JOURNEY OF DISCOVERY: INDUSTRY 360° EXPERT INTERVIEW...

JOURNEY OF DISCOVERY INDUSTRY 360°: EXPERT INTERVIEW REPORT

FinalApril 2014

Prepared by:CE Holmes Consulting, Monique Morden and Solvable

Prepared by: CE Holmes Consulting, Monique Morden and Solvable

BCREA Journey of Discovery INDUSTRY 360°: Expert Interview Report

BCREA launched the Journey of Discovery (JOD) to help our organization and BC’s eleven member boards strategically plan for the next five years. This project seeks to understand where the greatest contributions of products and services could be for increasing the innovation of REALTORS® in ser-vice of their clients. If organized real estate is to effectively adapt to and proactively initiate change, which we believe is necessary now more than ever, the first stage is to gain a solid understanding of the current and future states of the industry.

Our guiding question for the JOD project is: “What will the practices of the REALTOR® look like in five years?” And we ask the question specifically considering the role that BCREA should play in enabling those adaptations and innovations in practice over the coming years.

1. What are the current and future priorities of the REALTOR®? 2. What will customers expect from their REALTOR®? 3. How will technology impact REALTOR® practice? 4. How will shifts in the competitive landscape over the next five years affect REALTOR® practice? 5. What other trends will significantly affect REALTOR® practice? 6. What services and products will enhance REALTORS®’ daily practice?

The first stage of our research is called Industry 360° which provides a window on the changing practice of the REALTOR®, and the associated needs and opportunities that could be provided by BC ORE. Industry 360° is composed of two reports: Secondary Research Synthesis and Expert In-Depth Interviews.

The Industry 360: Secondary Research Report was dedicated to amalgamating the excellent re-search conducted by member boards and associations across Canada and the U.S. It summarized existing knowledge rather than presenting new findings. This enabled us to recognize gaps in exist-ing knowledge and conflicts in research data where our own research efforts could play a valuable role.

The Industry 360: Expert Interview Report builds upon the Secondary Research Report by le-veraging the knowledge of respected industry and outside experts from across Canada and the US. The goal of this report is to identify significant trends influencing REALTORS® and BC ORE, and where these trends appear to be leading. As the JOD is a future-facing endeavour, gaining knowledge of the perceived direction of the industry with its inherent opportunities and challenges provides great value in both understanding the current state of the industry, as well as providing a foundation for our next research phases.

PREFACE



DAVID BAXTER, a Special Advisor at Urban Futures, is a recognized authority on the impact of demographic and economic change on the North American and international consumer landscape. David’s main focus at Urban Futures is on population and economic change and the resulting implications for business and society. David is the global mobility consul for the Washington D.C. based International Employee Relocation Council and a member of the British Columbia Govern-ment Economic Forecast Council. His academic career spans four decades, and includes teaching and lecturing at both Canadian and international universities.

LARRY BEASLEY is the retired Chief Planner for the City of Vancou-ver. He is now the “Distinguished Practice Professor of Planning” at the University of British Columbia and the founding principal of Beasley and Associates, an international planning consultancy. Cur-rent roles include: Chair, ‘National Advisory Committee on Planning, Design and Realty’ of Ottawa’s National Capital Commission; Senior Advisor on Urban Design in Dallas, Texas; International Economic De-velopment Advisory Board of Rotterdam in The Netherlands; Special Development Advisor, Concord Pacific Developments; and previously, Special Advisor on City Planning to the government of Abu Dhabi in the United Arab Emirates.

GRAEME EADIE iis Senior Vice-President, Head of Real Estate In-vestments at the Canadian Pension Plan Investment Board. Graeme is responsible for the global real estate program which encompasses both equity and debt investments. Prior to joining the CPP Investment Board in 2005, Graeme held multiple roles including Chief Finan-cial Officer, Chief Operating Officer and President of Cadillac Fairview. Graeme has also held senior management positions with a number of entities in the retail and manufacturing areas and formerly was a Trustee of the Morguard Real Estate Investment Trust and a Director of the Ontario Realty Corporation.

