D.A.N.G.E.R Report
/D.A.N.G.E.R. Report
(Definitive Analysis of Negative Game changers Emerging in Real estate)
The GNAR released this report, that was prepared for NAR by the Swanepoel/T3 Group, a couple of weeks ago. It’s 166 pages long, so I don’t suspect that you took time to read it – and I don’t expect that you will do that now either. But I thought it would be good to provide you a summary of what the report says, or at least hit what I perceive as the high-lights that impact us directly as agents. The full report is available by clicking the link below. The purpose of the report, which was done by interviewing many of the top industry minds, is to give us a description of what are to be the challenges (or “threats” to use the report’s term) that we’ll face in real estate in the years to come. It addresses threats to Agents, Brokers, Associations, and the MLS. There are 10 listed for agents directly. I’m going to high-light what I think are the top five and some suggestions to counter the threats.
- Masses of Marginal Agents Destroy Reputation – the real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry. This one hits close to home for me because I’ve seen it in the mortgage industry as well. All it takes is the notion that there is an easy buck to be made doing something and everyone wants to do it. As a group, we need to make it harder for individuals to enter our profession. That alone would cut down on the people entering just to make “easy money”. The other thing we can all do as individuals is differentiate ourselves with better knowledge and service platforms. The better I am at what I do, the less likely I am to lose business to those that are marginal – even if the marginal competitor happens to be friends with the client.
- Commissions Spiraling Downward – a variety of powerful forces exert significant downward pressure on real estate commissions. Discount brokers are becoming more and more commonplace. With the availability of information that is now at the consumer’s disposal, we have to do more today to earn our commissions than ever in the past. If we don’t start thinking outside of the box, and creating value to provide our clients, then what we give them will become worth less, and we don’t deserve the commissions we are paid.
- The Decline in the Relevancy of Agents – the role, function, and perceived value of agents deteriorates as agents fail to properly assess and respond to changing consumer demands and expectations. Whether it is dealing with new technology or with what the different generations want from a home, it is our job to be relevant and needed. We will only become obsolete if we let ourselves become so. What is your value proposition to your client? Are you trying to do business today like you did 10 years ago? Staying relative is a conscious choice and one we must all make if we want to see our businesses progress.
- Commissions Concentrate Into Fewer Hands – a very small group of very efficient and effective agents discover the winning formula and secure a disproportionate market share. Everyone is familiar with the 80/20 Rule, where 20% of the people do 80% of the business. To me, this is a concept that has been around forever and will continue to be so. I think the bigger question here is simply: What are we doing individually to be in the 20% that is closing 80% of the deals? Emulate those that are already there. No need to reinvent the wheel – learn from those that are where you want to be.
- The Agent is Removed From the Transaction – a tech company cracks the code and connects enough of the dots to conduct real estate transactions without the need of an agent. FISBO’s have always been a part of our business. There are always going to be those that think that selling on their own is a more cost efficient manner of selling. And while we might think that the Millennial Generation, who are more technologically advanced than any before (and more than most real estate agents), would make this number grow, I would argue, as the report does to a degree, that they are in more need of help, primarily because of their financial situation, than any generation before. They need guidance more than anyone. We just need to understand that and create a service platform for them that meets their need. Again, it is about being relevant to the client.
The other threats to agents listed in the report were: Agent Teams Threaten the Survival of Brokerages, The Agent-centric Era Ends, The IRS Forces Exodus of Independent Contractors, The Housing Finance System Fails, and The Commoditization of Residential Real Estate. These are all definite threats to our individual businesses going forward. But to a large degree, they are things that are out of our individual control. Not that we can’t make an impact – like voting in an election. But the reality is that by myself, I can’t keep the housing finance system from failing nor can I keep an institutional investor from coming into Nashville and buying up 100+ homes to rent. But I can all focus on how well I am doing my job – Are we up to date technologically? Do we understand the latest rule changes that impact our clients? Are we communicating well? Do we give exceed our client’s expectations and do we even know what they are? And most importantly – Am I doing all of these things better than my competition? When we focus on getting better ourselves, the rest takes care of itself.
https://s3.amazonaws.com/dangerreport.com/Danger+Report+-+Item%23E135-107.pdf