RISMEDIA, December 13, 2006—What’s on the mind of Power Brokers? Nearly one thousand real estate professionals gathered to find out in New Orleans last month for RISMedia’s 11th Annual Power Broker Forum where a panel of leading industry experts discussed some of the most important issues facing the real estate industry.

The work session, titled, “Managing In A New Market,” brought together industry leaders including event host John Featherston, President and CEO, RISMedia, Inc., and moderator Jim Sherry, President, Innovative Solutions along with panelists Brian Buffini, Chairman and Founder, Buffini and Company; Earl Lee, President, Prudential Real Estate Affiliates; Dave Liniger, Chairman of the Board and Co-Founder, RE/MAX; Alex Perriello, President and CEO, Realogy Real Estate Group; Harley Rouda, CEO and Managing Partner, Real Living and Arthur Sterbcow, President, Latter & Blum, Inc., Realtors

Moderator Jim Sherry opened the questions to the panel with the first of these Top 10 most important issues question:

Jim Sherry: How has the media made an impact on today’s real estate market?

Alex Periello: The media has had a significant impact on the industry and people’s perception of the market. If you go back to 2001 that’s when we most recently began hearing about the ‘housing bubble’ and that proverbial headline. Headline writers have to grab people’s attention and they find a factoid in the industry and report anecdotal stories based on gloom and doom. They draw their own conclusion and say, ‘this will happen to you’ and it’s been continuous for the last five years. It’s influenced people’s attitudes. Interest rates have been coming down over the last several months and what we [Realogy formerly Cendant] did was run a full page ad in the Wall Street Journal letting people know it was still a good time to buy real estate. It was the same day that interest rates hit a seven month low, and where was that story? Buried in section C…no one saw it.

If interest rates were at a seven-month high, it would have been a front page story with graphs and pictures and a story about someone who lost everything in real estate.

The market is not as bad as people think. There are lots of opportunities and we can’t sit back and let the media define our industry. They’re not going to do us any favors. We have to take responsibility for our own message.

Added Featherston: “Eighty percent of local newspapers do not employ a business editor. You have influence on your local newspaper. Tell them what a great time it is to buy and sell real estate. Let them know how strongly you feel about your position. You are a force on your local industry. Don’t let your local media sensationalize your industry.”

JS: How are you helping agents articulate their value to the consumer online?

Harley Rouda: One of the biggest challenges in our industry is differentiating ourselves to the consumer. If you were to poll consumers on the difference between brands, they would have a difficult time distinguishing between them. Our challenge as broker/owners and franchise owners is to distinguish our brands.We have a strong focus on our technology platform, which allows our agents to do more deals and be consistent throughout each consumer experience. With the number of people searching online we need to increase our industry spend online.

JS: What’s different about the market versus just six months ago?

Dave Liniger: Now we’re getting back to a normal market, but keep in mind this year (2006) is on track to be the third best real estate year in history. Now instead of homes being on the market for two or three days we are seeing a six-month supply of inventory and the average property is staying on the market for nine months.

Marketing has changed too. Two years ago we were spending most of our ad spend on television. With the Internet becoming more powerful we are changing our television ads to direct people to remax.com. Our print and radio ads do that too. We spend quite a bit on search [engine optimization]. The way we measure results has changed too. We have a firm that tracks every hit – two to three million a week – and we can tell where people are coming from, Google, Yahoo!, etc. Trying to figure out where people were coming from television ads was difficult but with the Internet we can track that much better.

JS: How are you changing the coaching business?

Brian Buffini: Anyone who has been in real estate less than eight years has never experienced a normal market. The market is changing and new skills are required for different times. I like to think of it as when I was 25 I could eat all the pizza and Oreo cookies I wanted and still lose weight. Then once I hit 40 even if I smelled them I’d gain weight. As we get older we have to work out more and be more intentional at 40 than we do at 25. The market drifted to a different place. The sheer speed of the market made us develop bad habits. We got used to losing weight. But now, we have to work a little bit harder; now we have to get in the game. Now we need to focus on skill training. Three years ago, we had multiple offers; now we have to know how to manage a price reduction. This is also going to take some time for consumers to understand, so our skill sets have to be different. It’s a phenomenal opportunity for professionals in this business. If you’re a licensee, you’re dead; urge them to get another job.

JS: How are you handling the market shift in the wake of Hurricane Katrina?

Arthur Sterbcow: The importance of a real estate agent is the human connection they make with people. Nothing can replace that in my mind. We saw that connection here in the wake of Hurricane Katrina. It was difficult to assess the damages and the human tragedy is impossible to quantify.

