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Trends in Residential Brokerage.ppt
 

Trends in Residential Brokerage.ppt

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    Trends in Residential Brokerage.ppt Trends in Residential Brokerage.ppt Presentation Transcript

    • Trends in Residential Brokerage A Presentation to the Georgia Association of Realtors
    • Trends
      • Trends in residential brokerage point towards a more competitive industry than has been the case since 2000;
    • Trends
      • Consolidation
      • Outsourcing of realty functions
      • Focus on consumers
      • Democratization of listings on the Internet
    • Trends
      • More price competition among realty service providers
      • The integration of core services
    • Consolidation
      • As in previous downturns there is massive consolidation underway in terms of the numbers of sales professionals, realty firms and all forms of real estate industry professionals (title, mortgage, etc)
    • Consolidation
      • The number of real estate professionals has already declined by over 150,000: we expect it will decline another 100-150,000 in the next two years
    • Consolidation
      • The market share of leading regional and national brokerage firms, even with a decline in their sales, increased to a record level in 2007:
      • And was the single biggest yearly increase in the last 15 years
    • Consolidation
      • The level of sales in 2005: 8.3 million
      • The level of sales in 2008 5.5 million
      • The level of sales
      • projected in in 2010 6.1 million
    • Consolidation
      • The level of sales will not soon again even reach 7 million
      • The fight for lower levels of business will drive competition to stronger levels
      • Some will chose not to play
    • Outsourcing of realty functions
      • With revenues down and the pressure to compete increasing realty firms and sales professionals are increasingly outsourcing many parts of their businesses
    • Outsourcing
      • Technology outsourcing
      • Lead management
      • Transaction management
      • Web hosting and design
      • Email
      • Lead generation
      • Accounting and financial systems
    • Outsourcing
      • Marketing outsourcing
      • Printing and Direct mail services
      • Custom design
      • Online Graphics
      • Sales professional branding programs
      • TV and video production
    • Outsourcing
      • Other areas
      • Education and training
      • Finance and accounting
      • Recruiting
      • Management development
    • Outsourcing
      • Few realty firms or sales professionals can afford the fixed cost of full time service/product suppliers in-house
      • In the new competitive environment, for most realty firms, the lowest cost provider will have a significant advantage
    • Focus on Consumers
      • The Internet and generational changes have brought about the early stages of the age of the consumer in residential real estate services
    • Consumers
      • If it can be known, it will be known
      • If it can be rated, it will be rated
      • If it can be shared, it will be shared
      • Rich Barton, Chairman and CEO, Zillow
    • Consumers
      • The impact of the age of the Internet in our business can be most acutely identified by looking at how much consumers believe Realtor® assurances that “now is a great time to buy” versus how much they believe their online valuation tools and other networked advisors
    • Consumers
      • According to the Houston Association of Realtors and other leading sites, the percentage of consumers going online to check the valuations of property now exceeds that of those looking at listings
        • Fall 2007
    • Consumers
      • REAL Trends/HarrisInteractive housing consumer studies done since 2002 show the following:
      • The younger the consumer the less they plan to use traditional full service real estate professionals and the more they trust the Internet
    • Consumers
      • Housing consumers are starting the process of searching for answers to a purchase or sale 12-18 months ahead of the actual decision time
      • While real estate professionals are still geared to tackle only those who are deciding right now
    • Consumers
      • What do housing consumers of all ages value?
        • Communication
        • Trust
        • Relationship
    • Consumers
      • The future
      • Shift from showing and telling
      • To listening and sharing
      • Shift from real estate expert
      • To neighborhood and community expert
    • Democratization of listings
      • The listing is a perishable asset
      • Leave it on the shelf long enough and its value declines
    • Democratization of listings
      • Leading firms of all brands, sizes and structure are finding that a broad based listing distribution strategy works well
      • Although several firms have discovered that the most effective way to market a listing is to advertise it under your own brand (RE/MAX, Real Estate One, etc)
    • Democratization of listings
      • Those realty firms and real estate professionals who defy open sharing will lose ground to those who share
        • Refraining from using addresses
        • Refraining from having a valuation tool
        • Requiring online registration
    • Democratization of listings
      • It is not that your listings have to be everywhere all the time
      • It is that they should be where most real estate consumers are searching with superb content
    • Democratization of listings
      • It is also an attitudinal issue
      • If you view sharing information as negative you will have a negative view of the new housing consumer
      • If you have a positive view and do not fear openness, then you have the chance to succeed
    • Competition
      • It was competition for listings among traditional sales professionals that brought down commission levels in the 1995-2005 period:
      • 1991 National average 6.1%
      • 2005 National average 5.0%
          • Source REAL Trends, Inc
    • Competition
      • It was competition among real estate brokerage firms that increased the average commission sharing between realty firm and sales professional
      • 1995 68.0%
      • 2005 73.2%
    • Competition
      • PS
      • That 5% swing from 1995 to 2005 for realty firms was equal to 75% of their profit from 1995
    • Competition
      • There are only two ways to go now
        • High value, high margin low market share
        • Lower value, low margin, large market share
    • Competition
      • Those who make no choice will have the choice made for them by segmentation in the market by their competitors
      • The same is true for real estate sales professionals only it is the consumer who will make the choice
    • Integration of Core Services
      • Housing consumers have increased their use of realty firms and sales professionals who offer a full package of services
        • NAR study on One Stop Shopping, May 2008
    • Integration of Core Services
      • Housing consumers continue to seek real estate firms and real estate sales professionals who provide “full service” more than any other segment of service providers (73%, 2006)
        • REAL Trends/HarrisInteractive
    • Integration of Core Services
      • Whether you own or partner or ally with core service providers, you will need to:
      • Continue to give consumers choice
      • Find ways to add value to the use of your affiliated Core Services to both consumers and real estate sales professionals
    • Conclusion
      • It is not just the skill sets that will be important but the mindset of the leaders of the industry
      • While the level of sales will not be what it was, the need for real estate professionals will continue
    • Conclusion
      • What will also change is the definition of what constitutes “full service”;
      • How consumers perceive you and your service will be the measure of whether you measure