Indian real estate, real estate portals and the real estate agent of the 21st century
Real estate agent? Hasn’t the internet got rid of them yet?
I hear this question all the time. Most people assume that property portals in India are working towards eliminating brokers and facilitating guter Makler direct interaction between seller and buyer. While this is partly true, real estate agents are the largest customers of these portals and the portals do their part to facilitate their growth. We interact with agents every day and we see that most of them do good deals. I would like to take some time to explain the dynamics behind Indian real estate, the role of agents and how the role of agents will change in the future.
Note – In this article I have only focused on the rental and resale market and have not addressed the sale of new homes by builders as the dynamics of this market are radically different. Also, the scope of this article is limited to Indian real estate.
” MakeMyTrip eliminated travel agents. So why didn’t real estate agents do the same?”
One has to understand that ticketing is now a point-and-click industry – travel agencies have been replaced by computers. Obtaining information about the journey AND purchasing tickets can be done online. Real estate is basically an offline process. While aggregating information is an important part of this, site visits, negotiations, and paperwork must be done offline. Even from an owner/seller perspective, renting/selling a home is not as easy as listing online – the process can take months. This is where real estate agents come in – guiding clients through the offline portion of the transaction, getting both parties to agree to the terms and completing the paperwork.
Why don’t real estate portals try to eliminate agents and become virtual middlemen?
A real estate portal provides a platform for interaction between a seller and a buyer (a seller can be an owner, a builder or an agent). If we eliminate agents from this equation, portals are left with a C2C platform where property owners are the sole source of inventory. Although many prefer such a scenario, we need to find out how the platform provider will make money from this setup. You have the following possiblities –
Listing Fees – You can charge the owner/seller a fee to list their property. There are few owners who are willing to pay for premium listings (last I checked about 5% of owners who posted online listings were willing to pay), but that’s just not enough to keep the business going. Indian consumers are willing to use a free service (free listings) OR pay for a service once it is provided (brokerage), but don’t agree to anything in between.
Charging Property Searchers Fees to Receive Owner Information – Another option would be to charge property searchers a fee to give them information about the listed owner. This is also not a sustainable option as owners who list online tend to list on multiple portals and you can always find a portal that will provide you with the owner information for free.
Brokerage fee when the deal is closed – This would be a great monetization scheme that anyone would be willing to pay for, but it is very difficult to implement. To do this, portals need to track every deal that is closed offline, and that would be next to impossible.
There could be more options, but I don’t really see them becoming huge “sales machines”. Running a real estate site is a VERY expensive business and sites need a solid revenue stream to offset these costs.
This is where real estate agents come in: Agents are willing to spend good money to market their properties on a platform that would get them good leads. Real estate portals see it as a steady, sustainable source of income. This is apparently a game made in heaven.
So you’re saying that real estate portals haven’t left a dent in the brokerage industry?
No doubt they have. On a grand scale! With many owners listing their properties online, realtors are starting to feel the heat. Couple this with the fact that the number of real estate agents has almost tripled in the past few years, you will see that the average real estate agent made MUCH less in 2014 than they did in 2011. Agents are beginning to realize that there is a paradigm shift and it is time to change before the game is taken out of their hands. There needs to be a mindset shift, and it needs to happen NOW.
The role of the real estate agent in the 21st century
10 years ago realtors were charging quite a bit of money for information arbitrage – “I have the contact information of the owner/tenant and you have to pay me money to get that contact” was the mantra and it worked. A disproportionate amount of money was asked for this seemingly simple service, and the world went on without hesitation, mainly because there was no alternative. But now they exist. Increased owner listings on portals, a multiplication of real estate agents, internal company portals that help employees find housing, Facebook groups, etc. have all impacted the real estate industry and need to be overhauled.
“What’s dangerous is not evolving, not inventing, and not continuously improving the customer experience” – Every real estate agent in the country needs to capture these words from Amazon CEO Jeff Bezos . Information arbitrage can no longer be the game real estate agents play – We are moving towards a world where access to information is becoming easier and this cannot remain the USP why a property seeker goes to a real estate agent. I believe agents must adopt the following practices –
Save time for your clients – In today’s world, no one has time to get things done (even when they have time, people don’t want to waste their time looking for a place to live). Saving time for your customers is probably the best value an agent can offer. Be up to date on the latest inventory available in the area. If you’re not sure if the client will like your property, just tell them! Don’t drag them into a dingy apartment they ‘ll never be interested in – they’ll lose confidence in your judgment and never come back to you. Learn to truly understand what your customers want, be equipped to find the most relevant inventory, accompany them on site visits and close the deal. A really good agent should be able to close a rental need in 7 days and a resale need in 1 month at most.
Provide as much information as possible – Instead of hoarding information, agents must part with it voluntarily. Tell your clients exactly which housing association the property is in, tell them exactly how far it is from the bus stop, and tell them if the owner/tenant doesn’t feel comfortable with anyone in their community. In the long run, this helps build a better relationship with customers. Sure, other agents (or your customers themselves) can get to the owner/seller without you, but in the long run this will work.
Adopt Technology, Don’t Fight It – Apart from WhatsApp , agents don’t use their smartphones for business activities. Why is that? For starters, there are many CRM applications on the App Store that you can use. This alone will improve your productivity by 100x! Other applications for inventory, marketing, etc. are available but are not used by agents.
Develop skills that a computer/technology cannot – A computer can never negotiate a good deal for the customer – this is a task that requires a human touch. A computer can never get a sense of what the customer really wants – agents can do that provided they are always with the customer. This is a relationship oriented industry, always keep that in mind.
Using Social Media as a Marketing Platform – If owners are using Facebook as a marketing platform, why shouldn’t real estate agents do the same? Creating a Facebook group to market your offerings is a great way to reach new customers. There are some agents already doing this and getting good feedback from them.
Be Professional – As cliche as it may sound, a return to basics is something every agent needs to do. Being on time, dressing in formal attire, and speaking politely to customers are some key skills agents need to practice. There are well-mannered agents here too, but the number seems to be shrinking.
The list goes on, but I can summarize it like this: If you are a real estate agent, think about what you did for your business 5 years ago and compare that to what you are doing today. If not much has changed, understand that you will become redundant in the next few years. The world is changing and only those who change with it will survive to fight another day. Portals have evolved, the way end customers look for a home has changed and it’s about time the role of the real estate agent changed too.
How are we positioned in this complicated market?
Our vision has always been to build a technology-enabled real estate agency that works to help our clients find a home they truly love. We do this by combining cutting-edge technology and imparting expertise. We add great Haus verkaufen agents to our team, give them next generation mobile applications/desktop products to run their business better, help them understand the market as it is today, provide training and learning material and finally help them , to serve customers better. Given the amazing response we’ve had from customers and agents so far, we’re confident about what lies ahead.
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