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Brokerage, Industry, Residential Real Estate, Misc

October 5, 2018

The Lion Cometh – Get Ahead of the Curve

The Lion Cometh – Get Ahead of the Curve

Change is Coming, But When?

There have been many industry changes discussed over the last 25 years, many of which have materialized and some which have yet to materialize. Don’t become complacent and believe that because it hasn’t happened yet, that it will not happen. Ignore them at your peril.

If it has been discussed for years, why hasn’t it happened yet?

Because the buying and selling of a home is an infrequent event for most people, there is no compelling consumer drive for technology innovation in the real estate industry. The drive instead comes from entrepreneurs who look at technology as either a way to enter into what they believe is a highly lucrative field with lots of waste to trim or from existing brokers and agents who see the use of technology as a differentiator.

For this reason, it takes years for significant change, and yet there is much incremental change. Today, change is beginning to accelerate in real estate based partially on generational expectations. Here are some of those things which have been discussed for years and will start to manifest over the next few years:

Data Standard for MLS

In 1995 the industry was working on a “data dictionary” to standardize MLS data fields (Data Exchange Method or DXM). For many reasons, a real standard has never been achieved. Today, with technology such as Open APIs, we are edging closer to what will honestly be a game changer. This could lead to a single point of entry listing inventory system, requiring only one vendor with degrees of permission to access the data, based upon license jurisdiction and fees paid for access. Industry players will begin in 2011 to focus and differentiate between MLS Governance and Rules Enforcement Structure, MLS Data, MLS Vendors, and MLS Access.

Awareness by consumers and by real estate practitioners that the value proposition has changed, resulting in changes to the current and inefficient pricing and compensation structure.

There was a time when a major component of the value proposition offered by a real estate practitioner was the knowledge of available inventory. Today, consumers no longer need a real estate licensee to fulfill that aspect of the value proposition offered by brokers and agents, and yet compensation has not changed all that much. What will replace that portion of the value proposition? Will sales compensation adjust to this change? It is not a question of if, but when, and what.

The current compensation structure is a “contingency based” structure and by its very nature, it is inefficient and unfair. It can be described (from a licensee’s perspective) as “work for free, work for free, work for free, work for free…close a deal.” Who ends up paying for all of the free work is the party whose deal closes. The paying party pays for the inefficiency of the system and for all of the work performed for others for free. This will change in an era of transparency and ever more informed consumers, and entrepreneurs willing to challenge the status quo.

Virtual Office Websites

What real estate professional would not want to give consumers access to information about not only what is available for sale, but what has sold? Consumers, whether they are in the market to buy or sell real estate, are always interested in what their neighbors received for the sale of their homes.

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