Per my earlier post regarding the evolution of technology driven real estate solutions, I believe the next generation of buyers and sellers will be more empowered to search, purchase and sell real estate themselves, without the services of a real estate professional.
At the highest level, the success of an entirely virtual solution rests in its ability to clearly and confidently shepherd a potential buyer or seller through the process of buying and or selling. Very few sites provide a path to success. The irony for me was what I found while reviewing do-it-yourself real estate sites/services. In my opinion, www.helpusell.com provides decent content regarding the “how’s and what’s” of buying and selling. I am not holding Help-U-Sell as a beacon of light, but merely a site which provides far more content regarding the “how” of buying than the “what” to buy.
The focus of technology solutions has been too highly skewed towards the data and not the content nor the process.
Clients are not looking for listings – they are looking for homes. Do not underestimate the connotation or meaning of home. Data is not the answer – it is part of the solution. The solution is achieved by execution. Execution requires clearly defined, repeating steps – a process.
There is a lot of chatter regarding how to keep potential prospects “stuck” on your site. Many believe that IDX property search is critical. Important? Maybe – but if you are relying on search capability as your differentiator, you’re wrong. I argue spending a majority of your time and effort building content around the process – mapping out the steps – one by one – specifically what needs to be done to get from beginning to close will get them stuck – FIRMLY – on your site. Everything else is secondary to the process.
So what does a completely virtual solution look like?
First and foremost, it assumes that there is no real estate professional involved with managing the process – or providing “services”. If you’re recoiling from that last statement, I merely ask, have you mapped out the process step-by-step and defined what you do at each step? Moreover, do you sit down and walk through the process with your clients – even review it daily? Do your clients know what your services are? So many agents argue that consumers require full-service brokerage. What is full-service? Does every one of your clients require full-service? Some do – some do not. Perhaps this sole issue alone is why I believe a total virtual solution is not only possible, but probable.
The current paradigm of buying and selling real estate assumes that a real estate professional is a given – you can’t have “full-service” without one. Without a real estate professional, a consumer is left to fend for themselves.
New paradigm perhaps? Consumers can have full service without a professional.
What’s the first step for buyers?
Amazingly enough, it isn’t search. Step one is forming and confirming buying criteria. Buying criteria is delving into how a buyer(s) lives – likes, dislikes – lifestyle attributes:
“I like to run in the morning, ideally along a path in a park. I love coffee. I like to eat organic and want to be relatively close to a farmer’s market. My daughter goes to Montessori and I want a good program within 10 minutes by car etc.”
Some buyers are not as specific, but they still need to consider how they want to live. Budget constraints need to be reviewed and established. Critical to the budgeting process is a tutorial on financing – what a mortgage is – how rates and different financing options affect monthly payments. Maybe there is a social media component which allows consumers to go out and ask the “expert” for input, whether they be mortgage professionals or other consumers. Buyers should have access to a pre-approval process.
This buyer profile needs to be built and used as the basis for how properties are searched, aligned and essentially weighted to provide a meaningful results to potential buyers. Again, most search engines provide visually interesting results, but they are simply presented by property attributes. Today buyers and/or real estate professionals need to sort through the results to see which ones make most sense.
Onboard Informatics has created the first Lifestyle Search Engine, aligning how people live with property search results. Rentwiki is building a similar renter profile to better link how people live with potential properties. In my opinion, this is how search must evolve. The sorting and matching process is traditionally an agent’s role. With a more technology savvy buying population entering the market, more sophisticated “lifestyle” search engines could leave traditional agents completely out of the property search game.
Will everyone buy into this search process? No, but I suggest many will. The more accurate the results – the better aligned the results are to actual criteria, the more confident buyers will become. Trust and confidence are weighty intangibles, however, Millenials readily use technology solutions and trust and admire brands and sources that identify with their unique needs and wants. Honestly, I am not sure that is limited solely to Millenial.
Ok – of the hundred or so properties that are available, twelve or so properties are close matches to a buyer’s lifestyle preferences. Tools like Trulia or Redfin provide Open House schedules for available properties – this process would be no different. The buyer decides to work his/her weekend schedule around the times the properties are open, viewing each one. Upon completion of each viewing, the buyer completes an on-line worksheet assessing how each property matches their criteria. Maybe the search criteria needs adjusting – maybe broaden the criteria etc. Perhaps the buyer runs a few scenarios and narrows down the choices to 3 specific choices.