And there is not a market in the United States where this couldn’t happen: a natural disaster, a terror attack, or something we can’t imagine. It’s a different world. Before the storm we had 28 offices. After the storm we had four. I was thinking about all our agents, where they were, were they alive, what about their families? It’s impossible to grasp what happened but the important thing is we all learned why we’re all here.

We’re rebuilding our marketplace. In one year we now have 28 offices again with a 29th under construction, and we’re heading for 40. We’re going to be just fine.

JS: Will the market change the franchise business?

Earl Lee: Where our business is moving is where there’s a proliferation of information. There’s no shortage of leads. The Internet gives us the ability to mine data, but our business is defined by completing a transaction. Our whole business since 1973 is getting in front of prospects and building that bond. On the Internet we build relationships somewhat extraneously and it is uncomfortable for us, but it’s what the customer wants. We’ve taught consumers that we’re not very responsive, because we haven’t been very responsive. A recent [California Association of Realtors] survey reported that one out of four consumers will work with the first person who contacts them, not who is the best informed. What is the future of franchise? We have to help our affiliates capture a larger portion of Internet leads.

JS: How do you train new people to work with Generation X and Y?

Brian Buffini: A small percentage of people search for an agent online and less than three percent actually find their agent on the net. People want to search anonymously. The key for us is how to train and work with consumers to take that lead and convert it. Agents are used to getting a call and a lead and that’s a buyer. Now we need to develop a process where leads come up and you send out an item of value such as information, tips, articles of interest to homeowners to work toward converting them to clients. No one is going to just go online and click a few things and add a house to their shopping cart.

Harley Rouda: I disagree. I’ve had plenty of people buy a home sight unseen. It is embedded in our culture. If we don’t recognize Generation X and Y and how they are using the Internet, it’s a tremendous fundamental change in communication, we will get left behind by other solving that issue.

John Featherston: Change is constant and it has evolved faster in our industry than other industries. Those who embrace change and provide the right services—finances, technology—if the large regional players change and adapt they will stay ahead of the needs of the consumer.

JS: How is Google affecting our business?

Dave Liniger: Google is attempting to control all the information. They say they want to get people off their site and onto their destination site as quickly as possible. They measure their success on how fast they get people to their desired site. But the public wants that information as quickly as possible. We were controversial when we put all our listings on Realtor.com. People don’t want to go to 10 different sites to get that information. Younger people want as much information as possible, houses in neighborhood, maps. Young consumers are smarter. They’ll say to us, ‘the other [real estate] company said they’ll put my house on five sites and Google. Will you?’ If you don’t, you’re at a disadvantage.

Alex Periello: What is modern today will be old news two years from now. Now, Google is free, and that’s great. But their economics is search and they have an advertising-based business model. The question is, if that’s where they are today, what happens three years from now when they become the destination site for real estate. Then the economics change.

Earl Lee: I visited the Google campus and it was a very sobering experience. There are a lot of extremely bright young people and they are looking ahead 15 years. We are looking ahead three years.

John Featherson: Tech companies are also very astute at influencing the right people in the media to get their stories above the fold. We have to do a better job of that.

JS Where should we focus our attention now?

Dave Liniger: We’ve had it easy for the last few years and we’ve developed poor habits. We have to be more proficient than ever before and get back to basics. We should turn down a listing today if it isn’t priced right rather than let the client down 90 days from now. If you walk away from a listing that’s overpriced that’s powerful. That how we need to train our people better.

Harley Rouda: Most say the market will rebound at the end of the second quarter of 2007. But we have to understand the changing market and garner as many eyeballs as possible. If you look at where we spend and where our buyers go, there’s a large disconnect. We still have a herd mentality. We need to reallocate our spending dollars.

Arthur Sterbcow: All real estate is local. You have to raise that trust level and the value of the relationship. Expectations of those under 30 have changed. We need to go back and train our agents to work in changing times.

Brian Buffini: We can’t base our business on passivity. We have to continually strive to develop proactive systems. There’s a piece of technology out there called a telephone. We have to sit down and make calls and focus on generating leads. Our mindset has to shift from they’ll come and find me to I have to go find them. Get out of waiting for business and into finding business and get out and start talking to people.

JS: What are your closing thoughts?

Alex Periello: The media will always be negative. They can’t help themselves. We are getting the message out to all our franchises—the market is not bad. It’s still the third best year in history but consumers don’t know that. Start advertising. Twenty percent of your advertising should be sold listings. If you do that then everyone will follow suit and people will see that houses are selling. Don’t just send out one sold post card; send out four. If you have a sign with a sold rider, ask the homeowner if you can leave it up for another two weeks. And create a sense of urgency with sellers. Create limits.

For more information about the Power Broker Forum, visit www.powerbrokerevent.com.

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