Four Trends That Will Rock the Real Estate Industry in 2012

If there is one thing that I’ve learned in the real estate business over the years it’s that change is constant.  New tools, programs, regulations and innovators make this an industry that doesn’t stand still.

From computerization of Multiple Listing Service data to smart phones to mortgage preapprovals to digital signatures; innovation waits for no one.  You either embrace it or get out of the way.

So without further ado, here are my predictions for the upcoming year and some of the things that I believe will rock our industry (again):

1.  Listing Syndication and Internet Data Exchange (IDX) Will Come Under Fire

It has been commonplace over the last couple of years for companies and agents to syndicate their listings to as many real estate web sites as possible to increase the chance that their properties will get noticed by home buyers who will in turn contact an agent to buy a home.  Sounds like a plan – right?

Enter Edina Realty.  Edina is a mega broker with 60 real estate offices and over $5 billion in sales located in Minnesota, Wisconsin and North Dakota.  In late 2011, Edina stopped syndicating their listings to national websites.  Why would one of the top ten real estate companies in the US decide to shun syndication?  If you listen to them, there are three reasons:

• Loss of Data Control – Edina says it is tired of having their listings appear on thousands of websites and not knowing if the information is accurate.  In many cases, changes in list prices, terms and status never get changed on websites.
• Greed of Websites – All websites that listings are syndicated to are in the business of making money.  They sell real estate leads back to agents/companies for a price.  If an agent with XYZ Realty forks over some cash to one of these national websites, they qualify to receive internet leads based on zip codes or geographic areas.  So a listing that was syndicated to a website by one agent or company is being used by the website to generate a lead who resells it to another agent or company that has nothing to do with the listing.
• Helps Smaller Brokers – In the world that we live in today, a smaller broker (or agent) can use an IDX feed to populate their website and attract buyer leads.  Edina is asking the question, “Why should we do all the work to get listings and have another broker cannibalize them to attract business for themselves?”

In addition to Edina Realty, the National Association of REALTORS® is taking a look at how it allows IDX feeds to be used by mega-brokers and national franchises.  Right now, these entities spend millions of dollars designing websites to attract leads to their sites by using IDX feeds from their respective franchisees across their geographic footprints.  If NAR says “No” to this practice this year, expect a lot of push back.

All this adds up to a tumultuous year for syndication and IDX.  Hold onto your hat!

2.  Borrowers’ Credit Scores Will Go Under the Microscope

Get ready for the emergence of CoreLogic’s CoreScore which will change how lenders view your buyers.  Late last year, CoreLogic partnered with FICO (Fair Isaac Corporation) to provide an additional credit view of consumers.

What was wrong with the credit scores that FICO was providing the leading credit agencies such as Experian, TransUnion and Equifax?  They didn’t account for evictions, applications for payday loans, child support judgments, property tax liens, status of homeowner’s association dues, whether or not you are underwater on your house or owned other properties that credit agencies miss.  They are even considering whether or not to include utility bills and cell phone bill payment histories.

So how will this impact a borrower’s ability to obtain a mortgage?  It is still an unknown because CoreScore will not be available for use until late March; however, I believe once it is in place, lenders will cast a wider net over a consumer’s credit history.

The bottom line – it will become increasingly more important to have buyers prequalified (even pre-approved) before you spend time with them.

3.  Working in the Cloud Will Revolutionize Real Estate

Traditionally, if you’ve used a computer – you’ve installed software (such as Microsoft Word, Outlook, etc.) on your computer, and it, along with the files created, have been stored on your computer.

Today, software has migrated to be ‘installed’, and used, on the Internet.  And you use it through a web browser such as Internet Explorer and Firefox, or even a smart-phone such as an iPhone.  You no longer have to buy the physical software in a store and download it onto your computer for use.  In other words, you are doing more and more work on your computer ‘in the cloud’ and not on your hard drive.

When digital signatures on documents became legal a couple of years ago, the real estate industry was unprepared.  Most real estate agents were still running across town getting signatures and initials on real estate contracts then delivering those documents to everyone associated with the transaction.

Over the past five years, DocuSign entered the picture and made it possible for legal documents to be e-mailed to various parties to obtain digital signatures.  Some agents took advantage of this new technology but many shunned it.  Not because it wasn’t convenient, but because it was relatively expensive and required a certain amount of tech savviness to set up an account.  In addition, in order for the technology to be used effectively, everyone in the transaction had to understand what was being e-mailed to them.  Wishful thinking.

Enter DotLoop!  A company created by a twenty-something entrepreneur to handle legal documents ‘in the cloud.’  Unlike DocuSign where documents get passed around to various e-mail addresses after every digital signature, with DotLoop, all parties come to the document because it is stored on their secure site ‘in the cloud.’  All parties in the transaction have a user name and password to access the document(s) in real time.  No more wondering whether one party has signed an addendum or extension – you can see it right online.

DotLoop is a young company and is still perfecting its product; however, if early reviews are any indication, it will become a game-changer.  During 2011, the site was used by over 80,000 agents in 700 cities to obtain 1,000,000 signatures.  In addition, it signed partnership agreements with three national franchises with plans to keep penetrating the market further.

4.  More than Just a White Screen with a Search Box

For years, Google has been the go-to site to search for anything.  The site was designed with simplicity in mind.  Anyone could go there and immediately figure out what to do because it wasn’t junked up with lots of stuff that you didn’t care about.

Over the past year or two, something happened to Google.  It grew up and started to venture into new areas of our lives to simplify them also.

If you spend more than ten seconds on Google’s home page today, you’ll discover that there is a whole new world waiting to be discovered.  Look at the black band above the white screen.  More links are showing up to make your life easier to manage.

After years of watching Twitter and Facebook fail and succeed, Google rebranded across the board, linked all of their services together and launched their own social network in 2011 which already has 62 million users.  With more traditional marketing via television and digital marketing, along with a built in user base of Gmail users, Google+ could be the hottest social network in 2012 and go mainstream.  Some are predicting that by the end of 2012, Google+ will have over 400 million users.

Couple Google+ with other sections in its site for documents, pictures, mobile, calendars, videos, presentations and mapping and you’ll begin to understand the potential for a one stop solution on the web to manage your personal life as well as your professional, real estate career.

Look for Google to make its way into your life this year in ways that you never thought possible.  Google gets it!

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• The Rest of the Story for Edina Realty (bobgilberthomes.wordpress.com)
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• The lost art of becoming a true expert (agbeat.com)
• Urban challenges faced by real estate industry (devrealestateconsultant.wordpress.com)