How is real estate marketing changing? The traditional bricks-and-mortar real estate brokerage is hemorrhaging, and all that keeps this archaic business model alive is consolidations. As offices close, some agents quit, but the survivors move their licenses to another sinking ship, a ship that looks just like the last one and often with the exact same name on the bow. The changes in real estate marketing are dramatic. According to the NAR, we’ve lost 300,000 agents nationwide since 2006, and one NAR spokesman suggested we need to drop from 1.1 million agents to 750,000. This past week two more offices closed in my small market, and the press is not writing about these closures. But this is happening all over the country–it’s just not front page news . . . for anyone who still reads the front page.
These changes in real estate marketing are killing traditional business models. Bricks-and-mortar real estate brokerages that stubbornly refuse to bridge the gap to an entirely new business model will die a slow and painful death. It’s one thing for brokers to ride their own ship down, but it is quite another thing altogether for those brokers to sell tickets to real estate agents with promises they can’t keep.
The most unfortunate thing about all of this is that the agents who think they are doing what it takes to survive are only re-arranging the deck chairs on the Titanic. Many of them truly do not know or comprehend how precarious their fate is. They know generally that real estate marketing has changed, but they are getting little genuine help from their brokers. Just like so many of the passengers on the Titanic near the end who smiled and kept saying, “Don’t worry, everything always works out alright,” traditional agents continue to greet people with a smile and wait for the phone to ring. But the ship is tilting, and they are at risk. They just don’t know what to do.
I outline what I think the future real estate brokerage will look like, and how it will operate. It will be substantially different than the traditional brokerage of today.
Flynn Gentry-Taylor says:
Can’t thank you enough for this ebook download. I am eager to read about the changes in store. I see a lot of agents not renewing their designations and many many more working from home. Fees have remained the same, and some of the local Boards are in danger of folding, or consolidating with neighboring Boards to survive.
December 1, 2010 — 11:36 am
Greg Swann says:
Oh, bless you, Chuck. I’m downloading my copy now.
December 1, 2010 — 11:50 am
Boots says:
Thank you. As someone who works in the Real Estate Industry (but not an agent), this is something I am very interested in.
December 1, 2010 — 12:04 pm
Greg Payette says:
Hi Chuck. Excellent. Eye-opening. I’m listening to you right now via the audio.
You’re right on time with this…I just hope all those hanging on to that sinking ship will take the time to read this.
December 1, 2010 — 12:36 pm
Greg Payette says:
Chuck, do you want us to (or mind if we) share this ebook?
December 1, 2010 — 12:53 pm
Jim Klein says:
Thanks very much, Chuck. I’ve only glanced at it so far, but I’m pretty sure the broad issues you address are widely applicable well beyond the RE industry. Generally I dislike taking something for nothing, but this looks like a great exception!
December 1, 2010 — 1:27 pm
Bill French says:
Chuck,
I like your futuristic style and many of your points I hadn’t considered mostly because I’m not in the real estate industry. However, I think you’re inaccurately assuming an element of business computing will be sustained into the not-so-pretty future that lay ahead for real estate agents.
“The brokerage would teach their agents how to bridge the gap from their PCs to mobile devices, which is another rapidly growing segment of the market.”
Gap? The Gap won’t exist long enough to training anyone on the techniques required to bridge it. The gap you speak of exists only in a historical context.
“Over the longer term, media tablets are expected to displace around 10% of PC units by 2014 … expectations of weaker consumer demand, due in no small part to growing user interest in media tablets such as the iPad”. — Gartner (yesterday)
The “gap” you speak of will close rapidly (and has already started actually) because anyone who works in a services industry that is largely dependent upon mobility and information, must completely disengaged from desktop technology, or die.
Furthermore, all mobile and quasi/mobile workers will widely and rapidly embrace the app market model which provides hyper-productivity and just-in-time solutions. Anyone who doesn’t, will be severely constrained (by time) and unable to compete with mobile workers who do embrace the app-centric model.
Many of your readers will look at the 10% citied by Gartner as relatively insignificant. However, two things come to mind – (i) who is in that 10%?, and (ii) Gartner has already admitted that they totally missed the iPad revolution and the rapid embrace of the app market model in business. Are they wrong about the 10% and does the 10% redirection of PC sales to tablets represent 30% of realtors?
Your article accurately assess the ominous situation for realtors. If 25% of realtors suddenly adopt a work model without the overhead and baggage of a debilitating desktop, how will the other 75% compete for a dwindling cut of a pie which will be absorbed by lightning-fast and extremely agile sales and customer service made possible by [ironically] less computing power which is backed by extremely powerful cloud services and always-on communications? (I don’t expect you to answer this BTW – just rhetorical)
The app-centric enterprise (of one person or thousands) will also be known for making the “Web” irrelevant. Mobile business people will work on the Internet every minute of every day, but they will never user the Web.
My paper (The App-Centric Enterprise) touches on this a little – worth a read.
http://www.scribd.com/doc/42105609/The-App-Centric-Enterprise
December 1, 2010 — 1:56 pm
Chuck Marunde says:
Greg, I was told today is officially “Pay-it-forward Day,” so you and everyone here are welcome to share this eBook with anyone via this article or the direct download link. If this is either helpful or entertaining for anyone, I will feel good about that. I love marketing and technology, and I have a personal life mission of trying to help others improve the quality of their lives, so perhaps in a small way this might be helpful to some. I hope so. God bless.
