Excerpts from the speech given by Jacksonville’s Cathy Whatley to the Real Estate Connect conference last month in San Francisco. Whatley is president-elect of the National Association of REALTORS.
It’s a pleasure to be here today to share some of my thoughts about technology. It’s revolutionizing our marketplace. And it’s galvanizing REALTORS® throughout America to embrace and leverage technology and its tools to our advantage.
NAR, through our new Center for REALTOR® Technology (CRT), is moving ahead to harness technology that serves our REALTOR® members. To do that, the Center is working with vendors to ensure that developing technology is REALTOR-friendly and keeps the REALTOR central to the real estate transaction.
Real estate professionals like me are looking to be in better control of technology and searching to find ways to use technology tools to our advantage.
One-on-one
As real estate professionals, we’re still in the business of one-on-one communication with our customers and clients. We need tools that help facilitate efficient and effective communication and interaction where the consumer sees greater value in the real estate professional’s involvement throughout the transaction.
So, where are we today? Let me begin by talking about the Internet, which – as you know – has sparked fundamental change in real estate.
One thing is clear: the real estate professional is no longer at risk. REALTORS® and other real estate professionals have not been relegated to the sidelines.
Online real estate shoppers are not simply browsing the Internet. They’re also contacting practitioners and following through with purchases.
Both buyers and sellers, whether gathering information over the internet or through more traditional means, recognize the value a real estate professional brings to their real estate transaction.
Homebuyers and sellers need a professional to complete the legwork and paperwork, to negotiate the deal, and resolve the unexpected. And there is always something “unexpected” that happens in every real estate transaction!
Expertise needed
Last month, we released our 2002 Profile of Home Buyers and Sellers. It shows how consumers are getting more and more comfortable with gathering information through the Internet … and it highlights how REALTORS’ expertise and knowledge remains critical in the transaction and didn’t disappear as use of the Internet by a mass of consumers flourished.
The for-sale-by-owner (FSBO) data is our strongest proof of this.
The results show that homebuyers are using professionals more than ever. In fact, it shows buyers who use the Internet are even more likely to use a real estate professional.
According to the study, the number of homes sold directly by owners without involvement of a real estate agent continued to decline. Let’s look at some of the numbers.
The percentage of FSBOs selling their own homes hit a cyclical peak of 18 percent in 1997.
Now think about the strength of our real estate market over the last 3 to 4 years. We have had markets of multiple bids, bids over list price – way over list price.
In my time as a real estate professional, I had never previously done media interviews on counseling buyers on how to submit their best proposals in light of the strong sellers’ market.
Should they waive all inspection rights, have prearranged financing, agree to purchase “AS IS”? The questions were endless. Sellers were in control.
So look at the numbers of owners selling on their own. In 1999, the number fell to 16 percent, and it fell further to 13 percent in 2001 – despite one of the most “sizzling” sellers’ markets in history.
If sellers aren’t inclined to attempt to sell their own property during peak selling years when buyers are combing the market for available housing, then it is unlikely they will take a different position as the market becomes more balanced in supply and demand.
Our survey confirms that while the Web is great in providing information, consumers rely on real estate professionals to provide context to the research they are gathering through the internet. They rely on their agent to counsel them about the information they have gathered.
Again, they need their agent to guide them through the negotiation and transaction process. They need their agent to handle the “unanticipated” issues that arise. They need – and value – their agent’s expertise and involvement to help ensure a smooth transaction.
What I’d like to do now is share with you some specific findings of the Profile. I’d particularly like to focus on Internet use by homebuyers last year, as well as their expectations when dealing with real estate professionals.
We found that 62 percent of homebuyers with Internet access used the Web to shop for a home.
Of the 62 percent using the web, 94 percent of those homebuyers were seeking home listings on real estate Web sites.
If you’ve seen the study, you may recall that the most widely used site was our own – REALTOR.com, the largest database of homes for sale. REALTOR.com attracted 66 percent – or nearly two-thirds – of Internet home searchers.
Thirty-five percent of the Internet users looked for information about the area, such as schools, shopping, and proximity to transportation systems.
And the survey had a very key finding. Those who search on the Internet to purchase their homes are significantly more likely to use real estate professionals than traditional homebuyers.
Help from Internet
Why is that?
There’s no single explanation for this, but we have our theories.
For one thing, Internet users are more likely to be young professionals who place a higher value on time.
Our survey shows that users of the Internet as a home search tool tend to be younger than non-Internet users … 36 years old versus 40. And they earn more … $77,100 a year, compared to $65,100.
Furthermore, most online users (63 percent) said using the Internet saved them time in their search for a new home.