METHODOLOGYEight experts provided insight into the influences on real estate practice of changes in economics, demographics, technology, urban planning, and emerging business models. These experts were selected from across North America – five Canadian, and three U.S. Experts from the U.S. were included to learn from a market that is changing more rapidly and could provide valuable insights into the future for the Canadian (and BC) market. To follow is the list of the eight experts included in this research, listed in alphabetical order, and their respective biographies.



MICHAEL GOLDBERG is currently a Director, Canada Pension Plan Investment Board, Chair of the Board - Surrey City Development Corporation, Professor Emeritus and Dean, University of British Co-lumbia’s Sauder School of Business and Scholar in Residence, Asia Pacific Foundation of Canada. Earlier roles included Chief Academic Officer, Universitas 21 Global; member, B.C Workers’ Compensation Board Investment Committee; member, Deposit Insurance Advisory Committee to the federal Minister of Finance. Mike has also served as a Director on several boards including, China Enterprises Limited, Redekop Properties Ltd., Vancouver Land Corporation, Imperial Park-ing Limited and Lend Lease Global Properties Fund.

BOB HALE has been the President and Chief Executive Officer of the Houston Association of REALTORS® (HAR) since 1988. Through Bob’s leadership, HAR has grown to become the largest trade asso-ciation in Houston and the second largest local REALTOR® associa-tion in the country, with more than 24,000 members. HAR.com is a household brand in the greater Houston area and the most frequently visited website for Houston real estate. As a thought leader for the real estate industry, Bob has been interviewed and quoted in The New York Times, Wall Street Journal, Houston Chronicle, Houston Business Journal as well as countless real estate trade publications.

DR. STANLEY HAMILTON is an emeritus professor at UBC’s Sauder School of Business and served in a number of senior administrator roles at UBC. Dr. Hamilton taught and conducted research in real es-tate valuation and taxation, institutional investments and pension fund governance. Throughout his career he has been active in community activities including serving on the boards of the Children’s Aid Society of Vancouver, the Vancouver Stock Exchange, the B.C. Assessment Authority, and the Vancouver City Planning Commission. He has been a member of the Investment Advisory Committee of the Public Guard-ian and Trustee of B.C. and the Financial Services Tribunal of B.C. Dr. Hamilton is currently a member of the UBC Development Per-mit Board and the Investment Advisory Committee of the Real Estate Foundation of B.C.



NOBU HATA iis Director of Digital Engagement at the National As-sociation of REALTORS®. An industry veteran since 1996, Nobu is a student of marketing, communications trends, social media, and technology in the real estate industry, having implemented and adapt-ed various new-school techniques to his successful brick and mortar business in Minneapolis, Minnesota, for Edina Realty until July 2012. An accidental speaker, instructor, and volunteer member leader since 2009 (NAR YPN, Communications, Equal Opportunity/Diversity, Strategic Planning Committees), Nobu brings to NAR his insights on agent, brokerage and association issues up the pipeline, and delivers value-added information down, both in-person and through the digital domain.

ADAM WIENER is the Senior Vice President of New Business, Analyt-ics & Marketing at Redfin. Adam leads the company’s efforts to use proprietary data to build new products for the web and improve Red-fin’s real estate services. He is also responsible for data-driven mar-keting efforts and identifying opportunities for business growth that align with the company’s overall mission to reinvent the consumer experience for buying and selling real estate. Adam joined Redfin in 2007 on the product management team and was one of the pioneers of the Redfin Partner Program for agents, in addition to its service provider directory, Redfin Open Book.



Based on the eight expert interviews, we consider the following insights to have potential signifi-cance on the future practice of the REALTOR®:

• The shift from a service-based to a knowledge-based economy has created new challenges for the real estate industry, in particular, articulating the value proposition of the REALTOR®. Sophisticated consumers with greater access to data (previously proprietary to REALTORS®), awareness of the transaction process, and involvement in the process are demanding more specific value and demonstrable expertise from the REALTOR®.

• Do-it-yourself (DIY) behaviour, technology adoption and transaction transparency are “stress-testing” existing real estate business models. These behaviours are fueling the growth of al-ternate business models such as FSBO and 1%, 2% and 3% Brokerages, further driving the fragmentation of Brokers and REALTORS® on the value for service continuum.

