Industry Perspective 2006:

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Industry Perspective 2006

• Succeeding Within the Boundaries of An Internet
  Mature Industry
• Jeremy Conaway

RECON Intelligence Services
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Monday, June 19A day in the life of your future
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What is the real story?
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Our designation this morning

• Lets go up to 100,000 feet
• What weather patterns are influencing todays
  market?
• How is the market environment changing?
• Whats happening with todays cosumer

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Impact Factors on Todays Real Estate Industry
Long-term trend factors
Mid-term directional factors
Short - term market condition factors
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Top Ten Long Term Factors Impacting the U.S.
Industry Today

• Untrained agents
• Technology exhaustion
• Realignment of business models
• Channel confusion
• Adopting to a new generation of REALTORS

• Consolidation
• Information
• Differentiation
• Customer relationships
• Regulation

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The Five Mid-Trends

• The move from an internally focused industry to
  one that is driven by consumerism.
• The challenge to the working relationship between
  agents and brokerage firms as we move from a time
  of homogeneity to one of mass segmentation and
  customization. Will new standards be necessary
  to differentiate between full service full price
  and those who offer something different
• Will brokerage brands prevail over the search
  engines in the fight for the attentions of the
  online housing consumer
• How far will packaging of realty, mortgage and
  settlement services go? Will realty firms lead
  the way and how will they fare in the competition
  for the housing consumer
• What strategies will traditional firms deploy
  in their competition with alternative forms of
  realty services.

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The Current American Real Estate market
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Start by counting your blessings. You are in one
of the last remaining strong markets in the
country. This is a very good thing.
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This is a serious moment for the American real
estate market

• NAR is saying soft landing
• NRT/Prudential are predicting major down
• Home Services of America says big down
• By any definition this is a transitional market

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Sample Market Conditions

• National -11.7
• California -22
• Virginia -16
• Phoenix -53
• Minneapolis - 18
• Boston -23
• Las Vegas -26
• Chicago -13
• Florida -21
• Houston 11

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What is happening?

• Prices rose too fast in some markets
• Affordability is a crisis (11 in CA)
• Mortgage rates going up (6.67 today)
• Incomes are only going up 4-5
• Its a whole new consumer out there

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Just thinking about the role of mortgages in
this drama

• 58 no down, interest only
• 38 are on adjustable rates
• ARMs have gone from 4 to over 7
• 25 income rule moves to 46/56

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2005 was the most contentious year in the
industrys regulatory and image history
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Why is that?

• A 13 year run
• 5 record years
• Where did the money come from?
• Who is unhappy?
• Who has the power?
• How are they using it?

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Federal governmentHarassment

• FTC, HUD, GAO, DOJ, Tax reform
• DOJ/NAR lawsuit
• Attacks across the board

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These events planted the idea in the consumers
head that (1) REALTORS are not honest and (2)
consumers are entitled to cheap real estate
services
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The anti-REALTOR media

• Lots of agendas
• Most are negative to the existing system
• The attack has been mean
• There has been no real industry response

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The media is sending a message to consumers that
REALTORS are greedy anti-trust bandits who are
not really necessary
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Consumer activism in the real estate transaction
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Consumer Power A Chronology

• 1950 - 1964 The Age of vulnerability
• 1965 -1978 The age of the consumer
  advocate
• 1979 - 1995 Power through litigation
• 1996 - 2000 Discovering knowledge
• 2000 - 2006 Discovering the Internet
• 2006 - 2005 Using the Internet to compare
• 2006 - ? Power beyond self protection

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The Empowered Consumer of 2006

• 2nd generation power consumers
• Understands the importance of self sufficiency
• Understands the role of knowledge
• The Internet as a resource
• Taking control over information input
• Using information to influence markets
• Building power through interactivity

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Tracking todays consumer
Action
Dream
Research
First, Fast, Frequent
No contact
Electronic Relationship
14.5 months
17 Months (21 months for 1st Timers
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Consumer Evaluation / Rating
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New players in your market
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Even newspapers are now becoming competitors
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Search engines are working hard to replace
REALTORS as the consumers information choice
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You own and control the search engine that rules
in Houston
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500 Million in 2004
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Promoting REALTOR Value to the Consumer
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Billboards
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News from the Commission Front
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The eroding real estate commission

• Approaching 4 - 4.3
• The crabs are abandoning the ship
• It isnt about discounting
• Brokers are not stemming the drop
• Its all about value, your value

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What does all of this mean to you as an agent,
your careers and your futures
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This is a unique time in the real estate industry

• There is a new consumer out there
• There are new industry players out there
• There is a new market in effect
• There are career decisions to be made

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Decisions that should be made

• The role of the real estate agent is being
  redefined, what would you like it to be?
• What is your role in the new transaction?
• Can you continue to be a universal agent
• What role will a brokerage play in your life
  moving forward?
• What kind of relationship do you want with your
  customers?

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Decisions that must be made

• To meet or exceed the expectations of todays
  consumer
• To create a great customer experience
• To deliver an exceptional value proposition
• To have a productive relationship with your
  brokerage firm

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Designing your value proposition

• Why would anyone pay you
• Stacking up against the new value scale
• Documenting the expectation and the result

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Designing great customer experiences

• Understanding what they would like
• Incorporating what you would like to deliver
• Integrating with your value proposition

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Making a decision about your value

• The issue is your value
• Dont worry about what the next agent thinks they
  are worth
• Todays consumer is not looking for cheap, they
  are looking for value

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Who is your mentor and why?

• Be discriminating
• Dont listen to the crabs
• Go with the winners
• Understand why you are different
• Dont lose your passion

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This is a great time to be in the industry and a
super time to realign your efforts to achieve
your maximum success in whatever market lies
ahead.