Brokers - Consumers In Charge
This article was published on: 03/01/2007
http://www.realtor.org/rmomag.NSF/pages/innovatorseriesmar07?OpenDocument
INNOVATOR SERIES: Brokerage Roundtable
Much of a REALTOR®’s life focuses on the present, what it takes to succeed today, tomorrow, or next year. But if you expect to build your business for long-term prosperity, you have to explore what the industry might look like in the future. REALTOR® Magazine’s 2007 Innovators Series lets you sit in on four freewheeling discussions with some of the industry’s thought leaders in brokerage, technology, marketing, and customer service. Find out where the sharpest minds in the field think the industry is going. And then you can get there first.
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Brokers: Consumers in charge
BY ROBERT FREEDMAN
If the last 25 years of the 20th century were the years of the salesperson, Internet powered consumers have made it clear that now it’s their turn. How brokerages balance the agent centric present with the consumer-focused future may determine how they survive, agreed residential real estate leaders in a wide-ranging roundtable discussion on industry innovation recently hosted by REALTOR® Magazine.
“The future is about the value proposition you bring to your associates and the value proposition you bring to the consumer,” said Bill Evans, president of Ohio operations for Real Living, during the roundtable.
Being consumer centric today means being willing to instantly gratify your customers’ appetite for information about listings, communities, mortgages, and other services necessary to the transaction. At the same time, brokers acknowledge, companies need to support their sales associates with the training, resources, and one stop settlement services that enable them to concentrate on the value added services that consumers want.
Consumer centrism is also driving brokerage leaders to look with fresh eyes at industry fixtures such as the MLS and REALTOR.com. Those assets could be marginalized if they don’t evolve to look more like the online search sites that information-hungry consumers are making so popular, said participants during the roundtable.
REALTOR® Magazine convened the roundtable of some of the nation’s most innovative and successful brokers to get their views on where the real estate business is headed in the future. We asked them for their thoughts on the future of the MLS, what it takes to be profitable today, and whether minimum service standards are necessary.
Discount brokerage
REALTOR® Magazine: With the housing boom behind us and with customers looking for more marketing from their salespeople, do you think the growth we’ve seen in alternative business models such as limited-service brokerage will slow?
Bill Evans: I do see consumers coming more to full service brokerages today than they were when the market was heated. Still, there’s room in the market for all players. 
Lyle Martin: There needs to be a third category between full service and limited service brokers: discount full service. What we’re finding is that sellers need to be very competitive on pricing today. The full service discount model combines professional real estate services with a lower commission, which equates to sellers having the opportunity to price their home competitively.
Dave Jenks: The discount brokerages have tried to position the industry as rigid on commission structure and as high priced, yet our research indicates that rigid pricing isn’t true. Pricing isn’t the issue. Most people continue to look for service they can trust and for associates with a good reputation.
Evans: I’m reminded of what’s sometimes the problem with discount brokerage models: They give consumers the feeling that the only issue is pricing. But that’s not the only issue; consumers need associates with expertise in marketing, negotiating, and understanding the transaction.
Sharianne Daily: I agree that success in the slower market has nothing to do with pricing. Consumers want a trusted adviser. They already have the ability to get their information on the Internet. We need to offer something of relevance to them, and we have to tell them what they can expect by working with us. We need to be bold enough to put those expectations in writing. We need to have service standards.
Minimum service standards
Martin: That’s a hot potato, but I’ll jump on it. Legislating minimum services such as a brokerage’s obligation to present offers or negotiate contracts is the wrong direction for the states to be taking. Consumers will decide whether discount models work. We don’t think the limited service models will survive in the long run. Quite frankly, the level of services that are delivered varies so widely from associate to associate within one office, and from office to office, that once we start legislating services, we’re going to regret it [the floor on minimum standards might continue to be raised].
Matt Carroll: I agree with Lyle [Martin]. The marketplace will dictate the proper level of service, with consumers saying, “These are our baseline expectations.” All of us, limited or full service, have to exceed those expectations, or we won’t survive.
Jaren Davis: Minimum standards aren’t intended to keep an industry from having varied services. They’re intended to help ensure that consumers have a basic understanding of the services they’re getting. Without minimum standards, sellers working with an MLS entry only broker naturally look to the buyer’s representative, as the only licensee in the transaction, to get questions answered. But that professional has a fiduciary duty to the buyer. With standards, sellers at a minimum are ensured they have a professional to rely on for advice. It’s not an effort to do away with competition legislatively.