The next step would be analysis – maybe a valuation tool like Zillow which provides an estimated value as well as access to the actual sales comparision data. Perhaps the analysis will include a tutorial on how to objectively evaluate the numbers – an explanation from a source with no bias towards the outcome. Instead, maybe providing a probability of success for buying at a certain price, due to current market time etc. Again, maybe accessing a social media function which seeks advice from others specific to the issue of evaluating and assessing value.
Once a property is selected:
CHA-CHING
This is where the buyer parts with his money. The buyer answers a series of questions, not unlike Turbo Tax or Legal Zoom which begins the process of dynamically building the sales contract. How much does this cost? Somewhere between zero and 6% of the value of the property to be purchased. I suspect it is a lot closer to zero than 6%.
Maybe the dynamic documentation leverages ZipForms endorsed by NAR for real estate legal documents throughout the US. Data specific to the property is pulled from IDX data sources. Each key area of the contract is reviewed via tutorials, explaining the relevance of the language and providing access to legal advice.
The basis of navigating through the process is to provide a well defined set of tutorials which provide the backbone of the process knowledge, recommendations, tips – gotchas. This is where the rubber meets the road and where the real value is.
It is the shared knowledge, managed through a repeatable process that adds confidence and builds trust in the solution. In addition, the aspect of social media can be more specifically leveraged at key points in the process.
This is just a brief view of what buyers may do – I believe it can be just as comprehensive for sellers.
Will it replace real estate professionals? Maybe not, but do I believe it will change the landscape for buying and selling real estate.
Don Reedy says:
Thomas,
I think that thinking about what you have written may well make improvements to the client side offering much better.
But you are not considering the distinction between “information” and “knowledge.” Even though IBM created a program to play chess well; even though the Bible is filled with stories and axioms and wonders; even though what you write may be “factually” significant or correct, in the end, it is the unique transliteration of the information into a knowledge driven set of activities that we all require, and yes, even crave.
You won’t fill the needs of any consumer with just data. You still need to look a man in the eye, size up his gait, his posture, his smile, his tolerances and intolerances.
Interestingly enough, you end your topic with a reference to “changing the landscape……” for buying and selling real estate. Landscaping your web presence with all you’ve got still leaves out the smells, the heat, the dew, the chill, the wind and the sounds that take a paper (or binary) landscape and truly make it real for the client.
April 23, 2009 — 9:06 pm
Dave G says:
Wow. I really think you are on to something. To even begin building what you are talking about will be capital intensive (definitely outside the bootstrapping realm) – but you have a very big and viable idea/concept on your hands.
My advice, for what its worth, would be to stop sharing your thoughts on this with us and start sharing them with people that can help you make it happen (privately). Its a great idea.
FYI – your Turbo Tax/Legal Zoom analogy closed me.
April 23, 2009 — 9:15 pm
David Pylyp says:
Congratulations to you for your continued success in engaging your readership and providing a forum for response and lively debate.
That was a great post about the IDX exchange. Clients are people looking for homes. Its a small nuance but I comprehend the difference.
By providing topical and lively data you will continue to gain a following.
Thank you
David Pylyp
Toronto
twitter.com/dpylyp
April 23, 2009 — 10:23 pm
Greg Swann says:
This is a great post, fascinating reading. Here’s the bug in the broth for me: Do millenials buy their engagement rings on-line?
Highly information-efficient transactions seem to turn on high-fungibility, low-cost, high-predictability and low-emotional-investment. An investor buying tract-homes as rentals may qualify — although all of my investors want lots of on-the-ground information from me. A mother buying a home for her children wants someone to lean on.
There is no limit to how much better personal-service real estate can get, and that’s a big part of my own private religion. But I prove my value a dozen times an hour when I’m with clients, as I’m sure you do, too. I could probably learn how to buy an engagement ring on-line in three weeks or so — although no woman would ever let me actually do it. It took me years of working full time to get really good at “seeing” houses, and I’m learning more all the time.
Our sellers get more money faster than they would without us, and we can prove that with our numbers. Our buyers avoid literally thousands of disasters by heeding our advice. There is no way they can know what I know without doing what I do.
