Aaron Norris is filling in for Bruce this week and is joined again by Rob Hahn. He is the founder and managing partner of 7DS Associates as well as the blog The Notorious R.O.B. Here, he opines on topics including real estate, technology, marketing, and strategy. You may even catch him at speaking engagements like Inman Connect, T3 Summit, and local, state, and national association events.
In the last session they covered a lot of super-nerdy data topics. Aaron has noticed the real estate industry tends to be about 2-5 years behind the technology, depending on who you talk to about it. His biggest concern is that people are not thinking how to strategize and develop some tactics around the whole data play and where we are going. They talked a lot about brokers, agents, the information they own, the MLS system syndicators, and Zillow, Trulia, and Redfin and how they are ranking more.
Aaron asked Rob if you were a real estate professional in today’s market, how should they be strategizing to get word out about their businesses and listings? Rob said most of the audience listening would be real estate investors. Real estate professionals usually refers to brokers and agents, although there are a lot who double dip. They are Realtors who do investments, and we also have real estate investors who do their own listings to save money. Rob just recently became a landlord himself, and he believes the most important resource is the assets of the Zillow Group. They are still a domino on the residential real estate side, and they involved buyers and future buyers. Something to think about is how they have 120 million visitors a month now, but there is no way that they are all buyers. The population in the United States is about 360 million, so there is no way all those people are buyers today.
Rob expects a lot of them are renters. Depending on the investor you are, there has to be something pretty significant. You almost have to figure out how to get things there. They talked a lot about the syndication and the players in that game; but the fact of the matter is from a strategic, tactical standpoint there is nothing that prevents the homeowner or the broker from going directly into Zillow and updating the property records with the information they may have. Individual agents and brokers differ depending on what kind of technology or infrastructure they may have, whether it is through the brokerage company or the MLS. There is nothing that stops an individual agent or homeowner from going into that record and updating it. This could be with more or better photographs or listing descriptions. They would put in whatever is relevant for the renter or the buyer to see.
This is something a lot of the top agents do anyway. They might put a listing into the MLS, then go into Zillow and update it. Today, the number one thing Rob thinks about is making sure it is updated on the different platforms. To the extent you are trying to sell your investment property or find renters, it is something you will have to do or direct your property management company to do. This way you get the maximum exposure on the most amount of interest. The second thing he would look at is investigate what companies such as CoStar Group have. He would also want to have a conversation with his property management or the brokers he is working with about what other technology he may have.
Rob said one of the most important things to be thinking about is local databases. If you are thinking about disposing of your investment, you could have buyers coming from China. However, a lot of times the action is with the other real estate professionals in your area. Even if you are just looking for tenants, Rob believes a really good professional or broker agents is a pretty significant database of local contacts. This could be consumers, other agents, other brokers, or others with whom they work. They could use email to let people know about a property, even if this is not cutting-edge technology. The fact of the matter is from a strategy and tactics standpoint, it still works and is still valuable. This is one of the things he might look at if he is not trying to rent out or sell the property himself. If he is hiring somebody, then he may ask them how deep their network is. This is where he would begin, and if necessary would then start to get more esoteric things.
Every market is a little different. Out in the Inland Empire, the newspaper has really gone through some struggles. It was just recently purchased by another larger company. Aaron has been keeping track of Facebook profiles over the last four years and how it has grown. He has also looked at the demographics within the profile. Just within the top ten cities in the Inland Empire, there are more profiles with the age group 65 and older than there are within daily circulation of our entire paper. As he talks to Realtors and investors who are trying to get the word out about their business, he says you have to be a little more granular.
You have to understand that if you get sold on impressions, you have to consider when was the last time you ran an ad and had a true conversion. Aaron said if somebody just picks up the phone, this doesn’t really count as a conversion. If it does not end up in a sale or a buy, then you are wasting a lot of money. It is tricky, and a lot of small business owners get really taken to the bank because they do not know the difference. With Zillow, they have gotten a lot of eyeballs. Aaron said there were 30-40 properties listed at one time in their investment department, and they are only listing. Aaron said he can see on Zillow how many people are looking, but the actions that they take are so minimal that Aaron does not really spend a lot of money there.
When he has asked a lot of agents around town, the vast majority of Realtors said they most recently got rid of Zillow and are excited not to pay them any further. A handful say it is a necessary evil, but he does not know why it is working for some and not others. Rob was not really sure the reason either because it is one of those mysteries.
We may be dipping into ancient history here, but one of the more interesting things about the real estate business from a marketer’s standpoint is trying to determine all the different measuring specs. The reason for it is it is really hard until we have some better tracking. Even if you are a brokerage company and are doing whatever activity it is you are doing, you want to establish how many of your transactions close business as a result of that marketing. It is very difficult and something he ran into when he was at Coldwell Banker. If you have a certain number of impressions that lead to a certain number of inquiries, then you would have to see how many result in some kind of transaction. This is something that is really difficult and almost impossible to track.
It is hard because the typical consumer behavior might be calling the agent immediately because you really like a house you see. Then, you go call the agent and it is either too expensive or there is something about it you do not like. Six months later after the agent has put in a lot of time to make sure the consumer is ready of any new property on the market, they end up buying a house in a different zip code. How do you track this? There really isn’t any way to do it.
The other thing that is interesting is there are no questions that there are some professionals who are making money off Zillow. They are able to deal with the online quality of them and are able to make it work. Rob does not know if the small business for the small investor is realistic and is not a game worth playing unless you are able to play it in a really big way. Rob hears complaints from agents regarding things like house estimates, and he has to correct and educate them. This is not just the case with Zillow. One of the funny things about Redfin is the number of agents he has spoken to over the years who say things like their consumer will come back to them after doing all the research themselves. Rob will get the call from the client that they found a house and will ask if they should go look at it.
