Online consumer shopping behavior has changed the way consumers shop for real estate.
I am currently looking for a new car. Knowing that car salesmen are notorious for creating a lot of sales pressure by trying to close the deal and negotiate the highest price they can regardless of the competition, I have avoided visiting any car dealerships yet. To start the process I visited automotive.com. While there I looked at every luxury sedan available and learned more about each of their unique features and benefits.
Since I am a pretty loyal BMW fan, I then went to the BMWUSA.com site to see the news there. I am interested in finding either a hybrid or a diesel that is built to accept bio-diesel. I am looking for a fair amount of storage capacity to accommodate luggage, kids and kid’s equipment. The BMW site has a “build your own car’ tab which allows you to build a car with up to 130,000,000 combinations.
I used this functionality to design the model I want with exactly the features I want. Once I built my “ideal car” the website provided me with the MSRP for the car with the exact features I am looking for.
It then directs me to tab to help me ‘take a test drive”, get a quote and save my ideal BMW design. I requested a test drive and a quote and saved the car I designed so that I could forward it to my husband and save it for future reference.
In just a few minutes I received an email from one of the local dealers and a phone call from another. Now that I know what I want and have a pretty good sense of what the prices should be for the car, I was happy to talk to a sales person who could help me find availability for the car I was looking for. One of the dealers found one that is due to arrive at the Port of LA in three weeks. We just need to lock down the final price and financing details and we will buy the new car. This process was empowering and involved a sales professional at just the right time…once I felt like I knew what I wanted and I was confident that I had done my “homework”.
Recently I also purchased a LCD projector. I first went to CNet and checked out the ratings and feedback of electronics experts there. Next I went to Consumer Reports and checked out what they had to say. After doing this research, I then went online to find a retailer who had the model I was looking for at the right price. I never set foot in an electronics retail store, mainly because I don’t like the sales pressure I receive when I go there anymore than I like the sales pressure I receive at an auto dealership.
I can’t help but draw parallels between these two experiences and the real estate sales process. Consumers are following a similar process when looking for a home now. They first go to “objective” sites like Trulia, Zillow or a MLS Consumer Website to find unbiased, comprehensive information about the real estate market they are interested in. Many of these sites allow the consumer to register so they can receive on-going market updates. From the WAV Group MLS Consumer Website Study we learned that consumers in the Houston market said they preferred the MLS Consumer Website because they could become educated about the market without any sales pressure. They also appreciated the fact that Houston REALTORS® would share the “best property database out there” with them. They felt like they could become comfortable and confident in the type of home they were looking for as well as the neighborhood, school district. They also said they appreciated the opportunity to use these sites to find a REALTOR® that had local market knowledge and unique skills like language or unique expertise and training (designations).
Consumers first look at the market broadly. If they are considering a move to Florida, for example, they may look in Tampa, Orlando and Sarasota before they begin to lock in on a a particular area. Once they learn more about the nuances of each market, they may narrow their search to Tampa, because they would like to be close to beaches, but they may also need a thriving business community, for example.
Now they begin the process of ‘building their ideal home” just like I did when I was searching for a new car. They enter the criteria of the features that are important to them. Then they do a search to find which houses might fit their criteria. When they get to listing detail pages and they find a home they really like they may contact the listing agent directly or they may just save it and try to learn more about the property elsewhere.
When they get closer to purchasing a home they may “request a test drive”. They get with an agent who provides with a tour of the short list of properties they have identified by their own research. Consumers tell us they feel better viewing homes after they have done their own research.
Once the consumer gets to this point, a sales agent becomes absolutely critical. When I was ready to buy the car, I need to sit down with a sales agent and hammer out the details. I need about how to finance the car, how to trade-in my current car and how to feel really good about the resale value of my purchase. Real Estate agents play this same vital role. But if sales people get in the way of the consumers research and try to impart themselves in the process too soon they are not welcome.
While the process of buying or selling a home is clearly more complicated and emotional research process of buying a car or LCD projector, the consumer’s desire to take control in the early stages of the real estate sales process is analogous with other online purchasing processes. It requires the professional capabilities of brokers and agents to work through the intricacies of finding a home and location that meets all of the needs of a family. Our industry needs to understand this and provide the premium places for consumers to meet this need or understand that 3rd party sites like Trulia and Zillow are ready and willing to take on this task.
If the real estate industry wants to win, it must recognize this fundamental shift in consumer shopping behavior and embrace it. We can defer the important process of real estate research to third parties like Trulia and Zillow or we can take control of it and offer it ourselves. Consumers in Houston told us that they know the best real estate information is available through the MLS. They also told us that they appreciate the objectivity of the sites. There is no other site that provides this value to them. If we want to satisfy an important part of the sales process we must all focus on a common goal…helping the real estate consumer get the information they need. We need to stop debating about who should serve the needs of the consumer and unite for a common cause. Otherwise, third parties with very deep pockets will continue to take over leading search engine positions and take control of the real estate consumer. When that happens it will be more expensive to compete in real estate and it will more difficult to engage the consumer.
WAV Group is conducting a second round of research with consumers about the real estate sales process and the role of MLS consumer websites and broker websites. Our goal in doing these studies is to help the real estate community understand how brokers and MLSs can work together to collectively serve the needs of real estate consumers so we can all thrive and grow.
If you would like to be part of our upcoming research your MLS or brokerage to participate in this upcoming research, drop us a line and we’ll be happy to tell you more about them.