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Originally presented at the ORRA Broker Summit by Jeremy Conaway. October 10, 2012.
Citation preview
202012 ORRA Chair Stephen Baker
Chapter 1.
The Why of Today
The American real estate marketplace, industry and transaction is currently being
impacted by a number of demographic, generational, economic, technology and
informational forces.
But even as these forces continue to erode and invade your business and market spaces there is another more insidious factor at work out
there. There are individuals and entities from outside our industry who are aware of its
potential over the next several years and the possibility, indeed likelihood, that you will
choose not to respond to the trends, directions and forces that are currently realigning our
industry’s dynamic.
While there is adequate evidence to document the current impact of these forces
no consensus has emerged with respect to when they will generate sufficient
momentum to force a fundamental change in the traditional industry.
As the monitoring of these forces continues and the intensity of the conversation
increases it is essential to keep in mind that it takes 24 - 36 months to introduce and
implement meaningful institutional change
What Do We Know Today
• The consumer is in command• Agents are not transitioning into the new reality• Third party Internet firms are gaining ground• The consumer is being attracted by 3P• Brokerage profits from commissions are minimal• Brokerage values are lowest in years• There are no buyers for traditional brokerages
Where do we start?
The immediate challenge for the brokerage community is to learn as much as possible regarding the forces in play, monitor these
forces in their local marketplace and, at every opportunity, engage in the discussion relative to how they are likely to impact the
industry and the marketplace.
When do we start …
In other words, we start today!
This is a Broker Summit …
• It is not an association meeting• It is not a United Nation’s meeting• We are not here to be fair• Today we are focused on just one thing
• The Success of Your Brokerage Moving Forward
As brokers your primary concerns should be being able to …
• Be proud of your business and reputation• Manage your business asset in the right directions• Generate a market level profit and ROI• Present a successful consumer value proposition• Sell your brokerage when the time comes
Anything that stands in the way of these objectives is unacceptable!
The elephant in the room
The Contemporary Consumer
Chapter 2
Consider the impact of the rising power of the contemporary consumer.
The Contemporary Consumer
The REALTORS® and the consumers of the Orlando area are playing out a story. What we don’t know is whether it is a romantic story that will have a happy
ending or a comedy which will end in a tragedy. What is clear is that they are not communicating.
Tell us a story …
This is Orrie, he is a REALTOR®
This is Connie, she is a consumer
A real guy …
Orrie is a high performance agent:
• He has over 25 years experience• He sells over 5M annually• He has been trained to be in
control• He is a time managing machine• He prides himself in being able to
do ten deals at the same time• He loves to terrorize his broker
The contemporary consumer …
This is Connie• She is into social media• This is her first transaction• She has spend over 100 hours researching for her purchase• She considers herself to be in charge of her transaction• She has a clear idea what role her agent should take• She wants to have a warm and positive experience
Conny Orrie
• Engaging
• Warm
• Complex
• Distant
• Searching
• Multi-faceted
Believes all information is available and free
Expects to be able to validate information & people
Wants to remain anonymous as long as possible
Conny
Can you tell me everything about the home and area?
I can tell you how many homes there are for sale!
Can you help me find a place to live?
I can tell you how many homes there are for sale!
How long has this home been for sale?
It has 3 Bedrooms!
What is it's history? Has it been listed before?
It has 2.5 Bathrooms!
Can you show me how this home's price compares to other homes - for sale, that have sold. or are just nearby?
It has 2300 SQFT! Call me for more information
Romance
or
Comedy?
What’s happening out there …
The current market environment is marked by a growing level of disconnect between the traditional
agent and the contemporary consumer. Increasingly when Orrie and Connie get together
the sparks fly and we don’t mean romantic sparks. This situation can not be allowed to continue.
