Real estate professionals could learn a thing or two by paying attention to another industry that’s been turned upside down – the recording industry.
Last year, Paul McCartney distributed his new CD through iTunes and Starbucks; Radiohead netted millions selling their latest album themselves; and Gene Simmons of Kiss fame continous to mint cash licensing content.
During the worst year ever in the music industry — an industry hit as hard as ours by disinterested consumers, overstocked inventory, technology overload, Internet interlopers and a timeworn value proposition — some artists flourish.
These artists are not mired in blame. And they aren’t sitting around waiting for their market to change. They’ve moved beyond the mainframe and disengaged from dead-end practices. Amid the woes experienced by many of their peers, they’re rocking out. If asked to explain how, I believe they would say that a bad market could be an entrepreneur’s best friend.
Sadly, few in the music industry think that way. They’re stuck in the past. Stuck with huge executive overhead. Stuck with an overpriced product that’s packaged poorly. They excel at doing nothing and complain about everyone out there eating their lunch.
RIP
Over the holidays, I stumbled upon the RE/MAX 2000 obituary on AZCentral.com. According to the article, the Phoenix-based brokerage of 350 agents folded days before Christmas, citing lack of sales and the depressed housing market as the cause.
I can’t help but consider the similarities between the music and real estate industries as they drag down highway 2008 with all eyes affixed on their rearview mirrors.
Contrary to the company’s statement, I refuse to believe that a depressed market is the reason RE/MAX 2000 folded. Furthermore, I find this excuse irresponsible and insulting to those who own homes in Phoenix, those who are in the market to buy and sell and those who operate real estate offices in the area. As a homeowner, if I read this about one of the larger brokerages in my town, frankly I’d be freaking out right now.
A neater, cleaner, current box
2008 in real estate must be the year everyone stops waiting for yesterday’s success formulas to become their tomorrow’s gain. The market is indeed challenging but companies have had years of warning and years of opprtunity to prepare for this. If a company folds, there is more to the story than meets the eye.
Company’s mired in yesterday’s practices will find this market unsymphathetic. Paper-based real estate is over. Stealth lead generation is over. Bidding wars are over. Overpriced homes are over. Unimaginative marketing is done. Confusing map mash-ups are done. Stay stuck in this mindset and yes, the market will take you out.
Slimming and trimming is in. Being a visionary is also. And thinking outside the box ” well, as Bill Maher says, let’s leave that for the really smart guys. The rest of us should just make the box we have neater, cleaner and current.
2008 should be…
… the year of CEM — Customer Experience Management. Learn why over 80% of consumers polled by CAR say they will use the same agent again but only 1 out of 5 people actually do. Why is that? Polls, surveys, questionnaires, and focus groups should be a critical play for any brokerage this year. Real estate should not be afraid to talk to its clients. Find out where your weaknesses are. Identify your hidden strengths.
Vendor and product analysis is also critical. The number one question every vendor should be asking themselves is “on what basis do I believe my product works?” Vendors, you need to get cracking on that answer because I think every agent and broker customer has a right to ask you for it before buying anything you’re selling.
2008 needs to be the year of crystal vision. Getting real. Your website alone is a life raft at sea. Your blog – another life raft. You need to push your content out, attach that raft to the large ocean liners. You need to work with online companies to push, push, push your content and listings out so they can be seen.
2008 is the year to reduce expenses. Don’t fire smart people, fire stupid processes. Analyze the ROI on that newspaper contract you’ve routinely renewed for the past decade. Scrub your marketing costs. Learn how to use free online social networks. Learn how to blog correctly and efficiently. The web is replete with free software that can enhance your presence and save money.
2008 must be the year we begin to conserve. Reduce the amount of paper you use. Go digital everyone. Agents, get tablet computers. Get e-signature software. Send the copy machine to the Smithsonian. The amount of gas you buy to deliver paper back and forth is criminal. The savings you’re leaving on the table is mind blowing.
Yesterday, all my troubles seemed so far away
Maybe time ran out for RE/MAX 2000. Maybe their yesterday never came back around.
