Editor’s note: Inman News is exploring what the next decade may hold for real estate professionals in "2020 Re-Envision: The Future of Real Estate Brokerage," an editorial project that features a survey and related articles. Readers are invited to submit guest essays detailing their vision of the future for the real estate brokerage industry. Send your guest essay to future@inman.com by Feb. 28.
When examining something as far as 10 years away, to call it a prediction is a little silly.
I prefer to look at exercises such as the 2020 Re-Envision as a "possibilities exercise." Below you will find one possibility of what a real estate services firm might look like in 2020.
Since it’s only 10 years away I’ve tried to keep the technology limited to things that already exist (or obvious extensions of existing technology). Instead of technology, I’ve focused on the organization and profit centers of a fictional real estate brokerage, New Realty LLC.
New Realty LLC
Matt arrived early for the "all hands" meeting of New Realty LLC. This wasn’t unusual, as he arrived early every month. It was his company, after all.
Jen, the proprietor of the co-working space that New Realty had contracted with for the past nine years, greeted him as he entered the clean, contemporary, general work area with its open floor plan. There was a general hum of activity accompanied by some small talk by the espresso machine.
When Matt first closed his company’s brick-and-mortar office, a lot of folks had hailed him as a bold visionary. Back then he had real estate agents and they never liked doing office hours anyway. The truth is, he had to get out. The holder of his commercial mortgage had more to gain if he defaulted — which made dealing with them toward the end of 2010 less than optimal.
But as Matt was fond of saying, "Mama didn’t raise a quitter." He had swallowed his pride, extracted himself from the commercial space and put a bright face on switching to a couple seats and conference room membership at the co-working space.
In retrospect, it was one of his best moves. He and his staff were instantly in direct contact with the town’s most innovative freelancers and entrepreneurs. They were also, by default, included in an array of networking events he didn’t even know existed before.
"Conference room C is ready for you. The secure data link is waiting your voice-key," Jane said, smiling, giving him the key to the conference room and then returning to a conversation about billing systems she’d been having with one of the several experienced designers who also made use of the facility’s general work area.
Matt voxed in to the secure data feed and organized his notes, still kept in a paper notebook. His need for tangible records may have dated him, but he still thought best with a legal pad at his fingertips. The rest of his team would filter in over the next 10 minutes with coffee, computing devices of various makes and sizes, and likely a few tales of weekend glory.
Once everyone had arrived and was seated around the conference room table, Matt handed out the sociometers. New Realty LLC had been using sociometers in group meetings for about seven years now. The devices were connected to a display that let the group know, in real time, if the group’s process was trending towards polarization or (much much worse) groupthink.
Michael, in his post-ironic trucker cap and slightly disheveled GenX/ForgottenGen2.0 haircut, gave his usual complaint about "Big Brother" as he hung the device around his neck. Michael was a refugee from one of the many failed national news media organizations, a real journalist.
"I hear you Michael, but you know this helps us make better decisions," Matt said. "Remember how long it used to take to get a group to make any decision at all? And besides, these things don’t record the content of our conversations, just basic biology readings."
Matt was glad to have Michael as director of neighborhoods. Michael’s old-school journalism values were a huge asset to New Realty LLC.
"OK, standard format for the meeting: active clients, ongoing clients and then this month’s event. Sam, you’re up," Matt said.
Sam was the lead account executive for New Realty LLC. She always dressed sharply and had a thing for vintage Bapes. …CONTINUED
Active Client Engagements
Sam lit up the wall display from her Apple iPad 8Core and went through the basic trends in New Realty LLC’s current active client engagements. "Active client engagements" was the profit center most like the old real estate agency model.
When someone needed a house to be marketed and sold, they might be looking for the best price or the fastest sale. New Realty provided marketing services either on an hourly rate or as a percentage of the sale depending on the situation. Most New Realty clients chose the hourly rate.
Sam thanked Ashley, New Realty’s Media Producer, for getting the photographs, 3-D models and projections, video and audio screeners, social landers and interactionables completed in record time. Everyone at the table nodded — they’d been surprised at how quickly they’d all been able to actively promote listings that came in last month.
Jessica, seated to Matt’s right, had a concern: "The time-to-social-syndication KPI for last month was a record, which is awesome. But I’m concerned about the time Ashley had to put in to get that content created. Predictive analytics are looking like a burnout at this rate." Jessica was the director of business intelligence. She was friendly, but no-nonsense.
"How’s your team, Ashley?" Matt asked. He had learned to trust Jessica’s predictive analytics assessments even though he had only a slight idea how they were derived. Jessica had been accurate long enough that he trusted her at the gut level.
Ashley pushed back her long bangs, straightened her shoulders, and stated that the team was adjusting to new hardware and software upgrades made the previous month, but the production workflow was still sound.
"This month we really dialed it in, despite some technology growing pains," Ashley said. "Next month should go much more smoothly."
"Good. Keep us in the loop," Matt said. "Finding committed talent remains our most difficult challenge. Let’s avoid burnout."
It had once taken Matt 10 months to find a suitable augmented reality programmer for Ashley’s team, and he had no desire to experience that again.
Sam finished her portion of the meeting by noting several new social-location systems that had come online in New Realty’s market area, and that the local weekly news media source was testing a new listing aggregation service. New Realty’s code specifier would be busy this month.
