Thursday, February 19, 2009

Opportunity Lost

The CREA, the BCREA, and the VREA are all missing out on a huge opportunity.

The winds of change are blowing and rather than seize the moment, they blithely wallow in a misbegotten strategy.

For the past 10 years Real Estate agents have hooked their cart to the Real Estate seller. Signing up listings has been all important because even if another agent actually sells the house, you get a share of the commission. And the house would sell, often within days.

It was so easy within that milieu. Pump up the seller, push him to list the home at ‘market rates’ (often higher than he had envisioned when deciding to sell) and then have buyers compete with each other to offer a final sale price higher than the original asking price.

And it is within that model that the CREA, BCREA and VREA now mire themselves.

These associations continue to focus on the seller as the best way to represent and assist their members. An in catering to the seller, Associations steadfastly insist real estate values will not fall in Vancouver.

Marketing strategies (ie. Press releases) are built around this premise. ‘Consumer Confidence’ becomes the issue and strengthening that confidence becomes the goal.

When real estate agents take on buyers as clients, the focus is the seller and building confidence in the buyer to make the purchase is the primary tactic.

And so buyers are told, ‘the market will not fall much further’, ‘the seller will not come down in price’.

It is the easy path and whole strategies are developed to create urgency and overcome buyer reluctance. Persuade the buyer to meet the seller’s price, close the deal, earn the easy commission.

The problem is… the whole industry has shifted. And the Associations dither while opportunity is lost.

The paradigm shift from seller to buyer means that the buyer is now the primary customer and focus. In this type of market, amassing listings is a recipe for disaster. The cost, and maintenance, required in a stagnant seller’s market for a mass amount of listings is the road to ruin for an agent.

Instead… it is the buyer who now is the main focus. Finding buyers, with financing in place and prepared to buy, is far more valuable than signing sellers to listing agreements.

And the opportunity offered to those agents who recognize this is profound.

In today’s real estate market, the Buyer has all of the power. Finally in the real estate industry, the customer is king! The real estate agent who understands it is the Buyer who must be catered to, not the Seller will have a horde of customers beating a path to his door.

And as an agent for your customer (the buyer) you must be absolutely merciless on the Seller. In this market, successful buyer agents don’t ever become concerned with what the listing agent or seller needs, wants or even show a modicum of concern for their situation.

When you go to a “going out of business sale” at a retail outlet do you care why they are going out of business? Of course not, you buy that couch and haggle for the best price and walk out of the store with the best deal you could possibly make.

Did it matter to you that the store took 40 cents on the dollar? Nope.

And it is the same in today’s real estate market.

Recognizing this, Associations like the CREA, BCREA and the VREA should be coming out with the reports and economic assessments which serve to meet the needs of the most important component of today’s market… the buyer.

Rather than engage in a war on ‘consumer confidence’ and spend fruitless attempts at convincing buyers that the economy is not as bad as the layoffs, cutbacks, politicians and media reports say they are… Associations must recognize what is happening and respond.

Like Macy - with his department store Santa who responded to the needs of the buyer, not to the needs of the seller – the first agents to recognize this and shift their tactics will own the market.

And in catering to their agents needs, Associations can then turn their reports to truthfully explain to Sellers the reality of the housing market.

At the moment though, it seems it will take more than a 'miracle on real estate street' to see this happen.


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