Tuesday, December 05, 2006

How are online social networks going to change the real estate industry?

I’m going to play devil’s advocate for a moment. Many of us are online and blogging specifically to attract attention, drive web traffic and hopefully close clients. I love to write, but even I have an ulterior motive when I evangelize about prospecting engines. We are spending innumerable hours reading, posting, and interacting online. For me this addresses a need to express myself and a desire to teach. However, I want to post the question, is this new movement toward online social networking really as pervasive as everybody is saying? Are a multitude of myspaces going make up the entire landscape of the internet of the future? Finally, are online social systems really going to affect how we treat real estate transactions; which traditionally require a lot of face to face interaction?

My personal feeling is that much like online commerce, this new trend of social networking will have a period of rapid growth over the next two years as venture capital funds the new wave of Web 2.0. This growth will lead to a small bubble (I am getting tired of the term, but much like America declares war on everything, American economy sees bubbles everywhere) which will result in the platforms and technology stalling out for a few years. Finally online social networks will be adopted as a main component of human interaction and the technologies of Web 2.0 will grow at a calm but steady pace until the next revolution. The reason that I feel that this is what is going to happen is that it mirrors what has happened in the past. The most recent example is the dot com bubble, but farther back you can see this same trend in numerous technological revolutions. I think the rail industry experienced this at the turn of the previous century and provides a good example of the trend.

With that prediction for online social media in mind, I feel that this industry is going to change as a result of these new technologies, but the changes are going to be in some very unexpected ways. The internet has been called the great equalizer because it levels the playing field between big organizations and small businesses. For real estate the internet equalizes the playing field and is continually moving to eliminate inefficiencies in this industry. In addition, social networks are serving to create professional connections between real estate professionals that will serve to grow the overall position and service offering of the industry. Finally, these networks serve to generate close relationships between REALTORS and potential clients.

Personally my view of how the real estate industry will change is that real estate agents will become more of a value-added consultant in the future as many of the tasks that were once under the exclusive purview of REALTORS (CMA’s, MLS Listings) become accessible to everyone. Competitive agents will move their services up the value chain to help clients negotiate transactions and navigate the litigious waters of the real estate industry. Many of the inefficiencies in the transaction will be eliminated and communication technology will streamline the appraisal, financial and documentation process. It is difficult to predict the breadth of the changes that will occur in this industry over the coming years, but I think we all agree that this industry is going to change.

1 comment:

Derek Burress said...

Speaking of myspace, I actually wrote a brief except about that the other day in my blog which I later removed. A Realtor friend and I tried an experiment over Thanksgiving by sending out a bulletin with a hidden tracker in there. She had well over 1455 friends on here list compared to my 8. Anyways, out of 1455 people who were on here friends list mostly other Realtors and mortgage professionals, only 43 people actually opened the bulletin. To me that proved right there and then that it wasn't worth my time promoting myself on there.