If Real Estate Is Not a Relationship Business, What Business Is It?


I know you're working at marketing my 3BR/2BA colonial... but I just don't want to be in a relationship with you...

Over at Inman Next, Chris Smith stirs the cauldron up with a post entitled, “It Is No Longer A Relationship Business – Here’s Why“:

Where I disagree is in the stance that I want to have a relationship with my Realtor.

I don’t.

In fact, I can’t even imagine it.

My argument is that I am not alone.

Unlike a lot of the general public, I have a high level of respect for your profession.

I know how hard you work.

I know how unappreciated many of the things you do are.

I know the stress and challenges that come along with earning a paycheck and paying your bills ONLY if you sell things.

I have met countless Realtors both in person and online that have blown me away with their sales ability, marketing savvy, brand building skills and digital media efforts.

While many would never put the career Realtor along side other careers like Doctor and Lawyer which require significantly more education, I would.

It still doesn’t make me want to have a relationship with you. (Emphasis in original)

Read the whole thing. And people say I stir the pot….

In any event, not being a real estate agent, I don’t have a whole lot to add. I don’t know if RE is or is not a relationship business. But I am a strat guy, a general commentariat talking head guy, and so on. And I did have some questions for Chris (and others) which I asked over on his blog. It seems to me that what I’m asking needs a bit more elaboration, so here we go.

My Question

What I asked was, essentially, if real estate is not a relationship business, then what sort of business is it? Chris responded thus:

From post “I view buying or selling a home as a transaction” A huge one thus the Doctor or Lawyer juxtaposition. I also vie my interactions with those professions as transactions not relationships. Just my personal belief of course.

I think the juxtaposition of law or medicine is a good one to draw out the difference. Medicine and law both are inherently “skill businesses” in which the said business attempts to sell its services on the basis of expertise and skill.

The problem is that laymen have a tough time evaluating claims of expertise and skill by professionals like doctors and lawyers. Unless you went to medical school, or can watch the doctor in action, how the hell are you supposed to know that your heart surgeon is in fact skilled?

Same thing with lawyers — unless you’re an attorney, or have the requisite education and experience, would you know how to evaluate a lawyer’s summary judgment motion papers?

So both doctors and lawyers resort to other things, markers of expertise and skill. For example, they might trump their education: law firms hire at elite universities and elite law schools so they can say to potential clients, “Hey, we got a bunch of smartie pants from Harvard and Yale, so you can trust that we’re experts with awesome law skillz.”  Doctors display their diplomas from Harvard Medical School in the office, or proudly proclaim that they are Board-certified, or some such. Both likely talk about their years of experience, or how they’re one of the pioneers of laser-guided robotic surgical procedures, or tout their win percentages in lawsuits, or something.

The point is that all of the marketing revolves around expertise and skill.

With real estate (yes, yes, there are always exceptions…), the marketing revolves around not expertise and skill, but notions of service and trustworthiness. Your typical agent website will talk about how much she is devoted to the client, about how great she is at communication, about staying in touch, about highest customer service, and so on. Of course, you get the requisite nod to how the agent is an expert in handling transactions and such. But proof statements are few, far in between, and not necessarily convincing.

After Relationships?

The reason why “relationship” was such a dominant theme in real estate marketing, I think, is this focus on service, rather than on expertise.

Who knows why things developed this way? I can speculate that perhaps real estate is fundamentally a “low-skill” industry; I put that in quotes because I am not suggesting that it’s easy to do real estate brokerage. Indeed, it is very difficult. Some agents are really quite skilled, they’re experts in the real estate transaction, in the local market conditions, in property marketing, negotiations, and so on and so forth. But I am saying “low-skill” because compared to other professions, real estate does in fact require far less in terms of technical knowledge and skills. No one would think to diagnose himself and craft a treatment regime to deal with that painful hacking cough; few people know enough law to want to represent himself in a major lawsuit. But consumers do look at what they see real estate agents do and think, “Hey, that can’t be that hard, can it?”

The seven-year cycle is also a problem, right? I go to my doctor several times a year. And maybe he treated me for my sprained ankle last year, and now I need someone to help me with a broken arm. I can evaluate my doctor’s seeming expertise and skills at least from a layman’s perspective, as I continue to use more and more doctors. With real estate, I buy/sell a home once every six or seven years. It’s impossible to even get a frame of reference to evaluate agent skill.

Of course, the industry itself isn’t exactly skill-centric. You never hear anyone winning REALTOR of the Year at some local Association banquet because she did some truly creative negotiations on a complex short sale with international buyers. You never hear, “Oh man, did you see that reverse-engineered marketing technique Jane used to sell 123 Main Street for 10% over asking? It was mindblowingly innovative! She’s a real pioneer, that Jane, even if she only sold three houses last year.”

99.99% of the time, the REALTOR of the Year is selected on the basis of (a) production, (b) political contribution to RPAC, or (c) both. And let’s not even get into the whole #RTB deal, where brokers and agents are always slamming each other for low standards.

So here’s the real nub of what I’m curious to know.

If “real estate used to be about relationships” because it was, at its heart, a service-business rather than a skill-business… what is it today? And if the answer is, “real estate is (or needs to be) a skill-business, the way law and medicine are”… then consider the wide-ranging changes that would need to occur throughout every level of the real estate industry.

What I’d Want from Chris Smith (And You)

With all that said, I asked Chris for some specifics regarding the “post-relationship” real estate world. With the above examples in mind, then, I suppose I’d like to hear some ideas on how skill-based real estate agents would compete with each other. What sorts of proof statements would realtors use (e.g., lawyers might boast of some elite law school, doctors might talk about being Board-certified)? How would compensation work in a skill-based real estate industry, vs. the service-based one we have today? What would awards be based on?

There are hundreds of other such questions that can be asked. And that’s assuming the answer to post-relationship real estate is “skill-based” real estate. I’m not sure that’s the case. Maybe post-relationship real estate becomes a “design-and-marketing” industry, like say, fashion or luxury goods.

In any event, I hope that clarifies the conversation I want to have on this topic. 🙂



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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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