CAAR Blog

March 9, 2008

Trend #1 from Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 4:15 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #1 Two Worlds; One Industry
The Evolution of Online Communities & Networks
 

The first phase of the Internet was surfing or browsing where you just aimlessly wondered until you stumbled onto something of interest.  Then, powerful search engines like Google and Yahoo let us sort through the Internet with ease.  Now, we are at a third stage where we use the Internet for sharing both personal and business information.  We share on blogs and social networks where users interact with the help of technology.

Social networking is not a new concept – the term was coined in 1954.  It first hit the web in 1995 with classmates.com and other sites.  Later, MySpace and Facebook came along and social networks soared.  As of September 2007, 1 in 20 visits to the Internet went to one of the top 20 social networks.  Americans spend about 12% of their Internet time on social networking sites.  Investors are betting that number will grow dramatically as the value of social sites soars.  Microsoft paid $240 million last year for about a 2% stake in Facebook.

The report lists 5 examples of on-line communities that are worth looking at:

  1. www.linkedin.com – a business oriented social networking site
  2. www.ning.com – allows users to build their own custom social networks.
  3. www.squidoo.com – this is a network of experts who are sharing their knowledge
  4. www.digg.com – users add stories and if other users like the content, they “digg� the story or rate it.
  5. www.secondlife.com – this is a virtual world in which you can live and even do business.

Blogs are great places to share and gain knowledge.  The report list several blogs, but I would suggest the following as must reads for REALTORS® in Charlottesville:

  1. www.varbuzz.com – the official Blog of the State Association of REALTORS®
  2. www.inman.com/blog - great news content
  3. www.RealTown.com – the blog from the Internet Crusade – a very REALTOR® friendly group.
  4. www.narwisdom.com – the unofficial (and often anti) NAR site where you can take part in a frank discussion of the REALTOR® organization.
  5. www.bloodhoundblog.com – Internet marketing and irreverent REALTOR® chatter
  6. www.caarblog.com – this is a self-serving plug for CAAR’s own blog that delivers local Charlottesville market knowledge

Gen Y will be dragging baby boomers kicking and screaming into this new phase of the Internet.  As Sawnepoel puts it, “some of us will adapt, while the others will just watch the events unfold on YouTube.

Other Trend Reports

Trend #2 from Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 3:29 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #2 Pop Goes the Weasel
The Housing Bubble Tightens Its Grip
 

You would have to be in a coma not to know that the housing market has slowed, the financial lending markets are in a subprime mess, and new construction is way down.  It is safe to say that the housing bubble (that NAR and many of the rest of us refused to see) has burst.  The situation is way too complicated to fully explain, but here are several tidbits from the report to chew on:

The entire S & L Crisis of 1990 was 3.7% of GDP.  The subprime mess, at the end of 2007, was already at 3% of GDP and it has gotten worse.

  • There is NOT a lack of buyers, just a lack of buyers who can get financing now that the lending business has tightened the rules.
  • The best estimate is that around 2 million properties will be foreclosed on by the end of 2009.  1 out of 5 subprime mortgages originated in the last two years will end in foreclosure.
  • The problem is nationwide, but several states are really bad.  In Nevada, 1 out of every 154 homes is in foreclosure.  (Last I heard Virginia was at 1 in 2600).
  • The number of vacant homes is up 7% to over 2 million.
  • Home price decreases have snowballed because there are a lot of “badâ€? comps out there due to foreclosures, short sales, and builders slashing prices.
  • Congress may be making matters worse with well intended legislation that has unintended consequences.  The Mortgage Reform and Anti-Predatory Lending Act of 2007 will likely generate a significant increase in litigation against lenders and cause them to tighten lending rules even more.  This means fewer homes will sell and prices may go down further.
  • REALTORS® are in need of training on how to handle short sales because they are becoming much more prevalent.

The report contained a great quote from Warren Buffet:

“When the tide goes out, you find out who’s been swimming naked.�

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Trend #3 from Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 1:16 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #3 The New Digital Currency
Livestock, Land, Gold, Oil and Now Information

You may have heard of the 80/20 rule where 20% of the people do 80% of the work.  Well on the Internet, it is the 1% rule.  According to the Swanepoel report, “1% of Internet users are creating most of the user-generated content, 19% of users are interacting with that content and 80% simply view the content as they did in static Web 1.0.”  And creating data is not a problem - we have WAY more information than we can possibly read, digest, or even organize without concentrating full-time on one subject.

This could actually be seen as good news for REALTORS® as they struggle to define their role in the Web 2.0 environment.  Agents can no longer define themselves as salespeople, agents today are far more valuable to consumers as filters and interpreters of information.  REALTORS® who embrace this role are the ones who understand Web 2.0.