Who is the best agent around here …
Example #1:
Consumers want to know who the best agents are in terms of production and
neighborhoods. Way too many traditional brokerages are refusing to be transparent
“I want more information …”
Example #2The contemporary consumer has an insatiable appetite for very specific
inventory related data. By and large agents are refusing to provide it
What exactly do they want …
What about lifestyle information …
Example #3
Today’s consumer wants to talk about lifestyles and quality of life issues. The vast majority of agents are only prepared to discuss bedrooms,
baths and prices. This is contributing to the growing gap between the contemporary consumer,
especially within generation “Y,” and brokerages.
What does lifestyle mean …
• What about the schools• Where is the nearest decent golf course• Do airplanes fly over here• Where can I find organic vegetables• Where is the nearest synagogue• Who lives in this neighborhood• Is this neighborhood “walkable”• Are there babysitters around here
Example #4
Today’s consumer (especially the 40% that will be forced by circumstances to live in a rental for the next few years) wants to talk
about issues and options that compare ownership and rental options. Too many agents see this discussion as a threat to home ownership and refuse to engage.
Where are they getting it …
They want TM …
Example #5
Many contemporary consumers want to enjoy the benefits of transaction management so
that they can track their transaction. Very few brokerages in each market offer this service.
What’s the big deal with TM …
During this presentation we will make the case that Transaction Management is the
single most important process in real estate today. It is and it will be the gateway to the
new brokerage business model
KWI does TM …
92% want TM …
I need to know now …
Example #6
More and more consumers are asking that communications with their agent occur using
smart phones, i-Pads and other mobile devices with messages being delivered now.
Too many agents are responding that they will call after their regular day is over.
Is there a problem …
What’s the problem here?
Could it be generational …
Some experts suggest that what is happening here is that boomer agents
believe that they can control the marketplace by not accommodating the
unique and well identified expectations and demands of Generation “Y”
Wow! Big difference …
Could it be …
Other’s suggest that there a sense within the brokerage community that its future rests
with the aging agent population rather than the contemporary consumer?
Here are some of the companies that the contemporary consumers are forming
relationships with. Among other things each has a strong company directed consumer
experience. Which of these serve as a model for your brokerage?
Who is your customer …
How is Orrie doing …
• He wants to be the center of the transaction• He wants to sell not connect• He thinks lifestyle is for girls• He doesn’t want TM to let Connie know he
screwed up• He hates the idea of agent rating• He doesn’t believe Connie needs to know
everything.• He doesn’t believe that real agents do
rentals• Communication is not his priority• What in the heck is a consumer experience?
What happen to Connie …
Not to worry about Connie, she found what she was looking for
What does the market tell us …
Chapter 3.What is the Orlando regional real estate market
telling us?
ORRA CEO Michael Kidd
1
2
Your Association
The Orlando Housing Market
By the numbers: ORRA and Orlando
Your Association
REALTORS®6,752 members (77.73%)
Designated REALTORS®
1,934 members (22.27%)
ORRA REALTORS® & BrokersAs of September 2012: Total Membership of 8,686
Mega Board: 7,000+ members
Large Board: 2,000-6,999 members
Medium Board: 500-1,999 members
Small Board: 499 or fewer members