For all of me, everything I’ve seen so far from the Realty.bots has been a bust — a new way to window-shop and that’s it. As much as I love technology, I just don’t see the home-marketing process changing much. I could be wildly wrong, but what I see in my everyday work is that, while the easy work might get easier, the hard work just gets that much harder.
April 24, 2009 — 7:45 am
Thomas Hall says:
@Don, thanks for weighing in. To be clear, I don’t think a totally virtual solution is or will be for everyone. I am in absolute agreement regarding how people process information – not all will find a process I am proposing useful or manageable, but some will.
The real emphasis of leveraging technology should be on exploiting – as you say – the smells, the heat, the dew, the chill, the wind and the sounds as much as possible. Again – this is where the real knowledge is. Can it be done? Perhaps not 100% – but even 80% may be just enough for some people to feel comfortable with a virtual process. I think the Pareto Principle might be a way to evaluate how this might be adapted.
@DaveG / @David – appreciate your feedback as well.
@Greg – thanks for weighing in. No doubt buying real estate is a highly emotional decision. No doubt that many people will not rely on a totally virtual solution, but I am betting a good deal more will. Not enough emphasis has been placed on the process and leveraging the knowledge. Can 100% of an agents expertise be modeled – highly unlikely, but again, this doesn’t have to be a 100% solution.
I agree with you that the hard stuff is getting harder – maybe that’s the 20% of the deals that simply can’t be managed virtually.
April 24, 2009 — 9:27 am
james canion says:
It is to soon to throw in the towel or raise the white
flag. Why isn’t the discussion about how to improve the
agents value by taking advantage of the available virtual tools and improving their skills of time management,negotiation,and many others that will give them the ability to offer real value.There may be a day
when most individuals can hold their own against an
informed and skilled agent but in the interim I will
enjoy making some really good deals for my clients with
those who think they know enough to compete in this
very difficult environment.
April 24, 2009 — 10:18 am
Thomas Hall says:
@James – thanks for your comment. Why does it have to be an all or nothing proposition? My post has more to do with the focus of how solutions evolve. I suggest that too much emphasis has been placed on the agent being the center of the universe, not the consumer.
An agent-centric model does not work for all consumers – I think technology should focus on meeting the needs of consumers, not necessarily agents.
April 24, 2009 — 10:25 am
Al Lorenz says:
Super post. It got my mind running down the track of how I can use technology to differentiate my business from others by showcasing the process and the benefits I bring to my customers. Thanks.
April 24, 2009 — 11:02 am
Daphne Lacey says:
Wow…gives one a lot to think about. I am all for the technology getting better and offering better information to the online client, but I agree with Greg. I don’t believe that you will ever be able to give the buyer enough information that they will completely purchase a home on line. Buying a home is such an emotional process and technology cannot hold a clients hand when it something goes wrong in the transaction and they need someone to give advise or to solve the problem for them. Most of my clients want the personal touch that I give them and I do not think that will change. It might?!
April 24, 2009 — 12:28 pm
Don Reedy says:
Thomas,
I try not to waste time, yours or any of the contibutors, after my first comment. But I do want to say, having read the comments, including Greg’s, that I really enjoyed this post from you. It is well written, and while I think there’s never going to be a technological panacea, I do want you to know that the underlying premise that you hold, i.e. we can and should be much better at delivering the technology we have, is right on! Thanks again for putting the top down on that Pink Cadillac……
April 24, 2009 — 3:16 pm
Bill McMullin says:
Tom,
Very provocative and insightful post to say the least.
I am not a realtor, broker or consumer with an axe to grind, rather a long time technology entrepreneur that is focused on making the real estate process more efficient.
As you point out, it is theoretically possible to virtualize almost the entire real estate transaction but I think that extreme won’t be realized during our working lives (I’m 41 BTW), if ever.
That said, the satisfaction level of consumers and the health of organized real estate will positively correlate IF information transparency and access continue to increase AND real estate professional focus the majority of their effort on those tasks that require human skill, the ability to reason and discretion. Computers don’t reason or apply discretion, well, if at all.
I don’t pretend to understand the US market very well, but up here in Canada I personally believe we are demonstrating an economic and free market anomaly when it comes to organized real estate. Specifically, we have a hyper-competitive real estate services industry with some 90,000 realtors vying to participate in some 500,000 MLS transactions a year, yet we have witnessed very stable services pricing/commission rates, holding steady in most markets at or above 5%. More amazingly this price maintenance is occurring in the context of large increases in house values combined with significant productivity gains resulting from the use of the Internet by vendors, buyers and realtors.
