The Demise of the Real Estate Industry
A bad market is not the only concern for modern Realtors — a far more menacing threat is about to make sweeping changes in the industry. It's called Web 2.0 and is sure to be the downfall of those in the Real Estate who deny its impact and riches, and a great boon to those who learn to use it to their advantage. The very nature of the Real Estate industry is about to change. Who comes out on top is yet to be seen.
Many industries have already been hit hard by changes in information distribution caused by the Internet. The music and movie industry stood idly by while the likes of Napster devastated their profits. Newspapers thought nothing of Craig's list until it was too late. After realizing that they were losing millions in advertising revenues they tried to jump on the bandwagon but were too far behind to ever hope to catch up. They couldn't match the already huge user base with any amount of advertising. Will the Real estate industry fall prey next? The signs say yes. Any information based industry is at jeopardy and the Real Estate industry appears to be the next victim.
There is a general principle at work here and once one grasps its meaning the future becomes evident. In old school thought the idea was that information which is held tightly was valuable. Possessing the information put a business in a power position. In Real Estate, of course, this was the MLS. The Realtors had the information and the buyers had to come to them to find the right house. If you're in the industry you know that standard practice was to give out as little information as possible to try to draw in the buyer. In today's world that tactic spells disaster. The information is becoming more and more readily available and buyers won't stand for the old tactics. They will simply and easily go to whoever will give out the information. In the end, whoever packages the information best will be the victor.
A quick look around the Internet will reveal that technologies are nearing a point where a buyer can simply shop online for a house. A host of Web 2.0 websites are working hard at becoming efficient packagers of information. Zillow became one of the first to give buyers and sellers quick estimates of Real Estate value. While the accuracy wasn't always right on, the concept was. They were quickly followed by Real Estate ABC who took the same concept and enhanced it. Trulia is one to really watch, as they are attempting to scrape the internet for Real Estate listing information and put it all together in one package. Their technology is fast growing and if they really get it together they will be even more of a major player than they already are. Fisbos are using Craig's list and it is quickly becoming a strong real estate listing site. Even others, such as Housing Maps are scraping the Craig's list data and creating mashups to package the information in even better ways for consumers. Yet more threatening is the latest rumor that Google is working on a Real Estate related project. Who knows what will come from the minds of Google?
Right now, however, it's still up in the air. There are a number of possibilities as to how it could play out. Who comes out on top could be a behemoth company with the resources to gather the information through deals with information providers. That sort of play would take a great deal of negotiating to bring all of the information providers together. Or it might be that a smaller company with a little more people savvy will perfect a system of gathering information from participating Realtors and consumers — something like what Craig's list did. Or it might be a combination of both. No matter how it happens, one thing is certain: when this really comes to fruition old school Realtors will quickly become a thing of the past. Consumers will go directly to the information providers. If what a Realtor provides in services cannot meet the value of the commission paid someone else will step in and do the job.
So what's a Realtor to do? Well actually amid all this there is also a great deal of possibility. Those who understand the new concept in information sharing will prevail. No longer is information that is held tightly valuable. In today's world information that is widespread is valuable. A Realtor who becomes an information provider and is able to use the new Web 2.0 technologies to spread that information will succeed. The Web 2.0 world allows experts in a niche market to display their expertise. Niche marketers build huge followings by utilizing web technologies. Many have readerships which surpass that of major national periodicals. And Realtors are definitely niche marketers; a Realtor is an expert in his geographical area and in his specialty. So there are really as many niche Real Estate markets as there are geographical areas. If a Realtor exposes his expertise using web 2.0 technology he will develop a loyal following. Everyone in Real Estate knows a loyal following means money.
The beauty of it all is that these technologies are very simple to use. Blogs are easy to set up and run. You can find a great place for Realtors to have a free real estate blog and even add your Real Estate listings. RSS feeds are probably one of the most powerful features in a web 2.0 world and they can be totally automated. Realtors can easily interact with buyers and sellers and form relationships with them in numbers — all on their own website. Networking can be done faster and more efficiently from a computer if you have the right tools. Just look at the huge networks the younger generation is setting up online (think myspace). The possibilities are huge if a Realtor knows how to navigate the landscape.
Realtors, take a look at what's going on around you. Quit making brochure websites that do nothing to entice a buyer or seller to use your services. Get involved with the Web 2.0 world and use it to your advantage!
Phil Weaver of The Site Mechanics consults on social marketing and designs Web 2.0 enabled websites that engage the audience, providing the tools for the offline marketer to successfully utilize the web to enhance their business. He has been screaming about the possible impact of the World Wide Web on the Real Estate industry since 1995 when the web originated. He has recently built Real Estate guides dot, a website where Realtors can post their listings, have their own Real Estate related blog, and network with other Real Estate professionals.
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