• Technological change will happen with or without BC ORE, Broker and REALTOR® initiative. The impact of technology is already evident throughout the transaction process and is expected to increase. Experts advise BC ORE to be an active part of the process by understanding tech-nological change and enabling technological advancement within the industry.

• A combination of economic, demographic and technological trends has created a fragment-ed consumer market comprised of many segments—each with unique real estate wants and needs. As the ability to reach and credibly service specific segments of the market puts greater demands on REALTOR® knowledge, professionalism and expertise, REALTORS® and Bro-kers have adapted through increased specialization. Generalist REALTORS® (those servicing clients across all demographics, property types and a broad geographic region) will be greatly impeded in a marketplace demanding specialists.

• The long-term health of the BC real estate market is challenged by a lack of affordable options for new home buyers. The market has reacted with a more diverse portfolio of product offerings (e.g., property types and/or ownership models); however, even more diversity and inventory will be needed in the future to sustain market growth.

EXECUTIVE SUMMARY



Demographic, economic, urban planning and technology trends have created a fragmented consumer market with diverse needs.

“Real estate has always been local--with transactions and relationships being locally based. This is not going to change. Innovation will happen at the local level through REALTORS® and Brokers.” David Baxter

REALTORS® will continue to respond to the increasing diversity of consumer needs and expecta-tions through specialization, whether in a neighbourhood, culture, demographic, property type or a combination of some or all of those elements. Experts predict that successful REALTORS® of the future will select and dominate a specific consumer segment and evolve their business practices to best service that group. They also predict that REALTORS® will be challenged with marketing to their chosen segment due to the marketing “noise” in the market and fueling innovative approaches to online marketing and lead generation.

These specializations will most likely be a combination of factors. For example, a Vancouver condo specialist might need to focus on a particular neighbourhood in Vancouver, or on Millenial new home condo buyers in Surrey. The more the REALTOR® specializes, the better they can under-stand the specific needs of that consumer segment providing a customized service offering and focusing their marketing efforts.

The upside of specialization is a unique positioning for a specific type of consumer; however, the downside is not being “qualified” for other segments. Experts pointed out that the main discussions on demographic groups such as Baby Boomers, Millennials, and Immigrants should include an ap-preciation for finer sub-segments within each and the unique needs of these niches. on demographic groups such as Baby Boomers, Millennials, and Immigrants should include an appreciation for finer sub-segments within each and the unique needs of these niches.

“Our significantly aging population is going to need dif-ferent types of housing. There are lots of Empty Nesters who shouldn’t still be in a single family home; however, there is no choice in their neighbourhood. The market should respond by providing them with appropriate of-ferings in their neighbourhood and, going forward, RE-ALTORS® can help this transition.” Michael Goldberg

FRAGMENTATION & SPECIALIZATION



Immigration: Immigration in British Columbia will con-tinue to grow offset our aging population further adding to the complexity of the population due to the myriad of cultures and languages. The diverse immigrant com-munity, including first and second generations, creates many niches within the market with specific needs and expectations. Immigrants strive for home ownership but struggle with affordability often adapting by having mul-tiple generations under one roof. This has contributed to an evolution of the traditional single family home to a multi-generational home with various forms of joint ownership. Language is a huge barrier for immigrants disadvantaging them compared to English speaking con-sumers who have access to many self-service tools to guide them through the process. Many jurisdictions have expanded the language capabilities of their technology to assist immigrants as well as foreign investors.

Millennials: The Millennial demographic (20-35) has en-thusiastically embraced the urban lifestyle with home and workplace in close proximity (or combined) and reduced reliance on the automobile due to sophisticated transit systems. Millennials can maintain this urban lifestyle for a long time, as they are getting married and having chil-dren later in their lives.

“There are going to be a lot of young families in the next generation for which home ownership will not be an option. What behooves the real estate industry, in order to serve the demands of younger families facing increased house prices, is more low scale, multiple housing forms.” Larry Beasley

Many sub-segments exist within Millenials based on life stage, employment status, debt load, and income resulting in considerable debate among this demographic on the merits of home ownership versus renting. The proportion opting out of home ownership has the potential to grow, depending on interest rates and affordable home ownership options. In order to facilitate the transition from renting to owning, companies such as Urban Compass engage Millenials both through rental and home ownership options.