The web allowed them to be more efficient, to “touch” a home more quickly. And in doing so, they could weed out unwanted prospects. They could save time by not visiting every single property listed.
In addition to making the home search more efficient, technology is helping homebuyers extend the size of the marketplace. It’s allowing buyers to look beyond their current geographic boundaries to find a home.
When distance is taken into consideration, Internet users who are looking to purchase in the same city or town tend to purchase homes that are 12 miles from their previous residence, versus 7 miles for all homebuyers. The web’s exposure to more potential properties in their price range allows them to expand their potential home search market.
We found that Internet users are likely to use a real estate agent because they, as consumers, are now more informed. They have spent weeks researching information important to them about homes and schools. They have a better idea where they want to live. They know how much they want to pay to purchase a home.
And because they have been so thorough, because they have a better idea of what’s involved in the overall home-buying process, they know they need help. The more they know, the more they want a professional.
This is borne out in the survey, which shows Internet users better recognize the benefits of using a REALTOR® to help them find the “right home” to purchase.
‘The right home’
When asked what they wanted most from their real estate agents, for example, 73 percent said help finding the right home.
Finding the “right house” means more than just driving them to show them properties. Buyers want to ask questions that only a highly skilled and knowledgeable real estate professional can answer for them. The web can only provide information; it cannot convert it to knowledge that will help the consumer make an informed buying decision.
That’s not to say that traditional buyers don’t want their real estate agent to help them find the right home. In fact, 60 percent of traditional buyers gave this as an answer. However, because many traditional buyers have not done as much in-depth research as Internet consumers have, they have other things that are also very important to them where they need agent assistance.
Finally, Internet users will use a real estate agent because of online REALTORS® promotion.
This is – yet – another sign that REALTORS® are controlling technology to serve our own needs. We’re using online marketing and communication tools, and it’s working for us.
More and more consumers will look to the Internet for information when deciding to purchase a home. In fact, virtually all methods used by home buying consumers in doing their initial home search – including yard signs, newspapers and home magazines, and even word of mouth from friends and relatives – declined in the 2002 survey, except the internet.
An equal number of consumers looked at newspaper ads and online information. Where classified advertising used to dominate the market, consumers are branching out to other sources of information, and real estate firms and agents are responding.
With this type of interest in searching for online real estate information, it should be no surprise that the web is used by 53 percent of agents as a marketing tool. This represents a 14 percent increase from the year 2000.
Other trends from our survey show that homebuyers who searched for residential property on the Internet purchased more expensive homes.
Also, 41 percent of the Internet buyers were first-time homebuyers – about even with all first-time homebuyers. As those who are growing up using the Internet become potential homebuyers, we will probably see that number increase.
Helpful experience
Housing information online often transitions to contacting real estate professionals. And as the survey shows, homebuyers who do use the Internet are less likely to purchase their home directly from the previous owner – at least not without assistance from a real estate professional.
Overall, the good news from the survey is that homebuyers who used the Internet found the experience to be very helpful.
Virtually all homebuyers who used the Internet in their home search found it to be at least “somewhat valuable,” with just two percent reporting the experience to be completely invaluable.
The survey also shows that the majority of homebuyers who used the Internet found such features as detailed property information and maps of home locations to be “extremely valuable.”
In a nutshell, what the Internet information from our Profile of Home Buyers and Sellers continues to confirm is, in general, homebuyers use the Internet as a search tool in conjunction with – not as a substitute for – the services offered by real estate professionals.
If there’s a lesson to be learned, it’s that today’s real estate professionals must be technologically savvy and able to work with homebuyers and sellers who are wired into the Information Age.
This will become increasingly more critical, particularly when you look at future demographics and the technological savvy of potential homebuyers.
For example, between 1.1 million and 1.2 million new households will form in each year of this new decade. These households represent potential new homebuyers.
Baby boomers will be the prime market for trade-up, upscale, and vacation homes. And their children – Generation Y, between the ages of 20 to 35 – will be the main source of future homeownership growth, particularly as they begin looking for starter homes … and as they become key candidates for the trade-up market after 2020.
This solidifies there’s a market out there. But when you translate the potential of these buyers into their ability to really use the Internet, it’s phenomenal.
Generation Y is extremely knowledgeable about the Internet. It’s one of their real strengths. Most of them have been using the Internet in school for years.
Seniors, too
Even when you tap into the senior market, you’ll find more elderly homeowners who are adept at using the Internet. They not only have time on their hands to use this technology, they’re more comfortable using it. Many have their grandchildren to thank for that.
