The real estate industry is changing and it’s going to have huge consequences for Buyers, Sellers and real estate agents. Today, I bring out my crystal ball and share what I think will happen:
Prediction #1: Shifting Consumer Needs Change the Role of the Agent
As consumers continue to become more informed via online research, we’re seeing a huge shift in what Buyers and Sellers expect from their real estate agent. We’re no longer going to be Gatekeepers of Information. People are looking for Trusted Advisers to help them navigate the buying and selling processes. This trend will have huge implications for everyone.
The Canadian real estate industry has a well-deserved reputation for hoarding data. Over the last few years, we’ve seen several court challenges as consumers attempt to get freer access to real estate data – specifically sold prices. While the industry claims to want to “protect the public’s privacy” (and there are some good arguments for this), a lot of people (myself included) believe that the quest to keep sold prices private has just as much to do with protecting real estate agent jobs.
Buyers and Sellers want information and data to help them make the biggest financial decisions of their lives. Buyers are looking for strategic partners to help them find hidden gems and neighbourhoods, negotiate deals and win bidding wars. Sellers are looking for real partners to help them prepare, price and market their homes for sale. Everybody is looking for help to navigate the process and paperwork and reduce their legal liability.
Like it or not, the role of the real estate agent is changing. In fact I would argue that it’s already changed – agents just need to accept it.
Prediction #2: The Online Agent Wins
I think the days of door knocking and cold calling are coming to end. Buyers and Sellers have moved their lives online and expect to be able to research and shop for a home (and a real estate agent) that way too.
Properties that are well marketed online sell faster and for more money – there’s no denying that. The agent who can only expose their listings to a handful of people a day will lose business to those who have cultivated a real following of Buyers. Be it via email marketing, social media or content-rich websites, the online agent has a huge advantage.
In the future, I think we’re going to see a huge change in who is considered a ‘top producer’. Agent performance statistics will be publicly available and online reviews will provide the social proof of who the great agents really are. Gone will be the days where everyone will claim to be the “Number One* Agent”, or the days when the agent with the biggest billboard wins the business.
Prediction #3: The Game Becomes Real Estate Teams vs. Discount Agents
With over 40,000 agents in the GTA and annual sales of around 80,000 homes, there are a lot of agents out there hustling to get your business.
In the (very near) future, I see consumers gravitating towards one of two models: the real estate team that offers a high level of service and inclusions; and the discount agent who offers lower commissions in exchange for minimal or reduced services.
As consumers become more sophisticated, real estate agents are expected to be:
- House experts
- Condo experts
- Neighbourhood gurus
- Marketers
- Negotiators
- Lead generators
- Legal experts
- Advisers
- Pricing strategists
- Stagers
- Social media managers
- Photographers
- Videographers
- Writers
- Therapists
- Administrative whizzes
Is it any wonder that so many agents fail? Who could possibly be all of those things?
Real estate teams – where 2 or more agents pool their talents and resources to service Buyers and Sellers – are becoming increasingly popular. The team model allows agents to pool their marketing dollars, skills and experience. Teams can offer expanded professional services like staging and property management and invest in specialized training. Teams can focus on delivering wicked client experiences instead of spending their time figuring out where their next client will come from.
At the other end of the spectrum is the discount brokerage, providing minimal services for less money. Discount agents have been around for a long time, and there’ll always be a place for them in the market.
So what does that mean for the individual agent? The hustle is only going to get harder.
Prediction #4: The Boutique Brokerage Wins
Different brokerage models are being tested all the time, and while the number of agents working for the big franchise brokerages still outnumbers those of use who’ve chosen to work for boutique brokerages (by far), we are seeing more and more top agents choose to work for smaller brokerages.
By their very nature and size, boutique brokerages are able to respond more nimbly to changes in the marketplace. They’re small enough to test innovative models, develop suites of services for particular niches of the market and can truly become hyper-local.
With online and email marketing, small brokerages can reach the same number of potential Buyers (or more) as bigger brokerages. Gone are the days where it took an army of 1,000 agents to tell people a property was for sale.
From the agent’s standpoint, boutique brokerages offer individualized training, support and coaching. They might not have fancy conferences with thousands of agents, but the opportunity for daily hands-on mentoring usually has a bigger impact on an agent’s performance.
Smaller brokerages can also offer consistent client experiences, one of the biggest flaws of the big brokerage model. Strict hiring standards, performance metrics, common systems and processes, good collaboration and active management make a HUGE difference to a Buyer’s or Seller’s experience.
More importantly, this move to the bespoke and personalized vs mass-market mass-produced is part of a wider shift in consumer behaviour. As consumers in every area become more sophisticated, we are no longer satisfied with exactly the same product and service as everyone else–we want to choose something that’s just right for US. From microbreweries to artisan cheese shops, custom bike companies to cell phones and bespoke travel, consumers are choosing more tailor-made experiences over loyalty to big brands. Big Company market share is eroding, and it’s just a matter of time until we see that happen in real estate too.
Is the big franchise brokerage going to disappear? Not likely. There will always be people at the drive-through at McDonalds while others will choose the trendy restaurant with the hand-written menu on the corner. Consumers should always have a choice of the type of experience they want.
Did I miss anything? What do you think will happen?
