By Jeremy Conaway
It hard to describe or even imagine the level of change that has occurred in the American real estate industry and marketplace since 2017. Factors and trends that even five years ago were being discovered have now evolved into a new local, regional and national industry environment. Today the American real estate industry is dealing with current events and contemporary situations that have already changed or are in the process of significantly changing almost every aspect of the industry and marketplace as it grows and expands into this new environment.
As the Nation’s fourth largest real estate marketplace Houston’s real estate community is now hosting and integrating virtually every emerging, alternative and non-traditional real estate business practice and model including Redfin, Opendoor, OfferPad, Knock, Compass, Zillow Group, EXP and REX. Taken together the new market created by these entities includes new technologies, new management techniques, new competitive practices and new agent and brokerage opportunities and relationships
While historians will debate the specifics of the new industry and market environment for years, few will question that one of the most critical factors that have led to its development is the concept of “consumer centricity.” The rise in the power, influence and economic discretion of today’s sophisticated and Internet savvy consumer have made all things possible. Simply put, today’s consumer is and must be seen, as being central to all aspects of the real estate transaction and experience. Real estate service providers that are not totally focused on the expectations and demands of their clients and customers and that have not reflected that understanding in stated value propositions will find the road ahead to be most difficult.
Why is the value proposition so important in the current real estate market environment?
Today’s consumers differ greatly from their predecessors in a number of significant ways. A strong argument can be made in support of the idea that the key differentiation for today’s real estate consumer is the level of knowledge and sophistication that they bring to the transaction. The basis of this knowledge is the tremendous amount of information that today’s consumer brings into the transaction. Two factors are driving this phenomenon. The first is that there is simply more real estate related information available to consumers than at any other time in the history of the real estate marketplace. The second is the consumer’s access to technologies that can facilitate the consumers’ efforts to search, store and access that information than ever before.
Today’s consumer moves into the transaction with a significant amount of knowledge regarding what they should be searching for by way of properties, what they should know about the properties they are interested in and how to select real estate service providers who will help them survive the buying and selling process that prior generations of consumers found so daunting.
With this advantage consumers are much less vulnerable to mindless emotional based sales pitches. They are in a position of power as they make decisions with respect to what matter of service experience will best serve their needs. Today’s consumer is much more likely to know what qualities and characteristics they need to connect with in the selection of a real estate services provider. Today’s consumer is searching to fulfill a very specific value demand and expectation, one that focuses, not on the competitive aspects of the marketplace, but rather on the consumer’s personal needs, demands and expectations.
These new consumer demands and expectations have come together over the past few years and have coupled with new service options to create a partnership that is increasingly being referred to as the “new era.” One of the most important issues that has come out of the “new era” involves the concept of demonstrating brokerage and agent “value propositions.”
The first issue that must be considered in any discussion of a new era value proposition is the fact that the majority of the agents and brokerages that practiced in the traditional style rarely undertook to either consider or express their value proposition in terms of the consumer’s needs. Such a demonstration would have suggested some lack of self-confidence. Moreover these real estate professionals were often more comfortable expressing their professional skills and competitiveness in terms that often ignore the needs and expectations of their clients and customers in favor of self-aggrandizement by comparing themselves to other practitioners.
The value proposition challenge has been made onerous because during the transition period leading up to the “new era,” real estate service providers were subjected to a serious level of public relations and media assault with respect to their integrity, skills and motivations. The term “crappy agent” has become part of the cultural lexicon. As a result of this negative attention, in the new real estate industry environment the consumer does not assume that any brokerage or agent will be an adequate to meet their real estate service needs. The burden of proof to establish this status lies squarely on the shoulders of brokerages and agents. The first of several steps in this process is the development and communication of a proper value proposition.
A well stated and skillfully communicated value proposition will be a key element for those firms and agents who hope to succeed in the “new era” industry and market environment. Accordingly, an important part of HAR’s 2019 organizational objectives is to assist its membership to consider, develop and express value propositions that assist consumers who might be considering them for the provision of real estate services. The first initiatives of HAR’s effort will focus on raising overall member awareness of value propositions with subsequent efforts focusing on providing other relevant “value proposition” information.