1. GRAR Industry UpdateA Tale of Two ExtremesJeremy ConawayRECON Intelligence ServicesSeptember 9, 2010

2. The forces being generated within today’s market environment rival those of the most turbulent ocean currents and require entirely new navigation and handling skills for even the most experienced REALTOR®

3. Today GRAR members at both the broker and agent levels are caught between the extremes of challenge and opportunity. Both forces are equally powerful. Survival and success within these forces will require the combined resources of the GRAR REALTOR® Community.

4. The Challenge Side of the equation The Market GRAR Members The Consumer Tech/Info Economy

5. At the same time GRAR and its members exist in the most creative, innovative, and opportunity rich market environment that has existed since 1947

12. The present industry sphere has nothing to do with how powerful one is or how much money one has in the market. It is being guided by an unparalleled level of challenge and opportunity for those who can see beyond the numbers to a total lack of rules and restraint.

13. The next two years will be a “moment in time” for your Association. It is all about you, your spirit, abilities, engagement leadership and aspirations.This is your time!

14. These are very historic times

15. They are historic by virtue of the fact that the industry events of the past eight years, starting in 2002 to be exact, the last time we touched “normal”

16. The path of the past eight years 2002 - Market goes over 5M for the first time 2003 - 2004 450,000 new agents brought in 2005 - Market goes over 7m residential units 2006 - Sub prime mortgage crisis begins 2007 - Market goes into a down spiral 2008 - Recession hits - Social Media arrives 2009 - Recession ends, “recovery” begins 2010 - The new market arrives - REO continues 2011 - The shadow inventory looms

17. Virtually every segment and element of our industry is in a change mode.

18. One cannot underestimate the impact of the past eight years on this industry. From the perspective of expenditures, resources and philosophy we are dealing with a whole new situation at all operational levels

19. Understanding Today’s Market Environment

20. The Market … Location, location, location Holding annual rate of 5.3 residential Post federal incentives Foreclosures REO/Distressed properties Shadow Inventory

23. More good …

24. Not so good …

27. With respect to market forces nothing is as powerful and influential as the sinister shadow inventory. The only questions are when, what form and how,

33. What message does this convey?

34. Is this the beginning?

35. Waiting for the axe …

36. The shadow questions … How long will the liquidation take? How dramatically will the liquidation impact values? Will the liquidation process use REALTORS®? What impact will the process itself have on the transaction process? How much of the property will be put into If 11 million American families purchase through a new process how will current system be impacted?

37. The brokerage community, another evolving equation …

38. There is no longer any question that the traditional brokerage business model will not perform in a positive manner moving forward …

39. The purpose of the brokerage … Profitability is “the issue” There is nothing more important than attracting capital into our industry Who is going to be the broker of 2012? Agents not interested No brokers in training Existing brokers are aging quickly Many believe it will be individuals from corporate America Turnkey systems Benchmarking, systems and metrics

40. Getting a whole new handle on management through accountability, metrics and benchmarking

45. A number of brokers are preparing for the shadow inventory event by creating transaction teams and arming them with automation software.

46. Automation is the critical next step (next as in tomorrow) …

47. https://www.nationalquicksale.com/About.aspx

48. http://www.pulserealtysoftware.com/videodemo

49. The Brokerage Community Survivors are hanging in there Trying to increase panels and decrease overhead “100 plus failures by Christmas” Cash is precious Universal recognition of the fact that traditional business model is no long functional Working hard to control overhead Few if any acquisitions, nothing to acquire Low - nonexistent EBITA multiples

50. Brokerage Community, con’t Few if any investors in the marketplace New relationships with agents New relationships with managers Universal accountability Print marketing continuing to wane Online activities increasing Increased broker control over online leads

52. Opportunity Today’s GRAR Member Challenge

53. Agent Accountability … Everyone has a “boss” these days Independent contract is a “tax” concept not a management system Consumers are demanding a way to determine the “right” agent Agents are refusing to have their association control the system Internet based third parties are moving into position quickly A huge opportunity - lost to third parties?

54. Generally speaking today’s real estate agent is in a life and death struggle with respect to meeting the needs and expectations of today’s consumer. Only one side will prevail …

56. Agent rating slowly moves to the forefront …

64. 85% of Yelp reviews are positive

65. An essential element of the Automation process is identifying who has failed to meet their commitments …

68. TripAdvisor Experience Source: TripAdvisor

70. 8 of top-10 hotels have fewer than 100 rooms

71. London:

72. 6 of top 10 hotels have fewer than 75 rooms

73. Rome:

74. #1 hotel has 11 roomsSource: TripAdvisor

75. REALTOR.com will be next

76. 81% Will Benefit

77. Source: Based on graphic by Sean Moffitt, Agent Wildfire

78. A shift from agent centricity to consumer centricity The old system hasn’t worked since 2005 Doesn’t produce profitability Doesn’t create consumer satisfaction Didn’t make for happy agents Didn’t make for satisfied consumers

