Real Estate Discovers CRM, Part 1: Embracing the Idea
The real estate industry has been slow to implement CRM solutions compared with other lines of business. This is mainly because of the franchise nature of the business and the fact that agents work fairly independently. However, with on-demand services becoming more prevalent, agents are discovering the power of CRM.
In few other industries is the need for a good CRM system as great as in real estate -- a business that employs large sales forces with a need to build lasting client relationships and processes lots of documents. Add to that the need to track property listings, sales leads and referrals, and it becomes clear that CRM is the name of the game in real estate.
Yet for a variety of factors -- the franchise nature of the business along with the traditional autonomy of agents and agencies' traditional hiring and compensation models prominent among them -- real estate agencies typically haven't been big users of centralized CRM systems.
That is beginning to change as subscription-based Software as a Service (SaaS) applications built specifically for use in the real estate industry emerge and gain traction, however.
The Shift Online
Like most every other form of commerce, when it comes to real estate, more and more business is taking place on and being driven through the Internet.
The visually oriented, multimedia capability of Web 2.0 technology seems ideally suited for buying and selling real estate. Real estate agents are looking to find buyers via real estate social networking sites, wikis and blogs, such as Realtor.com, RealTown, the Real Estate Wiki and Zillow, while prospective buyers are turning to them for educational purposes, as well as to shop for properties and negotiate the ever-more-complicated world of mortgage financing.
"The phenomenon of social networking tools and user-generated content has definitely infiltrated all types of industries, and the real estate market is no different. Although face-to-face interaction is still an important part of buying and selling a home, real estate agents have begun to trade traditional communications tools for newer, Web-based technologies and applications," Gil Penchina, CEO of Wikia, told CRM Buyer.
"Currently, there are several real estate-focused social networks and online professional networking tools that agents can leverage to communicate and share information with other agents. In this same regard, Wikia offers agents the tools they need to connect and communicate with others in their field who share the same interests," Penchina said.
Don't Forget CRM
Richer communications media for connecting with prospective clients is all good, but when it comes to processing the vast amount of often time-sensitive information real estate agents typically need to access over time, an IT system with full-blown CRM capabilities can be worth its weight in gold.
Real estate agencies aren't known to be leading-edge users of centralized CRM systems, however. Indicative of that, leading CRM vendors such as Oracle and SAP do not have specific offerings for real estate agencies, though they are active in other segments of the real estate industry and do provide "generic" CRM business services and database software to the agencies.
The reasons for this are varied but essentially revolve around the territorially based, franchise nature of real estate agencies, their traditional compensation and hiring practices, the autonomy of real estate agents -- large producers in particular -- and agencies' traditional approach to managing IT.
New Technology, New Ways of Doing Business
"I'm on the mortgage side of things, that's the application we target," explained George Kenessey, founder and CEO of MyLoanBiz, which offers mortgage bankers and brokers a subscription-based SaaS CRM system built on Salesforce.com's CRM platform.
"The thing with the mortgage/real estate world is that they all have these really large sales forces and most are totally commission-based. It's the 80-20 rule, where 20 percent of your sales agents are closing 80 percent of the deals. Some real estate companies essentially charge agents a desk fee to cover their monthly costs, so I think a lot of these companies have been hesitant to spend on a centralized CRM system," he told CRM Buyer.
The value of a good CRM system to real estate agencies is only increasing, however, as their customers and business partners increasingly turn to the Web; and that's prompting them to re-evaluate the traditional methods and means they've used to manage their sales forces and the CRM tools they provide to support them, according to Kenessey.
"This really comes into play for a couple reasons: one is on the front end of the process," he elaborated. "The shift to the Web for initial shopping, filling out forms and applications -- that requires automation, and for that you have to have a CRM system. People expect a certain response time, and when it comes to things like performance metrics, that's the sort of sophistication a CRM system enables. You can start tracking deals, managing workflow, managing and supporting a sales force ... and dealing with unanswered requests."
The other reason prompting a shift is found "on the back-end," Kenessey continued, where "a treasure trove of transactions and data is found. Of all the agents that close deals, most never follow up with clients six months down the road. Implementing a good CRM system leads to the creation of a repository [that can be used to] automate follow-ups with clients, and implementing client retention programs. Most Americans move within five to seven years of buying and moving into a house."
Missing Out on Opportunities?
An overwhelming focus on closing deals and minimizing operational costs as opposed to using CRM data to build longer-term relationships may also result in real estate agencies missing out on new business opportunities.
Like many people around the U.S. and elsewhere, Robert Sikellis has invested in real estate as a means of building wealth as well as building a home for himself and his family. Having acquired and now renting out several residential properties in the Boston area, a number of concerns cropped up when Sikellis, a member of Siemens' legal and compliance team, was offered a position in Germany.
"I was living in Boston, where I have a number of properties, and when this opportunity to move to Germany came up, one of my concerns was how to manage them, how to avoid confusion," he recounted.
In addition to giving him the ability to keep track of rental payments and associated banking transactions relatively easily, communicating and maintaining good relations with his tenants was a paramount concern for Sikellis.
Searching for alternatives, unable to find an agent in the Boston area and finding that working through banks was cumbersome and costly, he eventually came upon Investment Instruments' Rentomatic, a Web-based property management system.
Online Property Management
"It's saved me a substantial amount of money and headache. It's easy, accurate record-keeping, and the tenants love it as well, which was important to me. The properties I have are nice properties with tenants I spent a lot of time handpicking," Sikellis told CRM Buyer.
Arranging maintenance services isn't part of Rentomatic's service but Sikellis did mention the value of the company's Rentometer service, which provides both property owners and renters a good gauge of rental rates and corresponding property types in specific areas.
"It gives you an idea of what you should ask for rent, and it's also a good gauge also to show tenants. It's a comparative rent service based on the area code, number of rooms, etc. -- all the kinds of things you would expect would affect the rental price. It proved very helpful when I rented one of the places just before I left," he said.
A former Massachusetts prosecuting attorney who helped launch the state's high-tech crime unit, the security and reliability of the service were high up on Sikellis's list of property management service criteria.
"Aside from my comfort level with the company, they are conducting financial transactions and the security they have in place is impressive. It certainly looks like they've put a helluva lot of time thinking about how to set this thing up. It's one thing as a sales pitch to offer this kind of thing; it's another to follow through, and they have followed through," he commented.