In the past five years, the Internet has transformed from a relatively dull, complex, network inhabited by techies and academics, to a rich, multimedia, interactive medium available to the masses.

Exploding beyond everyone's wildest expectations, sales of goods and services over the Internet is projected to exceed $1.2 Trillion by the year 2001.1 A significant chunk of this will be real estate related commerce.

Residential real estate consumers today have almost instant access to rich, multimedia based information on available properties and related data-information which was previously the industry's closely guarded raison d'etre. This is the beginning of a new phenomenon of the Internet Empowered Consumer (IEC).Emergence of the IEC is the primary factor influencing the fundamental shift that is affecting the real estate industry. Within a few short years, current and projected innovations to the Internet will hasten the transition considerably.It will take a dramatic-perhaps ominous-turn for those organizations and individuals who choose to ignore it, or fail to understand its true nature.

This document provides insight into the Net's impact on the residential real estate industry today, and how its look and function will likely be affected over the next 3 to 5 years. It shows how key industry players-agents, managers, executives and organizations-can navigate to this new reality while avoiding the inevitable storms, rocky shoals and ill winds along the way.

Today's Real Estate Industry

Shifting economics, demographics and the advancement of technology have fueled much of the industry's evolution over the past few years. Significant changes such as consolidation and strategic alliances have been incremental at best. They will pale in comparison however, to Internet-induced transformation.

Not known for innovation or long-range strategic thinking, the real estate industry tends to look the other way at the thought of fundamentally changing the way it does business. This is true at all levels, from individual agents to the executive suite.

Resistance to Change Among Agents

Since the turn of the century, real estate sales associates have been the core of the business. They are still the primary business channel for the industry. But of roughly 1.4 million licensees in the U.S., a large percentage drop out of the business annually, and those who replace them in most cases need only pass a simple test to get their licenses.

Most often hired for superior people skills, agents tend to be highly technophobic, stubbornly resisting efforts to adapt technology to their business despite its proven boost to their bottom-line. As independent contractors who deal primarily with people, few see the need to learn new skill sets or adopt new technologies. Given that kind of complacency, it is hardly surprising that fewer agents are doing more of the business.

Corporate Myopia

Running a successful residential real estate organization is more complicated these days.Aggressive consolidation and the formation of strategic alliances with national consumer sales organizations have opened new channels to access the real estate customer. As a result, maintaining brand awareness within one's market region is more urgent than ever before.

Many companies find themselves consumed with reacting to market cycles and wondering how to best strategically align or merge with other organizations. Most still struggle to integrate computer technology into their operations, primarily due to costs, rapid obsolescence, and strong agent resistance.

Given these distractions, it is little wonder that many senior managers and executives have a hard time seeing the Internet as nothing more than just another promising technology. They know they have to deal with it for competitive reasons. However, very few recognize the Net as the harbinger of change that will cut to the very core of the current industry business model.

Part II: Real Estate 2001: Change Coming Faster Than Ever

Published: February 17, 1999

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Editor's Note: This article reflects the opinions of Michael J. Russer only and not necessarily the views of this or any other publication, organization or Website owner.