Baby Boomers: Baby Boomers present numerous market niches based on situational factors. While they are living longer, healthier lives, Boomers are not a homogeneous segment downsizing en masse as was predicted. Some are downsizing such as empty nesters who have gone urban or rural or who winter in vacation properties. Others hope to be empty nesters in the future as their adult children cycle back home in attempts to establish themselves—creating financial stresses on Boomers as they assist with post-secondary education, first homes, or debt load.



Urban Compass <https://www.urbancompass.com/> is one of many examples of brokers specializing in the ur-ban needs of Millenial renters and home owners provid-ing detailed information on amenities provided by spe-cific neighbourhoods.

Changing Image of the Suburbs: The suburbs are in re-naissance as they transform from a uniform community of single family homes to mini-metropolitan and econom-ic hubs with rich and diverse amenities: restaurants, arts, culture, activities/events, shopping, etc. The evolution of an urban/suburban offer is attracting Millenials who get the best of both worlds.

Affordable Home Ownership: Home ownership has de-clined in certain segments. Immigrants, lower income households and those 20-39 years old are struggling to enter the real estate market, indicating a decline in hous-ing affordability for those entering the market. While al-ternate forms of housing have provided somewhat lower price points, it has not adequately addressed affordability for new home buyers entering the market. The real inno-vation in the market is in the form of alternate ownership models. For example, non-profit ownership aims to help people enter the market and acquire equity but in a con-trolled manner where the selling price is predetermined. Sequel 138 is a Vancouver development providing both lower price point offerings and alternate home ownership models.

San Francisco, which faces similar affordability issues to that of Vancouver, has introduced a very generous down payment loan program for qualifying first time home buy-ers. The city provides a loan based on a percentage of the home value and up to maximum of $200,000 to first time buyers. When the homeowner sells or refinances, the loan is repaid along with a percentage of the prop-erty’s appreciation associated with the city loan. This in turn builds up the loan pool for other first time buyers to take advantage of.

“Healthy cities and communities utilize multiple housing models to meet the demand.” Larry Beasley



Importance of Transportation: Transportation and mobil-ity are more important than ever as the nebulous work-place demands more flexibility in how and where we work. Technology has not necessarily caused this change but it has facilitated and enabled it. This has fundamen-tally changed how people view their home, their work-place, and their community, as well as expectations to travel efficiently among them. World class cities rely on the efficient movement of people across ever increasing geographic areas and complex routes. Experts stress that urban planning is now driven by transportation, and that housing (and commercial) density increases in locations adjacent to these transportation access points.

“Land use planning shaped cities in the 50s and 60s, and set the context for today and the future where transportation planning is and will be the big shaper, with land use and density moved around to fit into the billions of dollars spent on transportation concrete.” David Baxter

“Transportation will be the biggest driver in shaping the urban environment.” Graeme Eadie

“REALTORS® will need to understand the nuances of transportation and transit types to service their clients.” David Baxter

Transportation is becoming extremely important for consumers in purchasing a property, especial-ly in urban centers where car ownership is more expensive and commute times infringe on quality of life. To properly service consumers, REALTORS® need to not only understand the current transit infrastructure for a property but also the short term and long term implications of planned transit infrastructure expansions.



Blurring of Commercial and ResidentialCommercial real estate in urban centers is also under-going change and a “ResiMercial” market has emerged made up of combined office, retail and/or residential space. This change is being fuelled by reduced space needs as more employees telecommute and/or share office space. In addition, online shopping is causing traditional retailers to hold less inventory on site, result-ing in smaller stores and a reduction in the number of retail locations. Traditional warehouses, built 20+ years ago, have been caught up in urbanization and investors are transforming them into blends of office, retail and residential to improve their capital returns. Urban plan-ning experts point out that these shifts are evidenced by the constant state of flux in zoning where rezoning negotiations are constantly taking place. Specialized knowledge of these blended real estate offerings puts further demands on the expertise of the REALTOR®.

Broker Adaptation to Fragmentation National Brokers will need to distinguish their value proposition, as most consumers remember their REAL-TOR® but not the associated brokerage. The consulted experts agreed most consumers cannot distinguish among brokerages. With greater fragmentation in the consumer market, brokers will continue to specialize, grow and consolidate. There is general agreement among experts that all types of brokerage models can exist together but that there will be a shift in the pro-portions. Virtual brokers will increase, consolidation of brokerages will continue, specialized brokerages within a unique niche will thrive with the right marketing, and the multitude of smaller 1-3 person brokerages will be-come endangered. Small brokerages will survive in the short term but not into the next generation.



