Are You Ready to Become a Predictive Farmer?

The 2015 NAR Annual Meeting in New Orleans was, at many levels, a far different experience than any of its century of predecessors. There was a clear and consistent vibe that after all of the years of talking about transition and disruption that the long predicted tsunami of change had indeed arrived to create something "far different." Moreover, that this far different thing was going to be broker centric with a strong consumer flavor rather than consumer centric with a strong broker flavor.

You could hear it in the presentations and programs. You could sense it in conversations and hallway huddles. You could feel it in the demeanor of the late night gatherings. Interestingly enough, one came to understand that those who were not receiving this vibe were also those who were probably never going to get it.

Perhaps it was the specter of the recent News Corp related purchase of Move.com. The realization that the industry demographic had expanded to include yet another team of powerful global experts for whom the industry's traditions and legacies paled in comparison to its long denied financial potential. One could not help but feel the gaze of Rupert Murdoch looking down on the trade show floor, working a checklist of what was relevant and what was fluff.

At the same time, the vast expanse of brilliant white and generally unoccupied carpet that comprised the massive Berkshire Hathaway exhibit area served as another reminder that the industry dynamic also includes a major player for whom the annual meeting might be seen as more of a cultural event than a business opportunity. The Berkshire booth reminded one of the presence of a king's massive yacht at the Cannes film festival--hauntingly beautiful yet mysteriously vacant. There was work being taken care of elsewhere.

There is no doubt that the vibe was being driven by the influence of the NAR's Core Standards program that has thousands of association junkies at the edge of their seat. It has become increasingly obvious that, like so many other powerful players, NAR's vision of the future of the REALTOR® has moved significantly from its classic position.

At the end of the meeting, the vibe was literally shot into the sky by the decision of the nearly 850-member NAR board of directors that approved policy recommendations directing NAR's leadership team to create a new "Code of Excellence" educational requirement and make the current requirement to complete Realtor Code of Ethics training biennial instead of quadrennial. The yet-to-be developed "Code of Excellence" appears to be the trade group's latest effort to "raise the bar" of professionalism in the industry. These actions seemed to support the growing sense that the current role of the agent is not working for anyone.

Interestingly enough, in the middle of this confusion, Trey Garrison, writing for Housing Wire, published an article entitled Prediction: Realtors Almost Totally Unnecessary by 2025. The article centered on the continuing world of digital disruption. One of the article's more interesting quotes suggested that the gap between real estate services and market demands would continue to expand, creating a vacuum that would demand to be filled. "Real estate traditionally changes slowly, but these new emerging aggregators could revolutionize the market."

Somehow this article generated a new round of the now decade old discussion regarding agent "disintermediation." Politically motivated industry players once again rushed to the forefront to insist that real estate agents would always exist, as if to say "don't sweat the changes," you are irreplaceable. Yes, there will probably always be humans involved in the real estate transaction. The real question is how far they will fall from the "center of the transaction" to an administrative runner.

Continuing the search for the origins of the "vibe," one cannot underestimate the impact of the ongoing buzz within the large brokerage sector regarding the flawed conceptualization that is the Realty Alliance's "downstream" project. How can it be that we refuse to recognize that the MLS challenge is not about technology? The act of melding over seventy of the most magnificent corporate cultures ever created by man will require an almost biblical act of leadership when it comes time for each to sacrifice individual uniqueness in favor of the common good. Is Solomon really waiting in the wings?

Continuing with the MLS theme, some observers might suggest that the vibe was impacted by the constant background buzz regarding the rapidly deteriorating MLS situation. Another round of seasonal MLS leadership meetings has, with the exception of the really well done CMLS Best Practices program, expended significant resources yet netted little or no substantial progress. In the meantime, the large brokerage sector has given transparency to a growing realization that far too many MLSs are little more than vigilantes manning strategic roadblocks designed to protect local village markets. It is clear that the industry will not allow this situation to continue. It is now just a matter of who will rescue the industry from this unacceptable behavior.

In the final analysis, if one were to convert this stream of consciousness into a "Vibe Causer" beauty contest, the clear winners might be two organizations, one called Realogy and one called Smartzip.

During the meetings, Realogy announced its new Ascend program. While only time will tell whether this program has the potential of making a major contribution to both the mindset and procedures involved in the long standing dilemma of succession planning within the real estate brokerage industry, the initial design looks promising.

The fact is that despite the major role that the "having the kids take over" fantasy has played in the industry over the years has not, by and large, been a successful play. The Realogy press release quotes the Family Business Institute as suggesting that only about 30% of family businesses made it through the second generation in 2012. Experience over the past two years will probably find that even this number has dropped due in part to the massive changes that are taking place in all industries. Daughters and sons who might have found their parents' traditional business model attractive will probably not find the task of reinventing it and/or rehabilitating its dysfunctions equally attractive. The problem will clearly not be improved by the fact that an ever-aging brokerage population will increasingly be seeking an escape from an invading technology sector, increased competition from new business models, a consumer who is now some thirty years younger and, most importantly of all, seeking a well deserved retirement.

This program is a brilliant idea. A real "Hail Mary" strategy. Realogy is to be congratulated for addressing this major industry issue. Hopefully they will be rewarded with many high quality relationships with the next generation of brokers that they will help to create through the Ascend program.

The second "Vibe" winner has to be SmartZip and its SmartTargeting product. This is actually not a new product but perhaps rather a product whose time has arrived. The product places the extensive powers of "big data" and "predictive marketing" in the hands of the brokerage to deliver a farming system that few, if any, agents could even dream of.

Brokers can purchase a marketing "farm" comprised of some 2000 contiguous residential properties. Once this farm has been established, Smartzip will target its impressive big data resources on the residents living on the "farm." Using a very sophisticated logarithm, Smartzip is able to correlate certain of these residents with behaviors or actions that have been found to be consistent with a decision to buy or sell property. One can only imagine how many Rotary Club meetings would be required to match such a system's momentary sweep. Smartzip's product is but one of a number of examples of how the agent function is being systematized and automated.

The National Association of REALTORS® held their annual business meeting in New Orleans. The city performed well and a good time was had by most. There was a tension in the air and a powerful vibe in the wind. Lurking between the drumbeat of progress and the laughter of celebration were a number of clear signals that the industry has now fully engaged with a new era.

To view the original article, visit the RECON Intelligence Services blog.