There has been much discussion in the REALTOR® community about challenges facing the real estate industry, especially amid rapid changes caused by advanced technology. Real estate experts say while there will always be threats to any industry, especially if that industry is doing well, keeping an eye on the horizon helps industry stakeholders position themselves so they can prevent threats from occurring and adapt to changes ahead.
The leadership of the Silicon Valley Association of REALTORS® has referred members to the "D.A.N.G.E.R. Report (Definitive Analysis of Negative Game Changers Emerging in Real Estate)," released by the National Association of REALTORS®. The report details threats, risks and challenges the real estate industry faces today and will likely face in the future. The report lays out 10 potential dangers impacting five groups in the industry – agents, brokers, the national, local and state associations, and multiple listing services.
Commissioned by NAR, the D.A.N.G.E.R. Report is the result of extensive research, a survey of Realtor members undertaken in 2014 incorporating 7,899 responses, and one-on-one interviews with 74 CEOs/senior executives inside and outside the industry conducted by Stefan Swanepoel of the Swanepoel /T3 Group. Fifty dangers (10 for each group) are listed and threat levels are estimated according to their probability, timing, and impact. The report says the dangers are hypothetical and may or may not occur, but serve as food for thought for industry stakeholders.
Here are the top threats facing each group:
Dangers Impacting Agents
Masses of marginal agents destroy reputation
The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry.
Commissions spiral downward
A variety of powerful forces exert significant downward pressure on real estate commissions.
Dangers Impacting Brokers
Regulatory tsunami hits
Regulatory creep and large financial penalties increase compliance costs.
Paper brokerages cause disruption
With no walls and little operating costs, Paper Brokerages proliferate and become a major force overnight.
Dangers Impacting NAR
Decision-making structure becomes a hindrance
NAR's complex governance structure encumbers its ability to adopt the strategies, tactics, and policies that are appropriate for the future.
The three-tier structure liability
The unique three-tier REALTOR® Association structure emerges as the trigger of major crippling channel conflicts between national, state, and local REALTOR® Associations.
Dangers Impacting Associations
Leaders not in unison with fast-paced world
The inability to recruit, train, and engage the skills required to lead associations through transition.
Too many uninformed decisions are taken
Misguided decisions are made by leaders who don't clearly understand their obligations and responsibilities.
Dangers Impacting the MLS
Entry by a new player
The current warlike environment in real estate becomes attractive to a large non-industry company that sees opportunity.
Unclear end result
The MLS movement hasn't thought through what a post REALTOR® - owned MLS might look like or how it would operate.
What does this report mean for local REALTORS® and consumers? Chris Isaacson, president of the Silicon Valley Association of REALTORS®, says the local trade association is currently preparing for its long-term strategic planning session. "Strategic planning will help position SILVAR, so if something happens we can adapt," said Isaacson. "We continue to seek ways to elevate the profession and hold our members to a higher standard of conduct than other real estate professionals."
As for consumers, Isaacson said the message is the same. "Your agent will help you with one of the biggest financial investments in your lifetime, so it's important for buyers and sellers to choose a trusted and knowledgeable REALTOR®. Do research on their qualifications, ask about their experience, advanced training and certifications," advised Isaacson.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.