80. The power of generations … This force is impacting every industry Boomers - 74 million - 45 - 65 X’ers - 47 million - 33 - 44 Y’s or Millenniums - 82 million - 17 - 32

86. The Consumer as an individual…

87. What does today’s consumer want from their business and professional or Association experiences?

88. Simplicity

89. Innovation

90. Speed

91. Relationships

92. Entertainment

93. Collaboration

94. Transparency

95. Integrity

96. Scrutiny

97. Customization

98. Freedom

99. Community Service

100. Consumers as customers … Are not happy with real estate agents at this point in time The issue isn’t whether to use, it is what to pay Knowledge of the marketplace Ability and willingness to negotiate What is the agent value proposition?

101. Recent Consumer Satisfaction Surveys and Research

104. 54% We aren’t going to escape the ethics quandary

110. The Consumer as a market force …

111. Consumer interactions … Consumers do not trust advertising Consumers do not trust broker websites Consumers do trust what their contemporaries say about a brokerage or an agent Consumers are all about relationships Consumers will begin to trust brokers and agents who converse with them through appropriate blogs, tweets and other social media

112. Trust Source: Forrester Research / Intelliseek

113. "C-level life"--complete consumer control--has arrived. Consumers now have unprecedented access to excess-entertainment, infotainment, utilitainment and everything in between. It has put chief marketing officers and their marketing minions in the hot seat.

114. We must learn to practice effective generativity by learning about our Generation X and Y members and dropping our “kiddies table” approach.

115. Communication respelled … We will learn to listen We will learn new languages We will learn the language of generativity We will learn the language of the consumer We are going to become hyper-video We will incorporate social media in everything we do

116. Are we stuck in The Age of Crap?

117. Google Maps Gulf Oil Spill Recovery Map - Anyone can report what they observe in their backyards, upload stories, photos and video to this common shared map

118. Fold It

119. Meanwhile, Independent book stores have declined 3,250 to 1,400 in 10 yrs Annual book avg sales grew 1.6 % for last 6 years E-books are now 10% of market; sales increased 175% in 2009; to go to 50% in 5 years 600,000 titles in the Kindle bookstore; ebooks now outselling hardcovers and will outsell paperbacks within 18 months American booksellers association 2009); newyorker, april 23, 2010) ; usatoday, july 23,’10

121. Insatiable Thirst for Media on the Internet “Media is the connective tissue in our society.”

122. 200 billion hours of TV alone

123. How to Deal with Info Overload? 55% of Americans say it is easier to keep up with news and information than 5 years ago. 70% of Americans feel it is overwhelming. PewInternet.org; illus: Humboldt College Library

124. The Re-Emergence of the Curator

125. Curation & Real Estate Position your business as the community curator, curating local and national real estate news, information, events, performances expressly for your client base To avoid the Age of Crap, deliver relevancy in real time – differentiate yourself with keen editorial judgment, bold initiatives and creativity

127. Other Fresh Ideas Arrange online chat between the home seller and the buyer. Do WebEx of a house and local community, complete with a presentation by the home inspector and a mortgage broker, to an audience of invite-only potential buyers. Create an ‘ecosystem’ of locally informed content blogs about your neighborhood. Sponsor the blogs, separating you from the Let clients opt in to receive text alerts about specific properties. Build "geo-fences" around certain homes that automatically notify by text message

128. SOCIAL ME- dia ‘The balance of power is shifting. A new era in buyer/seller relationships is being defined. And unlike other revolutions, this isn’t so much about the power of "we the people" but rather "me the people.” --- Jeff Pulver, The Connected Me

129. 1:1 with 7 Billion People “What I would like to have is a one-on-one relationship with seven billion people in the world and be able to customize offerings for those seven billion people. Digital allows that relationship.” - Bob MacDonald, CEO of Procter & Gamble

130. Facebook in its own words More than 500 million active users Avg user has 130 friends Avg user is connected to 80 community pages, groups or events Avg user creates 90 pieces of content each month More than 30 billion pieces of content are shared each month.

131. Social Age Groups

132. So who’s driving Social? The average social network user is 37 Linkedin’s average user is 44. The average Twitter user is 39 The average Facebook user is 38 The average MySpace user is 31 Twitter and Facebook have almost the same male-female ratio; Twitter with 59% female users and Facebook with 57% women.

133. Is Gen X Having a Midlife Crisis? Matt Dorfman for the NYTimes

134. Gen X Comprise many of today’s “trade up” buyers Having fewer kids than boomers Generally have two jobs Do not seek or have a desire to own a large home Many have lost their initial investments in their homes Remain skeptical of Boomers “Owning a home used to mean building value and adding to your net worth, but these days more people are finding that owning a home is nothing more than a large monthly payment.” - GenX Finance.com

135. This is the generation that will likely find the home of their dreams on a 4G wi-max third-generation iPad and will contact their real estate agent via Twitter or text message.

