In my presentation at the National Association of REALTORS convention in November, "Stop It! The EGO Marketing Mania," I delivered my perception that we are now in the age of the Evolved Consumer. First by defining the difference between a Fad and a Trend -- a Fad is revolutionary and a Trend is Evolutionary. And, second, uncovering three identifiable stages of evolutionary trends overlaying these trends on today's real estate consumer to illustrate that the real estate industry is in a far better position to assist the Evolved Consumer than it has been in the past 100 years.
The Predictable Model
Evolution is inevitable when it follows a distinct model; that of: Dependence, Independence, and Interdependence. For example:
Start in the 12th Century. King John, (1199 - 1216 ad) sovereign ruler of the realm, claimed all within his boundaries from the center of the earth to the zenith of the sky. Everyone, and everything within, was Dependent on him, including their existence. Not everyone liked this, however. So to enforce his laws, collect taxes, and protect his chattel, he called upon his mightiest warriors.
It didn't take long, after a taste of power, for their egos to get in the way and they began to distrust his lead. Seeing this, King John played to their egos and knighted them. He also expanded his boundaries allowing his Knights to build castles on his parameter giving them rule of domain and privileges in his name.
Understandably, they relished this power. And, as a result, they pushed for more Independence. In a further attempt to appease his Knights, he bestowed a higher title, that of Baron. This backfired. They began to squabble among themselves as to which Baron was the most powerful and, you guessed it, a fight broke out!
King John was not only at war with his own Barons, but with France and the Pope as well. His lands became battlefields -- stripped of game, crops, livestock, and, hence, value. His people were killed in battle or famine and his economy collapsed.
The Barons, in the same shape, finally had a light bulb go off! Hey, wouldn't we be stronger as one? Sound familiar? So they banded together and called King John, "We're meeting at Runny Mead for a beer and to create a united front. Would you join us?" He, of course, said no, and they said, "Okay, we'll kill you. After all, we have you surrounded." He then agreed and the rest is history. On June 15, 1215, they created the "Great Charter"; i.e., the Magna Carta - a document of Interdependence and the Evolution of Democracy.
Okay, But How About Today's World?
Let's take it closer to home: Children. As babies, they are totally dependent on their parents for everything -- food, shelter, clothing, love, care, attention, knowledge, and diaper changes. But as they mature, they constantly test the boundaries of parental hold.
Then one day they become TEENAGERS and they lay claim to the world, as they know it. And the fight for independence is on! Their words are, "Why?" "You don't know." "You don't care." "My friend Jessica said." Then they get their 'perceived ticket' of independence, a driver's license - and off they go!"
After what seems like forever, they return home (some permanently) as Adult Children. Their words are, "Dad, I love you." "You're so smart." "You were so right back then." "You taught me so much." "Wow, a home cooked meal!" And, with an education, jobs, and a solid love interest, they sit at the family dinner table to express their Interdependence of love and mutual respect. Again, the Evolution model of Dependence, Independence, and Interdependence shows the trend.
How Does Real Estate Fit Into This?
Let's apply this evolutionary trend to real estate brokerage. When I started in real estate in 1971, I was an agent for Doyle Pargin Realty in Albuquerque, NM. The agent commission split was 50/50 and, regardless of when a property closed, we were paid once a month. Even though, as licensed real estate agents, we were categorized 'independent contractors', we were dependent on Doyle. Dependent on him for everything; training, encouragement, advertising, marketing, leads, income, and, often, sellers and buyers -- that was the broker/agent norm.
A new concept. About the same time, in the early 70's, a company with a new idea appeared on the horizon. Realty Executives of Phoenix, AZ, whose owner, Dale Rector, watched the restless fervor of high income producing agents as they left the fee split offices seeking Independence to open offices of their own. Dale Rector knew that running a successful real estate office for a profit was a difficult task, to say the least. His new concept would take away the burden of office ownership and management and charge the agents a monthly fee for a desk and office support allowing them to keep 100% of their commission! Very win/win. It not only satisfied the need of high producing agents for Independence, but let them do what they did best, sell real estate and close transactions!
One highly productive agent seeking Independence was Dave Liniger -- a salesman, and later manager, for one of the largest most respected fee split companies in Denver, CO, Van Schaack & Associates. He, too, was dissatisfied with the fee split company and its control, restrictions, and market direction. And, when the company's owner told him that he was not allowed to wear loafers, he knew he had to change. It seems that in those days, Van Schaack fancied themselves as the button-down collar, white shirt and tie, wing tipped shoe, real estate version of IBM.
Dave had heard of Realty Executives' and their new business model and moved to Arizona to experience it first hand. Later, he returned to Denver to duplicate the 100 percent concept and opened a new company by the name of RE/MAX -- and the rest is history.
