Trends
The Great American Real Estate Alchemy
October 2, 2009 by e-Partner · Leave a Comment
For centuries, the notion of turning lead into gold has captured the imagination of countless Alchemists, all of whom were doomed to failure.
The real estate industry’s economic model has been for decades akin to conjuring concoctions that claim to convert the weight of our tarnished enterprise models into shining bars of profitability.
We have not always understood the true alchemy of our industry and the relationship between the decline of profitability with the introduction and application of new technologies to our industry.
Each of the two great historical shifts (economic eras) in our industry have occurred with the rise of new technology, the independence of agents and the empowerment of the consumer. Consider the following diagram and then listen to the accompanying presentation.
The shift from the Broker-Centric era to the Agent-Centric era was created largely as a result of the introduction of a technology known as the Personal Computer (PC) to the daily work habits of agents, empowering them to globalize their reach. From that point on, Broker-Owners were not able to fully contain the spillage of property information into the streets of their marketplace.
Download a FREE copy or the First Economic Wave, the Second Economic Wave and the Third Economic Wave.
The loss of the MLS Book coupled with PC access to MLS data created a decline in the control of property information (always a key contributor to loss of profit) and the empowerment of the consumer who no longer had to enter a real estate office in order to see the Holy Grail.
Nor have we fully appreciated how technology has always defined each of the three economic eras of our history and most importantly how each increase in technology within the industry reduces profitability.
In 1994, along came the Information Super Highway and property data began to find its way to the Internet, where a hungry consumer was waiting. The Internet created a bridge from MLS sources to consumers who were also empowered with PCs. This was the beginning of a shift from the agent-centric model to the current new real estate economy where the consumer is now the central character.
“Pb” (lead) can become “Au” (gold). The alchemetrics (not sure that is a word but I’ll run with it) are simply undeniable. Technology creates the shift and transition from one real estate economic era to the next. With each transition three things always occur:
- Technology always defines the shift, the model and the wealth in our economic models
- Owner profitability declines as control over property information control diminishes
- Information control is distributed over time to an increasing number of people thus, democratizing real estate
What does all of this mean? Simply, and yet rather profoundly, this means that ours is a history made up of transitions created primarily by the introduction of new technologies and a fundamental shift in economic control from us to consumers. It also means that the principle of alchemy is real.
Our lead-based model (forget lead-based paint for a moment!) is in the process of being turned into gold. However, in the alchemic (not sure that is a word either but I’ll run with it as well) process, we will not necessarily become the benefactors of the creation of new wealth being created by the introduction of new consumer-centric technologies. We could be but we are not, it appears, equipped to transition with the consumer into The New Real Estate Economy.
Watch the presentation and please, comment.
Survival Tips for Brokers by Stefan Swanepoel
To Succeed Follow these Ten Golden Rules
Whether you own a small real estate office or a franchise with multiple offices, real estate brokers have much in common with other small business owners during these difficult economic conditions.
This economy affects all businesses and it doesn’t really matter if you are the local hair salon or the major department store, current market conditions are tough.
For real estate brokers, owners and managers the focus revolves around how to recruit quality agents, how to retain quality and productive agents and how to increase overall profitability.
This is analogous to the farmer who must plant, fertilize and water before reaping – and the sayings goes, “You reap what you sow.” Sowing solid business principles is certainly a key part of reaping a profit.
Included in the Swanepoel TRENDS Report 2009 is a list of 10 suggested action steps for brokers to be successful during the down turn. Here is a synopsis:
Recruiting
1. Define Your Hiring Objectives
Brokers must know what they want in a new hire before they can communicate the need to the marketplace. It’s no longer a numbers game but a quality contest. Creating unnecessary turnover wastes too much time and is too expensive, let alone the disruptiveness that results from bringing a team member on board who’s not a good fit.
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Economics Trends, Post 2009
March 23, 2009 by e-Partner · Leave a Comment
To be certain, the anticipated 2009 economic trends for Broker/Owners are not exactly stellar.
We know that the Obama administration is announcing plans to detoxify the acid infested mortgage portfolios that are crippling major lending institutions and creating a lending relunctance as they scramble to balace their cash reserves against risky notes.
e-Partner is not a trend alalysis company at its core although we observe and decipher and analyze the reports from within and without the real estate industry. We do this primarily on behalf of Broker/Owners and we look for those economic trends that impact them and their ability to sustain their operating models and profitability.
What we see is this:
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