by Michael E. Parker

In
a dynamic and stimulating presentation given at the Association
Executives Institute Conference February 19 in San Diego , Blanche
Evans, Editor of Realty Times, woke up many in the audience with her call to action. Ms. Evans presentation, entitled: The Conspiracy to Put You Out of Business and How You Can Help Your Agents & Brokers Win The Commission Game pointed out the daunting list of challenges facing NAR® and the real estate business.

Ms.
Evans also successfully communicated her view that the real estate
business is in the throes of change, and she presented her action plan
for the industry. She also pointed out that the public perception of
real estate professionals is disheartening, and urged a proactive
effort by every broker and agent to educate the public about the
benefits of using a professional and tech savvy agent. No arguments on
any of that from me.

I started thinking about it
all: about how the Internet has been a major agent of change, about how
third parties perceive openings for leaner and more feature-laden
competitors,

about how the public misperception
is that all realtors make gazillions (while being ignorant of the
average realtor income; $48,000), and how the only true reality in life
is that change is constant. I then lit a joss stick and began chanting.
(Just kidding!)

The question for each of us is: Are
we going to sit here and quiver in fear while change happens, or are we
going to be an agent of positive change and take the best that third
parties have to offer and use our superior knowledge of the business to
make us stronger and more successful?

Can an online
home-valuing service ever be as accurate as a local on-the-ground agent
who knows the town, the market, and the property? No. Can an online
brokerage ever replace a professional real estate agent? No. Is the
growth of social networking (My Space, YouTube, Zillow, Trulia, Craig’s
list, Point2 NLS) a bad thing? No. Why? Because all these things
present opportunities for agents and brokers committed to adapt. Isn’t
that the very essence of the promise that brought our families to North
America in the first place? Hasn’t the North American business model
always been about efficiency and merit (vs. the European model of
connections and blood line)? Nothing has changed at its core, only the
methods of delivery of services and of managing information have
changed.

One of the points Ms. Evans stressed was
governmental action against MLS and the business as a whole. This
doesn’t look to be going away for the simple reason that someone in
government has decided that the model should change, probably prompted
by lobbyists for certain companies who would benefit from that. There
is no doubt that—as our President might say—”mistakes have been made”
when it comes to trying to keep out �discount brokers” “Online
brokerages” or combinations of the two. The DOJ is all over the
NAR®/MLS because the industry has tried to cling to an ancient
exclusionary model as a way of dong business and plenty of people
complained. Refusing to show properties listed by a discounter is
probably one of the single biggest things that got government to even
look at this industry. Trying to exclude anyone from the marketplace by
improper conduct will always cause government scrutiny, when it is as
widespread and in a industry that is so universal to all consumers.

The
banks want in because of the MONEY. As banks have lost one formerly
safe portion of their business after another, they seek new sources of
reliable revenue. The last time this was tried, the S & L crisis
destroyed a good portion of the thrift industry. Back then, Savings and
Loans, Commercial Banks and Savings Banks couldn’t wait to develop
property in partnership with others. There was too much money chasing
too few solid opportunities and a glut ensued that kept the country in
the tank for years. The government agency charged with fixing that
problem then compounded it by closing institutions and putting vast
amounts of property on the market all at once. This is what happens
when government enters a business: nothing good results. Open and fair
competition is the way to deter government intrusion, not by excluding
or demeaning competitors.

Third party providers are
chipping away because they perceive that they can better help the
individual agent and broker market themselves and their property, and
in many cases, they are right! Every business evolves and that includes
the business of selling real estate. As information management
continues to open broad opportunities for every business, so too it
opens opportunities to creative minds and businesses. That is natural
business evolution and we all know it is inevitable. Trying to protect
our position through rules and policies will never be as effective as
protecting our positions because we are the best purveyor of services.
No matter how good the run was, it is time to get with the 21 st
Century and change business models. No longer can the fees to run a
huge bureaucracy simply accrue without competition; no longer can
exclusionary policies be relied upon to protect our business. It’s
about information, folks, and in this age, anyone and everyone has it.
Now it’s about taking back your intellectual property: your listings,
your connections, your knowledge and using it and technology to out
perform your competitors.

The more I considered Ms.
Evans call to action, the more I wondered if any of these developments
(save government intervention) were as scary as they might first
appear. Not being a lawyer or a banker, I did not inquire of them what
their view was. Not being a member or a Board of Realtors, I didn’t go
there, either. Because I am somewhat knowledgeable about online
marketing, I decided to inquire as to what the third party marketing
movers and shakers thought. After some thinking, I called Point2
Technologies, one of the third party providers developments cited in
Ms. Evans presentation and one of the largest purveyors of marketing
platforms and websites to real estate professionals, with over 110,000
customers. I asked a lot of questions and I learned about their NLS
system,. Were they a competitor to be feared, or an ally to be embraced?

