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The following is the second part of a two-part Q&A with Kirsten Mohan, a Seattle-area real estate agent and marketing specialist (click here to read Part I, "A flight to real estate quality"):
Q: What skills will the real estate agent of the future require?
A: There are two skills in particular that agents will have to acquire in order to be successful in the future: one being marketing and the other being the strategic use of the Internet — and social media in particular — to build business.
Any agent who wants to survive must have a deep understanding of fundamental marketing principles and understand how to apply them in today’s market. Innovative marketing is the key to success in tough times. In fact, study after study has confirmed that those who strategically increase marketing efforts during economic declines reap noticeable gains in market share over their competition. In the real estate business, that means understanding the concepts and allocating capital towards more professional means of marketing: professional staging, professional photography, and promotional videos for listings are examples. Agents who don’t understand this aren’t likely to thrive in this market long enough to see the recovery.
Second, agents will need to have an understanding of social media and its applications to their businesses. With so many tools out there opportunity abounds for each agent to find what works for them, whether it’s blogging, online networking on sites like Facebook, or the combination of online networking with the more traditional face-to-face on sites like Biznik.com.
The point is to grow your sphere, and the most cost-effective, environmentally friendly, and impactful way to do that today is online.
Direct mail is becoming less effective (and is in fact a turnoff to many people because of the large amount of waste it produces), and it doesn’t create the type or strength of relationship necessary to build a strong and thriving business in tough times. Agents need to learn how the different sites function and how to make them work as a business application so that they can develop a social media marketing system that works for them. Agents who hold fast to the traditional models such as geographic farming will find their costs rising and their return diminishing over time — not a recipe for success in a contracting market.
These shifts in the real estate business model will raise the bar for professionals in the industry, meaning that once we recover we will have a vastly improved industry. The industry and the consumer will emerge from this period of economic contraction stronger, more knowledgeable, and more capable of taking advantage of the wide array of technologies available to further their needs.
Q: How will real estate advertising dollars be spent in the future? How will real estate marketing be different?
A: I think in the future we’ll see the shift continue from advertising dollars being spent on print to dollars being spent on advertising listings via the internet. I think we’ll see more agents purchasing paid subscriptions to sites like Trulia that include increased exposure for their listings, but more importantly I think we’ll see more dollars being spent on the services that help showcase those listings on the Internet, namely professional staging, photography and videography. Internet advertising for listings comes at a very low cost when compared to traditional print advertising like classifieds and magazines, leaving the agent more money to spending where it counts: showcasing the listing.
Real estate marketing will — and must — change to a more professional model than it has had in the past. A listing agent will need to spend more of their money on professional photography and promotional videos if they want to stay competitive in an Internet world. With buyers increasingly finding homes online, it is imperative for listing agents to do everything possible to showcase listings, and that means more than digital pictures from their point-and-shoot camera and brief descriptions of the property.
Agents who lack an understanding of key marketing concepts are already seeing a reduction in income, and that reduction will only continue for those who do not embrace technology or understand that something valued at hundreds of thousands of dollars can’t and shouldn’t be marketed poorly if it is to sell in a highly competitive market.
Once the consumer receives a higher level of marketing and representation, this will become the norm upon market recovery. Agents would be wise to begin the transition now so as to enjoy an increased market share and profitability when the recovery does arrive.
Q: Will sales activity in your local housing market contract or expand in 2009? Will national sales activity contract or expand?
I’m optimistic, though. I think at least in the West, and in Seattle in particular, we’ll see improvement in 2009. But it might take longer to improve nationwide, perhaps into the beginning of 2010 with so much unsold inventory and overbuilding in other parts of the country.
Q: What will drive the expansion or contraction?
A: I think the expansion that we’ll see in 2009, at least in some areas like Seattle, will be driven by an uptick in consumer confidence once we see forward progress towards fixing the broken system. Clearly, many will hold off until the economy is mostly stabilized, but at least in Seattle people will want to take advantage of opportunities they know won’t be around too much longer.
Of course, Seattle hasn’t been hit nearly as hard as most of the country, and I think those areas hardest hit will only rebound once major progress has been made in lending and consumer confidence rises much higher than it is now.
Q: Will local home prices decrease, increase or remain stable in 2009? In 2010? Will national home prices fall, rise or remain flat in 2009? In 2010?
A: I think we’ll see prices in Seattle decrease a little bit more at least over the next month or two, then likely stabilize or even improve in early to mid-2009. I’ve seen a great deal of pent-up demand on the buying side in Seattle and a lot of people waiting for the market to "hit bottom." Once prices begin to stabilize, I think we’ll have a lot more activity which will at the very least keep prices stable or even increase a little in 2009.
In the national market, I think we’ll continue to see decreases in price until we rid ourselves of an extensive inventory of overbuilt homes. Given the large number of foreclosures, stricter lending guidelines, and lack of consumer confidence even in qualified buyers, I think we won’t see an increase in prices on a national level until all of those problems are addressed — hopefully beginning very early in 2009.
But even if substantial progress is made early in 2009 toward addressing those problems, it’s going to take at best a few quarters and more likely at least a year for those changes to have a meaningful national impact with such an extensive backlog of unsold homes.
Kirsten Mohan is a Seattle-area real estate marketing specialist and a residential real estate agent with John L. Scott Real Estate.
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