Many industry participants have now had the chance to hear and learn about the new Pinnacle Group Program. Sponsored by the National Association of REALTORS® and over 50 state and local REALTOR® associations the Pinnacle Program is focused on reengineering both the state and local REALTOR® association. The goal of this ambitious program is to ensure that, moving forward, state and local associations become a recognized part of the new industry solution.
Given the priority which has been assigned to this goal, it might come as a surprise to many that Pinnacle’s first objective will be to assist participating associations to understand the intricacies of creating and respecting positive relationships with consumers.
In an attempt to head off a massive protest relative to how such a relationship would inappropriately interfere with brokerage operations the following thoughts are provided.
There are two forms of consumer relationships as they relate to the real estate marketplace: Civic and Transactional. “Civic” based consumer relationships is founded upon the common interests of the consumer and another party in the benefits of living in a community that celebrates the values of a quality community including the virtues of private property and homeownership. This relationship does not exclude consumer households that must, or choose to, rent their residential accommodation.
“Transaction” based consumer relationships are created around a consumer’s active efforts to qualify for and complete an actual real estate transaction. The Pinnacle program recognizes and honors the fact that the transactional consumer relationship is the exclusive province of the real estate broker and agent. Going one step further, the Pinnacle program also advocates the idea that the existence of a positive “civic” relationship, indeed a partnership, between the “yet to be transitionally active” consumer and a state or local REALTOR® association will have great value in promoting a positive consumer attitude regarding the role of the REALTOR® in the transaction.
Why this sudden interest in consumer relationships? The fact is that across the North American economy the battle for the hearts and minds of the real estate consumer has now taken center stage. As a starting point for the discussion, it is important to note that today’s social media armed, almost totally “independent”, consumer is the single most powerful force in the American marketplace.
Internet access on broadband, mobile technology, information about virtually every consumer related real estate interest and the power of social media have all enabled this new consumer.
Armed with these resources, today’s consumer has become their own advocate and through the power of social media has also become their own judge and jury with respect to issues of credibility, integrity and transparency within the real estate space. Adding to this power are consumer-powered agent rating systems that have become an accepted and even expected part of the consumer landscape.
The real estate industry, marketplace and transaction have experienced and are experiencing the full effects of the new consumer power and influence.
During the same period of time that the consumer has increased their community based power and influence, the REALTOR® movement has decreased theirs. During the post WWII economic boom real estate brokers were some of the most powerful individuals in almost every community. As a group they were very successful and prosperous, having taken full advantage of the housing aspects of the post war economic boom. Brokers were responsible for developing millions of new housing units and found success in condominiums, collectives, apartments and subdivisions.
These financial successes brought opportunities to assume powerful appointed positions as directors of banks, hospitals and other community positions including elected office and/or access to those in elected office.
Beginning with the rise of “agent centricity” in the 1970’s, the aging of the post WWII power broker, and the drop in the profitability of the brokerage business model, a shift in civic power and influence began to occur. By 2003, the majority of brokers and brokerage executives had to work full time just to meet the multiple management and ownership challenges that had developed.
Consider the impact on brokerages dealing with an accelerating market that produced 7.5 Million transactions in 2005, the collapse of the mortgage market in 2006, the recession of 2007 and the market collapse of 2008 followed by the market rehabilitation of the past five years. Each of these seminal events carried with it a corresponding financial and power impact upon brokers and brokerage firms.
In today’s real estate marketplace, very few brokers and even fewer agents can be classified as being powerful and/or influential in their state or local communities and even less can lay claim to the level of financial and civic power and influence enjoyed by their predecessors. There is just no time for brokers or their managers to become engaged in their communities. Out of some manner of respect or courtesy, this vacuum has not been either recognized or filled by either REALTORS® or REALTOR® associations.
This civic energy vacuum has, on the other hand, been filled by thousands of Generation X and Y consumers whose focus on quality of life issues has driven them into volunteer and elected positions of power and influence in their cities, towns and communities.
This situation is made even more difficult by the fact that the REALTOR® movement has, for some good reasons and some not so good reasons, elected not to address the continuing “respect” crisis that has seen consumer respect for REALTORS continue to hover around the bottom of the scale. The industry has adopted an attitude that seems to say; “if they don’t respect us then why do they continue to use us?”
The answer is simple. Consumers like the REALTORS® they know, but disrespect the species at large. Recognizing this new order, alternative brokerages and “non REALTOR®” real estate marketing programs such as Zillow, Trulia and Redfin are designing websites, tools, mobile apps and online services to capture this new consumer before they elect to access the “one we know and love” REALTOR®.
In this situation it would appear that REALTOR® associations are the only REALTOR® resource available to bridge both the current power vacuum and respect gap.
For those who still question the need, consider what lies ahead.
The stressed economic events of the past several years have placed state and local governments in dire need of raising revenues to fund what some believe are out of control costs. Increasingly, state and local governments are looking to the taxation (both taxes and fees) of residential properties as their “golden egg.” At some point, these increased burdens upon homeownership will break the younger generations’ ability to meet the financial challenges of owning their own home.
The evidence also suggests that, as the lifestyle preferences of Generation X and especially Generation “Y” began to play out in communities across the country, those preferences that appear to be “different” than what is accepted by the “in control” Boomer generation politicians are being blocked and/or frustrated by statutes and ordinances.
In all likelihood, for both financial and cultural reasons, individuals and households from the X and Y generation will not be able to and/or may not elect to enjoy the homeownership experience in the same way as the Boomer Generation did. Most popular among these preferences is the growing idea of “doubling” up, discussed by Stan Humphries of Zillow at the “Gathering,” where two or more households share the same property. (11.7% of households at this time)
Some experts have suggested that doubling might be the solution for the “McMansion crisis” brought on by leading “boomers” who want to downsize from their 3500 – 5000 square foot homes, but find that there are no younger households who can afford them.
Accordingly, in order for a new market to form and new lifestyle preferences to be accommodated, many communities will have to alter their current zoning and/or land use regulations. The failure to make these changes could have a devastating effect upon both homeownership and private property rights. This is going to require power and influence.
All of these factors and considerations serve to validate the reasons why state and local REALTOR® associations should work to create “civic” relationships with the consumers of their communities. We can do this.