"If you don't like transformation,
you're going to like irrelevance a lot less."
- General Eric Shinseki, US Army
Do you ever get the feeling that things are falling into place? An unspoken and inarticulate sense that something approaches. The faint smell of ozone as a thunderstorm approaches.
In 2008, I get the feeling that the real estate industry is entering such a time of transformation. Things are falling into place. That it's happening in the midst of a sustained downtime in the industry as a whole is not wholly unexpected. We will come out of this downcycle, and while keeping an eye on the ball here and now is important, I thought to take things up one level and offer some thoughts on what the real estate industry that emerges from the darkness might look like.
At any given time, there are innovations and trends that bear watching. But recently, three disparate and apparently unconnected events struck me as something falling into place. I share them with you.
Prime: ActiveRain launches Localism.
Now, I have no way of knowing whether Localism will be successful or not. Jon Washburn, CEO of ActiveRain, has no such doubts, claiming that Localism.com will have more traffic than Trulia and Zillow combined in 24 months. Perhaps. As the saying goes, that's why you play the game on Sunday.
The fact of Localism.com itself suggests, however, that there is something shifting underneath the surface of real estate. I believe it is a very subtle shift, but a seismic one. I believe we may be entering into a new era where real estate becomes centered around community instead of property. These are uncharted waters.
What is meant by "community"? It goes beyond simple geography. Realtors are already familiar with 'neighborhoods' -- Onboard clients more so than others, perhaps (go go gadget plug!). But community is not just a neighborhood. It goes beyond place. Community is not mere geography. It is an emotional/psychological geography that encompasses the land, the buildings, the people, and the services that surround them.
My community is far more than just my little house; it also includes my neighbors' houses. The guy up the street who has a very angry dog that he keeps chained up in his yard is a huge part of my community. So is the pizzeria in town that serves delectable gourmet pizzas. The train station, the bike shop, the cafes, the little boutique that carries Prada and Helmut Lang, the summertime concerts in the park, the diner where the locals get together for Sunday brunch -- these are part of the fabric of community.
Localism.com's purpose is to tap into that community, to capture its essence, as well as all of its local information and flavor. Again, whether it is successful or not, only time will tell. But the motivation behind it, the reason why ActiveRain thought to bring this to market at this time, will remain as strong as ever.
Secundus: MLS 5.0 Manifesto.
Saul Klein, of InternetCrusade and Point2 Technologies, penned a detailed proposal (more like a call to action really) about the "MLS of the Future" that is generating quite a bit of conversation around the RE.net.
While I have my criticisms and questions about the vision of MLS 5.0, the interesting phenomenon is that the responses -- almost all of which are negative, some even downright hostile -- do not take issue with the basic concept itself. The negativity is almost entirely about the role of the National Association of REALTORS®.
The issue, then, isn't with the idea of a single national MLS that simplifies business-critical tasks like syndication and listings exposure; the issue is who controls that resource and its distribution rules. The idea of a single standard and what that enables -- that idea everyone loves.
But consider what the admission of the need for a single system means psychologically for real estate. Once upon a time, it was almost as if the value of an agent was tied entirely to his ability to deliver access to the MLS. Wasn't that the whole point of the DOJ lawsuit? And yet, even as NAR and the government duked it out in a battle royale, there was a shift going on underneath the visible surface as individual agents and brokers realized that if the business of real estate is to serve as a human user interface module to MLS data, they are in deeper trouble than they had thought.
The explosion of agent blogs, of real estate blogs, of social networking, of twittering, and so on is but one response to the fundamental shift away from interface-to-listings towards something new.
Imagine a real estate industry awash with data, the way that financial services are awash with data. Basic information about a property will be everywhere. With a common standard, pushing listings from your laptop to a hundred websites, blogs, and microsites throughout the world could be automated. Real personal syndication direct to consumers -- along the lines of RSS readers -- can become a real possibility.
If you are a real estate professional in that industry, what do you compete on? What is your value proposition?
We are entering uncharted waters.
Tertius: Better Homes & Gardens Real Estate launches the Clean Slate Blog. (Disclosure: BHG is a client of Onboard Informatics)
Better Homes & Gardens, the most important strategic initiative launched by the industry giant Realogy in recent years, has an official corporate blog. This is a HUGE development. There is no company that is more important -- nor more conservative -- in real estate than Realogy. For a Realogy brand, and to boot its most important brand in years, to have a corporate blog is an incredible development confirming the power of blogging and social media in general.
If Realogy can get into corporate blogging, then any real estate company can. Furthermore, if Realogy with its billions of dollars, TV advertising, and hundreds of thousands of agents, is going to leverage the power of social media... you had better keep up.
But what is that power, at the end of the day? I actually believe that BHG's embrace of blogging, Web 2.0, and social media will be seen a couple of years from now as the peak of the Web 2.0 movement in real estate. We'll refer to it with the same wistful tone with which we talk about the days of $128 Yahoo shares.