In the “old days” REALTORS® were the gatekeepers of information.  After the Internet became popular, they became distributors of information.  With Web 2.0, they need to be the interpreters and filterers of information.  There are a myriad of options to leverage real estate knowledge discussed in the report, but a change in mindset is what REALTORS® will need to be successful.  As Swanepoel puts it, “consider the agent of the future to be a personal shopper that isn’t just focused on price points but on the intangible features that separate neighborhoods and communities.

Other Trend Reports

March 8, 2008

Trend #4 From Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 9:44 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox. I’m going to provide a trend by trend breakdown to create a 10 post summary of the report. To purchase the report for yourself, go to www.retrends.com.
 

Trend #4 Four Weddings and a Funeral
The Changing Borders and Boundaries of MLS

MLS’s were originally developed, according to NAR, with the intent of serving as “a facility for the orderly correlation and dissemination of listing information so participants may better serve their clients and customers and the public.� Today, they have become much more – they have become “marketplaces for showcasing housing prices and amenities.�


 But the MLS as we know it, is and will be going through enormous change over the next few years. Baby boomers, according to the report, are typically not overly techno-savvy, so they are generally happy with the current MLS systems on the market. Gen X and Y, on the other hand, are demanding more and more from their MLS system. At the route of this generational difference, is Web 2.0 and the interactive philosophy of the younger generations.


 There is also significant geographic pressure on MLS’s to expand/combine their territory. Over the past decade, the natural marketplaces that agents operate in have expanded geographically. With the housing boom, many were priced out of the core markets and real estate markets expanded to meet the customer’s needs. We saw this in the Charlottesville area as Waynesboro, Orange and other “distant� locations became part of the main market. The expanding market area required agents to join multiple MLS systems do business in “their� marketplace.


 34% of REALTORS® surveyed said the ideal MLS boundary would be “statewide,� which was up from 19% the year before. At the very least, agents expect to have one market area served by one MLS. There is a great deal of pressure to “fix� this and MLS’s are starting to address the problem.


 The two most common solutions are as follows:

  1. Merging of MLS systems – about 10 to 15 years ago, there was a major effort to merge MLS systems and we are now in the second wave of these merges. There are organizational turf wars and issues to overcome, but many MLS’s are either planning or looking into merging with one or more neighboring system.
  2. Data sharing – the advent of RETS (Real Estate Transaction Standards) has opened the door for MLS systems to share data with each other. RETS has been around for a few years, but is now really taking off and doing what it intended – allowing the free flow of MLS data. (CAAR is in beta testing with an MLS Alliance product that allows for data sharing between MLS systems. There are 4 other MLS’s that are part of the Alliance and the goal is to make it a statewide system).

Many other changes to the MLS/listing data and the marketing of listings are detailed in the report.  Mobile technology was the most interesting because it is exploding in popularity and will soon take another quantum leap as the next generation (4G) wireless networks are brought online.  This will make the transfer of data and the Internet to your mobile device much faster than it is today.  Text messages and the delivery of MLS data will likely create a whole new frontier and cause MLS rules to have to play catch-up once again.


 Another issue raised in the report is that NAR is losing control of the term MLS.  NAR has used MLS – Multiple Listing Service – for years, but the trademark has already been taken by Major League Soccer.  Recently, NAR and many local associations have tried to pass rules limiting the use of the term, but at least one lawsuit has already been filed by members.  Since NAR does not have the trademark, it is going to be impossible for them to stop the rampant use of the term MLS (i.e., “search the MLS�).  Non-members, including newspapers and websites, can freely use the term and there is nothing NAR can do to stop it.  Many question why NAR does not just create a new term, trademark it, and move on.  That’s exactly what REALTORS® in Indianapolis did when they came up with Broker Listing Cooperative (BLC).


 Other Trend Reports
 

March 5, 2008

Trend #5 from Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 4:15 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #5 In Search of Productivity
Growing Market Share on a Slippery Slope
 The average annual commission earned for a real estate agent is only $34,020 (before expenses) and there is a lot of pressure on commissions to go down (see trend #9).  To survive in a competitive business like real estate, you must capture more market share to survive.  That, of course, is tougher when the market slows down.  REALTORS® have to work smarter, not just harder, to grow their market share.The report gives us 5 strategies to work smarter:

  1. Maximize technology and the Internet – More and more REALTORS® are advertising on the Internet and taking advantage of other on-line tools to market themselves and the properties they list.  The report lists many innovative on-line services including:
    • Meebome.com – offers a website add-on that allows visitors to IM the REALTOR® and chat with the agent live.
    • MyBlogLog.com – adds social networking functions to a REALTORS® web site including creating an image that can be associated with the visitor.
    • Point 2 – allows REALTORS® to “listâ€? a property on multiple sites and cooperate with other agents easily.
    • Talkshoe.com – allows agents to become a talkshow host and record their own podcasts
  2. Building Teams Correctly – the use of “teams� in real estate is not a new business model, but it is one that seems to be coming of age.  There are two basic types of teams 1) two or more productive agents partnering for greater efficiency and 2) one agent builds a support team to create a small business within a brokerage firm.
  3. Know Where You are Going – In the hot market of 04-07, agents could be successful simply by working hard.  Now they need to have a solid business plan and a good sense of where their business is going.
  4. Using Virtual Assistants – A virtual assistant is someone you hire to perform a specific non-core task (i.e., producing flyers, running reports, etc.).  There are many tasks that agents can delegate to a virtual assistant that frees up their time to do more productive activities.
  5. Diversify Your Business – There are two types of diversification – geographic and product/service.  Agents are finding new ways to create value in the real estate and related markets.

Other Trend Reports  

 

Trend #6 from Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 2:36 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #6 Gone in 60 Seconds
Identity Theft and Data Security Runs Rampant
 

Security and privacy have become major concerns in recent years for everyone and this trend applies to real estate.  The real estate industry has to protect the tons of confidential data/information that comes into industry from buyers, sellers, and other industry sectors.  A lot of related laws and regulations have already been implemented and will be a great deal more are likely to be on the way.  In addition, REALTORS® are implementing more secure systems for protecting data from hackers and protecting their clients and customer’s personal property. 

Hackers are after MLS data and REALTORS® have taken giant steps to protect their clients and customers.  In addition to main stream security firewalls and systems, some MLS’s have instituted specialize security measures like high-tech passkeys and even fingerprint recognition devices. 

Lockboxes have also gone high-tech over the years to make sure homes are secure during the time they are on the market.  CAAR implemented electronic lockboxes almost two years ago to ensure sellers were not compromised by having their property open for showings. 

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February 29, 2008

Trend #7 from Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 4:42 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #7 The Tug of War has Started…Again
The Evolving and Changing Real Estate Business Model
 In trend #8 it was noted that the impact of new business models in real estate had not been death blow to the traditional model.  Instead, the traditional model was showing signs of adopting some of the new practices and adapting to new consumer expectations.  Now it is time for the next wave of innovative business applications to hit real estate.  Many of these new services are Internet based and may have the effect of reducing the cost of a transaction by 50%.  That reduction in cost would likely translate into a reduction in the fee listing agents charge.

Here are a few of the new business models and applications discussed in the report:

  • HomeThinking (www.homethinking.com) allows consumers to find real estate agents based on what previous customer have said about the job they did.
  • Ease Realty (www.easerealty.com) is a real estate marketing cooperative.  They provide national branding for a very low entry fee for agents.
  • O48 (www.o48.com) offers free moving after the sale within the continental United States.
  • Home Vestors of America (www.homevestors.com) is a business model that helps you buy houses that need repair, fix them, and then sell them.

Other Trend Reports

Trend #8 from Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 3:49 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #8 Clash of the Titans
Power Brokers Flex Their Muscles
 In the last 10 years there have been a myriad of new business models introduced in the real estate industry.  Each of these new models has been proclaimed to be the idea that will change the way real estate will be sold.  But Swanepoel points out that “the impact of new real estate business models has been for the most part insignificant.�  Instead of changing the business completely, these new models have created niche markets and some have been very successful.He also points out that this lack of an industry killing new business model does NOT mean that the traditional business model is safe.  Instead, he reveals that “many traditional brokerage companies remain dysfunctional, burdened with layers of unnecessary costs, still struggle with the independent nature of their agents and cling to old vestiges, systems and ways.�  The trend, however, is for traditional firms to embrace change and learn lessons from the new business models.  Remember when the Internet was going to put REALTORS® out of business?  Instead, REALTORS® embraced the change, adapted it to their business, and became stronger. 

Swanepoel identifies his Top 10 Titans of the business based on an unscientific model which factors in size, production, growth, innovation, Internet strategies, industry profile and consumer awareness. (in alpha order):

  1. Exit Realty
  2. HomeServices of America
  3. Keller Williams Realty
  4. Leading Real Estate Companies of the World
  5. Long and Foster Companies
  6. NRT, Inc.
  7. Prudential Real Estate
  8. Realogy Corporation
  9. RE/MAX
  10. Weichert

Other Trend Reports  

 

February 24, 2008

Trend #9 from Swanepoel

Filed under: 2008 Trends, Real Estate — Dave Phillips @ 10:44 am

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox. I’m going to provide a trend by trend breakdown to create a 10 post summary of the report. To purchase the report for yourself, go to www.retrends.com.