Implications for the REALTOR®

The value proposition of the REALTOR® has shifted from a service provider to a knowledge provider. REALTORS® will increasingly need specialized niche knowledge across three main dimensions that are expected to increase in complexity and diversity in the future: consumer seg-ments, neighbourhoods, and property types. REALTORS® will need a higher level of knowledge to manage transactions involving increasingly complex products to increasingly diverse consumer segments in more defined and targeted geographic neighbourhoods.

• Specialization will inhibit the generalist REALTOR® (those servicing clients across all • demographics, property types and a broad geographic region) as a competitor who provides

the consumer with a well-defined offer customized to their needs presents greater value and reinforces the view that you cannot “specialize” in everything.

• Specialization will require a disciplined gathering, analysis and synthesis of information for use in marketing to targeted consumer segments.

• REALTORS® will need to develop more sophisticated marketing capabilities as they strive to reach specific consumers, develop and communicate a targeted offered, and build a special-ized reputation and referral network including REALTORS in adjacent specializations.

• Brokerages supporting specialization, through marketing information, tools, or processes, • will attract and keep REALTORS®



REALTOR® specialization and consumer DIY trends are putting pressure on the commission structure and fueling more diversity in business models

“The increase in housing prices, which has far outstripped inflation, has resulted in the dollar commissions to sell housing to be inflated relative to what most people are making…meaning commissions are more of a value equation. If there isn’t value, market forces will address it and they have already started to.” Graeme Eadie

Experts feel that REALTORS® will face increasing pressure on commissions and will increasingly need to clearly demonstrate the value they bring in return for the commissions they earn. This is especially true in light of increased consumer involvement in the transaction process. Consumer tolerance for holistic commission fees is decreasing as the perceived value of services declines.

Residential commissions have increased disproportionately over the past 10, 20, and 30 years due to increased housing values. When house prices rise rapidly, as they have over the past decade, it is difficult to convince the consumer that the value of the work involved to sell a $1M house today is more than for selling that same house five or ten years earlier for $500K. Experts feel that market forces have already caused the real estate industry to adjust commission fees through the evolu-tion and increased use of alternate business models such as FSBO.com, 1%, 2% and 3% Realty as well as developers who are bypassing traditional ORE by selling their own product. Increasingly, developers are bringing a Broker in-house—providing savings in the selling process, flexibility in the overall pricing, and increased perceived value of the unit and the overall transaction. “Brokerages are actively looking to disrupt the market through innovation.” Nobu Hata

There is expected to be increased investment in online brokers on both sides of the border. In Canada, Zoocasa and Viewpoint Realty are upstarts. In the U.S. market, Trulia, Zillow, Redfin and Movoto are rapidly evolving new business models and experiencing huge growth. Investment in these four companies over the next year alone is expected to be in the hundreds of millions. Ad-ditional new entrants are expected, although they will have more difficulty entering the industry as first entrants to the marketplace have a considerable customer acquisition and proprietary data advantage. There is every indication that the Canadian and British Columbian markets will expe-rience their own evolution of online brokers as they look to examples in the south to create new options for consumers.

EVOLVING BUSINESS MODELS




• Experts suggested that the industry address commissions proactively to increase public trust. If the industry is resistant to change, they risk tarnishing the public image of the profession and potentially pushing consumers into alternate models, including the purchase of a single service within the transaction process rather than the entire bundle of services as is now the case. Experts feel a modified commission structure could positively contribute to the afford-ability issue and that evolving business models are a healthy market reaction to the commis-sion value issue.

• REALTORS® will experience increased consumer pushback against traditional commission rates and structures as they evaluate and challenge the value proposition being offered.

• REALTORS can expect more competitors to enter the market which are specialized in a spe-cific part of the transaction process

• As increased competition provides consumer with more options, downward pressure on com-missions will increase resulting in more business models.

• REALTORS® can expect the composition of different types of brokers to shift in response to pressures on the traditional business model.