I know this sounds extremely negative, but it isn't really. Social media -- and its cousin social networking -- is but one piece of the overall puzzle. Arguably, it isn't even the most important piece. But while blogging and social media have taken center stage in real estate as they have for the past few years, true progress has been blocked. Like infants who discover that they have these things called hands, we have been picking up just about everything we can reach, to play with it, put it in our mouths, without too much consideration about business value.
Now that even major brands are adopting it, perhaps we can put down the shiny new toy and start focusing on actually delivering customer value which involves far more than simply blogging about a listing.
These pieces are interconnected, although at first glance, it's hard to see how they hang together. They hang together in pointing the way to how the post-bubble, post-Internet real estate services may be conducted.
At the end of the day, real estate is about service.
No matter what the technology, no matter what version of the Web we're on, no matter how many social networks we are part of, the solid ground underneath everything in real estate is service. The delivery mechanisms might change, the speed and efficiency may be dramatically improved, but the substance of the value will remain service.
Brokers and agents get paid for the service they render to clients. The shift in the definition of what service it is that a realtor provides to a customer is being pushed by the trend towards data ubiquity and pulled by the trend towards hyperlocal information. Both are rooted in consumer desire to leverage the power of the Web and databases to understand more about the most important purchase of their lives. Prior to the real estate bubble bursting, realtors still believed that they were in the business of providing access to various trading platforms and data systems. Those who still do are doomed to irrelevance. Data wants to be free; data wants to be standardized; and data wants to be shared.
Because simultaneous with this trend towards data ubiquity, consumer emphasis is shifting away from the property itself to the surrounding community. Localism and initiatives like it start to showcase agents, brokers, and others who are truly experts in the town, neighborhood, the community. Consumers themselves find that they care very much indeed not only about whether their house has a fireplace or not, but what the Walkability Score is. They find that they care greatly about what shops are nearby, what parks, what transportation facilities, what restaurants; they find that they want to know if they'll fit into the life of the community, or if they would be standing out like sore thumbs. They want to work with real estate pros who know the inside scoop about the community -- as well as being experts on housing and the transaction.
The agents and brokers who survive and thrive will realize that their expertise and knowledge of the local community may be more important an asset than how many listings they have. They will come to realize that the consumer can get listings from every site, blog, and Twitter around, and realize that the service that the consumer can only get from the local realtor on the ground is his or her knowledge of that particular local market. This is the principle and insight that Onboard Informatics has been founded upon. That the world is coming around to how we've always seen things is, well, gratifying.
And of course, at the same time, social media is moving into the mainstream. When even the major brands are getting into blogging and social media, there are three big implications.
One, social media is no longer 'out there' -- it is as mainstream as it can be. It is no longer a fad. It isn't a passing fancy. Transform, or become irrelevant. The message could not be any clearer.
Two, the likelihood of truly radical innovation coming from social media is now rapidly approaching zero. Once a technology moves into the mainstream, it ceases radical innovation. Consider if our laptops are really that dramatically different from the Apple II. Instead, the next period is one of adoption, integration, and evolution. Blogs, social media, and social networking have yet to prove true ROI in real estate -- and it will become more and more difficult as more and more agents realize, "I gotta get on this blogging thing." Many of the resulting blogs will be bad; some will be great; the vast majority will fall into that middle area of mediocrity.
What will move the industry forward is not some new technological breakthrough, or some new way of doing the same old thing. Instead, it will be finding a way to do brand new things using proven mainstream methods of social media. That is what true adoption and integration means. Sending someone the same old MLS listing via Twitter to their iPhone is not "new service". Arranging an online chat between the home seller and the buyer might be. Doing a WebEx demonstration of the house and its local community, complete with a presentation by the home inspector, and the mortgage broker, to an audience of invite-only potential buyers might be.
Three, the age of the amateur might be coming to an end. Social media done badly is an advantage only when professionals are busy doing something else. Plus, it's too hard to do truly outstanding social media marketing. (In part because it bears no resemblance to "marketing" as we have understood it to date.)
Of course, the definition of a professional might be changing. The old skills will also require transformation or suffer irrelevance. In an industry where personal and uniquely individual service delivery is the basis of competition, how does one do branding? What does it mean to have consistent message? These are but a couple of the questions that the marketing professionals -- of both old and new methods -- will need to wrestle with.
In the Glass Darkly
It is, of course, impossible to say what the final shape of the industry will be. It is unknown whether a single data standard can be established. Whether Localism.com spurs on new change, or dies on the vine, too far ahead of its time, is unknown. We see these things as if in a glass, darkly.
What is important to keep in mind is that transformation is coming. We may not know what will change, but we do know that change will come. Flexibility, preparedness, and strategic insight are key skills to have so that your organization can indeed transform successfully. The alternative is irrelevance.
Image Credit: Wikimedia Commons