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Pursebuzz.comIn a post this AM by Pat Kitano, over at TransparentRE, Pat talks about how “huge” the impact of online social networking is going to be on the real estate industry.

I just can’t agree.

I see the following three reasons for online social networking to fizzle out in the real estate community in the next 36 months:

1. Passive Relationships

Online social networking is by design, a series of systems that allows people with common interests to connect in a virtual environment. I think it’s a little “too” easy. Linking, connecting, and chatting online are low risk activities, with such little personal investment, these relationships tend to be passive, meaning once the chat, link, or reading of a particular blog is over, the parties depart, most times never engaging again. I’m not sure consumers are going to be attracted to, much less participate in real estate networks, like Active Rain for instance. Success in real estate sales requires constant contact over long periods of time, to catch your clients when they are “in-market”. Low-risk, passive activities are better suited to small dollar selling.

2. Content Production & Commoditization

I have a myspace page, www.myspace.com/agentscoreboard one of my “friends” on there (MySpace), Pursebuzz (who happens to be a licensed CA broker) is a very good friend of mine (in the real world) that produces short 4-5 minute videos about applying makeup that have topped the charts over at YouTube. She has some 1300 + friends, does she know them? Heck NO. Has she converted this following into big money? Not Yet. The problem here is that she is now a producer of content, not a makeup salesperson; she has to find someone to put all of those pieces together to monetize her fan base. She must focus on producing compelling content or be crushed by upstart competitors.

Real estate, unlike Pink Lighting eye shadow, doesn’t sell itself, and the best commentator on a particular real estate market, may not be the best real estate agent. Real estate agents have a lot on their plate now, adding “develop and maintain compelling local content” is going to be a tall order for most. Eventually, they will resort to purchasing someone’s feed, and then we’ll have the IDX all over again, 90% of the agents will have the exact same content on their little “cookie cutter” website they pay $49 a month for.

3. No measurable ROI

Calculating ROI for online social networking would be very difficult, as there are so many variables on a given profile or blog that creating a repeatable profitable formula for lead generation might prove impossible. I have yet to see anyone that has credibly claimed to generated significant numbers of leads from social networking, or even blogging for that matter.

Online social networks are cool and fun, but there is little new or interesting about them. What is new is that Google is using the content to index them better than any previous search technology, which is allowing obscure information to be found and enjoyed more easily. Keep an eye on Powerset, they have some scary smart people w/ a big ole pile of “Pay Pal” money looking to kick Google in the gut.

There will be some benefits from online social networking, it will allow people to figure out who they “don’t” want to do business with much faster.

In a post this AM by Pat Kitano, over at TransparentRE, Pat talks about how “huge” the impact of social media is going to be on the real estate industry. I just can’t agree.

I see the following three reasons for social media to fizzle out in the real estate community in the next 36 months:

1. Passive Relationships
Social media is by design, a series of systems that allows people with common interests connect in a virtual environment. I think it’s a little “too” easy. Linking, connecting, and chatting online are low risk activities, with such little investment, these relationships tend to be passive, meaning once the chat, link, or reading of a particular blog is over, the parties depart, most times never engaging again. I’m not sure consumers are going to be attracted to, much less participate in real estate networks, like Active Rain for instance. Success in real estate sales requires constant contact over long periods of time, to catch your clients when they are “in-market”. Low-risk, passive activities are better suited to small dollar selling.

2. Content Production & Commoditization
I have a myspace page, www.myspace.com/agentscoreboard one of my “friends” on there (MySpace), Pursebuzz (who happens to be a licensed CA broker) is a very good friend of mine (in the real world) that produces short 4-5 minute videos about applying makeup that have topped the charts over at YouTube. She has some 1300 + friends, does she know them? Heck NO. Has she converted this following into big money? Not Yet. The problem here is that she is now a producer of content, not a makeup salesperson; she has to find someone to put all of those pieces together to monetize her fan base. She must focus on producing compelling content or be crushed by upstart competitors.

Real estate, unlike Pink Lighting eye shadow, doesn’t sell itself, and the best commentator on a particular real estate market, may not be the best real estate agent. Real estate agents have a lot on their plate now, adding “develop and maintain compelling local content” is going to be a tall order for most. Eventually, they will resort to purchasing someone’s feed, and then we’ll have the IDX all over again, 90% of the agents will have the exact same content on their little “cookie cutter” website they pay $49 a month for.

3. No measurable ROI
Calculating ROI for online social networking would be very difficult, as there are so many variables on a given profile or blog that creating a repeatable profitable formula for lead generation might prove impossible. I have yet to see anyone that has credibly claimed to generated significant numbers of leads from social networking, or even blogging for that matter.
Online social networks are cool and fun, but there is little new or interesting about them. What is new is that Google is using the content to index them better than any previous search technology, which is allowing obscure information to be found and enjoyed more easily. Keep an eye on Powerset, they have some scary smart people w/ a big ole pile of “Pay Pal” money looking to kick Google in the gut.

There will be some benefits from online social networking, it will allow people to figure out who they “don’t” want to do business with much faster.

Getty ImagesWell if you were Coca-Cola it would be. In a recent BusinessWeek article, the small but powerful reputation consulting firm Communications Consulting Worldwide (CCW), claims that if Coke’s reputation were as good as Pepsi’s their stock would be worth 3.3% more or about $4 Billion dollars.CCW goes on to outline several other “brands” that benefit from the intangible attribute of “good reputation” such as Exxon, Southwest, and Johnson & Johnson. They report that, “a company’s reputation for being able to deliver growth, attract top talent, and avoid ethical mishaps can account for much of the 30%-to-70% gap between the book value of most companies and their market capitalizations.” WOW!

One of the problems they discuss is just how companies go about communicating their reputations to the rest of the world, and why many times, all things being equal, the company with the better reputation gets a premium on its value.

There is no mystery about this. Good companies are worth more. So are good real estate agents. I think good agent instinctively know this, and work at cultivating a good track record.

Reputation science is going to become the new “mass media”, only ads or marketing from trusted sources will be let thru many consumers filters, look at what has happened with spam. How are you managing your reputation? Do you realize that your good reputation is worth? 

What if it were worth just one percent (1%) more of commission?  In California, that worth about $28,000 annually, for the average agent, but its probably worth substantially more, since a good reputation would elevate you above the average agent, but its hard to quantify.  1%, 1 more deal, 1 more referral?  I’d say conservatively its worth about $12,500 for doing the same number of deals your doing now

I’m really interested to hear what you are doing to build a good reputation. Drop me a note at mike@agentscoreboard.com

231 years ago, some men risked everything on a new business venture, a revolutionary idea that all could and would be free to govern themselves and put their destiny their own hands.

In hindsight, and the compressed timeline of history, America’s freedom seemed to be inevitable. However, everyday for those men, it was a daily challenge to keep their spirits up and keep going toward their goals. There were hundreds of problems, no money, no food, no arms. Sickness, disease, and disorganization abound. How could this group of farmers and businessmen have created such a great country? Determination!

The market seems to be bad, money is tight, and you may be afraid that you may not make it. You can. You will. Fear is your enemy and you have to fight that everyday, make it a good battle.

Happy 4th of July!