Real estate rides into the info age
by Phil Burgess, Unabridged from the Life section of the Annapolis Capital, Sunday November 11, 1994
ANAHEIM, Calif. — “It’s a whole new world.”
So rings the theme of the 87th annual meeting and trade exposition of the National Association of Realtors. It’s an apt theme because revolutionary changes hitting every other information-intensive industry are about to hit real estate.
Nearly 17,000 people carne here last weekend to participate in business and education sessions. I came because I was curious. I wanted to see what is happening in an industry used by close to million Americans each year as they buy and sell homes, vacation properties and the like.
Real estate is a huge industry, accounting for about one-fifth of the U.S. economy. The buying and selling of real estate, managed by more than 1.2 million licensed agents, is an information-intensive business that relies primarily on a broker’s control over a list of nearly all the homes for sale in an area served by a group of Realtors. Called MLS — for Multiple Listing Service — this near monopoly is about to be unhinged, not by reform legislation but by new information technologies and new forces in the marketplace. Because new information technologies are not kind to governments, publishers or any other institution that tries to control the collection or dissemination of information, the real estate industry is headed for revolutionary changes.
At first glance, it appears that people in the industry understand that the revolution in telecomputing (computers + software + telecommunications) will soon change their business forever. NAR leaders created a program that included several education sessions on the use of technology and the exposition hall, with more than 900 exhibits, looked more like a computer show than a real estate show. But if the new paradigm defined the structure of the meeting, the old paradigm described the content.
Most of the computer technology here is oriented toward personal information management and improving office productivity. Very little is oriented toward the use of kiosks, bulletin boards or wireless or portable systems that would make things more convenient for the customer. In fact, a recent survey of real estate professionals showed that less than 50% use desktop computers on a regular basis and less than 5% use portable computers. That’s not a good sign for incumbents in this business.
Even more dramatic evidence that this industry is headed for a technology-induced buzz saw was apparent on Saturday, when a major session on using business and information technology to improve profits drew about 400 people in a room for 2,000. At the same time, a session on improving profits by using “tricks of the trade” to resist giving customers a discount on the sales commission had a standing-room-only crowd of 2,100.
Real estate is unlikely to escape the fate of nearly every other information-intensive industry, where new telecomputing technologies reduce the number of middlemen and increase the volume and speed of transactions while often reducing the profit on each. Result: New players (banks, telephone or CATV companies), more choices and convenience for the consumer, lower prices, and more income to fewer but more productive agents. The survivors will be those who ride the tide of change sparked by new technology.
The wake-up call was issued in Anaheim. I’m not sure it was heard.