Attitude & News Home

Directories
  Int'l Realty
  US Realty

Today's Real Estate Industry
Shifting economics, demographics and the advancement of technology have fueled much of the industry's evolution over the past few years. Significant changes such as consolidation and strategic alliances have been incremental at best. They will pale in comparison however, to Internet-induced transformation.

Not known for innovation or long-range strategic thinking, the real estate industry tends to look the other way at the thought of fundamentally changing the way it does business. This is true at all levels, from individual agents to the executive suite.

Resistance to Change Among Agents
Since the turn of the century, real estate sales associates have been the core of the business. They are still the primary business channel for the industry. But of roughly 1.4 million licensees in the U.S., a large percentage drop out of the business annually, and those who replace them in most cases need only pass a simple test to get their licenses.

Most often hired for superior people skills, agents tend to be highly technophobic, stubbornly resisting efforts to adapt technology to their business despite its proven boost to their bottom-line. As independent contractors who deal primarily with people, few see the need to learn new skill sets or adopt new technologies. Given that kind of complacency, it is hardly surprising that fewer agents are doing more of the business.

Corporate Myopia
Running a successful residential real estate organization is more complicated these days.Aggressive consolidation and the formation of strategic alliances with national consumer sales organizations have opened new channels to access the real estate customer. As a result, maintaining brand awareness within one's market region is more urgent than ever before.

Many companies find themselves consumed with reacting to market cycles and wondering how to best strategically align or merge with other organizations. Most still struggle to integrate computer technology into their operations, primarily due to costs, rapid obsolescence, and strong agent resistance.

Given these distractions, it is little wonder that many senior managers and executives have a hard time seeing the Internet as nothing more than just another promising technology. They know they have to deal with it for competitive reasons. However, very few recognize the Net as the harbinger of change that will cut to the very core of the current industry business model.

Real Estate 2001- On the Horizon
The residential real estate industry will experience more change in the next 3 to 5 years than it has in the last 100. The Internet Empowered Consumer (IEC) is the new, rapidly growing reality. They will no longer need-nor want- the traditional 'one size fits all' services.

Without doubt, not every real estate consumer will suddenly become 'Internet empowered'.However Net induced stratification among real estate consumers, segmented by their unique needs and capabilities, is occurring. Also, several coming fundamental changes to the capability and infrastructure of the Internet will lock in this trend, eventually enabling most people in their search for real estate services.

Ubiquitous, Continuous, Affordable Access
Ubiquitous, affordable, very high-speed, continuous (no dial up) access to the Internet is already becoming available in major markets around the United States. Within the next few years nearly everyone will have greatly enhanced Internet access via cable modem and/or some form of DSL (Digital Subscriber Line) through local telephone providers. As a result, these capabilities supported by powerful and easy to use personal computers will allow the consumer to take advantage of increasingly rich, immersive multimedia presentations of real estate related data.

Two additional factors will dramatically affect the quality and scope of the information that they tap and how they interact with it: XML Enabled Intelligent Searching and the Paperless Transaction.

XML Enabled Intelligent Searches
Where HTML (Hypertext Markup Language) determines how data on a Web page looks, XML (eXtensible Markup Language) determines how the data is defined. It allows standardization of various kinds of data no matter who presents it. Through the use of an industry-agreed-upon DTD (Document Type Definition) XML standard for listing data, property information will "look" the same to a Web browser no matter where it resides on the Net. Using greatly enhanced search capabilities, otherwise impossible without XML, consumers will be able to access essentially a nationwide virtual MLS-comprised of listings from any online source around the country.

While a tremendous boon to the homebuyer, it also has important implications for the MLS industry. Since listing data will be equally "visible" on the Web, no matter who publishes it (including individual FSBOs), literally anyone can become a MLS. As a result, regional MLSs will need to redefine their value to the broker community. One possibility is to offer innovative means of presenting listing data on the Web using rich interactive and immersive multimedia virtual tours, demographic mapping etc.

The Paperless Transaction
The real estate industry is literally buried in hundreds, perhaps thousands, of paper based forms that make tracking and exchanging data difficult, time consuming, expensive and error-prone.

Certain Internet technologies will make the truly paperless transaction a reality. XML will allow standardization of the data found on all these forms. This will simplify processing and transmission from one vendor or system to another. Digital signatures will become the basis of secure, legally binding Net based transactions and contractual commitments. The coming digitization of money will allow easy yet secure Web-based transfers of funds.

And finally, the advent of a Universal Forms Description Language (UFDL) standardizes secure, tamper-proof Net-based forms. UFDL preserves both the data and the presentation context of the information (i.e. paragraph formatting, type size and color). These forms can either be viewed via browser or printed to hard copy with presentation and information intact, thereby alleviating concerns of governing authorities about legally binding transactions over the Net.

XML and the advent of the "Paperless Transaction" will greatly empower, and hence alter the very nature of the real estate consumer -how they shop and work with various real estate services.

The following scenario (circa 2001 - 2003) offers a glimpse of how these and other Net based capabilities could be used for the typical purchase transaction. A word of advice-this is just one of many possible scenarios. Suspend your disbelief, because the technologies mentioned in the stories below are either already available or will soon be...

Contributing Author
Michael J. Russer
Michael J. Russer, President of RUSSER Communications, is an internationally recognized speaker, writer, and strategic consultant for the real estate industry about the Internet. His 22 years experience in the real estate field include the development of marketing and software systems as CEO for a high-tech mortgage consulting firm he co-founded. Also an authority on Internet risk management, he recently authored the industry's first comprehensive Internet policies and procedures manual for those companies that have agents active on the Net. He can be reached at (805) 882-1170 or mrusser@russer.com.