I have set up a Google alert to be on the lookout for our company name (Boston Realty Hub) as well as a few word combinations I’m interested in lately, and Google alerts finds interesting things for me. This was a recent catch, from Tomas Frey’s blog. (He’s a futurist with an impressive client list. This as opposed to the type of futurist we used to make fun of in high-school, as in ‘in the future, this guy might have a real job.’)
Real Estate: The recent chink delivered to the armor can barely be heard over the sickening thud of an industry that has fallen flat on its face. Real estate had a lock on the marketplace called the Multiple Listing Service until a recent antitrust lawsuit. The outlook is not a good a one. Expensive services such as appraisals, inspections, title and mortgage insurance face unusual forms of competition. Estimated time frame - five years.
Here’s how we see this working in our little neck of the woods—rental real estate in the Boston Metro Region.
We see the creation of a real-time, on-line database for rental apartment units. Our site, www.onmarketboston.com, is a first crack at this. It’s already the best system ever constructed in the region, which, alas, isn’t saying much. I’m reminded of this quote from Churchill:
Democracy is the worst form of government except for all those others that have been tried.
- Winston Churchill
But even doing what we’ve done, which is to create something merely better than all the rest, we see glimpses of what is to come. Whether we are the ones to make it first, we can’t say for sure. We sure hope so! But the future is going to look something like this.
- Renters search a realtime, online database which has most of the available apartments in it in great detail. Every view out of every window; every inch of it can be previewed on the web. The information is certified by a non-realtor third party data service. It isn’t marketing anymore. It’s pure information. (think Google Streetview, not a contemporary apartment hunting site with photos of model units.)
- Far Fewer Real Estate Agencies: efficiencies purge 30-60% of the people currently working in rental real estate. Much more of the work of renting apartments is done by apartment hunters themselves from their own computers.
- Far fewer Rental Agents: See above. These agents, armed with efficient sales force automation tools, use their knowledge of the market to help apartment hunters make decisions about what they can and can’t rent. Instead of ramming properties down the throats of apartment hunters with which the agency has a tight relationship, or just pushing whatever is sitting on top of the fax pile and telling prospects to hurry up and rent something. ( You do know that currently the real customer in rental real estate is the property owner, not the renter, right?)
- Rental Agents On Salary. Rental agents will be on salary, with agency owners absorbing all commissions, investing most of that money in maintaining an outsourced data infrastructure which allows those agents to be productive without being uber geniuses.
- OR Agency’s cease to exist and solo rental agents become one man bands, working from wifi hotspots, tapping into outsourced data infrastructure and paying for it themselves out of pocket; they then keep all commissions. These lean and mean one man virtual agencies are bonded, trustworthy, and again, focus on market segments where their knowledge will actually meaningfully help the people they are working with.
Of course there are other scenarios. We don’t believe in a pure self-serve brokerless market at this point. You can imagine it, with networked digtial keyboxes and credit card kiosks; apartments dispensed like slices of cake from a 1950s automat, but this is so far in the future that it resembles Star Trek more than Minority Report.
Because, like it or lump it, Agents are an indispensable part of the current system. They open doors, they handle the keys, they make stuff work. Now most agents quit after a few months, after realizing there’s no easy money doing this, and that is something we’d like to see change.
We want to see the top and bottom of this profession truncated, with the bottom earner dreamer fools skipping the profession in the first place, by getting rid of the scratch ticket mind-set (I’ll rent a unit every day and make a zillion a year!) and the top earners making less with a base salary and bonus package which acknowledges the agency owners investment in the real time data infrastructure which makes their jobs much easier, funner, and more sustainable. The agency owns the factory in which you are a skilled craftsmen.
We see consolidation in the agency space with the ‘bottom feeder’ agencies, boiler rooms packed full of newbie agents generating Craigslist bait and switch representative listings, being squeezed out by established, ethical agencies with deep roots in communities and long standing relationships with quality property owners. At the bottom of the market, perhaps a purely vertical self-serve model could take hold, with pure comoddity units being sold in an automated fashion through the real-time data portal. (think of those magnetic keys you get in hotels, dispensed from kiosks after credit checks approve you for your cell in a vast apartment hive.)
Or as Shakespeare puts it in The Tempest:
“O wonder! How many goodly creatures are there here! How beauteous mankind is! O brave new world! That has such people in’t!”
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