Industry experts sound off on technology and more 
 

The Panelists:

Brad Inman

Founder of Inman News, Turnhere.com, and HomeGain

Mike Silvas

President and co-owner of Morgan Lane and current chair of the CALMLS effort

Jeff Culbertson

Executive vice president of the Southwestern Region of Coldwell Banker Residential Brokerage, NRT, LLC

Each year, as part of CALIFORNIA REALTOR® EXPO (www.realtorexpo.org), C.A.R. convenes Tech Tuesday, a one-day event that showcases the latest in real estate trends and technology. This year was no different, except that in the weeks leading up to the event’s opening session—“Wired for Change: Industry Experts’ Take on Technology and the Future of Real Estate”—the Dow whipsawed, the U.S. government nationalized leading banks, and all eyes were on Wall Street. Like an uninvited guest, the economic meltdown took center stage.  •  While technology was on the minds of the event’s panelists, each—with a different take on the events—weighed in on the impact of the financial markets on the housing market. The panelists who joined moderator Joel Singer, executive vice president of C.A.R., were:

Singer: What’s your take on what has occurred recently in the housing and credit markets in September and October, and where are we headed?

Culbertson: California was the first state to lead us [NRT] into the slowdown. I’m looking for the “fourth stage of the recovery.” What we’re seeing in many of our markets, especially San Diego and Sacramento, is if that last comp was 280, the next one that’s coming on the market is 280, 285, with maybe multiple offers.

We know we’re in that fourth stage when there’s a reduction in inventory and the last sale in the neighborhood is holding.

With regard to the last several weeks [early Oct. 2008], I thought we were going to see the numbers just fall through the floor. The opens are still strong. We’re challenged in the high end and the $2-million to $5-million market is not moving as briskly as we would like, but it didn’t fall off the cliff.

Silvas: With regard to the last few weeks, things are uncertain. We’re all over the place. Seventy percent of the people who live in Marin are involved in the finance field, yet that market has held up. Agents are reporting that buyers are saying, “I’m getting out of the stock market. Now is the time to buy real estate. Things are as affordable as they’ve been in years.” On the other side of that coin, we’ve got buyers who have lost so much money in the stock market that they’re just not doing anything. They’re just sitting on their hands, even though they could be buyers. They’re paying $6,000 to $10,000 a month to rent multi-million-dollar houses.

The low end is moving, with multiple offers. There are elements out there that people are buying, and then others are just spooked.

Inman: Who would have imagined the things that have happened in the last 60 days? Republicans nationalizing banks! This is an unbelievable time. But I’ll point to some good news and some bad news.

Isn’t it fantastic that every night we have economists, Ph.D.s, educated people discussing really tough issues, instead of Paris Hilton getting arrested in Beverly Hills? If there’s a little more pain—and I don’t want to be frivolous about this—I think that’s good.

I think we’ve got to rethink the fundamentals [of the housing market] that we’ve been pointing to over the last five years. One of those “fundamentals” was that the transfer of wealth from boomers to their children was going to empower demand. Instead, a lot of wealth has been evaporated. Another fundamental was population growth and immigration. We closed our borders, and people aren’t coming here because there are not as many jobs. We talked about consumer confidence in real estate. For years, buying real estate was like the Starbucks habit: We did it with confidence; we did it every day. That has dissipated.

We have to go back to real fundamentals: Why do you buy a house? One, the government subsidizes it, because we support homeownership as a great public policy. Two, it’s a way to save. It’s the ultimate form of freedom. That has to return.

The thing I’m worried about now is the economy. This massive consolidation in banking means layoffs. The other shoe to drop is employment. That really worries me.

I think all of this pain will lead to us getting back on track—personal savings.  To think that people would refinance their home and buy stuff that depreciates. We got foolish—top to bottom. It’s Wall Street and the average citizen.

Singer: What do you recommend that brokers and agents do in this environment of tremendous uncertainty?

Culbertson: Something that we started about two years ago: “right-sizing.” It’s a very painful exercise for those of you who own your own companies or run companies. There’s nothing more difficult than having to sign that document that lays someone off, or closes or merges an office. If you’re a broker, stop thinking about those tough decisions and start doing them to right-size your operations and to make it through the storm.

Agents, you need to right-size your business, too. You need to treat it as a business; you need to become a salesperson again. You need to understand that dialogue is important. You need to help people come to the right decision. People still need to buy real estate for the right reasons.

In your individual markets, find out something that they don’t already know. Is there going to be growth in this area? What’s that area behind that green belt and are they going to put homes back there? Point things out. Become the specialist in the marketplace. You need to retool, and you need to continually reinforce to the buyers and to the sellers your value proposition.