After
talking to many people in the management chain, it was Brendan King,
COO of Point2 Technologies Real Estate business, who put the company’s
philosophy into the following bullet points for me:

• “Point2 NLS is for real estate professionals only;
• We created it to promote and enhance the value of ‘organized real estate’
• We
  designed NLS as a device that gives back to agents and brokers
  ‘complete control and choice’ of their most important marketing asset
  (the listing) by the assets owners (Broker/Agent). Choice with respect
  to whom with, when, and where they advertise these assets;
• NLS
  is strictly an advertising and marketing platform. It is not designed
  to compete with the MLS, but to provide complementary services;
• Through
  NLS, we can also offer services to a large set of MLS that cannot
  afford them while working along side the MLS that can afford to provide
  them; and,
• Point2 NLS is not consumer-facing;
  it allows professionals to efficiently advertise their listings on
  other member sites of their choice, and to syndicate their listings to
  15 popular third party consumer search sites, also if they choose to,
  with no intermediaries, and to receive all leads directly from those
  postings. Consumers cannot search directly in Point2 NLS, only licensed
  real estate professionals can.”

I
must admit that after researching these points and carefully thinking
about them, I see no threat, only a great opportunity for agents and
brokers. That perception was reinforced when I learned Point2′s mission
statement: � �We create innovative technologies that empower our
customers to lead their field.� . Hmmm. I found nothing scary or
undefeatable in that or in any cited third parties arsenals, either. I
think it’s s simple case of the cheese being moved. Whenever the cheese
is moved or when the �game� changes, we all go through the cognitive
dissonance that comes with adaptation, but we all manage to adapt,
somehow, and that is true now, too..

For a long
time, any reasonably competent person could make money in real estate,
and almost any one with a license could sell real estate. I personally
think that’s one reason we have too many agents: this is a business
with too many part-timers who are either inactive or maintain very
little activity, yet compete with full time professionals for listings
and sales—usually with family or friends. I once wrote a column about a
California county with 5500 homes sales last year and 5500 realtors
licensed. Currently, there is one licensed realtor for every 125
Americans. Do we really need that many realtors? I personally think
some kind of performance standard should be a condition of maintaining
a license, but that is another column, entirely

The
market is still subject to further bad things. Where is it written that
the Federal Reserve will keep interest rates artificially low
indefinitely? Where is it written that we won’t have a repeat of the
1970′s oil crisis? Heaven knows the Mideast is not the most stable
place in the world—isn’t another mess likely there3? What effect will
that have on home prices? The collapse of the sub-prime mortgage
business was faster than its rise. It’s going to be a lot harder to
sell homes with 80-20 financing and no money down. Whenever a segment
of the financing business takes a hit, it is customary to see a rise in
costs to earn the hit back. From all accounts, this is one heck of a
hit. Where is it written that just as prices are undergoing a
correction, financing won’t also? There are about 30+% of our
population for whom home ownership is becoming out of reach. When do we
get worried? When that percentage hits 50%?

All
business is dynamic; that is, constantly in a state of flux and
changing. Real estate is no exception. In boom times, the needle sways
toward large profits, huge incomes and more buyers than homes for sale.
Reality is different The Law of Supply and Demand is as valid today as
when Adam Smith first coined the phrase. When it comes to buyers,
there’s more demand than supply; when it comes to realtors, there’s
more supply than demand. Correction is inevitable and it is also
permanent: craziness is always supplanted by reality; just think of
your college days!

You can either fruitlessly look
for NAR® to protect the status quo or you can stop being in denial and
face reality: with technology and fabulous tools that challenge the way
that the real estate business has been done for the past 60 years.
Agents and brokers are now better equipped and qualified to profit and
prosper. Some business models and conventions are going to need to
change. But they will change and those who change with them will still
be on top regardless of how the business model changes.

There
are all kinds of profound statements that have been made concerning the
need to adapt or die. One doesn’t need a Ph. D. to know what the
situation is today. In trying to cope with it, I always fall back on
this statement by professional Hockey’s greatest scorer: “Some people
skate to where the puck is. I skate to where the puck will be”, Wayne
Gretzky famously said. Learn from the past but focus on how to win the
future.

Go to where the business is going to be.