This does not even register as anything. The buyer agent is not contacting you saying the client wants to look at a particular property unless you have a good relationship with them. You want to know what the buyer found out about the house. If you are an agent and your buyer calls you saying they saw a property, Rob will first go into the MLS to make sure it is real and that it is still on the market. Once he has gone through the MLS and checked on it, then the conversation will be about where and how the buyer found it.
Aaron said the Norris Group released their CRM system almost a decade ago and were one of Microsoft Dynamics’ first businesses to use inCloud. They have three very different audiences; and now that they are tracking where they come from, at the very end of the year you run a report and are creating that ROI by audience. They were getting a lot more specific and realized they did not have to give up every week in speaking at certain engagements. This way they can be a little more strategic in how much time they give up on the weekends. Since a lot of the leads come from referrals, then you should have a referral system in place to really cement that relationship. This makes you a lot more strategic in your outreach.
For the Realtor department, the three big areas are relationships, farming, and internet social media. Aaron’s personal experience has been that you need to keep it updated because with properties built earlier than 1960, the information could be totally wrong. If the information is wrong in the system, then the estimate is off since it is only as good as the available data. At least showing up and updating it is a huge benefit. As far as advertising on Zillow, everyone has to test that out since Zillow may be doing their job and it’s the agent’s fault for not having a closing system.
Rob said he is not sure, but if he is going to list his house for sale he will not expect the agent to spend thousands of dollars promoting it. However, you should put it where potential buyers are going to be. As a home seller, Rob is not as concerned about how many leads generated off of his house. All he is concerned about is having his house exposed and that the public is aware of it. This almost seems like, “You need to do it for me as a service.” It is a little different when it comes to investors in that aspect.
If you are talking about things related to property management for first-time homebuyers, there is a lack of follow-up post transaction. The fact of the matter is, if you buy a home there are a number of agents who will say they are your Realtor for life. However, are they really going to stay in touch with you over a 7-year period? Most agents and brokers do a very poor job of staying in touch with someone who has done a transaction.
Rob feels the real opportunity is when you are talking about renters. These people will be back in the market, whether it is in a year’s time or two years. All the studies show that everyone wants to buy a house one day. Rob asked what the follow-up systems are for their CRM systems. If someone rent a house to you, you would think they should get in touch with the client at least ten months later to tell them their lease is up and what they plan to do next. Part of the reason is you do not make that much money in the rental side of business. However, he believes this is something the residential side could really learn from the commercial side. In commercial, you do leasing not because it is a hug money-maker since controlling the leasing means controlling the property. This means at some point you can get involved with disposition or the purchase of $25 million. This is why they do it and something the residential folks could really learn.
Aaron agreed and noticed how different those lists are. He had spoken at an event last week where they talked about doing marketing and working two lists. You are looking at both the renters and the people who buy. You are sending mailers to possibly non-owner occupied people saying you want to buy their house, and they don’t even own it. Unless it is really pushed by the broker, Aaron does not believe a lot of Realtors even understand what CRM systems are and how powerful they can be. There are other ways around it too. You can run an Excel spread sheet or other cool work flows through CRM that automate the things discussed in this segment.
Rob and Aaron continued their discussion with artificial intelligence, virtual reality, and other technology that could go big in the next five years. Rob said he thought there would be A.I. going big in the last five years, but was wrong about that. He remembered when a technological watch came out that was really a question/answering device. There is no reason you cannot have that be a pulse center for consumer inquiry. You could take things to the next level in terms of where A.I. will stay and where they will head in the next 3-5 years.
Rob thinks anything that can be automated most likely will be. To the extent that anybody is doing commoditized things or basic work like transactions and figuring the number of rooms, A.I. could work for this. This raises the question of what a human being can do that artificial intelligence or data cannot do. Rob said as far as he can tell, it has to come down to information that cannot be put into a database. This could include a house you know will be covered with leaves after a wind or birds will gather on the top of it. These are things a human can provide that a computer system just cannot.
Does a Realtor happen to follow economic development trends, and do they know that the local economic development agency is actively pursuing corporate headquarter relocations to that particular area? They could be involved in the local community organizations who may not want any development at all. Rob said from a real estate profession standpoint it really needs to move away from data and information. The computer cannot do better than any human being and move towards insight and wisdom.
Right now where things are headed with big data and A.I., it is another walkthrough and is still not going to replace actually stepping foot in the house to see how it smells. There are limits to this, but Rob does feel the important thing for the industry to take away is anything a computer can do better than a human being will be done by a computer. This means you have to really start thinking about what it is that you, as a professional human being, have access to that a computer cannot or will not. Rob said this is where we really need to focus our attention. You want to build that niche and be able to be on the creative side to throw solutions at a situation.
Rob said if he were wanting to buy a home in the Inland Empire Area, he would want to know where things are going to be three years from now. He is planning on being there for the rest of his life. Computers are really bad at some things, and this is why we have things like prediction. You do not have to stand behind him and guarantee what will happen. What we know is happening is job growth and where the industry in the Inland Empire is heading. There are companies moving into logistics and warehouses, and that is a pretty big part of the economy. These are things Rob said as a consumer he would have a difficult time getting a computer to tell him. Investors need to know this too when buying houses since this can make a big difference. Anyone can go look up the job growth over the last seven years, but what Rob would want from a human being is wisdom on where it is heading.
For more information, you can go to Rob’s blog at www.notorious-rob.com. Google Notorious R.O.B., and you will find it.