Matt thought back to his old MLS system and how it eventually become irrelevant in the face of increased FSBO activity, improvements to search aggregation systems, and several fairly poor technology decisions at the local level. MLS still existed, of course. But his client’s money was best spent elsewhere. Jessica’s analytics system had worked that out nearly six years ago.
Before moving on, Jessica mentioned that the social CRM had identified several medium-sized businesses that were relocating. Also, Michael had completed research on the impact of city plans for a park in one of New Realty’s strong neighborhoods. Perhaps some residents would feel it was time to sell. Michael and Jessica ported their data to Sam’s prospecting system.
Ongoing client services
Sam now shifted gears into ongoing client services. The wall display changed to show trends related to their subscription-based neighborhood information service. The neighborhood information service was a premium packaging of the work that Michael did for New Realty: keeping up-to-the-minute on all the boring zoning, planning, education and other issues that affected quality of life in the neighborhoods that New Realty worked.
News media, during their downward spiral, pretty much abandoned local government reporting as expensive. Also, since it rarely yielded an exciting headline it just didn’t seem worth it. New Realty, however, had found a way to package this sort of information and sell it to people they’d worked with. Over time, even people who hadn’t listed a home with New Realty began subscribing to the service.
The neighborhood information service had a subscription rate of about 25 percent in the neighborhoods that New Realty worked. It was a stable, consistent revenue stream that provided the firm with enough of a safety net to allow them to consider and evaluate other innovative ideas.
Though the neighborhood information service did convert people into active client engagements, the big difference to making the service work had been to consider it as a profit center instead of a marketing expense.
It had taken two years to figure out how to get the information service profitable. But Michael’s past newsroom experience and Ashley’s media production workflow skills were significant assets. …CONTINUED
The other portion of ongoing services was consultations. Several past clients (and a few people who had never been clients before) were being assisted with some technical and tricky improvements and adjustments to their property.
In the past few years New Realty had assisted a fair number of people with the permitting and certificate of public good filings required to install grid-connected solar power devices and a few residential wind turbines. The research and relationships that went into the neighborhood information service were useful in getting these ongoing services off the ground.
"Alright, good work on this, Michael and Sam. Let’s move on to events. Emily, you’re up," Matt said.
Events
Emily was the youngest member of the group and hadn’t really spoken up much yet, but had taken notes furiously the whole time. The wall display wiped to her presentation on last month’s event — a "How to Sell Your Home" workshop.
Getting the New Realty team to start doing workshops that were, at first glance, sort of competing with one of their profit centers had been difficult. They began first planning them around the time they began using the sociometers, and the polarization warning had been going off at every meeting. Eventually they got it sorted out and now the events were a very profitable business for New Realty.
The workshops were genuinely useful to anyone who planned to sell their own home containing information on marketing, community dynamics and legal issues. The participants gladly paid the fairly high fee because they were do-it-yourselfers and looked forward to the challenge of doing their own marketing.
Most of the participants went on to hire one of the lock-box-and-show services offered by discount real estate companies. That was fine with New Realty, as they had no interest in approaching that low-margin business. A few of the participants eventually signed on as active client engagements. Many of the participants subscribed to the neighborhood information service.
When the group began planning out next month’s event, Matt noticed that sociometer had indicated groupthink was occurring. This was the fourth month in a row that this had happened. As a result, the group agreed to bring in an outside consultant next month to challenge the planning and marketing process for events. Even though events was doing well for the firm, innovation was critical to keeping it successful.
The meeting wrapped up and most of the members of New Realty LLC went back to their home offices. Emily spoke with Jen, the co-working facility owner, to schedule this month’s event. Sam stayed to work in the general working area, networking a bit with one of the new entrepreneurs who had been showing up lately.
Conclusion
This future for real estate contains the following possibilities:
Using a shared office/co-working space becomes a marketing asset, putting team members in constant close proximity to innovative ideas outside the real estate space. This has fostered a continuous learning ethic for the firm.
The firm is dedicated to making the best decisions possible and uses the sociometer as well as a human business intelligence asset to keep them on track. They’ve replaced policy with process.
The firm engages in several media production tasks including creating materials necessary to market listings for their clients, developing in-depth content about their neighborhoods and event materials. All of their content-development activities are situated at the center of profit-generating activity.
All activities are leveraged and integrated as much as possible. For example, their knowledge of the local government and the impact on neighborhoods is packaged and sold in a variety of ways: direct consultation with active clients, the subscription-based neighborhood information service, ongoing client consultations and content for their live event series.
FSBOs work with an inexpensive service that just does the showings and open houses. The firm in this narrative doesn’t offer that service because they prefer the human interaction and higher-margin consultation model. The firm does, however, profit from FSBOs via their event series.
Generally speaking, the firm described has transformed itself from a traditional real estate brokerage into a knowledge/information services firm.
Attracting and maintaining talent becomes one of the biggest challenges for the firm. Compensation models likely reflect this. New Realty LLC most likely has some employee-ownership structures in place.
Gahlord Dewald is the president and janitor of Thoughtfaucet, a strategic creative services company in Burlington, Vt. He’s a frequent speaker on applying analytics and data to creative marketing endeavors.
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