With industry pundits and economists, including the National Association of Realtors' Chief Economist David Lereah, all predicting a slowing real estate market for 2006, real estate agents might be feeling like sitting ducks. Should they be worried about opportunities to make sales in real estate?
Not according to a new white paper by HouseValues . All they'll need is a little adjustment more toward Internet marketing.
"Real Estate in a Down Market" addresses the "numerous and significant challenges facing the real estate industry and explores how real estate professionals can prepare for success during the next three to five years."
Ominous signs of a real estate slowdown are everywhere. Fluctuating mortgage interest rates have risen a full point over the last 18 months. Rising unsold housing inventories have reached the highest point since 1986, according to Bloomberg News.
But, maintains HouseValues, "A more normal residential real estate market may not be such a bad thing."
Says Ian Morris, CEO of HouseValues, "Real estate professionals now more than ever will need to more effectively position and market themselves online, where their customers and prospects are. Agents who want to succeed in a changing real estate market must continue to build their online presence and become the go-to neighborhood expert when home buyers and sellers are conducting local searches."
While some may scoff that Morris is the Internet fox calling to the traditional newspaper-dependent agent hen house, Morris may be right. The number of consumers who "first go online in their search for homes, neighborhood information, selling tips and all things real estate have risen exponentially since home listings were first posted on the Internet 10 years ago." Seventy-four percent of homebuyers use the Internet for research before entering the market, with as many as 97 percent "using the Internet" to help them "better understand the homebuying process."
Borell Associates, a national research firm, noted that real estate professionals are shifting their advertising from print to online, and agents will spend more money online than in newspapers by 2009, or sooner.
To ease agents' fears of being decimated by commission cuts, HouseValues points out three myths:
- The real estate industry slowdown will be devastating.
In fact, the NAR is anticipating home prices to increase by 6.1 percent, although there is no estimate anticipated for the number of transactions. HouseValues believes that a market less driven by speculators and one more driven by the moves of marriage, divorce, childbirth, etc. would "suit many real estate professionals just fine."
- A real estate slowdown will negatively impact all agents equally.
In a gold-rush fever, real estate agent memberships have risen greatly, with the NAR's membership burgeoning 60 percent to 1.2 million in just five years. About 500,000 are licensed in California. HouseValues suggests that it was the boom that brought them, and the quiet will send them away, leaving the true professionals to "win more customers and listings, complete more transactions, and earn higher incomes."
- The Internet and related technology are making agents superfluous; soon they will no longer be central, or even necessary, to the process of buying or selling a home.
While plenty of examples of how technology has disintermediated professionals from their professions exist, HouseValues suggests that there's no "experience that can match that of buying or selling a home." As every home is unique, there are "potential glitches and pitfalls that demand the undivided attention and involvement of a local real estate professional who has been trained in the intricacies of steering a transaction to completion." It's also an emotional experience, which requires some hand holding by agents.
To survive and thrive, HouseValues has some advice:
- Agents must go where consumers are -- online.
- Agents must partner with online lead generation companies to help agents connect more easily with greater numbers of customers.
- Agents must prove they know online technologies with an online presence by means of a professional website.
- Agents must use business management systems that automate as much communications and follow-up as possible.
- Agents must advertise their listings where buyers are looking -- online, using the tools that make online presentations uniquely rich and detailed.