136. “emerging adults” 1/3 move to a new residence every year 40% move in with their parents at least once. 7 jobs in their 20s 2/3 live with a romantic partner without being married Avg marriage age: 26 for women, 28 for men “The younger generation is starting to question the American Dream as it was created in the 1950s. Npr.org

138. Like to work in teams

139. Need feedback

141. Critical Reading

142. Critical Reading II

143. Attributes of digital natives Remain anonymous until they decide Won’t register or leave personal data to receive information Have little use of expertise, believe they can do it themselves Will research online before making contact Trust what their cohorts say, not you Eternally mobile

144. 5th Cycle in Last 50 Years

148. The Phone Call is …. # of mobile phone calls has dropped since 2007. Length of calls = 3 mins in 2005; now it’s almost half that. 20% of all voice mails are never listened to. “We’re moving toward a fascinating cultural transition: The death of the telephone call.” Clive Thompson, wired, 8.10

149. The Web is Dead. Love Live the Internet

150. The Web is Dead* In 2007, when the iPhone arrived, the web became less critical to daily life There are 304,561iPhone/iPad/Android apps available; 2.69 billion app downloads in 2009 A mobile screen is always with me. Fast apps beat flexible browsers *wired, august 2010

151. In Conclusion Link New Opportunities to Old Motives via the Right Incentives Digital data is infinitely copyable at marginal cost People like to share data & content (information & knowledge) Link those two items to engage your client base

152. NYTimes 0c10.02.09 illusTim Gough

153. Don’t Forget the Boomers They’re connected, they have time 60% of 50 to 64 use smartphones to send text messages; 2 out 3 use cellphones to take photos. Social networking use among internet users 50-64 grew by 88%--from 25% to 47% -- from April 09 to May 10 During the same period, social network use among those ages 65 and older grew 100%--from 13% to 26%

154. We must reengineer our approach to issues of integrity and ethical practices

155. We will have abandon our institutional approach ethical behavior and adopt a very personal one

156. Social Media … Is based upon person to person communications Allows consumers to talk to other consumers about their experiences Allows individuals to have one to one relationships Is not an essential part of the real estate culture and transaction

158. Blogging is not spamming …

161. Lifestyle … Civics let their parents pick their lifestyle Boomers let their peers pick their lifestyle X’ers designed their lifestyle to get away from boomers The Millenniums are in the process of re-inventing lifestyles Today almost every American is in the process of creating a new lifestyle (either up or down)

162. Life style marketing will be the single most profitable opportunity for brokerages moving forward

163. Consumer lifestyles are changing dynamically under social environmental influences. Lifestyle marketing aligns brands with consumer interests, needs, desires, and values. As businesses have grown to realize that their success is increasingly dependent upon an adequate knowledge of consumer behavior, the importance of lifestyle market segmentation has increased steadily. Companies must be able to interpret customer/product lifecycles and apply their marketing machine to successfully innovate around lifestyles and repackage existing offerings to fit the needs of new customers.

164. Rental lifestyles … The past five years have changed many minds about home ownership It is no longer about making money it is about lifestyle Generation X and Y are changing lifestyle Generation X and Y are changing jobs frequently and are deferring ownership to be able to transfer more smoothly.

165. A starting point …

170. Moving forward the smart brokerage will be in the concierge property management business

172. The Emerging Neighborhood Dynamic … Civics went back to the old neighborhoods Boomers were about moving up not settling down Besides they had no furniture for the longest time X and Y are all about relationships Neighborhoods are all about relationships Neighborhoods are coming back big time

179. The Internet … Web 3.0 From publication to conversation The full force of information and participation Creating relationships Providing experiences

182. Mobile Computing … The ubiquitous hardware Smart phones Paperless readers Within 3 years over 50% of American internet contacts will be by mobile device Understanding the mobile app

184. Here today …

185. The game changer …The iPad isn’t for what you are going now, it is for what you should be doing ..Rich Barton, CEO, Zillow

187. Without a mobile application

188. With a mobile application

189. Just around the corner …

190. Real Estate Information … Information is the new currency Upcoming dependency The fight to be the vendor RPR vs. Core Logic vs REALTOR.com Hyper local content will be king

191. Data has become to REALTORS® what aviation fuel has become to the airlines. Your association must become part of the solution. Information will the currency of the real estate industry moving forward

192. Layered real estate data Availability data Contact data MLS Data Target property specific Neighborhood data Public data Lifestyle data

193. Knowledge will become the single most critical element in the REALTOR® value proposition.

194. Here is the old …

195. Here is the new …

196. Essentially we must start our communications programs all over from scratch