• REALTORS® will look to Brokers and/or ORE to proactively address commission issues in the industry and support different business models.

• Would think you’d want to make a point here about the $ investment in understanding con-sumer needs and utilizing data by the online brokers far outpacing the level of investment and innovation by traditional brokers



Technology will to increasingly impact the transaction process as consumers demand access to rich, real-time information, packaged and delivered across multiple devices.

Technology has enabled real estate consumers to get access to incredible amounts of information —simultaneously sifting, sorting, packaging and presenting the information for better understand-ing and usefulness. These technological tools have touched all parts of the transaction process to varying degrees and experts predict technology will continue to infiltrate the process, further trans-forming the consumer experience and challenging the value of the REALTOR®.

TECHNOLOGICAL TRANSFORMATION

Property Search: Technology is radically altering, par-ticularly in the U.S., the search and comparison process with rich visuals (photos, videos), filters, neighbourhood market data and information, comparable listings, deal info, historical info and agent performance transparency. Furthermore, sites enable this experience across multiple devices leveraging mobile technologies like GPS to aid property searches. For example, homesnap.com uses GPS technology when users take a photo of a house to access the listing information. “More and more people are feeling empowered to search for properties on their own and they want the tools to do that easily on the web or from their mobile device and without needing to get in their cars. The richer you can make that online experience for them, the happier they are.” Adam Wiener

Finding an Agent: Numerous tools assist customers with finding, evaluating and comparing REALTORS® result-ing in increased competition among REALTORS®. Other consumer products, such as Trip Advisor and Yelp, have already taught consumers to use crowdsourced information of this nature to assist with their purchase decisions. Con-sumers are able to base their evaluations of a REALTOR® using quantitative data (i.e., ratings from past clients) as well as subjective qualitative data (i.e., comments from clients) and contextual information (i.e., details on the transaction).

“We do a lot of consumer research to help in matching the direction of the consumer with the direction of the REALTOR®. They are not always aligned.” Bob Hale



REALTOR® ratings are not ubiquitous in Canada or the US but there is a growing trend to provide this type of information. For example, the Houston Association of REALTORS® (HAR) conducted research to assess consumer demand for ratings on individual REALTORS®. The vast majority (90%) of consumers involved in this quantitative research wanted this information, prompting HAR to implement a voluntary model with approximately 1/3 of active REALTORS® taking part. HAR is the only US association offering this information, despite the fact that alternate model competitors such as Redfin, are providing this information to great success.

Some Redfin REALTORS®, where demand exceeds their capacity, efficiently overflow consumers to REAL-TORS® in their referral network. The reputation of the referring REALTOR® provides credibility to their net-work, making them a valuable asset colleagues and providing consumers with credible referrals. Referring REALTORS® can easily monitor the effectiveness of their referral network modifying its composition based on results and providing an additional revenue stream

Finding a Customer: While there are currently a myriad of social media tools being leveraged for marketing pur-poses, REALTORS® are struggling with which ones to use, how to use them, and how to develop a coordinat-ed strategy for their online marketing. Lead generation will continue to be a challenge in the industry, especially in light of increased specialization and consumers who are more self-serve oriented.

“Consumers think ‘I will reach out to an agent when I am ready’ but consumers sometimes don’t know when they are ready.” Nobu Hata

In the past, consumers contacted a REALTOR® when they were ready to search; now they are contacting them well into the search and evaluation phase of the process. This is further challeng-ing the industry as consumers push REALTORS® out of the early stages of the transaction pro-cess, however, REALTORS® are not proactively engaging consumers in the earlier stages



Deal Transparency: US experts provided many ex-amples of technology enabling transaction transparency. Virtual secure deal rooms (e.g. REIwise.com) track the process: dates, deadlines, stakeholder responsibilities and more. These tools bring the consumer into a robust view of the transaction process, creating more comfort, accountability and trust, resulting in consumer empow-erment and involvement. There are also numerous deal templates and agent check list apps (e.g., GoConnect) <http://www.goconnectapp.com> which include steps and checkpoints which are specific to the jurisdiction, the type of property, type of financing and other charac-teristics which are constantly evolving and expanding. While it tracks the “what,” experts stress that REAL-TOR® value lies in the “why” and “how” of these different steps.

