Swanepoel Trends Report

1
Swanepoel Trends Report

• 2007

2
10 The Hangover Declining Market Too many
agents Broker Impact
3
10 Too Many Agents

• NAR Membership
• 2000 766,000
• 2003 976,000
• 2006 1,364,000

• CAAR Membership
• 2000 775
• 2003 1000
• 2006 1200

4
10 Factoid

• The Average agent did fewer sides in 2005 than in
  2000.
• Membership expected to drop to 1 million

5
10 Impact on Broker

• Average commission has dropped from 6 to 4.9
• Commission splits are higher
• Overhead has increased (technology)
• Net profit declined 45 from 400 to 219 per
  transaction
• Declines covered by higher home prices

6
10 Question?

• Did we learn anything?
• Are we ready to embrace change?

7
9 NAR Extinction or Evolution
8
9 Association Membership

• Membership is expected to Decline
• History says membership adjust to 6 sides per
  member.
• CAAR had 7.22 sides per member in 2006

9
9 Association Leadership

• Need clear understanding of new environment
• Must change from protectionism and become
  committed to meet the membership where they need
  it most the environment they operate in
  everyday.

10
9 Quote

• Failing to make a decision (to change) is simply
  not an option the market will make one for
  you.
• (Swanepoel Report)

11
9 To Five Issues for Associations

• Future of the MLS
• New business models
• Declining commissions
• Changing membership profile
• Impact of technology and the Internet

12
Association Todo List

• Engage young members
• Supercharge government affairs
• Develop non-MLS identity
• Support brokers in a continuously unstable
  environment

13
8 The Tipping Point Rise of Minorities
Global Market Role of the Association
14
8 Minority Clients

• Minorities could account for 60 of all first
  time buyers over the next 5 to 10 years.
• (According to HUD and Fannie Mae)

15
8 Role of the Association

• Minorities are under-represented in the
  membership and on committees
• Recruit minority agents into the business

16
7 The Race Is On
17
7 The Rise to Franchise

• Top 5 Current Franchises
• Caldwell Banker
• Re/Max
• Century 21
• Prudential
• Keller Williams

18
7 The Rise To Franchise

• Top 5 NEW Real Estate Franchises
• Exit
• Help-u-sell
• Weichert
• Sothebys
• Avalar

19
7 Branding and the Internet

• Top 5 On-line Real Estate Brands
• www.Realtor.com
• www.Zillow.com
• www.HomeGain.com
• www.Trulia.com
• www.HouseValues.com

20
7 Waves of the Internet

• Portals
• Tariff Way sell back to REALTORS
• Vertical Search aggregate without permission
• Portals revisited

21
7 800lb Gorillas

• The Original IBM
• Second Microsoft
• Latest Google
• Next - ????

22
6 Young, Daring, and Smart
23
6 Young, Daring, and Smart

• We are in generational transition
• Boomers nearing the end of careers
• Gen X and Y are taking over
• 38 of homebuyers in 2005 were under 35
• Big difference between REALTOR demographics and
  homebuyer demographics

24
(No Transcript)
25
6 New Face of Real Estate

• YouTube
• FaceBook
• Blogs

26
6 Quote

• Generation X and Y are growing up with a poor
  perception of the real estate industry.
• They believe they can and should fix it.
• (Swanepoel Report)

27
5 The Swinging Door
28
5 Quantity vs Quality

• With the expansion of the number of REALTORS,
  the level of competence has fallen to the lowest
  point ever.
• John Tuccillo

29
5 Factoid

• 85 of those entering the business have no sales
  background half leave the business in the first
  year.

30
5 Things to Consider

• It is not ethics that ruins the reputation of
  REALTORS it is bad service
• 75 of consumers think they would benefit from
  seeing REALTOR ratings from previous customers
• VAR Partnership with Quality Service
  Certification (QSC)

31
4 Chasing the Consumer
32
4 Chasing the Consumer

• Marketing's Move From Ink to Link
• Advertising is moving to the Web
• New Tools New Rules
• The New Social Committee

33
4 Whats Here, Whats Next

• Here
• Blogs
• Single Home websites
• YouTube (60 of all Internet traffic)
• Myspace
• Next?
• Live video Reality Real Estate

34
4 Factoid

• Google purchased an unprofitable YouTube for
  1.65 Billion and their market value jumped 5
  Billion.

35
3 Web 2.0
36
3 Web 2.0

• Next Generation Internet
• Web 2.0 is not really about software rather it
  is about thinking and acting differently on the
  web.

37
3 Web 2.0

• Requires new thinking, not new software
• Web 1.0 is like going to the library easy to
  understand/normal
• Google is the embodiment of Web 2.0

38
3 Web 2.0

• Old Rule
• Create and hold information to create value
• New Rule
• Share information and collaborate to create value

39
3 Web 2.0

• Mashup
• A website or application that seamlessly combines
  content from more than one source into an
  integrated experience

40
Web 2.0

• E-mail is dying
• Too slow
• Too junky
• Not interactive
• Replaced by Facebook, IMing and Texting

41
3 Web 2.0

• Who to watch
• Google
• Zillow
• Trulia
• Craigslist
• These sites dont just provide information, they
  create a customer experience

42
3 Question

• Will Web 2.0 empower REALTORS to provide a
  better, more professional customer service
  experience, or will it reduce, or even remove the
  role of the listing agent?

43
2 The Perfect Storm

• Everyones out to get us!
• DOJ and FTC
• Wall Street Journal
• Google
• Aggregators
• FSBO Sites

44
2 MLS Evolution

• MLSs have evolved into public utilities
• MLSs have boundaries that dont match the
  markets they serve

45
2 Internet Sharing

• Music Sharing (Limewire)
• Friend Sharing (MySapce)
• Photo Sharing (Webshots)
• Video Sharing (YouTube)
• PowerPoint Sharing (Slideshare)
• MLS Listing Sharing (????)

46
2 MLS Consolidation

• 1 concern for REALTORS
• 1 market 1 MLS
• Data to be standardized
• Universal Access by all REALTORS
• Rules consistently enforced

47
2 Question

• Some sort of national MLS will happen. Will the
  REALTOR organization create it or will it be
  created by Google or some company yet to be
  invented?

48
1 Paradigm Power
49
1 Paradigm Power

• The Proliferation of New Business Models
• The natural resistance to change, fueled by the
  unparalleled success of recent years, has kept
  the status quo in control. It appears that is
  about to change.
• Dave Phillips

50
1 Existing Brokerage Models

• Residual or Annuity
• Agent owned
• On-line
• Auction
• Multiple Level Marketing
• Flat Fee
• All Embracing (on-line/off-line combo)
• Outsiders (Walmart, Google, Bank of America)

51
1 Question

• Swanepoel believes the real estate professional
  will survive, but not in its current form. Will
  we seize the opportunity to create our new form,
  or will we let the marketplace create it for us?