Web sites that are housing-centric like CraigsList and Zillow in addition to consumers yelling at real estate settlement tables "I'm mad as hell and I'm not going to take it anymore!" are all indicators in addition to bubble woes that some major changes in residential real estate are fermenting. What will they be and how will the business change are answered by Mark Nash author of 1001 Tips for Buying and Selling a Home. What do think will be the largest change in residential real estate in 2006? Home buyers will move away from instant profits when considering buying a home and we will return to the home as a long-term investment as shelter. The get-rich-quick drum beat of the last couple of years will wane and buyers will be more assertive negotiating purchase contracts with property sellers fearing prices are near peaks. What do you see looming on the horizon for home buyers and sellers in the U.S.? A major shift in the home purchase and sale process driven by technology. Internet business models have started to make inroads on the traditional brokerages market share. Zillow.com was rolled out with much fanfare and didn't quite meet expectations, but real estate consumers love it right or wrong. The last piece for these Internet innovators to be able to make wholesale changes to the brokerage industry is to find the piece of the residential business model that can replicate the local market, not easy, but only a matter of time. By 2010 we'll live in a new world of how real estate is bought and sold, much I believe to the consumers benefit. What will be the intermediate steps to 2010? -A national Multiple Listing Service (MLS). Inside and outside pressure will force the change. -An end to the real estate agent job description as it is today. Look for the different skills an agent contributes to a home purchase or a sale to be dismantled and be handled by salaried specialists in the transaction segment. Home showings will be done by property hosts or hostesses, contract negotiations by transaction managers and market value analysis by inventory managers. -The fall of the one-size-fits-all brokerage. Consumers want choice in how much they pay for real estate brokerage services. Value-driven consumers will have more options with fee-for-service and discounters and luxury consumers will have boutique brokers that offer full-service. The industry is at a point where consumers will force them to stop being all things to all people. Do you see commissions falling? Commissions have fallen in the last couple of years, probably not as much as consumers want. The problem is that many consumers don't have a grasp of how labor-intensive a home purchase or sale is for a brokerage. Especially in a cooling market with increased competition and marketing costs. If you look at all the steps that a brokerage goes through from the first point of contact until closing or escrow its hard to see without technology and salaried specialists, commissions declining substantially. They will fall, how much and when is a crystal ball question. The real estate bubble, fact or fiction? The bubble is all about fear, which has played well since 9/11. I see a soft decline in prices, supply and demand still rule. Plus rising mortgage rates always impact prices as purchasing power declines. The country is made of of many micro-real estate markets, so to make a macro statement is not in any consumers best interest. The media though, has done a good job educating consumers with related stories on trends, demographics and signals of a transitioning market. I'm most concerned about newbie arm-chair investors who got into some over-heated markets late and could suffer big losses. So what's the good news? The most important news is that real estate consumers are more informed today, the residential real estate industry is more consumer-focused than ever and the next four years will see the largest changes for both in over fifty years. A plus for consumers and possibly a minus for the industry. |
