Every day, there’s a new threat to the way real estate professionals do business. There’s always a startup looking to rope in a chunk of the homebuying market by promising to undercut standard agent commission rates or even offering an online transaction platform that bypasses the need for an agent altogether.
I can think of two recent examples off the top of my head. SRE Matrix, a Hawaiian real estate firm founded by billionaire Takeshi Sekiguchi, who plans to take the company national, uses a network of salaried agents and offers registered users on its site a 100 percent rebate on all commissions for buyer’s agents. Seattle-based Faira, an online real estate platform, plans to do away with escrow and contingencies by offering a system in which disclosures, appraisals, and inspections are served upfront to buyers on its listings. Buyers can place an offer on the site for a fee, and sellers can purchase “transaction failure protection,” which essentially insures them against a deal collapsing.
And there’s the advent of virtual reality in the real estate space, which has designs on offering consumers a fuller home-shopping experience with a virtual guide online.
We’re only at the beginning of this transformative age where new technology and business models seek to reform the traditional real estate industry, hoping to gain the first mover advantage that comes with being the latest innovative brand. The rise of Redfin and even newer startups boasting other revolutionary models is an indication that the ranks of disruptors aiming to be game changers in the real estate space is only increasing.
Despite their strong efforts, a total reboot of how real estate is done won’t happen quickly, and today’s top real estate companies won’t lose their command of market share anytime soon. But these newer “Walmart brokerages” — which grab attention with low prices and buyer kickbacks and operate with the advantage of a monstrous scale of resources — are putting change in the air and luring market share. How long can individual agents and brokers compete? Will they eventually have to throw in the towel?
The appeal of deep commission cuts like those offered by SRE Matrix extend only to the point where discounts and kickbacks are not worth the inevitably poorer service that comes with an increasing scale of transactions. And a completely novel system like Faira runs up against immense hurdles in gaining the understanding and trust of potential customers. New technology will only be able to make limited inroads into gaining consumer trust in managing the most important transaction of their lives.
That’s where REALTORS® have won the game for years.
Real estate continues to be — and will always be — a relationship-centric business. So practitioners must never underestimate the importance of the human factor in the transaction, and that’s where we need to master our skills the most. That cannot be replaced by algorithms and technology platforms, and drastic discounts on commissions aren’t enough to maintain a high quality of service. The professionals who will adapt most successfully to the changing landscape will be the ones who fulfill their role as a trusted guide and fierce guardian of their clients’ interests, not simply as a salesperson who just happens to be administering a transaction. These are some of the most crucial skills we need to master right now:
- High ethical standards: The Code of Ethics is the most powerful tool we have to differentiate ourselves from the competition today. Purchasing real estate will continue to be the most important transaction in the lives of consumers, so convincing to them to work with you requires demonstrating a strong sense of integrity and loyalty. You must fulfill a crucial role acting as both an honest professional to the public as well as a trusted guardian of your clients’ core interests. Now is an important time to live by the Code more than ever.
- Beyond fact and figures: Consumers are better informed about the real estate process than ever before because of the availability of information online. So while it’s even more necessary for you to know market statistics like the back of your hand in order to compete, you also have to focus on the skills that a computer can’t perform for a consumer: negotiating, understanding the nuances of sensitive situations, and conflict resolution. We have to be better at the relationship-building part to show our clients that a positive transaction requires some with social intuition, which cannot be replaces by technology.
- Understanding the technology that threatens us: Technology is changing the way everyone lives, and we can’t continue operating our businesses like it’s not. We must understand that the magnitude of change that we have seen in the industry is only beginning. So we need to be better prepared for it by continually updating our knowledge of new technologies and concepts, and finding the piece of the puzzle these advancements can’t perform better than a human. By understanding the methods and incentives which are driving these new challenges, we can adapt our business models to address new demands and survive in the industry of tomorrow.
None of this is to say that a portion of us won’t lose to new technology. Part-time agents who don’t commit themselves to education and keeping their business up-to-date will likely fall to the wayside and be unable to sustain a business. Those who lack a strong work ethic or fail to focus on self-improvement will face increasing difficulties in earning a living as the traditional industry model faces an increasing barrage of threats.
Those of you who manage to survive and thrive in the real estate industry of the future will be the ones who have earned it.