Last week the well-known real estate author/speaker/consultant Stefan Swanepoel wrote on Facebook that money is flowing into real estate technology. That observation sparked a heated discussion; many argued that real estate doesn’t scale, it’s too complicated, transactions are too difficult, too expensive, and too emotional for technology to disrupt, and so on.
To paraphrase Darth Vader: I find your lack of paranoia disturbing.
The great Mark Steyn wrote “The assumption of permanence is the illusion of every age.” He wasn’t talking about real estate, but he might as well have been. Because this assumption is widespread throughout society at large, it is also deeply embedded in the real estate industry at large. So I thought it was worth meditating on.
Ends vs. Means
The graphic above is a classic quote from Theodore Levitt, economist and professor at Harvard Business School, often called a founder of modern marketing. His advice to companies is to stop focusing on what they do and start focusing on what customers want. People don’t want a quarter-inch drill, they want a quarter-inch hole. If a new technology comes about that produces a quarter-inch hole more efficiently and less expensively, people will stop buying quarter-inch drill bits overnight.
The history of business is full of such examples. Kodak forgot that people didn’t want film, or even photographs, but memories. Record companies everywhere forgot that people didn’t want albums and CD’s — they wanted music. Cab companies forgot that people didn’t want better taxis — they just wanted to get from one place to another. Before cab companies, buggy whip manufacturers forgot that people didn’t want better, cheaper buggy whips — they just wanted transportation.
People don’t want to hire real estate agents — they just want to buy or sell a house as efficiently and as inexpensively as possible.
Today, that might mean using a real estate agent. Tomorrow?
You could start by asking the 5,925 people who have used Opendoor.com to sell their homes. While the industry sits around saying it’ll never work and who the hell wants to take less money for their home and such, actual homeowners are voting with their wallets. They are saying that yes, as a matter of fact, they would take less money for less hassle.
Not Just Real Estate Agents
The illusion isn’t limited to only real estate agents.
Take the MLS for example. Many of them have forgotten that their customers don’t want a better, cheaper MLS with more bells and whistles. No, they want to know what homes are for sale, to advertise their own listings, and to run comps. Instead of thinking about adding yet another ancillary product that 3% of the subscribers would use, maybe talk to your MLS vendor about the user interface? (Yes, I realize many of you do offer those ancillary products for the “non-dues revenues” that the vendor kicks back to you, but… if you fix the UI, your subscribers might be willing to pay more.)
Brokers have forgotten that agents don’t want a better, cheaper brokerage — they want to make money and serve their buyers and sellers. Yet another happy hour for your agents isn’t really what they want from you, is it? Because if it is, you might want to open a bar instead.
Even technology providers often forget that their customers don’t want whatever latest doodad or gadget they are offering; they want business results. For instance, remember QR Codes?
And the REALTOR Association? Well, let’s just say it’s time they started to remember what their customers/members actually want. Hint: It’s probably not another golf outing or a lavish installation dinner party.
Feel Their Pain
I realize this next part is a bit pat, but… that’s because it’s an eternal truth. Business, politics, society… everything is not about you, but about them. You are a means to their ends.
Whether you are an agent, a broker, a MLS executive, an Association director, or a tech CEO, you have to know, understand, and feel their pain. I know it’s hard, because I have trouble with it myself. I constantly have to remind myself that my advice can’t be about me and what I want. It must be about them and what they’re dealing with, and what they want. Isn’t that what being in business is? Understanding what your customers are dealing with, what their pain points are, and trying to figure out how to address them?
As we try to understand, empathize, and create solutions, we have to keep Levitt’s maxim in mind: people don’t want the means, but the end. They don’t want a drill, but a hole.
The healthy paranoia of a healthy business is not whether someone else has a better drill, but whether someone else can make a better hole. Look beyond your horizons, think broadly about the hole instead of the drill, and you’re far more likely to survive and thrive.
And I can think of no industry more in need of that kind of broader healthy paranoia than real estate.