Mega Board: 7,000+ members
Large Board: 2,000-6,999 members
Medium Board: 500-1,999 members
Small Board: 499 or fewer members
NAR Board Size DesignationsNAR Board Size DesignationsNAR Board Size DesignationsNAR Board Size Designations
ORRA is a Mega Board8,686 ORRA members
Primary: 6,684 Secondary: 35 Responsible
Managers: 33
Total 6,752
Primary: 6,684 Secondary: 35 Responsible
Managers: 33
Total 6,752
Primary: 1,749 Secondary: 185
Total 1,934
Primary: 1,749 Secondary: 185
Total 1,934
Designated REALTORS® Designated REALTORS® Designated REALTORS® Designated REALTORS® REALTORS® REALTORS® REALTORS® REALTORS®
ORRA Membership by Type8,686 members
ORRA Membership by Member DurationORRA Membership by Member Duration
Years of MembershipAlmost 45% of members have belonged to ORRA for less than 5 years
Less than 1 2-4 5-9 10-19 20-29 30 or more
20.78%
24.08%
31.94%
15.10%
6.50%
1.59%
ORRA Member Offices by SizeORRA Member Offices by Size
Office SizeMore than half of ORRA member offices are one-person firms
1 2-4 5-9 10-24 25-49 50-99 More than 100
51.68%
32.39%
7.92%4.06%
1.33% 0.95% 1.66%
ORRA Membership by AgeORRA Membership by Age
ORRA Membership by AgeMore than 77% of ORRA’s membership is 40 and over
Under 30 30-39 40-49 50-59 60 and over
4.96%
18.10%
28.60%26.86%
21.48%
Males: 52.0%
Females: 48.0%
ORRA Membership by GenderAs of September 2012: Total Membership of 8,686
Top 5 DesignationsTop 5 DesignationsTop 5 DesignationsTop 5 Designations
Designations11.4% of members have at least one designation
Top 10 DesignationsTop 10 DesignationsTop 10 DesignationsTop 10 Designations
GRI 757 55.05%
ABR 184 13.38%
CRS 143 10.40%
CIPS 58 4.22%
CRB 29 2.11%
SRES 28 2.04%
CCIM 24 1.75%
AHWD 23 1.67%
E-PRO 20 1.45%
GREEN 20 1.45%
GRI 757 55.05%
ABR 184 13.38%
CRS 143 10.40%
CIPS 58 4.22%
CRB 29 2.11%
SRES 28 2.04%
CCIM 24 1.75%
AHWD 23 1.67%
E-PRO 20 1.45%
GREEN 20 1.45%
Designations
Agents with One or More Sales in YearAgents with One or More Sales in YearAgents with One or More Sales in YearAgents with One or More Sales in Year
ORRA Agent Sales
Avg. Total Membership
Percent of Membership
2007 8,039 12,094 66.47%
2008 6,508 10,028 64.46%2009 7,636 8,773 87.04%2010 7,935 8,607 92.19%2011 7,532 8,273 91.04%
YTD 2012 6,661 8,187 81.36%
Sales per agent (2007 – YTD 2012) Sales per agent (2007 – YTD 2012)
ORRA Agent Home Sales
1 sale 2-4 sales 5-9 sales 10+ sales0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
48%
39%
11%
2%
33%
40%
20%
7%
2007 2008 2009 2010 2011 YTD2012
Percentage of selling agents by number of sales
The OrlandoHousing Market
Orlando InventoryOrlando Inventory
Orlando InventoryOrlando inventory decreased 19.16 percent since August 2011
8/04 8/05 8/06 8/07 8/08 8/09 8/10 8/11 8/12
3,940 5,532
21,077
26,313 24,834
16,361 16,535
10,055 8,128
Orlando Home Sales (2007 – YTD 2012) Orlando Home Sales (2007 – YTD 2012)
Orlando New ListingsAnnual number of new listings by price range
$1 $150,000‐ $150,001 $250,000‐ $250,001 $500,000‐ $500,001 +0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
9,654
29,381
29,882
7,786
21,626
8,271
4,839
1,752
2007 2008 2009 2010 2011 YTD2012
Orlando Home Sales (2007 – YTD 2012) Orlando Home Sales (2007 – YTD 2012)
Orlando Home SalesAnnual number of total home sales by price range
$1 $150,000‐ $150,001 $250,000‐ $250,001 $500,000‐ $500,001 +0
5000
10000
15000
20000
25000
30000
219
317
146 22
10,796
2,215 685
143
2007 2008 2009 2010 2011 YTD2012
Orlando Normal Home Sales (2007 – YTD 2012) Orlando Normal Home Sales (2007 – YTD 2012)
Orlando Normal Home SalesAnnual number of normal home sales by price range
$1 $150,000‐ $150,001 $250,000‐ $250,001 $500,000‐ $500,001 +0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2,700
8,137
7,606
1,785
5,873
3,313 2,017
563
2007 2008 2009 2010 2011 YTD2012
