Michael Guthrie, CEO/managing broker of Roy Wheeler Realty Co. in Charlottesville, VA, tackles some of our questions about the future of the real estate industry.

What do you think will be the key real estate trends in 2009-2012, and how are you preparing for them?

The key trend over these next few years (2009-2012) will be understanding the impact and successfully engaging in the social media/networking marketing strategy. It has been amazing to watch how what was a small niche in our industry has reached “the tipping point” stage. It can no longer be ignored by agents and – more importantly – companies, without the risk of losing opportunities that could be the difference between future success or failure. Many of us do not like change, and if we had our choice, we would rather do business the way we have always done it. Our company believes that we need to lead our Realtors into the world of Facebook, LinkedIn, Twitter, etc. It is uncomfortable for most of us, but something we need to have a handle on if we want to communicate with this next generation of buyers and sellers. Therefore, we have been proactive in offering social media/networking classes, from a general overview to agents sharing how it has impacted their business. At the same time, we are not allowing the agents to forget that nothing replaces the time honored and tested fact that however they create business relationships, personal follow-up (hand written notes, phone calls, dropping by to say hello) is what will always set you apart from everyone else.

What will the physical real estate office of the future look like?

The physical real estate office is changing before our very eyes. The brick and mortar office used to provide a place where people came to do their business and met their clients. Technology and the reduced costs of having a home office make the need to come to the office less important. Because of these changes, more and more agents do not need an office but instead a place to work when they do drop in to meet clients or process paperwork. Therefore, the physical real estate office will not need as much square footage and will be made up of open areas with shared agent work space, along with conference rooms for meetings and a larger room for training or office/company meetings. These offices will need high speed internet connections throughout and phone systems that an agent can have one number that follows them wherever they go.

Where is your housing market in terms of “the bottom,” what do you forecast for 2009 and why? How are you preparing for it?

Our housing market will hit bottom sometime during 2009. We have not been hit as hard as other parts of Virginia, Florida, or California, but 2008 prices were less than 2007, and 2007 was worse than 2006. The number of sales in 2008 was off 23% from 2007, but our median price was only down 5.2%. That is why I think our prices will go down before the number of sales increase. 2009 will be another tough year because of the impact of a struggling economy and the tightening of credit as it relates to mortgages. Hopefully, the Economic and Housing Stimulus packages will make a difference resulting in a better real estate market later this year and really kicking in as we move into 2010. 

We are preparing for this by watching our expenses on a monthly rather than a quarterly or semi-annual basis as we have done in the past. We are also proactively marketing the $8,000 tax credit for first time buyers, while educating the buyers to take advantage of the low interest rates while they are at an almost all time low. We continue to counsel our sellers that we are in a price sensitive market. Those that are aggressive with their price are finding that there are buyers ready to take advantage of homes priced to sell. In fact, NAR just reported that the ratio between housing prices and mortgage rates is the best it has been since 1970. All in all, the key is finding ways to take advantage of the market, rather than letting the market take advantage of us.

How will real estate advertising dollars be spent in the future? How will real estate marketing be different?

We have spent a great deal of time on how we will spend advertising dollars this year and into the future. Print media is still where folks (especially sellers) look to see what is on the market, but there is no arguing the fact that people are spending a lot of time searching properties on the internet before engaging a real estate agent for help. This is proving to be a fact when we see long time newspapers cutting back on what they do or (like the Rocky Mountain News last week) going out of business all together. This reality coupled with the high commission rate agents expect, make it difficult to spend as much on advertising as we have in the past. Therefore, in my opinion, two things have to happen. 

First, a partnership needs to be formed between the company and the individual agent. The beauty of this arrangement allows the company to sign corporate contracts with the different types of media and then provide the individual agents advertising opportunities at a cost they couldn’t get on their own. An example of this would be a monthly buy of radio advertising by the company that then gets split by eight or nine Realtors.

Second, companies need to find a way to market themselves on the internet both by branding and by engaging in the social media networking that is growing exponentially. At the same time, the company needs to empower the individual agent to do the same. By doing this, it helps ensure the agent’s success while keeping that agent from feeling they have change to another company that seems to be more on the cutting edge of what is happening in the market place. Some of this can be done pretty inexpensively but the challenge is to know where to spend the company and agent dollars allocated to this type of marketing to get the best return on the dollars invested.