So when you look at the demographics, it behooves REALTORS® to be as technologically savvy as their customers. We already know that more REALTORS® are latching on to technology.
Last year, more than 40 percent of our REALTOR® members had a Web page, and more than 75 percent of them used e-mail in their real estate practice. Furthermore, 80 percent of all residential real estate firms now place listings on the Web.
As you can see, REALTORS® have found a way to thrive in the new information technology environment. Now, NAR is moving ahead to the next level to harness technology to create products and services that serve our members.
That’s where our Center for REALTOR® Technology (CRT) comes in. As I stated at the beginning of my remarks, we’re looking to work with vendors who will develop technology products and services that truly serve REALTORS.
Everyone in the business of providing technology services to REALTORS® should take notice. We’ve moved from being at the mercy of technology to taking advantage of technology by promoting simplified interfaces based on open standards.
No longer will our members spend money on products that don’t meet their needs. As real estate professionals, we will use technology that helps us do our business, rather than change our business to fit the technology.
And we’re prepared to constantly remind our members to protect their data from being aggregated and/or distributed in ways that could be costly to their business.
It’s that simple … and it’s that important.
At the same time, we want to help reduce your cost of doing business by helpingyou create products that will meet REALTORS® needs.
Let me tell you a little about CRT. When we opened the Center last August, we started it on a three-prong program of advocacy, education and implementation.
First, as a technology advocate, CRT plays a critical role maximizing the technology investments of REALTORS. It works with vendors to define and drive market segmentation. It assists vendors who want to demonstrate their solutions to REALTORS. It promotes features that assist REALTORS. And it encourages the adoption of technology that works now.
But CRT is also forward looking. It looks at emerging technology to see what should be used in the future to keep REALTORS central to the real estate transaction.
Secondly, in its education role, CRT holds talks for members on upcoming technology and what it could mean.
For example, at our Speakers’ Series in February, Danger, Inc. talked with us about their new HipTop product, which converges five computing functions into a single device.
The HipTop – which will combine computer, cell phone, pager, e-mail, and organizer functions – is currently in initial testing with a December release date.
At least three other companies – Samsung, Nokia and Sharp – are also coming out with similar devices. All of these products will use internationally recognized open standards, which will make it easier for REALTORS to access information when using any of this technology.
So we have at least four vendors who are developing technology to converge various computing functions into one product. It’s up to the Center to help these vendors realize the potential market that the real estate community can drive to them, thus getting vendors to focus on us as an early adopter for any technology they might create with us in mind.
To highlight this point, we did member research that looked at the kind of devices that REALTORS use in the field. The research showed that more than 60 percent of our members carry between 4 to 6 devices with them for their real estate business.
We basically did this market research in order to show vendors that we are a market and that we should be recognized as such. And as I mentioned, the industry is responding in looking at real estate-related uses for convergence devices, such as the HipTop.
In its third role – implementation – CRT writes proof-of-concept demos to evaluate tools or technologies, as well as reference implementations of standards or technologies that are important to the industry.
More information
There have been numerous presentations given at conferences around the country. Surveys have been done and reported on, and there are six software projects that are either underway or have been completed. You can find out more about them on the CRT web page at REALTOR.org.
CRT is already working with vendors to help them incorporate features that REALTORS need into their products, and it is always open to working with more of you.
For example, to help promote emerging technologies such as the Real Estate Transaction Standard (RETS), CRT has written and continues to improve a reference implementation RETS server.
This helps you as a vendor by letting you test your products against another server that can be obtained at no cost. Also, it lets you look to see how a certain feature can be implemented by examining our source code.
And because of its open source nature, another vendor can take the reference implementation, change and improve it, and use it as a basis for its own product.
By promoting open standards like RETS, we believe the industry as a whole can save time and money by using common protocols.
The RETS Reference Implementation will shorten your development cycle, thus also saving money, so value-added products can appear on the market faster.
This is a great way to allow new vendors to enter the market because there are no proprietary concerns. It’s an open system.
It also allows everything to easily work together, thus avoiding wasted time trying to get different technologies to integrate.
In the end, this all translates to lower costs for REALTORS® because vendors can get their products to the market quicker and cheaper, and pass those savings on to our members.
It also allows REALTORS® to get the information they need to do their job faster and easier than in the past or to use it in ways never imagined before.
As you can see, we’re moving full speed ahead. Potential buyers, as well as REALTORS, have latched onto the Internet. So there are ongoing tremendous possibilities with this technology.
And, again, we’re very open to new products and services that you can deliver to help facilitate even greater advances in this area and many others.
As we move forward, our expectations are high.