December 1, 2010 — 2:02 pm
Keith says:
Can’t wait for the read, I am in one of those 100%, pay $35 per month brokerages and it is working for me. Wonder what you are thinking!
December 1, 2010 — 2:15 pm
James Malanowski says:
A 114 page advertisement for eXp Realty. New marketing at it’s finest.
December 1, 2010 — 2:16 pm
John Kalinowski says:
Thanks Chuck! Just downloaded my copy and will pour through it tonight! Sounds like everything I’ve been preaching in my market for the last year or so, and we’re trying to position Liquid Blue Realty to avoid the negative changes taking place. I left ReMax in December of ’08 to start my own place, and that office closed early this year. They had 100 agents and three retail spaces at the beginning of ’08.
I’ve been watching the sales numbers for offices in our market this year, and you would be amazed at how little most are producing. Doing some back-of-napkin calculations, I can’t figure out how some are clearing enough to pay their rent and overhead, let alone make any sort of profit for the owners. I could be missing something, but I’m afraid it’s probably worse than I think for many companies.
For example, Keller Williams agents in my area are constantly pitching how we should join with them and earn profit sharing! They are growing like crazy and signing any agent they can, and now are bigger than ReMax in our MLS, but the numbers I come up with are pitiful. I just don’t see how it all can come to a happy ending unless the market suddenly skyrockets again. I’m sure their corporate people show the prospective franchise owners lots of fancy graphs with projections of where they’ll be when the market takes off again (or Shifts, as they like to say), but I doubt they’re talking to them about what might happen if prices drop another 20%. Again, I could be missing something, but my calculations are very conservative, so I can imagine 2011 will be an interesting year.
December 1, 2010 — 2:26 pm
Al Lorenz says:
Chuck, I just hope you’re not being optimistic. Since health care has become a basic right, don’t you think food and shelter are next?
I hope to be wrong, but imagine marketing if housing becomes just another state controlled commodity.
December 1, 2010 — 6:16 pm
James Malanowski says:
You don’t think housing isn’t already a state controlled commodity? Why do you think the banks keep holding REOs off the market? Why are people able to stay in the house rent-free for months – years in some cases. The banks that took TARP funds are very much state controlled and are working with the government to make the foreclosure numbers look much better than reality.
December 1, 2010 — 6:21 pm
Teri Lussier says:
I didn’t read the whole thing. I apologize if I’m way way off base here, and I don’t want to ruin the cornflakes, but honestly it looks like you are trying to recruit. But aside from all that…
I like having a brick and mortar office, and not to impress folks because I don’t invite clients into my office, but I do get more work done away from home. I also make good use of the sidewalk window on Main Street in a small town. We don’t get foot traffic into the office, but people walk past and look at the window display. It’s more name repetition/recognition, which I can’t get working from home.
I do think brokers need to work out flexible splits and fee schedules within the office- one size should not fit all. I lease an office suite, use the copier, a broker supplied ifax, his paper and ink, and bend his ear whenever I can, but if another agent never steps foot in the office, charge them differently.
Opening up options is good. eXp is just one option of many but the future, to my mind, is going to a celebration of viva la difference!
December 1, 2010 — 6:32 pm
Chuck Marunde says:
Teri says by writing the book I’m trying to recruit. Duh. Hey, all of us here are marketing ourselves and our businesses every day of the week, and we all write articles on Bloodhound and work hard marketing every day to promote our passions, our ideas, and our businesses. This book is about my passionate ideas developed from 30 years in real estate, including 20 as a real estate attorney. 90+% of the book is about traditional verses new marketing business models for brokers, and I mention in a very soft low key way that I work as a broker for an eXp Realty office. I would be remiss if I did not. Of course, I believe my business model is the best. Doesn’t everyone? By the way, I have a public office, too, and I share that in the book. This book is not a diatribe against buildings. It’s a diatribe against an old business model represented symbolically by an expensive brick building.
December 1, 2010 — 6:44 pm
Meg Hurtado says:
Yes, so true. Your Titanic metaphor runs along the lines of my favorite line from “Fight Club”: it’s like “polishing the brass on the Titanic; it’s all going down, man.”
December 1, 2010 — 7:03 pm
Jolenta Averill says:
Thanks for the e-book (and I will read it) but you’re preaching to the choir! The traditional real estate broker is dead and those remaining are languishing and hoping to ride out the storm. Unfortunately the only agents still working for them have large teams and therefore find synergies (don’t be fooled, they’ve all eliminated their splits from the equation) and the rest are hurting because they don’t have the guts to go it alone (yet). What kills me is the large number of “sheep” these firms (especially KW, Re/Max, etc) are able to recruit based on smoke and mirrors arguments. $35/mo my $*@%! Why is that so many agents don’t factor commission splits into their annual expenses?? If they would only look at it that way, they would realize it costs a pretty penny to work for “the man”. Go solo, I say! I did two years ago and have never looked back.
December 2, 2010 — 8:48 am
Wayne says:
Thanks for the book Chuck. I am always ready to listen to new ideas.
December 2, 2010 — 10:47 pm
Charles says:
The industry has already changed and will continue to do so. Jolenta I still think you are the exception, not the rule.
December 3, 2010 — 5:53 pm
Moris says:
I hope this fantastic book will be helpful for every one who is directly or indirectly engaged with marketing.
December 23, 2010 — 1:30 am