Everyone knows the story.
Back in the Real Estate Dark Ages, there was an MLS book. That’s right. An actual physical, printed-on-dead-trees book containing all the area’s listings. Every few weeks, it showed up at your local real estate office. Agents gathered ‘round, poring over The Book, searching out the perfect home for their customers.
Then the Internet arrived and all of that changed. Listings previously locked in printed pages accessed only through your local real estate agent now flickered across every screen in the country. Anyone can find their dream home, online. The information freed, the consumer wins.
This is the story that we all know.
The less-told, more varied story is what changed for the real estate agent. Whether a fairy tale or a nightmare, I have yet to talk to an agent who wishes we could go back to The Book. In one way at least, since the intervention of the Internet, the life of an agent has changed for the better.
Enter Zillow, stage left.
The Internet has given birth to what Brian Boero calls the passive online lead-gen paradigm. The Zillows of the world promise agents an easy recipe for growing their business: wait ’til a buyer clicks on their face, sends them an email, or calls them up out of the blue. A set-it-and-forget-it model of attracting new clients, what could be better?
That which comes easily often easily goes, as is often the case with online leads.
However, that which comes easily often easily goes, as is frequently the case with online leads. Buyers are fickle, and without any personal connection to their agent, they’re more likely to move along to that next agent, that next home without much thought. Agents find themselves frantically trying to catch leads the moment they come through, and then entertain them well enough that they will consider signing that elusive exclusivity agreement.
Now, there are more leads coming in than agents know what to do with, and a whole industry is rising up to meet the challenge of capturing these leads. It’s exciting, costly, and at times overwhelming; but it’s the new way. Agents everywhere are signing up for the chance to work with strangers from the internet, no matter how low the conversion rates are.
Billions of dollars are being spent on online lead generation. But what’s often overlooked is the relationship. Last year, 70–80% of all real estate transactions originated from an existing relationship with a realtor.
And those billions of dollars? They only accounted for 12% of all transactions.
Today we stand on the cusp of another fundamental shift. In a way, it’s a return to the old school, back to basics (But not The Book. Never again The Book). And it’s powered by completely new, game-changing technology.
This revolution revolves around a realtor’s relationships.
You know, that 70–80%.
The new technology allows realtors to know when everyone they know is likely to move and frees them up to do what they do best: nurture relationships.
Enter predictive analytics, stage right.
I remember an “ah-hah” moment when we were sitting down with a broker who had been in the business for several decades. We were talking about the coming shift.
“Before Zillow came along, buyers would come to us when they were ready to go looking at houses. Typically, the process took a few months and they were locked into working with me from the beginning. Now, it’s different.”
“Yep,” I reply, hoping to hear more.
“Now, buyers start looking a lot earlier. They interact with many different agents during that process. It’s usually 18 to 24 months before they finally make a purchase decision. At any point in that process, they might end up going with another agent.”
“Predictive analytics about when people are likely to move does that same thing, but for listings. It used to be when someone was ready to list their house, they would reach out to their realtor. With predictive analytics, realtors can start reaching out 6 to 12 months before the seller has made a decision to list. That’s a game changer. Again.”
The wisdom of working via relationship is not new. Just ask Brian Buffini. Or Gary Keller. Whether it’s “I’m never too busy for your referrals” or putting together a 33-touch plan, relationships are a great way to build a real estate business.
But here’s the frustrating truth: 7 out of 10 people usually work with the first agent they interact with when they are getting ready to move.Staying top of mind is important. But being there at the right time is essential.
With predictive analytics, you can connect with the right relationship at the right time.
If you’re working a 33 touch system, you should add in predictive analytics. If you’re doing Buffini, you should add in predictive analytics. Heck, whatever it is you’re doing, you should add in predictive analytics.
Now those 33 touches can be targeted at people who are most likely to move. Your referral marketing can be targeted at the people who are most likely to refer you business. You’re now 3 to 5 times more efficient (click link for more on that).
SPOILER ALERT: Predictive analytics can even predict how a person would like to be communicated with. Relational Maverick Status: Achieved.
It’s time for relationships to take center stage, once again.
Predictive analytics applied to the 70–80% of transactions that happen via relationship is a powerful new way to grow a real estate business.
Some days, it seems like the Zillow way has won. But a few years from now, we’ll be telling a different story. For one thing, every agent will know when every potential customer is likely to move.
We know this will change the world of real estate in profound ways that we can’t predict. What we do know is it can supercharge your relationships.
This new chapter has already begun. Will we look back on these next few years as a Real Estate Golden Age? Well, that’s up to you.