Why must we fight it? For years, the Dependent Brokers and Independent Brokers fought it out on the recruiting battlefield. When the dust settled, they realized that there was room for many variations of fee structures and a third model evolved; that of choice with a menu of splits and fees to fit the individual -- the Evolution of Interdependence triumphed.
"What About Me?" Cried The Consumer.
For the last one hundred years, real estate buyers and sellers have been dependent on real estate agents and brokers for property information. Where did the one hundred years come from? Well, it's a WAG (Wild A_ _ Guess), but I do own a copy of the seventh revised edition of a book published in 1910 entitled, How To Sell Real Estate At A Profit. Part 1, How To Get And Handle Clients, as you can imagine, is about being the source of all the information on properties, causing the suspect purchasers, aka prospects, to come to you, the agent. The result-- the consumer was trained to be dependent on real estate sales agents.
Manipulation. By the time I got into the business, agents and brokers had perfected the methods of withholding information. They were even trained to manipulate buyers and sellers to work solely with them. It could have been a Parker Bros. game named "Let's Call a REALTOR." You start by rolling the dice to see which part you would play -- Consumer or Listing Agent.
The Consumer moved first, they were to call the Listing Agent and get as much information about a specific property as s/he could without giving any information on themselves. If you were the Listing Agent, your job was to get the consumer's name, address, telephone numbers, checking account numbers, and first male born child before divulging any info on the property. It's hard to believe that some agents still play this game!
Technology Ticked Slowly
The real estate industry has been slow to accept technology. At first, it was just an easier way to obtain Multiple Listing Service (MLS) information than leafing through the books (MLS catalogs). But later, it became a threat.
The threat was in the form of public access to MLS information. The idea that the public would have access to the same information real estate agents and brokers had struck fear into their hearts. They cried out in pain, "The buying and selling public won't need us!" And REALTOR Associations, real estate companies, MLS's everywhere began to clamp down on what they now call "Proprietary Information", aka exclusive property listings. After all, it was 'their' information, 'they' owned it, and, if they didn't want to share, it was 'their' right.
Forced Independence. The tighter they held on to the property information, the louder the cry of INDEPENDENCE from the buying and selling public! The fight was on. And, quickly, the Internet became the consumer's vehicle of choice for property searches for two reasons; speed and autonomy. Not newspapers, not flyers, not yard signs - all were too confining, too time consuming, and dependent on the agent. Consumers went to the Internet because they didn't want to give their name, they wanted property information on their time schedule, and they wanted it NOW.
Agents were in the way. Besides, they had spent years on 'Personal Promotion'. You know, the me, me, me, me, me, me, and look at me Ego Marketing Mania! Well, no one cares! It's not that they don't like your photos, your billboards, your "I sold Millions" marketing. Actually, the Independent Consumer appreciates the entrepreneurial spirit. They just want to know, FIRST, What's In It For Me! (WIIFM).
I've been teaching WIIFM for years -- not many have listened. It's actually hard to hear over your inner voice of WIIFM. But, just like your teen children and King John's Barons, they want attention, they want to be noticed - that's a sign of Independence - the need to be recognized as Independent. I'm OK, You're OK.
Technology Feeds Independence
How great this age of technology where, as promised, everything occurs at the speed of life. Okay, many things. However, evolution appears to be happening exponentially because of world interconnectivity. Read The World is Flat, by Thomas L. Friedman. Real estate has been brought to the pinnacle of awareness by negative media and recognized at the forefront of the consumer's mind - and it is being well fed.
House Mania TV. To accept this, simply turn on cable TV and you'll literally see hundreds of hours of programming: Flip This House, Bought & Sold, Buy Me, Designed to Sell, Desperate Spaces, DIY to the Rescue, Curb Appeal, Double Take, Don't Sweat It, Dream House, Find Your Style, Get It Sold, Fun Shui, Get It Together, Ground Breakers, Hidden Potential, Homes Across America, House Detective, My First Place, House Hunters, My House is Worth What?, House Hunters International, I Want That!, National Open House, If Walls Could Talk…, Offbeat America, Over Your Head, Property Virgins, Takeover My Makeover, reZONED, That's Clever!, Rip + Renew, What's With That House?, World's Most Extreme Homes, Secrets That Sell, Sensible Chic, Sleep On It.
The Independent Consumer is being recognized. They have been schooled in front of the tube, coached on how to avoid the agent, buy from the owner, get the best price, fix it for cheap, decorate it to sell, and flip it for cash. Watching to reading Rich Dad, Poor Dad to Flip It, the Independent Consumer cuts a wide swath through market after market with the conquering stance of Attila the Hun. Independent Consumers gobble up top-selling business books like Freakonomics, A Rogue Economist Explores The Hidden Side Of Everything. You know, the one written by Steven D. Levitt and Stephen J. Dubner. They informed the consumer of the REALTORS' secret cipher and how to decode it. Somehow, I never received my decoder ring.
Check back March 14th for Part II of this series.