Silvas: Retool, yes, but it’s even more serious than that. A C.A.R. focus group with approximately a dozen buyers found the buyers all knew more than the first agents they contacted because of the research they had done on the Internet. All of them said they kept replacing their agent until they found somebody who knew as much or more about the individual marketplaces than they did.

We are working with our agents every day to help them learn to analyze the marketplace. The other thing we’re doing is telling them you don’t let the deal die. You talk to both sides and you work through the negotiations. That’s what we get paid to do. That’s where our skills are. If you haven’t got those skills, that’s what you really need to bone up on.

Singer: From a public policy standpoint, how do you assess the reaction to the meltdown, and what do you think needs to happen from here on, with regard to real estate and long-term real estate financing?

Inman: There was a time when Fannie and Freddie were in trouble and hobbled along, and there were no mortgage-backed securities and very little liquidity. You got your home loan from a savings and loan that basically took your passbooks and leveraged them a little bit. We are now are in a very similar predicament.

What I find troubling is the volume of sales—there is not enough liquidity in the secondary market to support anything close to what we’ve been up against. If the average buyer can get loans, then we’re okay. In terms of repair, the best we’re going to get is a restored Fannie and Freddie and FHA playing an important role in the market.

I don’t see a secondary market close to what we had before. … We have to put some liquidity into the secondary market so people have access to capital because there is pent-up demand. Prices are low. … The quick fix—stimulate the economy, get it going, consume, flood the market with liquidity—is not what we should be doing. We should take incremental steps in our lives, simplify our lives, and incremental steps in Washington. But they’ve got their back against the wall, and, obviously, they’re doing some pretty radical things.

Singer: What should REALTORS® be doing right now in terms of technology?

Culbertson: If you don’t have one of these [holding a PDA], you’re not really in the business anymore. I hate to say it that directly.

You have to become savvy. The other thing is to not only know what your company’s Internet strategy is, but how you can piggyback on that to take advantage of it. Because sellers and, rightfully so, when we get away from the bank-owned properties and the distressed sales, will ask more difficult questions. When somebody says, “What is your Internet strategy?” we should be able to respond, “We do this, and here’s why we do that. Here’s why our company invests in REALTOR.com®. Here’s why I invest in REALTOR.com®.”

Silvas: We’ve been pushing our agents to upgrade their individual Web sites. We’ve managed to move a lot of them over to a new provider. The Web sites that they’re providing are much more robust and have a lot more information available to the agents.

Everybody’s got to have a PDA. We also have some very robust efforts at the company level with regard to driving traffic. Our company maintains two different Web sites, and we employ a search engine optimization specialist whom we are constantly working with so that when people go onto Google and search “Napa Valley real estate” or “Marin real estate,” we come up on the first page. If we get inquiries, they all come to me. I respond immediately to the inquirer. Then I forward it to an agent, and I phone up the agent, and I tell them it’s coming. If they aren’t available, they don’t get that lead, because they’ve got to respond immediately.

We subscribe to analytical tools that download MLS data. The agents are able to sort and use those tools to see what’s going on in the marketplace at the micro and neighborhood levels. Those are the kinds of things that we’re working on.

The other thing you can do is use Google Analytics. You can use that information to target your advertising or target your marketing on the Web.

Inman: I agree with all of the above. I also would suggest if 80 percent of buyers and sellers [find you online], and you’re investing 25 percent of your advertising offline, you get a disproportionate mismatch. Accelerate that to 80 percent.

I also agree with using the analytical tools.

Open source programming has now made applications that used to require heavy-lifting, industrial-strength IT departments, and given you tools that are online, password-protected. There are thousands of engineers at Google, for example, who are writing code on your behalf. And I’m a big fan of one called Google Apps. The fourth thing, because of what’s going on in the real estate market and the economy, there will be a structural shift in your world. There’s going to be more pressure on all of you, your education levels, your fiduciary obligation. The way you’re going to keep up with that is with technology. This is something we’re going to have to watch as a trend.

Singer: What’s the hottest app you’ve seen lately?

Silvas: My next-door neighbors are in the PR business, in their mid-30s, and they are very technologically oriented. They put up a wireless stereo system—it’s called Sonos—[in their home]. My partner in Marin uses it as client gifts on high-end properties. It doesn’t have anything to do with selling real estate.

Inman: The amount of innovation is overwhelming. Some of the most crazy stuff—with a balance between crazy and relevant—is being built on the iPhone platform. Last night I downloaded a free flashlight, so this [holding up an iPhone] will work as a flashlight.

iPhone really put a stick underneath the rear end of the telecoms to innovate. This device really lets your imagination go in terms of the possibilities. … I’m a big fan of Steve Jobs. These are the [types of individuals] who will take us out of this mess.