The party hats are off. We’ve dusted away the new year’s confetti. Let’s embrace the depressed market. Let’s let it serve a greater purpose. Let’s take a cold hard look at the problems it is uncovering and start addressing them right now.
Markets come and markets go. The real estate market will rebound itself next month or next year. The greater question worth discussing is what kind of real estate industry will be left — and who will be working in it.
- Davison
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I love this… "fire stupid processes."
These times create opportunity, the goal of everyone in real estate should be to analyze the problems, that is the opportunity and then solve them in a simple elegant cost effective way (by cost effective I mean for both the agent / company and consumer). Do that and you will do very well.
Preach.
I absolutely agree with the headline of your post. And I've been amazed over the past year, as the market has morphed from "changing" to "challenging" to something even more desperate that we haven't seen more new concepts being tested, new business models emerging”for months I've been saying, "Where is the industry response to this market?!"
Maybe it's because I was raised in the retail industry, and when business gets slow, retailers know that they need to run a sale or a promotion or an event or SOMETHING! All my broker friends just keep whistling past the "business as usual" graveyard, saying "It's going to get better”I just need to knock on 100 doors today instead of 50," as if it's a spiritual mantra.
I think that some of what's going on in today's market remains fuzzy to a lot of agents and brokers because it all gets bundled under the heading "subprime meltdown", but there are fundamental changes taking place that are going to permanently alter the real estate landscape. As more and more of our clients and prospects are turning to online tools to empower themselves, the realtor's value proposition continues to erode. And this has absolutely nothing to do with subprime lending or the fact that everyone's uncle will have an ARM re-set in the next 12 months. This is a long-term, serious shift in consumer behavior and consumer expectations of our industry. Where are the entrepreneurs who are creating the new blueprint for success in real estate???
Davison-
You are ALWAYS the guy who gives me the kick in my a**!
I know that I'm not supposed to say this–but awesome post!
When I come back to my hotel room tonight, here at Inman, I will be re-reading.
Just forwarded this to Butler.
Marc,
I agree with your ideas but the actual implementation of the ideas is much harder simply because it's like pulling teeth to get other professionals to start working this way. I don't know about the tablet computers just yet (unless Apple releases one, of course) but the changes are slowly happening.
For example, I recently had a builder's agent send contracts to my buyer client's attorney by email which he forwarded to the buyer, reviewed and gave advice, the buyers signed and the contracts were back in the sales office within 7 days — during the last week of December. Technology will go far but fear of technology will be its biggest hindrance until the day agents learn to create value beyond being keyholders and information gatekeepers.
Marc, excellent post. Just added your blog to my rss reader.
Just graduated. I worked for TechCrunch for a little bit, but now I'm doing my own project building affordable housing.
I plan to incorporate web 2.0 into my whole project. Look forward to future posts.
I absolutely agree with the headline of your post. And I've been amazed over the past year, as the market has morphed from "changing" to "challenging" to something even more desperate that we haven't seen more new concepts being tested, new business models emerging”for months I've been saying, "Where is the industry response to this market?!"
Maybe it's because I was raised in the retail industry, and when business gets slow, retailers know that they need to run a sale or a promotion or an event or SOMETHING! All my broker friends just keep whistling past the "business as usual" graveyard, saying "It's going to get better”I just need to knock on 100 doors today instead of 50," as if it's a spiritual mantra.
I think that some of what's going on in today's market remains fuzzy to a lot of agents and brokers because it all gets bundled under the heading "subprime meltdown", but there are fundamental changes taking place that are going to permanently alter the real estate landscape. As more and more of our clients and prospects are turning to online tools to empower themselves, the realtor's value proposition continues to erode. And this has absolutely nothing to do with subprime lending or the fact that everyone's uncle will have an ARM re-set in the next 12 months. This is a long-term, serious shift in consumer behavior and consumer expectations of our industry. Where are the entrepreneurs who are creating the new blueprint for success in real estate???