Orlando Distressed Home Sales (2007 – YTD 2012) Orlando Distressed Home Sales (2007 – YTD 2012)
Orlando Distressed Home SalesAnnual number of distressed home sales by price range
$1 $150,0001‐ $150,001 $250,000‐ $250,001 $500,000‐ $500,001 +0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
219
317
146 22
10,796
2,215 685
143
2007 2008 2009 2010 2011 YTD2012
Normal Home Sales (2007 – YTD 2012) Normal Home Sales (2007 – YTD 2012)
Days on Market: Normal Home SalesAnnual number of normal home sales by days on market
0-30 days 31-60 days 61-90 days 91-120 days 121-180 days 180+ days0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
5,359
3,446 2,888 2,306
3,239
2,990
5,335
1,864 1,194 794
982
1,597
2007 2008 2009 2010 2011 YTD2012
Distressed Home Sales (2007 – YTD 2012) Distressed Home Sales (2007 – YTD 2012)
Days on Market: Distressed Home SalesAnnual number of distressed home sales by days on market
0-30 days 31-60 days 61-90 days 91-120 days 121-180 days 180+ days0
2,000
4,000
6,000
8,000
10,000
12,000
170
137
102 97
107 91
6,309
2,042
1,293
971
1,130
2,094
2007 2008 2009 2010 2011 YTD2012
Orlando Pending Home SalesOrlando Pending Home Sales
Orlando Pending Home SalesPending home sales have more than quadrupled since August 2007
8/07 8/08 8/09 8/10 8/11 8/12
2,194 3,220
8,237 8,945
9,502 9,362
Short Sales: 28.82%August 2011: 32.92%
Normal Sales: 48.03%August 2011: 41.04%
Foreclosures: 23.16%August 2011: 26.04%
Orlando Home Sales by TypeNormal sales made up almost half of all home sales in August
Median Home Prices by Sales Type (2007 – YTD 2012) Median Home Prices by Sales Type (2007 – YTD 2012)
Orlando Median Home PricesMedian home prices by sales type
Overall Normal SS/BO0
50,000
100,000
150,000
200,000
250,000
300,000
$240,000 $243,000
$190,000
$118,000
$150,762
$95,000
2007 2008 2009 2010 2011 YTD2012
Average Home Prices by Sales Type (2007 – YTD 2012) Average Home Prices by Sales Type (2007 – YTD 2012)
Orlando Average Home PricesAverage home prices by sales type
Overall Normal SS/BO0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
$298,604 $301,607
$212,316
$155,161
$199,447
$117,509
2007 2008 2009 2010 2011 YTD2012
For more information, visit www.orlrealtor.com.
Contact ORRA at orra@orlrealtor.com.
Its about time …
Morning Break(We are back in 15 minutes)
Whose on line …
Chapter 4.The Rapidly Transitioning Real Estate
Internet Space: Brokerage Ally , Business Distractor or Skillful Competitor?
Let’s start by examining how the new breed of Internet based real estate companies are
doing with the consumer demands and expectations discussed above.
I want to know which agents are good …
On the subject of agent rating
Trulia does agent rating …
Yelp does agent rating …
Zip Realty does agent rating …
Redfin does agent rating …
Zillow does agent rating …
What about transaction management?
What’s the big deal with TM …
During this presentation we will make the case that Transaction Management is the
single most important process in real estate today. It is and it will be the gateway to the
new brokerage business model
Redfin does TM …
KWI does TM …
What about advanced inventory information?
Remember what they want …
NuHabitat has it …
NuHabitat has it …
Zillow has it …
Sawbuck has it …
Sawbuck has HomeSnap …
Where to get rental info …
On the subject of rental vs. ownership lifestyles
Information on the decision …
The Zillow breakeven …
The Zillow rental app …
Trulia Market Watch
Where can I live my life …
Lifestyle information
Zillow can help …
Street Advisor knows the good stuff …
Where can we walk …
We have to mention Craig’s list …
No discussion of real estate on the Internet would be complete without an honorable mention for Craig’s List. In some markets
entire teams are tasked to Craig’s List based marketing activities. It has become a skill set
of its own.
