Charlotte Property Management Weekly: 2011 Should Be a Fun Year to Work in Real Estate! Really.

“What?? Are you crazy? Is moonshine still a big draw in Charlotte?” you may say.




Sure, I’ve read the news and understand the dire straits the housing market is in. And, no, there is no gold rush (that I’m aware of…) coming to Charlotte; we’re getting hammered like everyone else. My reaction is just based on the sheer need of buyers and sellers to transact real estate and what that means to real estate professionals.



Pat Riley, the legendary professional basketball coach, used to tell a story to his players before big games. He would talk about a small, blue-collar company filled with 9-5 workers; they would clock in, clock out, and never really form any real relationships with each other. Every day was filled with just going through the motions to earn a paycheck.



Then one day, it was announced that their company had won the bid to send the first rocket to the moon. And then, something strange happened. The largely unmotivated workers started coming to the office early and leaving late. They would meet up together after work and really started to get to know each other. Close relationships began to form.



At this point in the story, Riley would look his team in the eye and say, “You know why? They just wanted to make history.”



I tell this story because what is happening in real estate right now is historic. The gigantic number of buyers and sellers facing severe sales issues has never been seen before. But great problems create great opportunities. Innovation is always fostered in such situations.



And that sort of makes it fun if you care about learning in this profession. Things could be normal and the real estate business would have its usual flow of sales. Life would be fine and things would be controlled and steady. Yawn. And yawn.



Or there could be a broken market, problems abounding, millions of customers desperate for new ways to solve old problems, an industry in need of fresh innovation, and people open to trying anything that sounds like it has a chance of working. Billions upon billions of dollars and assets are ready to be disbursed to whoever can come up with the killer idea to fix overall market liquidity. And this idea can be thought up and disseminated from your computer, wherever you live, right now. That’s exciting!



And fun! Here’s wishing a profitable (and innovative) 2011 to you all. Thanks for reading!



Brett Furniss is the President & Owner of BDF Realty (“Charlotte’s Most Innovative Property Management & Investment Company”), and Rent-To-Sell Realty (“When You Need a New Solution to Sell Your Home”) which specialize in rent-to-own (lease options) and rent-to-sell homes. His newest book, A Real Estate Agent’s Complete Guide to Representing Rent-To-Own (Lease Option) Tenants (Delight Clients, Fill Vacant Homes, and Earn $2,250* Upfront! (*Minimum!)

Charlotte Property Management Weekly: Innovate Quickly or Die! In Real Estate?

“The economy will be back and things will be back to normal.” (Calm Charlotte Realtor)

"Only the Paranoid Survive" (Best-selling book by former Intel CEO, Andrew Grove)

“Financial Crisis
Stalled too many customers
CEO no more”
(Haiku twitter message posted by just fired CEO of Sun Microsystems, Jonathan Schwartz, 2/4/10)

The economy is moving fast. And it’s not just about competing with people in your town or region; now the competition is global. As Pulitzer-winning journalist, Thomas Friedman’s latest book’s title says, the world is "Hot, Flat, and Crowded". Putting aside the global warming “Hot” part of the title, the world is “Crowded” (with a rapidly growing population) and the internet has made it “Flat” (where people can compete with you from anywhere on the globe). This is scary stuff- more people in more places are going after your piece of cheese.

So when you stay still, the competition is gaining on you. You will not win in this global economy doing the things you’ve always done. In 2007, the National Academy of Sciences said that approximately 85% of growth in the world economy is due to innovation (ideas), with only 15% coming from other factors like productivity gains. As Jeff Wacker, the EDS futurist said, “The bullet that kills you never takes you between the eyes. It always hits you in the temple. You never see it coming, because you’re looking in the wrong direction.” Innovation comes rapidly and without mercy. Capitalism kills.

For further evidence of that, let’s look at the Fortune 500 (the 500 biggest companies in America). Between 1955 and 1995, the turnover on this list was around 20 companies a year. From 1995 to present, the turnover is 8% annually and growing. The Fortune 500 in 1995 only had 250 original members left in 2008. The companies that continued to innovate remained relevant, while the ones that didn’t were left behind.

How does this happen? Well, companies come up with new ideas and are able to sell them initially for a high profit margin. However, other companies from all around the world copy these ideas and make them cheaper and better (decreasing profit margins for the idea creator while lowering prices for consumers). Another way is that some innovations are completely disruptive and change the very face of the industry; think about the digital camera destroying Kodak’s Polaroid, and Apple’s IPod rendering the portable CD player obsolete. A better solution comes one day and you can be out of business the next.

So what does this mean to real estate? It means that we better come up with ways to innovate and keep ourselves relevant. With most big real estate companies staunchly staying with traditional buy and sell services, they have made themselves susceptible to a disruptive, game-changing idea. Consumers are frustrated and want to be able to transact real estate; their business will flow (in a heartbeat!) to whoever can do it the fastest, best, and cheapest. Cost cutting measures, such as mergers to achieve economies of scale, will keep big real estate firms solvent for a little longer, but not relevant and growing.

When the economy and real estate market were booming earlier this decade, new entrants with new business models (RedFin, Zillow, etc.) offered niche real estate services for less money; this worked because they significantly kept their overhead lower than traditional firms which allowed them to still earn a good profit margin (which also was cheaper for consumers = good). Some brokerages went the discount route to compete against them, hoping to compensate for the loss of profit margin with increased sales. As this unfolded, sales commissions went on a downward trend. This should not be alarming; this is the natural activity of our global economy. However, earning less money for the same amount of work is disconcerting.

But the possibility (and likelihood!) of a disruptive innovation is potentially much scarier. For example, what happens if Google decides they want to offer real estate services for free? They are already mapping our listings. What about if they mail out free lockboxes to homeowners and find a way to assuage their security concerns? Consumers could do their own showings. What if they gave homeowners the ability to list their own homes on Google’s nationwide MLS system? What would this do to our jobs?

This, or something similar, WILL happen. And it will happen soon. Every industry in our global economy is ripe to be attacked and reconfigured, especially those that are considered to have an unwarranted high profit margin (like real estate). Nothing is sacred.

That begs the question: How will you stay relevant? How are you doing things faster, better, and cheaper for your customers?

Brett Furniss is the President & Owner of BDF Realty, “Charlotte’s Most Innovative Property Management & Investment Company” specializing in rent-to-own (lease options) and rent-to-sell homes. He is the author of the FREE E-Manual entitled “How to Rent-To-Sell Your Own Home” which details how to get the most potential buyers to your home in this challenging real estate market.