November 30, 2000

New NAR chief sold on the Net

Richard Mendenhall knows all about "old real estate" but he also is very clear that the keys to smooth sailing down the road are the new tools.

"Some people maybe took the Internet with a grain of salt because of the initial statistics that came in," said Mendenhall, the new president of the 760,000-member National Association of Realtors, "but there is absolutely no denying that hit has changed our industry for the better."

Mendenhall, a Realtor for 25 years and the fifth generation of his family in real estate, brings an obvious down-to-earth presence to America's largest trade association. He continues to live and work in Columbia, Mo., a college town, home of the University of Missouri and typical home sale prices in the $120,000 range. He shared no drop-jaw, double-digit appreciation figures; no fearless multi-offer bidding stories by desperate home buyers who continually have to stay on top of the market.

"Four years ago, only two percent of all consumers who were looking to buy a home used the Internet," Mendenhall said. "Now, that number has reached 56 percent, and counting. You can't tell me the number of tools available, the variety of options at consumers' fingertips hasn't made the Internet the biggest discovery and potential help for this industry."

Recent statistics from Gomez, a research firm specializing in the measurement of customer experiences, found that 46 percent of all online consumers have already used the Internet to research real estate related information. In addition, 29 percent of online consumers plan to buy or sell a home in the next two years.

"Two years ago I decided to conduct a little experiment in my office," Mendenhall said. "I was amazed at the statistic that Stuart Wolff provided - that only 15 percent of Realtors with email responded to inquiries within 48 hours."

Wolff, hired in 1997 to resurrect the online disaster called Realtors Information Network, is chairman and chief executive officer of Homestore.com, the parent company of Realtor.com. Wolff encouraged real estate professionals to embrace the power of the Internet at a greater pace and showed how Realtors were very slow to adopt simple communication tools such as email.

Mendenhall took Wolff's numbers to heart and began a 60-day contest. At the end of that time period, Mendenhall held a company meeting. He put the names of all agents into a hat who had consistently responded to his disguised emails within 48 hours. About half of the agents present were eligible.

"I told them that I had three strong referrals but that only the people whose names were in the hat could qualify," Mendenhall said. "When the others began to complain, I explained to them that these strong referrals came to me via an email. Therefore, I would award the names only to the people who used the same tool."

Mendenhall's example hit home. Now, more than 50 percent of his agents reply to their customers in less than two hours.

Mendenhall inherits an association that will continue to face diversity issues - from the age and race of professionals, to the "unbundling" of real estate services of agents.

For example, according to the Gomez study, online consumers want better service and lower fees and are willing to take a more active role in the home buying and selling process. In fact, 75 percent of Internet consumers who plan to buy or sell a home in the future plan to take at least 80 percent control of their next transaction. Only 25 percent of buyers and 49 percent of sellers plan to work with agents under a traditional commission relationship in their next transaction.

However, the industry continues to cling to the old way. Only 16 percent of online Realtors discount their current commissions on over 50 percent of their listings. And, 81 percent of the 4,000 industry professionals surveyed prefer to establish a standard, full-commission relationship.

"What will drive the change?" Mendenhall responded. "I think you will see the market dictate change. If Realtors can execute more deals in the new model, then they will move to that model. It's not unlike the email experiment we did in our office. If agents see they will benefit, they will change the way they do things."

What also has changed is the background of homebuyers. Realtors know they need to recruit younger, more diverse individuals to match today's buyer. The NAR recently stated that the largest group of first-time buyers is recent immigrants, many of whom do not speak English.

"I heard Tiger Woods say that his hope was that golf would look like America," Mendenhall said. "I was really affected by that statement. Wouldn't it be great if real estate also looked like America?"

Previous columns:

• Realtors caught in election confusion, 11-16-2000
• Pick up your commission at an ATM, 11-09-2000
• Insurance quotes now at the curb, 11-02-2000
• Auctions enjoying new-found popularity, 10-26-2000
• Election mojo and mortgages, 10-19-2000
• IRS OKs reverse exchanges  , 10-12-2000
• New NAR economist sees lower rates ahead, 10-05-2000
• Dot-coms offer help to renters, 09-28-2000