The future of real estate depends on our industry’s ability to innovate, adapt and adapt our brands to the changing market landscape, writes PR and marketing expert Molly McKinley.
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The real estate industry is on the verge of change. For years it has relied on traditional methods of buying and selling properties, but that is changing rapidly. Consumers are more informed, connected and demanding than ever before.
This evolution requires us to fundamentally rethink how we approach real estate transactions. As the father of modern management, Peter F. Drucker, demonstrated through his writings on innovation and entrepreneurship, it is time for the real estate industry to embrace true innovation.
need for innovation
Drucker identified seven sources of innovation, four of which are particularly relevant to today’s post-commission settlement real estate landscape:
- unexpected: The COVID-19 pandemic has dramatically changed consumer behavior and expectations. Remote working, virtual travel and online transactions have become the norm rather than the exception. This unexpected shift creates opportunities for those ready to innovate in the post-pandemic world.
- Incongruity: The gap between consumer expectations and what the real estate industry has traditionally offered is growing. Buyers and sellers want faster, more transparent processes and personalized service consistent with their digital lifestyles.
- Process requirements: Simplifying operations to increase efficiency is critical. Artificial intelligence and big data technologies can revolutionize property search, valuation and transactions, reducing time and costs while increasing accuracy and security.
- Industry and market changes: The rise of proptech and fintech startups is emblematic of broader market changes. These new entrants are disrupting traditional models and setting new standards for innovation, forcing established companies to adapt or risk being eliminated.
Innovation principles
Drucker emphasized that innovation is both conceptual and perceptual. It requires a clear focus on opportunities rather than problems and a deep understanding of consumer needs. Here’s how real estate companies apply these principles:
- Focus on user experience: Modern consumers expect seamless, intuitive experiences. Innovations such as virtual and augmented reality for property tours, AI-driven recommendations, and improvements to secure and seamless lending processes can significantly improve the user journey.
- Leverage data: Big data and analytics can provide insights into market trends, consumer preferences and property values to make more informed decisions. Predictive analytics can also help predict market changes and adjust strategies accordingly.
- Cultivate a culture of continuous improvement: Encourage a mindset that values experimentation and learning. Small, incremental changes can lead to significant improvements over time, fostering a culture of innovation.
- Work with tech startups: Partnering with proptech and fintech startups can inject new ideas and technology into established companies. Such collaborations can drive innovation and provide competitive advantages, especially with companies like Lone Wolf Technologies that are committed to improving the end-to-end consumer experience.
Market conditions and industry factors: opportunities for innovation
Current market conditions, such as low inventory and high interest rates, as well as industry shifts such as private equity groups purchasing MLSs, present unique challenges and opportunities.
As stated in Peter Lacy and Jakob Rutqvist’s book, Turning waste into treasure: Advantages of the circular economy, it is possible to innovate by taking advantage of this change by adopting a circular economy approach. For example, limited housing stock can drive the development of more sustainable and efficient building practices that reduce waste and utilize recycled materials.
High interest rates can promote the creation of new financial products and services to better meet consumer needs in volatile markets. In addition, the integration of MLSs by private equity groups can improve data integration and accessibility, thereby fostering a more transparent and efficient market. We are only limited by our imagination and can spend energy maintaining an outdated system or building a better one.
Recent commission litigation, including Sitzer | Burnett, suggests a critical moment for true innovation in the real estate industry, as Donald Kuratko and Peter Drucker in Entrepreneurship: Theory, Process, Practice (Peter Drucker) in Innovation and Entrepreneurship.
Kuratko emphasized that innovation is about creating new value and solutions, not just new ideas. Likewise, Drucker described innovation as a specific tool for entrepreneurs to exploit change as an opportunity.
These lawsuits challenge traditional business models and create an environment ripe for visionary leaders to redefine industry practices, increase transparency, and deliver unprecedented value to consumers. By embracing this disruption, real estate professionals can pioneer new strategies and technologies that align with Kuratko and Drucker’s principles of innovation, ultimately changing the industry landscape.
Align the brand with changing perceptions
To stay relevant, real estate companies must adapt their brands to changing consumer perceptions. This alignment involves more than just adopting new technologies; it requires a true commitment to transparency, sustainability and customer centricity.
- transparency: Today’s consumers value transparency in every transaction. Providing clear and understandable information about the property, pricing and process builds trust and loyalty.
- Sustainability: As environmental issues become increasingly important, integrating sustainable practices into real estate operations can enhance brand appeal. This includes promoting energy-efficient buildings, supporting green building practices and reducing the carbon footprint of operations.
- Customer-centric: A customer-first approach is critical. Personal service, providing responsive support and ensuring satisfaction throughout the buying or selling process can set a company apart in a crowded market.
- Brand identity: The look and feel of your brand must accurately convey who you are and what you stand for. A strong, authentic brand image allows a company to stand out in the market, create a memorable impression, and resonate with consumers. This involves consistent messaging, visuals and experiences that tell a compelling story about your values and unique offering.
The real estate industry is at a critical juncture. By following the principles of innovation and entrepreneurship as defined by Peter F. Drucker, companies can not only meet consumers’ changing expectations but also move industries forward.
The future of real estate depends on our ability to innovate, adapt and adapt our brands to the changing market landscape. Every shift and perceived problem or disruption in our industry presents an opportunity to innovate and reinvent with the right mindset. True innovators will lead the way in changing the way real estate is bought and sold.
Molly McKinley, co-founder of Redtail Creative, Intentionaliteas, and author of Intentional Business: The Path to Purpose and Prosperity, is an expert at connecting the dots. She is a serial entrepreneur, public relations and integrated marketing strategist with over 25 years of experience launching new products and brands.
