data samples suggest that you stand but there’s a 45% chance that the dealer pulls a card that will cause you to not win. (one deck shoe, Greg)
Why then, would a mathematically inclined player take a hit then? Because he’s seen 20 face cards already and has one of his own. That drops the probability of not winning to 11%.
As Jeff says, it’s not having the hammer, it’s knowing how to use it.
December 26, 2008 — 7:54 pm
Thomas Hall says:
@Richard – thanks for your comment. I am not taking away from what currently exists – technology is evolutionary. My point is that business models have to move away from discounting the valuable information or in some cases providing it for free.
When consumers don’t pay for things, they perceive little or no value in the product or service. IBM in the laste 80’s and early 90’s did a study on whether or not to charge for services – at the time, I was a Systems Engineer – my services were “free”. They discovered that while the services they provided were exceptional, customers didn’t value the services highly.
IBM’s generates more than half its revenues on services – not hardware.
December 26, 2008 — 9:17 pm
Gary Sattelberger says:
“Buying and selling real estate isn’t all about the data – it’s about knowledge and expertise.”
I couldn’t agree more. I’ve lost count of how many times a interested buyer has called me about a listing they found on the web not knowing it was a short sale or even what a short sale is. Of course the listing was very attractively priced making it look like a great deal but after explaining the short sale process and the low success rate the buyer usually and wisely opted to keep looking. Not that all short sales are bad but rather they require a buyer (and agent) with the knowledge and experience to understand the process and risks involved.
It will be interesting to see how RE.net 3.0 will incorporate the knowledge of professionals if it can at all.
December 26, 2008 — 10:58 pm
Sharon Simms says:
We need to be mindful of this in our direct communications with customers as well as on the web – they don’t need information overload, they need interpretation, culling, matching to their needs. That’s our real value.
December 27, 2008 — 5:11 am
Susan says:
This is a great topic and I totally agree. There is plenty of information available. What customers and clients need is someone to explain it, sort it out and help provide focus.
December 27, 2008 — 9:13 am
Brian Larson says:
>>Reduced fee business models often focus on reducing the most value aspect of the transaction – the knowledge and expertise of the real estate professional. Granted, if the knowledge and expertise is not readily identifiable, it makes sense to pay less.<<
The expression I like for what real estate brokers add is “professional judgment”. It’s a combination of knowledge (or information–I don’t so much care what we call this ‘raw material’) and experience. Books (and software) can give you data and generalized rules about how certain situations should be treated, but only experience prepares you to exercise professinal judgment in each unique set of circumstances.
We have proof from other professions (like law, medicine, and education) that professional judgment can be taught (usually in a pseudo-apprenticeship environment). I agree that a problem for the real estate industry is selling the value of that judgment to consumers. But just as big a problem are the many brokers who do not realize their own value in this respect.
December 27, 2008 — 12:27 pm
Chuck Marunde says:
Thomas, I think one of our great challenges as professionals with the experience to offer real value to clients is educating the public and potential clients. Having been in the school of hard knocks for 30 years, I know, as many of my colleagues do, about the many traps for the unwary, and that my services most often either save my clients money or makes them money. But potential clients out there do not realize this. Until people have a nightmare or get really burned, they often do not appreciate the value of professional experience. And the public often finds many reasons they think they don’t need a professional. Aunt Mae sold her house by herself. My neighbor down the street sold his house in two weeks. And so on. Oh, there is so much more to the story, and so much value we know we have that benefits clients that is “hidden” from public view. It’s hard to convince someone they need you and could benefit greatly from your service when they feel so sure they don’t. Having practiced real estate law for 20 years, I could tell story after story of people who tried to do it without a professional, only to find themselves in the ultimate nightmare and spending $40,000 to $100,000 on attorney’s fees to boot, not to mention the stress of two years of litigation.
I think the great challenge we have is to use the web to educate and persuade, in other words, to build relationships. Most Realtors have not figured out how to do this yet. But I believe the top producers of tomorrow will have a strong, content-rich Internet presence that reaches out to connect with potential clients and persuades some of them of the value we truly offer.
December 27, 2008 — 12:45 pm
Thomas Hall says:
@BrianB – double down!
@Gary, Sharon, Susan, BrianL and Chuck,
Thanks for all of your comments. Chuck – I am in complete agreement regarding the importance of education – that’s why I am a big proponent of providing a consistent process that consumers should follow – granted, no two deals are the same, however, the framework should be consistent.
December 27, 2008 — 5:40 pm
MN Properties says:
While knowledge and experience is key in any market I do think the cornerstone of it all is good communication.
December 27, 2008 — 7:32 pm
Susan says:
While knowledge and experience is key in any market I do think the cornerstone of it all is good communication.
Thats an excellent point!
December 29, 2008 — 7:54 am
Barry Wheeler says:
Knowledge is valuable, but there has to be an underlying principle of communication. Regardless of how we perceive it, it’s still about a “little – r” relationship, and the foundation has to be built upon communication. Clients will appreciate being given the information, but will be grateful if it’s communicated effectively.
January 9, 2009 — 6:22 am