Experts feel that deal transparency could be good for the industry by making REALTORS® more efficient, educating consumers, and surfacing the value a REALTOR® brings to the process as they navigate through the multitude of utilize their knowledge and expertise to a successful out-come. Deal transparency also provides benefits in the auditing and monitoring of REALTORS® and Brokers, thus ensuring quality and consumer protection. Lastly, the trend of “big data” analy-sis can also benefit the real estate industry, providing value added information across different data sources connected to the thousands of transactions which occur annually.A completely self-serve process from start to finish would be extreme for most consumers, but taking on parts of the transaction, or a portion thereof, is more achievable and desirable for consumers. Increased deal transparency will mostly likely contribute to the DIY trend and/or an unbundling of services. In many cases, knowledge of the process does not mean the consumer wants to do it themselves, rather that it gives them peace of mind about where they are in the pro-cess, where they are going and the rate of progress. Currently most consumers feel they should use a professional instead of doing it themselves.

“Consumers are expecting more and more information that is easily accessible in a self-service way.” Adam Wiener

Equal Access to Information: Consumers have high expectations for access to information including quality, reliability, real-time provisioning and usability. Withholding or providing unequal access to information are not tolerated by consumers and will quickly find alternate sources to fulfill their needs. Controlling access to information can hurt the industry. For example, leadership in some U.S. jurisdictions decided to delay data provided to Trulia and Zillow by 48 hours. How-ever, it hurt consumers by providing inaccurate information and hurt the industry by supporting the idea that the data was inaccurate. While the decision was motivated by the desire to protect or help REALTORS®, in the end it hurt them.



Technological change will happen with or without you – Experts advise BC ORE to proactively understanding technological change occurring within the industry

“Information has a great desire to be free and open.” Adam Wiener

Don’t Fight Technology: Technology moves fast and has huge implications for consumers, and all parties within the real estate industry. Based on the experience in the U.S., experts advise being an active participant in the transformation by identifying, understanding, monitoring and, where possible, leveraging innovations in the market regardless of the source. This requires a coordinat-ed effort and cooperation across the different levels or ORE and a strategy on the role technology will play in the industry.

Open up the door to your members being innovators.” Nobu Hata

Technology experts strongly advise ORE against developing technology themselves as software development is not its core competence. Software development is extremely chal-lenging and dynamic with more companies that fail than succeed. Experts advise embracing third party technology companies, creating an ecosystem which benefits the con-sumer and industry alike. Leverage Innovators: Technology experts advise the indus-try to identify REALTORS® and Brokers who are innovators and early adopters to leverage their knowledge, expertise and energy to shape the industry. Much of the innovation emerging the US market is at the local level among smaller players in the market. While large scale innovation from virtual brokers requires attention it can distract from equally important developments at the grassroots level.




• REALTORS® must embrace technology—if they don’t work with it, it will work against them.

• Successful REALTORS® will incorporate technology into their business to make it as easy as possible for the consumer to participate in the transaction process.

• REALTORS® should expect the continued and increased involvement of consumers in all stages of the transaction process and be prepared to assist with that involvement.

• REALTORS® will be challenged to show consumers how they add value—wherever the consumer is in the transaction process—through relevant content and concrete expertise that helps the consumer feel protected against transaction risks.

• REALTORS® will experience increased consumer expectations for real time information pre-senting an opportunity to attract them or a threat of them going elsewhere.

• REALTORS® who are technology innovators and early adopters present Brokers and ORE with an opportunity to leverage their ideas.



Fragmentation, specialization and changing consumer expectations create increased demands on REALTOR® knowledge, professionalism and expertise.

“With a shift to a knowledge based profession, there is an opportunity for the REALTOR® brand to be repositioned with an evolved value proposition to further professionalize the brand.” Michael Goldberg

“There is lots of data, there is lots of information, but there is quite little knowledge out there. The real estate industry could be creators of that knowledge.” Michael Goldberg

An overwhelming amount of information exists on the real estate market, often making it dif-ficult for consumers to understand it and sometimes resulting in unnecessary uncertainty. This includes rising or falling interest rates, stability of the US economy and/or real estate market, fluctuations in financial markets, Baby Boomer retirement, urban densification, immigration and more. Experts recognize that REALTORS® play a major role in deciphering and communicat-ing to consumers how to apply larger trends at the national and provincial level to the localized market in which they operate. In a climate of hyper-localization and specialization, REALTORS® require sophisticated knowledge on how to analyze, interpret and communicate this information to consumers based on their specific situation.

