Have you researched how your real estate brokerage or brand’s research and development division functions, or who heads it up?
For example, what is being researched, and how does such research inspire corresponding development? To whom does your research and development executive or division report? Have you determined what specific tasks should be assigned to your research and development leader or division?
Tellingly, for most real estate industry organizations, these questions that I pose are of the rhetorical variety, as admittedly yet respectfully, I am pointedly exposing a real estate industry weakness. That would be the real estate industry’s conspicuous and monumental absence of research and development.
According to my most cursory and the simplest of all research, while Google annually invests $27 billion, and Amazon $42 billion, on research and development, the vast majority of real estate brands and brokerages don’t even wink at this element of their business. Remarkably, for most brokerages and brands, the specific letters “R&D” are nowhere to be found among their P&L line items. While almost every conceivable serious corporation recognizes how indispensable research and development is to keep companies competitive by developing research-based insights into ever-evolving consumer wants and needs leading to the development of new and enhanced services and products, not so for most of our industry.
As a long-standing subscriber to the Harvard Business Review, I am struck by how many articles in this esteemed publication emanate from research and development. The importance, focus and significance given to R&D by most of the consumer-serving corporate world serves as a stark contrast to the unending and non-researched anecdotal “winning” tactics served up to the real estate industry. Could such indifference to research and development be a factor in the consistently lower ratings our industry suffers from, and the seemingly collectivized inability to properly convey the true value of the service and skills real estate brokerages provide clients and consumers? Without research, our industry is limited to intuition, best practices and idiosyncratic insights versus “next practices” and forward thinking.
It is difficult to validate that assumption because other than the excellent annual report produced by the National Association of REALTORS®, quite candidly, there is a notable absence of real estate consumer research—and even more troubling, research that leads to actionable development surrounding its findings.
This absence of continual research and development perhaps explains why the real estate industry was first disrupted on the buying side and is now vulnerable to listing-side disruption. A lack of research might also account for how the rest of the civilized world rejoiced in the arrival of the internet, while much of our industry viewed the introduction of the world wide web as the second coming of the bubonic plague. Moreover, while consumers embraced the benefits of IDX, much of the real estate industry initially strenuously resisted this marketing marvel due to a lack of understanding of what it meant to buyers and sellers.
On a much simpler level, even the most basic research would reveal that consumers would prefer an individual description of their home, instead of being classified as a “comp.” Basic research might have also informed the real estate industry to migrate its value proposition from not just representing the service sector but also the skill sector much earlier. Such elevated positioning would consequently lead to higher perceived value. Such research and corresponding development would also motivate the real estate industry to transform databases into “clientbases” and elevate the importance of developing spheres of influence into influencing one’s sphere. A greater dedication to research and development in my view, will also be required to countervail the ever-evolving impact of transactional automation and AI driven services.
Let me end on this ironic note. Company executives should, at the very least, research who specifically is doing their company’s research, and perhaps contemplate the following questions:
A. Would more devotion to R&D benefit and impress your associates?
B. Would this focus also greatly benefit your consumers and clients?
C. Would a greater devotion to R&D benefit your bottom line or should you just rely upon the research conducted by vendors and industry disruptors?
D. What do you think is more costly: to do research without development or development without research?
E. Given the ubiquitous impact of the internet and social media on consumer behavior and decision making, do you believe that R&D is more important than ever?
F. Given how most industry leaders are consumed by the rigors of their day-to-day operations, how important do you believe it is that other members of their team are simultaneously doing consumer research?
Allan Dalton is senior vice president of Research & Development for HomeServices of America and Berkshire Hathaway HomeServices.