Mary & I have a new listing, and as we were talking about how we were going to market it, we were struck once again with how little we really know about who the potential buyers for this home are. Sure, we can make a few assumptions: based on the price of the home, we can guess at their socio-economic status; based on its size, we might know something about their family; and we can take a stab at their motivation, since they are buying in “interesting times” for our market.
But for our purposes, we’d like “who” to have a much more specific meaning, in the sense of:
- What are the names of these potential buyers?
- Where do they live?
- What is the most effective way to communicate with them?
If we knew these basic things, our marketing could approach the oft-discussed goal of targeting with a rifle instead of a shotgun. We’d be much better at selling our listings.
Today, I got an e-mail from Amazon.com, containing the usual suggestions about books I might be interested in. And as usual they were right – several were relevant to my interests and I didn’t already own them. Amazon does this often, and they’re very good at it. And it’s no secret how they do it – they pay attention, they analyze their data, and they communicate effectively. They know what I want, they save me the trouble of searching for it, and they offer it to me.
And I thought how excellent we would be at our profession if we were like Amazon – and I wondered what it would take for the real estate industry to develop the same kind of capability and why we aren’t doing it.
Paying Attention (Data):
As an industry, we have NAR’s annual survey, which contains a lot of very useful information about home buyers. But it’s a national survey, and we all know that real estate is a local phenomenon. We need to understand how our local market works – where our home buyers are coming from. It turns out that we’re sitting on a ton of data, in the form of our transaction records and files. And this could easily be supplemented by external sources such as public records and private databases. Information isn’t the problem.
The technology to manipulate large amounts of data to identify trends is widely available, as is the capability to aggregate raw data to respond to privacy protection issues. In theory and practice, it would not be difficult to use available data to characterize our local markets and answer questions such as:
- Are buyers of new 2-story homes local or relocating?
- What are Gen X & Y buyers purchasing locally?
- Are buyers actually using QR codes here?
- Is age still a major factor in identifying buyers of ranch-style homes?
- Etc. etc.
With the kind of characterization possible, we could have a pretty decent idea of what the typical buyer types were for any new listing in our market area. Analysis isn’t likely to be the problem then, either.
Effective Use (Marketing):
We’re all marketers – it’s what we do, and the successful among us not only do it really well – they innovate. This isn’t going to be the bottleneck – if we get a fairly specific and detailed description of the potential buyer for one of our listings, we’ll find an effective way to find them and present an interesting opportunity to them.
(And, on the other side, can you imagine a listing presentation where you can make a substantiated claim that you can identify specific potential buyers for the home?)
So, why aren’t we already doing this?
I believe the main reason we’ve fallen behind the technology curve on this has to do with the structure of our industry. The data, the technology and the ability to put the result to good use are all there. But it would take a big effort and a major investment to put them all together, and I think that the will to do so is lacking.
Most of us are independent contractors of some sort, and we walk out the door every day with a substantial percentage of the industry’s earnings in our individual pockets. Thus, for the large real estate companies – the ones with the capability to make the necessary investment – the profit motive is weak. And whatever the benefits, and no matter how they might be shared, they wouldn’t be immediately available – doing something like this would take time and effort, and, in today’s market environment, there doesn’t seem to be much long-term thinking going on.
But I’d bet that something like this is going to show up someday, maybe even soon. It’s probably going to come from a source external to our industry – maybe a couple of data geeks in a garage somewhere. It’s going to be revolutionary, and if the source is external, it may be disruptive. It might just wind up challenging us more than enhancing us, because we didn’t do it ourselves, and ceded the benefits and control of it to others. Maybe it’s time to start giving this some thought.
Mary & Dick Greenberg
Data Source: IRES MLS