Inventories, mortgage rates and marketing don't drive the real estate market.
Customers drive the real estate market, and the real estate buying customer is perhaps the most powerful customer in the marketplace today.
Thanks in large part to the Internet, today's real estate consumer has gained power through knowledge and that's transforming the real estate industry as never before, according to the latest "Confronts" white paper, "Real Estate Confronts Customer Acquisition," from RealSure.com.
The message for real estate consumers? More than ever, everything in a real estate transaction is negotiable.
"Today's customers have more information at their fingertips than ever before. More information has led to more sophisticated buyers, buyers that in turn have become more knowledgeable. More knowledge allows a person to become more demanding, which in turn leads to increased choice. And choice creates power," according to the white paper penned by Stefan Swanepoel, and Janet Branton.
Swanepoel, a real estate industry trend spotter, is a partner with the real estate consulting firm, RealSure, chairman and CEO of RealtyU, a network of real estate education services, and president and CEO of iSucceed educational curricula for real estate agents and brokers.
Branton is vice president of the National Association of Realtors' (NAR) Business Specialties Area, and executive director of the Real Estate Buyer's Agent Council (REBAC). She also manages the Realtors Land Institute, Resort Specialty, Appraisal Specialty, Auction Specialty and Real Estate Professional Assistant (REPA).
The white paper is designed to provide insight for real estate industry professionals who want to develop strategies for coping with today's more buyer-centric market.
For example, the growth of Internet-based real estate companies, which use nontraditional financial incentives to attract business have also given a boost to a growing industry segment that offers a menu of services or reduced services based on a client's need. The approach, along with a heavy use of technology, allows the companies to cut overhead and pass the savings onto customers.
"It's a challenging time for the industry because of pressures on commissions. The zipRealtys and the eRealtys outline a plan online, tell you what they are going to do and put a limit on what the transaction will cost you, but what the average consumer doesn't realize is that any broker can do that," said Dallas, TX-based Blanche Evans, author of The Hottest E-Careers In Real Estate (Dearborn-Real Estate Education Company, $24.95).
"And you can negotiate commissions with eRealty. They are just telling you where to begin," Ms. Evans said.
The white paper authors say ever more savvy real estate consumers doesn't mean the end of the real estate profession, but it does mean real estate professionals will have to hop to keep pace with informed consumers they want to acquire and retain.
"Professionals in the real estate industry will have to develop a more empathetic attitude towards customer care, redefine customer maintenance and create a better 'customer keeping' strategy. They will have to become 'married' to their customers," the report says.
That means changing the focus from the seller -- acquiring listings, marketing and selling the home -- to the buyer.
"Customer acquisition in the real estate industry has for a long time been associated with the acquisition of inventory; the listing, the home and the seller. The logic has always been, list the property and the customer comes with it. Everyone knows that he who controls the listings controls the market. Until the early 1990's that might have been true, but during the last decade, a whole new way of looking at customers has developed," the report says.
Among new strategies suggested for coping professionals, the report devotes an entire chapter to buyer-agency, an agreement -- often written -- between the buyer and the broker.
Virtually unheard of 10 years ago, by 1996, buyers agents were the agent of choice for 63 percent of all buyers, according to NAR's "2003 Profile of Home Buyers and Sellers."
"This shift in business models has also changed the customer's perception of the agent's role in the process of purchasing a home, a process that has traditionally been seller-driven. But with property listings now readily available online through a wide variety of Internet websites, buyers no longer view real estate agents as purveyors of properties," the report said.