Real Estate's Perfect Storm, Force 2: Disintermediation

Wikipedia defines disintermediation as:

the removal of intermediaries in a supply chain: 'cutting out the middleman.' Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet. One important factor is a drop in the cost of servicing customers directly.

This has already happened to the travel industry. It used to be when I wanted to fly somewhere, I'd call up my travel agent and say, I wanted to go to San Diego on a certain date and return on a certain date. She'd say, "I'll check and get back to you." A couple of hours later, she'd call back and book the flight for me. Now, I go to the computer.

It's now happening in the entertainment and publishing industries.

Disintermediation hit me in November, 2006, it became apparent that buyers weren't using agents to the extent they were even a few months earlier. The rapid shift to the computer searches, with Realtor.com, Zillow, etc., has totally changed the industry.

I used to do "floor" time, a period of time when the sales agent would field phone calls. Before that date, people would call up and say, "I want to buy a house, is there someone there I can talk to about it?" I would say, I can help you with that and away we'd go.

Beginning with November people would more likely call and say, "I'm interested in the house at 1234 Main Street. Can you tell me about it?" I'd look it up, describe it to them, then say, "Would you like to see it?" The caller would most likely say, "No thanks, I was just curious about it."

Our office kept records for a month on what callers were looking for. To a call, it was just seeking information. The number of buyers I was working with dropped each month after that.

I'll tell you the problem with this next time.

I'm trying to create a more informed real estate customer. Is this working?

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