“Change is really slow, until it’s not.” I love this quote from Peter Sheahan, innovation thinker, author of Fl!p and Generation Y, and a speaker at the exclusive Mastery conference held recently in Sydney.
It perfectly captures what most of us have experienced – that disruptive innovation starts off slowly, and then like a snowball grows until before you know it, it’s out of control and steamrolling down a mountain threatening to destroy all in its path. Google, Facebook, YouTube – who knew when they first launched that they would become the behemoths they are today influencing nearly every element of our lives?
Mr Sheahan spoke eloquently not just about how the real estate agency needs to expect 'disintermediation' (when a new influence not only disrupts, but gets right into the middle of the value chain) but where it is likely to come from, and what real estate agents should do about it.
“Most of what the industry will look like in 10 years is on the fringe right now,” Mr Sheahan said, citing how now common tech such as video, social media and even the internet started out on the fringe.
The key tip he gave to help agents move from “What the??” to “How do I embrace that?” is to question your assumptions. The next time you hear a technology-based idea that makes you think “Oh, that will never take off!” and your instinct is to dismiss it, try turning it on its head. Say to yourself instead, “Ok, that’s out there! Even if I can’t see the point of it myself, what would happen if it DID work?” This will help you identify potential outcomes that can disrupt your business – and get a feel for how you CAN start to prepare yourself.
Below is Mr Sheahan’s take on the options real estate agents will face/are facing as disintermediation takes hold.
What are those market forces causing disintermediation? Well, it’s the ease and support that vendors now have in selling their own properties with the rise of online websites and web advertising services.
It’s the access that buyers and sellers these days have to property data and background that informs their decisions which means they no longer need to rely on a real estate agent as their exclusive source of information.
It’s the fact that 70 per cent of purchase decisions are made today before you take steps to buy or contact someone through our ability to check out the social media profile of agents and create a shortlist before agents even know you are thinking about moving. And it’s the expectation by vendors and sellers of increased communication from agents, higher levels of service, and an easier and faster buying and selling process.
All of these things are pushing into the real estate agent value chain, meaning that agents who want to offer a middle of the road service for a middle of the road commission are going to find the going increasingly very, very tough.
Mr Sheahan’s advice is that there are three main ways forward. Either go niche and offer a premium service focused on excellence and expertise that cannot be easily replicated (which justifies higher commissions) or go mass, which is to turn over thousands of properties at cheaper commission levels but higher volume. Think of it as David Jones versus Target.
Alternatively, the middle ground is to look at options other than straight sales commissions to earn income from what you do – that is, clip the ticket on every property you sell by helping homeowners disconnect and connect services, or offer services such as cleaning, gardening and maintenance through preferred supplier arrangements (feel free to get creative).
There are multiple ways RP Data provides agents with the tools to execute either a niche or a mass strategy. Features in RP Professional such as territory builder allow agents to really drill down into micro territories and understand every inch of an area while access to local suburb performance data can be incorporated into newsletters, social media and blogs to empower conversations with buyers and sellers. For those pursuing mass, our Marketing Direct product offers the most compliant direct mailing and call database to agents allowing you to send addressed mail. It can be filtered to target long-term homeowners, renters, potential landlords and a host of other deep dives.
Increasingly, smart agents will probably look at combining either services and niche, or services and mass options as fourth and fifth options. This is probably a fringe idea at the moment moving slowly, but who knows, it could start snowballing soon! Best start preparing for the disintermediation now!
Kylie Davis is the Head of Real Estate Solutions at RP Data. She joined RP Data after nearly four years as Network Editor of Real Estate at News Corp Australia creating a national desk of real estate reporters across more than 100 titles, training them in the use of data and market journalism. She has a 25 year career in media across News and Fairfax, and as a 20-something was the founder and publisher of hyper-local newspaper The Village Voice. Follow her @RPData_KylieDavis