I look forward to reading your posts Tom! Keep them coming.
April 24, 2009 — 5:43 pm
Thomas Hall says:
@Don – again, I greatly appreciate your input and your feedback. Having many more years experience in the real estate game than me, your insight is of great value – thanks!
@Bill – thanks for sharing your thoughts as well – very interesting statistics regarding pricing and transactional volume in Canada. I have often thought that Canada would be an interesting market due to the fact that there is one national MLS. Prior to real estate, I spent a good deal of my technology career working and living in Canada – from St. Foy, Toronto and Vancouver. I think of Canada as my second home 😉
April 25, 2009 — 9:25 am
Thomas Johnson says:
Ouch! My head hurts thinking about codifying what we do in a transaction for a lay person. Many times we have solved/recognized the problem, solved, eliminated it before you blink twice.
Thank you for reminding me that our value to the consumer must be apparent and that is a never ending proposition.
April 27, 2009 — 10:00 pm
carlee says:
Great post! The internet offers a lot of tools to help us improve our business. It’s all up to us how to maximize their potential:)
April 29, 2009 — 8:12 am
Curtis Reddehase says:
The process will never be with out real estate agents, never. The fact that listings and contracts are available to the buyer has nothing to do with it. Anymore than someone picking a nose from a picture book makes them capable being a plastic surgeon. The fact is the process is far too complicated to do with out representation. From the surface it may look that way and that is exactly the trap. I am an expert negotiator and if someone thinks that they are going to out smart me they better get ready. I have a fiduciary duty my client to get them the most money possible and make sure that all of the terms of the contract favor them. Someone who thinks they can come along and just fill in blanks not knowing the strategies behind every variable will most likely find themselves a victim of someone who knows what they are doing. We see people trying to do this on their own and few get away with it from time to time, but the norm of a real estate transaction is far too complicated. Most people will not even know they paid too much or sold for too little until long after the sale, because they never knew what hit them.
I have seen first hand people use national websites, and I will not mention any names. They tried to tell us different about what the market was really like. Customers like this that get bad information and only believe that do not get to become my clients and I have seen people move forward misinformed, and willing to believe otherwise.
You see the information that is out there, is not complete or even close to what most agents have. Not only that, People who do not do this on a daily basis do not know how to read the information they find. I should say they can often read it, but not know the true meaning.
I run a full service real estate company with agents who know how to generate business on the web. Based on my observation; the idea that agents are not needed comes from a lack of understanding what it means to be a full service agent. No only not knowing what it means, but not being able to convey that value to prospective clients. I know that value, and that value and that service are what support a very high-tech real estate office.
The way I see it, it takes both in this era, both service and high tech tools for prospects to use. Tools, like sites to search for homes with out experienced agents behind them are traps. They often give the visitor a false sense of power from the information they get.
May 1, 2009 — 10:54 am
Patsy Snyder says:
It always amazes me when someone tells me they are going to purchase their home on their own. If I am going to spend several hundred thousand dollars, I am smart enough to realize that I do not have the knowledge nor expertise to protect myself from pitfalls that I know nothing about, much less hammer out a good deal for myself across a table from either a Realtor who does this every day or a homeowner who does not know any more than I do about a real estate transaction. In the latter case, how the transaction plays out is a toss up, too great a leap for me when spending this kind of money.
May 1, 2009 — 3:49 pm
Thomas Hall says:
@Thomas – thanks for weighing in! I agree, trying to model all of the in’s and out’s would be an enormous challenge, but then again, the intent would not be to address all of the potential complex issues.
@Curtis @Patsy – loved your comments, thanks. In my opinion, I don’t believe every consumer needs an “expert” negotiator, nor do they need all the services an agent can provide. Honestly, I’ve learned some really great negotiating techniques from my clients – clearly they didn’t need me to do the negotiating, but I did provide value in evaluating their options.
My intent in writing this post was not to say that a completely virtual solution is for every buyer and seller. My point is that many of the services that traditional agents provide could possibly be modeled, leaving the really tough stuff to the experts.
As real estate professionals, we won’t be all things to all consumers – regardless of our expertise, some consumers simply want to do it on their own – and guess what, they aren’t necessarily the clients you want.
May 2, 2009 — 9:14 am