This great article on the 1000w blog proves a great point. When business is booming, your market share will grow even as you become detached from the core needs of your client. Often it will take decreased revenues and market share before management will recognize something is wrong, and further decreases to determine the root of the problem. Often the solution is a simple as giving the customer what they want. I think real estate is no different, but with slight changes to the model depending on size of the business.
During the boom years everybody in real estate made money, you showed up and took the order. It wasn’t as critical to stay ahead of the next guy in every aspect, there was plenty of business to go around. Heck, homes sold themselves. When the market slowed, or stopped in some areas, it took the collective real estate industry a while to figure out the problem. The big problem was the credit market and unchecked price growth for several years, but there was another problem further down that was overlooked. The overall market slowed, but some brokerages and agents saw additional declines in market share. From my own personal observations, the majority of Realtors I talked to didn’t realize the magnitude of the declining market and in turn didn’t change their business model accordingly.
I had it easier than most, as I got into the market as it peaked and was beginning to correct. I hadn’t experienced the “order taking”, I got in just after that and began to build my business. Those around me that had been in the business less than 5 years were getting the same education I was: The Sellers were no longer in the driver’s seat, and the Buyers held all the cards. My agents continued doing the same things, marketing to Sellers and taking over-priced listings. The difference was this time instead of building an inventory of listings that would eventually sell, fewer listings would attract a Buyer and a growing inventory hurt your check book. There’s an old saying in real estate “list to last”. It’s definately true, but it has a different meaning today than 2 years ago. Agents and offices continued to do business as usual, not giving the consumer what they wanted. The consumer recognized the market correcting, and became empowered by the growing number of for sale signs in their neighborhood and dismal reports on the evening news. Buyers were hungry, but for what?
They wanted what everybody wants when supply out grows demand… A better deal. They wanted a bigger house in a better neighborhood for less money. Sounds easy right? Sure. Did they get it? Not really.
Slowly the battle cry at any brokerage changed from “go out there and get some listings” to “go out there and get some price reductions”. Eventually a few real estate professionals began to change their business from being Seller-centric to Buyer-centric. The ones who did this quickly actually gained market share because they responded to the consumer. Those that took a little longer to figure this out lost market share, and some closed their doors forever.
I don’t pretend to be a genius, nor did I stay at a Holiday Inn last night. However I do know what the consumer wants and try my best to deliver. I don’t have a fancy website devoted to soliciting customer feedback and I don’t need one, I do it the old fashioned way: I ask them what they want and deliver.
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