Trend #9 – Thought Reform

The DNA for a New Breed of Real Estate Professionals

 

Keep in mind that these trends are not things that have already changed; rather they are things that are changing. All real estate agents are not alike – some have embraced some trends and a few have embraced all trends.

The current real estate market is challenging for the profession of real estate. The number of sales has dropped nationally and here in Charlottesville by 20%, but the number of REALTORS® - competitors – has only gone down slightly. In 2007, CAAR had 1160 REALTOR® members and now we have 1118. So the pie got smaller, but the number of mouths to feed did not.

This is a time where REALTORS® will have to upgrade their skills to survive in this competitive environment. Clichés like “when the going gets tough, the tough get going� and “this is where we separate the men from the boys� (sorry gals) apply in real estate today. So what are REALTORS® doing to make themselves more competitive? They are turning to education.

This is not a new trend that came about because of the tough market – there has been a rise in educational demand and requirements for the past 10 years. The slower market simply adds sunlight to the trend.

There are two areas that REALTORS® are turning to for self improvement – designations and coaching.

Designations have been around for several years, but the number and variety have exploded recently. We use to have a handful of designations that were all developed by the REALTOR® organization. Now we have over 70 designations and certifications that have been developed by a variety of sources. NAR now has 21 official designations/certifications and the rest are from private enterprises.

To see a complete list, go to http://www.redesignations.com. Here are the top 5 most popular designations:

ABR – Accredited Buyer Representative

GRI – Graduate, REALTOR® Institute

CRS – Certified Residential Specialist

ePro – (designation recognizing Internet skills)

SRES – Senior Real Estate Specialist

 

In addition to designations, coaching has increased in popularity in recent years. REALTORS® can hire a personal coach, a group coach, or use an on-line service to self-coach. Swanepoel lists the top national coaching organizations as follows:

Brian Buffini & Co.

Mike Ferry Organization

Your Coach (Tom Ferry)

Coach Ken (Ken Goodfellow)

By Referral Only (Joe Stumpf)

Craig Proctor’s Home Selling System

Real Estate Champions (Dirk Zeller)

Star Power (Howard Brinton)

Sanford Systems and Strategies

 

February 23, 2008

Trend #10 from Swanepoel

Filed under: 2008 Trends, Leadership, Real Estate — Dave Phillips @ 2:53 pm

The 2008 Swanepoel Trends Report, the best summary of real estate trends, recently arrived in my mailbox.  I’m going to provide a trend by trend breakdown to create a 10 post summary of the report.  To purchase the report for yourself, go to www.retrends.com.

Trend #10 – Shattered Glass
Women, Youth & Minorities Step Up to Leadership Roles
This trend identifies a shift that has been brewing for a while but has just reach critical mass to make the top ten.  Shattered glass is a reference to the glass ceiling that has symbolically held women, youths, and minorities from being significant players in the real estate business. 

Women – Real estate has always been better than most industries for offering women and equal chance to be successful, but leadership is just now changing to women.  The first female president of NAR was Virginia’s own Dorcas Helfant from VA Beach in the early 90’s.  Since then there have been 3 other female NAR Presidents. The last 3 CAAR presidents (including the 2008 President Judy Savage) have been women and the current State President in Charlottesville’s own Patricia Jensen.  We still have a little way to go because 65% of REALTORS® are women, but only 50% of brokers are women. 

Women make up 52% of the population, but according to census data, they buy 85% of everything and start a business every 60 seconds.  Single women home buyers are increasing rapidly and now account for 20% of home buyers. 

Youth – Gen Y (also known as the Echo-boomers) are as large of a mass of people as the boomers.  The first Gen Y’ers turn 30 this year.  Over the next 10 to 15 years, boomers will transfer a great deal of wealth and power to Gen Y.  Already, Gen Y have leverage web 2.0 to establish great power.  Members Gen Y created YouTube and Facebook.

The Y’ers are definitively into home buying.  They value the solid long-term investment that real estate offers and they are a bigger portion of the total home-buying population than ever before.   In addition, they are not putting home buying off until they are married. In 1993, less than 15% of buyers were under 25 – today 25% of home owners are younger than 25.  42% of people between 25 and 29 years old are now home owners.  These younger buyers are responsible for the resurgence of the popularity of living downtown and in condo sales (up 110% in the last decade).

Minorities – There are 80 million multicultural Americans already and 1 million new immigrants entering the US every year.  Immigrants made up 40% of the new households formed between 2000 and 2005.  By 2050, half the population is expected to be of minority status.  Immigrants allocate a larger percentage of their income (39%) than natives (28%).

Hispanics are the largest minority and the fastest growing.  Half of the people being added to the US population are Hispanic and by 2050 they are expected to comprise 25% of the population.  Hispanics are almost 10 years younger than the average population and are expected to make up 40% of the first time buyers over the next 20 years. 

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