REALTOR® KNOWLEDGE & QUALITY

Experts commented on the increasingly complex nature of the industry necessitating a more sophisticated REAL-TOR®. Some mentioned the possibility of higher educa-tional requirements to enter the industry; others men-tioned higher licensing standards and/or different types of licensees. The possibility of repositioning or rebrand-ing was suggested, akin to that recently conducted for the accounting profession. Experts emphasize the need to ensure the quality of the consumer transaction, but stressed that this does not mean restricted entry in the market (number of REAL-TORS®), control over the type of REALTOR® (part-time versus full-time), limits on the number or type of business models (FSBO versus traditional broker) or restrictions on technology. Instead, experts suggest that additional measures, beyond those currently in place, are required to ensure that REALTORS® are operating at the highest level across these different dimensions: ensuring consumers have a high quality experience; ensuring consumers are protected against negative ex-periences; and ensuring there is a strengthened mecha-nism to monitor and continuously improve quality.



Experts agree that not all REALTORS® will be capable of surviving the transition to an economy where consumers demand the value proposition include demonstrable expertise. Conveying the new value proposition is akin to tapping into the internal algorithms REALTORS® have acquired based on their experience in the industry to optimally execute a real estate transaction given the myriad of possible factors and situations presented.

“The Real Estate industry needs to become part of the agenda and involved in the debate. Drawing on its expertise and experience, it can be a credible, objective spokesgroup for the industry.” Larry Beasley

While advocacy is generally done at the Association or Board level, experts see individual REAL-TORS® playing a bigger role as a “spokesgroup” for the industry within their community. Some may be fulfilling this mandate, but the majority are not rising to the occasion to proactively create accurate information, provide analysis and context on the market, foster discussion on economic development, support local businesses or debate urban planning issues like densification, trans-portation, housing types, zoning and more. While this needs to be done in an objective manner, REALTORS® can play a role in bringing people together for an engaged community by hosting, sponsoring, or participating in meetings, processes, workshops, committees, speaker’s series, and more. The more open the discussion, the more creative the solutions.




• REALTORS® must distinguish between information/data and knowledge in order to provide value to ever demanding consumers who are more knowledgeable and have increased access to previously proprietary information.

• With changing expectations of value, it will be crucial for REALTORS® to understand and clearly communicate to consumers the specialized expertise they bring to the process.

• REALTORS® have an opportunity to demonstrate the value of risk mitigation and consumer protection they provide in an increasingly complex industry.

• REALTORS® are in a position of influence to support and promote the industry, whether in relation to the economic development of a community, urban planning issues, community cohesion, education about the real estate industry or affordable home ownership options. RE-ALTORS® can reinforce the brand by becoming more involved in land-related activities within their communities.

• REALTORS® are uniquely positioned to provide knowledge about the changing needs of the consumer, such as barriers to home ownership, and can advocate solutions to meet market demands.



All of the experts applauded BCREA for undertaking the Journey of Discovery project, the spirit of which is proof that BC ORE is proactively addressing the impending transformation of the industry. The many aspects of the changing landscape discussed in this paper demonstrate the challenges facing the industry. A collaborative view of the changing practices will create a stronger BC ORE. The process JOD has kicked off is just that - a process. Planning for the future is never ending, so the process for planning must be fluid, continuous and accountable. Experts stressed the need to pick the right people to be involved—people who are open minded—but also ensure people on both ends of the spectrum are included to foster a healthy and robust discussion occurring within a culture of change, a culture of evolution, and a culture of success.

“You need the naysayers in the room. Have them come in and talk about their views. The nay-sayers can be very productive to the process. It doesn’t matter which side of the issue they are on.” Nobu Hata

You can learn more about the Journey of Discovery at <http://web. bcrea.bc.ca/jod/index.htm> and through our Facebook page, Extraordinary Moments in the Consumer Real Estate Experience <https://www.facebook.com/extraordinaryrealestatemoments>.

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