Craig’s list really works …
What about Zillow …
Lets take a close look at Zillow
I don’t work for Zillow …
This presentation is not about selling Zillow. It is about helping you, as brokers,
understand the Zillow competitive model and what it means for your brokerage.
They got listings …
They got rentals …
All the rentals …
They have agent reviews …
They have lots of consumer infor …
Zillow television ads …
They are recruiting agents …
They are providing valuable agent benefits …
Lets try it again, Zillow is recruiting …
Zillow has recruited 25,000 of
Your Agents
So what is the big deal …
Do you know what Zillow is doing with your agents?• They are taking a big piece of the commission• They are directing your agents to their consumers• They are setting standards for your agents• They are establishing a national system of
transaction coaches who will work with your agents every week
• They are telling your customers that they are better
Most ridiculous of all, your agents who refuse to cooperate with your efforts to
create systems and consumer experiences are now blindly following Zillow’s.
What does all this mean …
What should be we thinking here?
Here is the bottom line …
Lets talk about reinvention …
Chapter 5.Capital redefines Professionalism: The
Brokerage Success Formula Moving Forward
The story of the past five years …
Reason # 4 …
Because the recession happen to coincide with social, demographic, and technical developments. When the going got tough the traditional business
model couldn’t get going.
Why traditional business models don’t create value in the new environment?
• Inability to respond to current social and demographic circumstances
• Lack of management controls• Failure to employ metrics and
benchmarking• Costs of labor• Lack of accountability• Failure to be consumer centric
How are we coping …
What is the basic challenge …
A business model is a method for creating value. When a model fails to
create value it must be replaced
The traditional brokerage business model is not creating value for …
• Consumers
• Agents
• Owners
• Investors
Here is the moment of truth …
It is time to reengineer the brokerage business model!
Don’t take it personally …
• It is a “no fault” situation
• It is a huge opportunity
• Half the challenge is attitude
• You can do this
Most importantly …
Most brokers don’t have a choice if they expect to capitalize on their life’s work
Now enters the investor …
• They are with us now (Zillow, Realogy, Trulia)• The industry is cash poor after 5 years of hardship• Consider the average age of today’s broker• Consider the greatly reduced value of today’s
brokerage• Few agents want to be brokers and fewer yet have
any purchase money• Selling it to the kids has been less than successful
over the past several years• The most likely buyers may be from outside the
industry and they will need financing from investors.
What will investors require in order to provide funding for a brokerage.
• Turn key systems• Universal accountability• Effective management control over key
processes• Agent stability• Strong consumer connections• Strong business metrics and benchmarking• Appropriate market share
What to do …
Even if brokerage owners, executives and managers don’t believe any real change will
occur within the next three years what actions should they be taking between now and then?
What to do?
Even if brokerage owners, executives and managers don’t believe any real change will
occur within the next three years what actions should they be taking between now and then?
Get started on this …
Just do one of these …
Each of you has done this before …
Here is how to get started …
• Create your unique customer experience• Create standards for each experience
component• Create a system for each component• Assign responsibility for each component• Create an atmosphere of universal
accountability• Set up overview and monitoring• Incorporate metrics and benchmarking
This is what will be necessary …
• Profitability must be the central focus• Management must be in control of every
aspect of the business• Experience and personalities will not have
value equal to systems and effective management
• The firm’s consumer experience must be defined and implemented across the board
• Metrics and benchmarking must be implemented and transparent
This is no time to go solo …
This is a time to think about collaboration, cooperation and competition. Remember, your new competitor is probably not sitting
in this room today. Think about this.
The other side of the story …
As your brokerage community searches around the industry for friends and allies it
may be surprised to discover that those that it thought it could depend on may not be
there. Most franchisors are not in a position to assist with the development of new
solutions. They are either without sufficient funding, imagination or they have committed to global development.
Your REALTOR® association wants to be part of your solution. It has the resources, the
staff and the guts to get you there.
Give it some thought
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