The next series of innovations in real estate will empower savvy individual brokers to begin wiping out up to fifty percent of their competition over the next five years—not by withholding or controlling information, but by offering exactly what home sellers and buyers most want.
The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete. –Peter Thiel, Zero to One
For the real estate industry the above quote is true. But there are nearly two million brokers servicing five million home sales each year, all while technology has made much of a broker’s job easier and their clients far more enlightened. So the quote is only true for a few, smart, brave brokers willing to use innovations to better meet their market’s needs while eliminating their competition.
Brilliant thinking is rare, but courage is in even shorter supply than genius. –Peter Thiel, Zero to One
Don’t expect any radical innovations to come from NAR, your franchise, Project Upstream, the National Brokers’ Portal, your MLS, or even Zillow or Realtor.com. All of these major players’ incomes are based on everything remaining very much the way it has been for the last decade. With just a few exceptions expect only incremental improvements to existing systems from these players.
By default then radical innovations will come from outliers—those with nothing to lose by breaking the status quo and everything to gain by meeting the market’s desires.
The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man. –George Bernard Shaw as quoted in Malcom Gladwell’s David and Goliath
Invention is a terribly frustrating, time consuming, expensive, and dangerous endeavor—as you could easily lose everything you have if you fail. And perhaps just being an early adopter of any radical innovation may have similar hazards for you if you apply the wrong innovation to your business. But your only other choice is to offer the market pretty much what every other broker also does.
Remarkable marketing is the art of building things worth noticing right into your product or service. Not slapping on marketing as a last-minute add-on, but understanding that if your offering itself isn’t remarkable, it’s invisible. –Seth Godin, Purple Cow
How will you recognize these innovations so you can take advantage of them before your competition does?
First, they will be based on meeting the desires of the marketplace over everything else.
Second, they will look and function completely differently than the millions of broker websites and portals do today.
Third they will occur at the place your market is: on the internet.
And fourth, they will meet Seth Godin’s requirement of being so fresh and brilliant that the marketplace will talk about them and seek them out.
You need to be investing in the Purple Cow: products, services, and techniques so useful, interesting, outrageous, and noteworthy that the market will want to listen to what you have to say. No, in fact, you must develop products, services, and techniques that the market will actually seek out. –Seth Godin, Purple Cow
Do sellers and buyers need another standard website or portal—even a prettier one? No, there are probably over two million real estate sites on the internet. Do they care about a superior CRM program? No, that does not move their dreams forward. Then how do you know which innovations to seek out and implement?
…Start with a problem that you can solve for your customer (who realizes he has a problem!).–Seth Godin, Purple Cow
Home buyers’ biggest desire (problem) is to find their perfect home. Yet every real estate website is terribly burdensome for buyers. Websites force the buyers to select a price range, bedroom count, and bathroom count, then dump on them a list of 200 homes, essentially saying “dig through these homes and if you ever find one you like call us—we need the commission!”
Buyers don’t fall in love with a home based on bedroom count—all 200 homes on the list have an acceptable number of bedrooms. They desire and seek out homes with specific qualities triggering them to envision future life events there. The home with the greatest number of these emotional triggers is the one they fall in love with and buy.
Your home buyer innovation will allow buyers to automatically find homes based on their desired qualities, not bathroom count.
Home Sellers’ greatest desire (problem) and biggest fear revolves around pricing and preparing their home for sale. And they’re going to spend all of their time staring at Zillow’s Zestimate unless you can offer them a better automated valuation for them to play with on the internet.
Your AVM innovation must not only offer sellers a value, but teach them what buyers in their very neighborhood desire and how meeting their specific desires increases a seller’s home value. They need to know in a straight up list which qualities of a home create the most value and demand. The sellers can then understand value and correctly price their home, prepare their home for sale, and market their home. They win and you win.
And speaking of you, your greatest desire (aside from being rich, retired, and driving a Lamborghini around Hawaii) is a powerful stream of quality leads. Providing the two innovations listed above will do this for you, in conjunction with dominating local search. In a previous article I alluded to how you can dominate hyper-local search, but you have to be entrenched before the portals attack this position. This kind of mass-customized marketing innovation could well create for you a fortress against even the largest competitors. This innovation you can build by yourself.
If you have several options of implementing the innovations above, how will you know which to use?
Proprietary technology is the most substantive advantage a company can have…Proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage.
…Every business is successful exactly to the extent that it does something others cannot…each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.
The lesson for entrepreneurs is clear: if you want to create and capture lasting value, don’t build an undifferentiated commodity business –Peter Thiel, Zero to One