Apocalypse trilogy, part 2: leading the industry out of the wilderness.
If you're an industry consultant, here's the game plan.
Wait until the industry gets in dire straights. Patience is the watchword, but don't worry, you won't have long to wait. Every industry cycles between boom and bust.
Of course, when your target industry is booming you don't just sit there with your feet up on the desk. No, you make the rounds, hand out cards, go through the motions even though no one thinks they need you. After all, how could you help? Everyone is on top of their game. Their phones ring constantly. New offices spring up, and they're crammed with customers. The industry is in full go-go mode.
Face it, this isn't your moment. Right now you're the answer to a question no one is asking. Just bide your time and wait for the inevitable cataclysm.
Because when the bottom drops out of the market, a reeling industry will react much like a country that's just lost a war, and launch into full soul-searching mode. Why did this happen? Why did this happen to me? Me, a good person. Whose fault is it? Is it my fault? Is it divine retribution? Am I really a bad person or, worse, suddenly irrelevant? Will my customers come back? Will I be here if they do?
Now a busted industry looks, even begs, for answers from people like you.
I hate to interrupt this tedious mating ritual, but has anyone in this room ever heard of business cycles? Has anyone in this room ever thought that maybe the bust isn't about you?
I guess not, because these days the real estate consultants are hatching and swarming, like seven-year locusts, and the industry, or at least a good part of it, is in the mood to beg for deliverance. Whether the industry needs it or not.
I first noticed this phenomenon when Inman News, an online real estate news source geared to the industry, kicked off "Reinventing the real estate industry" with a November 19, 2008 editorial asserting that "the U.S. housing market and the real estate industry are in critical condition and they need a roadmap to recovery". Since then the series has introduced Inman readers to people with visions to share, services to sell, axes to grind and vague unreasonable fears to air. I won't dispute the first half of the editorial's statement, or even a good portion of the second. I will dispute the idea that the industry (as opposed to the marketplace) needs a roadmap out of here, other than the one most industries find helpful to get through tough times: tighten your belt without shooting yourself in the foot, stay calm, and stay the course. Get back to the fundamentals everyone forgets during the good times. Don't panic, don't look for easy answers and don't believe people who say they have them. Keep your head when everyone around you is losing theirs and I can well believe the claim that market downturns offer opportunities.
I can also well believe that the worst thing to do in tough times is turn in desperation to unproven ideas. Especially when the proven ones have worked so well for so long for so many, clients and professionals alike. The downturn isn't a referendum on the real estate industry, except among those who are always holding a referendum on the real estate industry. (Someone who calls himself a wealth advisor marvels on the Internet that more people don't blame the current economic crisis on real estate agents. Someone who writes on this Web site marvels that someone who calls himself a wealth advisor doesn't know that agents are usually outside the mortgage process.) The real estate industry isn't the mortgage banking industry trying to stop the bleeding so it can crawl out of the public's line of fire, or Wall Street hunkering down while it waits for its credibility to come back, or even the travel industry getting whacked by Expedia.
But Inman sees the state of real estate differently, demanding "a dramatic facelift for the industry". "This will prove essential in rebuilding consumer trust and achieving a sustainable housing market recovery." "Trust"? Polls show that most of the people least likely to have used an agent don't trust them, and that most of the people who have used an agent, do. How could any extreme make-over change this? What would be the point? And it'll take more than cosmetics to achieve "a sustainable housing market recovery". And how sustainable is any market recovery anyway, in any industry, when bust always follows boom (always follows bust)?
Sweeping generalizations don't turn around an industry, even one that needs it. And even this isn't the point: Industries don't self-consciously reinvent themselves by self-consciously reinventing themselves. Even if real estate did need a new look and business model, neither would or could come from the yawning vacuum of industry navel-gazing. Least of all would it come from outsiders with their one-size-fits-all platitudes. It would, and does, come from consumers. Lost in all the real-estate-is-a cabal conspiracy nonsense is the certainty that consumers write the industry's rules every time they write it a check. The industry is tethered to its consumers, and rightly so, and not vice versa. Consumers—not the media, not the consultants, not the industry—will provide the impetus for whatever face-lifting the occasion calls for. If it calls for any.
That's my story and I'm sticking to it.
Not that the real estate industry is static or could be. In fact, the industry is continually being, not so much rebuilt, as refurbished. Agents who remember when listing information could be found only in loose-leaf binders are rare these days. Agents who got into real estate from the tech industry are common. Agents who offer yesterday's skills to today's consumers see their business dwindle, get discouraged and fade away either on their own or with management's encouragement. It's the inevitable sloughing of the old skin that any industry goes through to stay relevant. The old ways aren't so much replaced as refined. Radical change usually arrives stillborn.
But what, you ask, could be so terrible about listening to the consultants? I could answer this by telling you about the managerial and organizational theory classes I took at Affordable State University, classes loaded with platitudes so fuzzy they made the mushy theorizing of the other "soft" sciences seem as diamond-hard as the Ten Commandments. Classes taught, as I think back, undoubtedly either by consultants who doubled as professors or by professors who doubled as consultants.
But that's probably not fair, because I don't know much about managerial and organizational theory or consultants, so instead I'll respond with this quote from the first person to take up the Inman challenge. In "Building tomorrow's brokerage", this industry consultant, whom I'll call Guru, begins by quoting real estate writer Blanche Evan's description, back in 1999 when, according to Guru, dinosaurs roamed real estate, of "the eight main services brokerages offered for sellers and buyers":
Sellers
Buyers
"This was 10 years ago", Guru intones. "A quick scan of the Web reveals how obsolete many of these services have become...what you did as a broker 10 years ago is no longer special...brokers are looking at a grim future and questioning both their services and value. And for good reason."
Faithful readers will recognize this as the latest dreary iteration of this changes everything! But it's Guru, not real estate, that's stuck back in 1999 with his message chock full of "let's revolutionize real estate with a really cool Web site" dot-com naïveté. Even the people who develop "really cool real estate Web sites" don't believe this anymore.
Others may recognize Guru's strategy as "tear them down so they'll pay you to build them up". More to the point, my former and current clients will recognize those oh-so-1999 services as ones I continue to perform, not because I jealously guard my turf, but because no other source performs them adequately.
My clients know this. The clients of every competent full-service agent know this. At least one real estate consultant doesn't.
Hey, maybe we should make the clients the consultants!
We did. They are. When enough consumers say "change", the industry will change. If and when they do, the change will almost certainly be incremental. And it certainly won't be contrived.
Next, Apocalypse trilogy, part 3: Nemesis wears a loud plaid sport coat.