Are You Taking Full Advantage of the Internet to Enhance Your Business?
For brokers who have been standing at the side of the online business pool waiting for the right moment to dive in, that moment is now. At an increasing rate, commercial real estate professionals are using the Internet to communicate with each other and their clients, share information, gather data, and market properties. Despite the fact that this technology has helped change the way the real estate industry does business, some brokers aren't using it to its fullest potential and others aren't using it at all.
"Where is the ongoing real estate auction on the CCIM Web site?" asks Tom Rohde, CCIM, president of NAI/Rohde Realty in San Antonio. Rohde is not asking for directions; he knows such a function doesn't exist. But Rohde, who has been in the real estate industry for 30 years, wants to keep expanding the use of technology in his business.
Rhode estimates that only about 10 percent of his competitors take full advantage of technology in their businesses, partly because they are intimidated by it. "Most of my competitors, ... if they have a computer, they're using it for word processing," he says. "They don't want to spend the time; they don't know what it will do for them."
For some brokers, doing business online is a matter of necessity. Joel Criz, CCIM, president of A. Joel Criz & Associates in Honolulu, uses technology to compress time and space. "I am stuck in the middle of the ocean, therefore I have to do much business around the country networking via e-mail and the Web," Criz says. Though he professes not to be at the vanguard of technology, he has been able to work at his own pace using what's available to him.
However, the bar for technological standards in the industry is being raised as the provision of actual business services over the Internet is becoming a hot topic. Instead of using several CD-ROMs to obtain mapping, demographics, and financial analysis data, Internet users can go to one or more Web sites, build maps, add demographic overlays or charts, run searches for environmental problems, and get comparable sales prices. All of these components then can be assembled into a single package.
This one-stop shopping ideal is what drove the creation of CIREI's Site to Do Business (http://www.stdbonline.com/), where members can compile information and create property packages. It is an ideal that is being pursued by other companies as well, as they see the potential of being the commercial real estate professional's gateway to the entire Internet.
How are brokers doing business online today? Are they ready for tools like the Site to Do Business? Are they even using the tools that have been around for years? As one observer noted, companies that already are online increasingly will want their business partners to be doing business online too. Thus, the effect of not doing business online has the potential to be disastrous. Not only business partners, but frustrated clients likely will move to companies that can offer them the service and speed that are becoming the industry standard.
To test a company's online savvy, Peter Pike, president of PikeNet, has developed what he calls an Internet quotient. Pike asks if a real estate company engages in regular e-mail communication with its customers; whether the company's professional staff is accessible via e-mail (with online biographies and descriptions of responsibilities so customers can pick the staff member with whom they want to work); whether the company monitors its competitors' Web sites regularly; whether property information is available online; and whether it provides quality market research online. No doubt, many companies can answer some of these queries affirmatively, but few will rate highly on all five questions.
Overall, the industry already seems to have mastered certain aspects of doing business online. For some time, commercial brokers have been comfortable posting their property notices on various Web-based databases such as LoopNet (http://www.loopnet.com/), CCIMNet (http://www.ccim.com/), or the Commercial Real Estate Exchange site (http://www.commrex.com/). They also have been busy exploring e-mail and using contact management programs such as Ares for Act! to manage their messages. Now, some commercial real estate professionals are going further, doing more and more of their business online or through their computers. This includes saving time by using online programs such as DemographicsNow (http://www.demographicsnow.com/), Comps.com (http://www.comps.com/), or MapQuest (http://www.mapquest.com/) to help assemble property packages.
"I'm constantly using the Internet to research the companies that we're doing business with, either tenants or owners," says Eric Wilcox, CCIM, vice president of A&C Ventures in San Francisco. His research sites include Commonwealth Title (http://www.commonwealthtitle.com/) and First American Title Insurance Co. (http://www.firstam.com/).
Some brokers haven't entirely been satisfied with their online pursuits. "I have tried almost every mapping and demographics site on the Web, and I cannot say I am sold on any one," Criz says. However, he hasn't completely been turned off by the Internet. "I am looking into other gadgetry and various methods of digitizing our small office, and into creating a Web site which my clients can access to stay current on projects and dealings," he says.
The next online trend appears to be taking loan applications. For example, FinancingSources.com takes commercial real estate loan applications through its Web site (http://www.financingsources.com/), which then transmits the application to appropriate lenders.
Comps.com is introducing a similar feature on its Web site. "By matching commercial real estate borrowers and lenders through a user-friendly application process that also provides automatic access to Comps.com's proprietary property information database, we will provide the commercial real estate industry the opportunity to speed up loan transactions and reduce transaction costs," says Christopher A. Crane, CEO.
A more-complicated Internet activity is to develop an extranet, or a Web site in which clients can access certain password-protected portions of it, usually up-to-date records pertaining to their account. Large companies such as CB Richard Ellis, the Staubach Co., and Grubb & Ellis already have such systems, and customers increasingly expect such service from their other commercial real estate professionals.
Smaller companies such as Criz's also can set up extranets — and they may be more likely to do so as their customers demand the same level of access to information that they get from larger companies. Allen C. McDonald, CCIM, a broker with Trammell Crow Co. in Nashville, Tenn., says that the drive toward direct access to a client's information is part of what's behind the fact that "more and more institutional clients are consolidating their vendors ... to be able to control costs and to be able to control information."
Appropriate Internet Marketing
Although the Web and e-mail have made it easy to transmit property information at little or no cost around the world, not all properties are made equally for the Internet, just as not all properties should be advertised in The Wall Street Journal. National projects, such as net leases, work well on the Internet; local product often does not, Rohde says.
McDonald finds the Internet useful for different sides of the deal. "There's the listing side and the selling side," he says, noting that for a 25,000-square-foot neighborhood retail center he recently was selling, two buyers were bidding: one from the East Coast and one from the West Coast. Although most of his properties are local, the Internet lets him find buyers from anywhere.
However, Wilcox says brokers don't always want to see listings from afar. Some brokers will put anything on the Internet and hope it catches someone's interest, he says. "It amazes me that our e-mail boxes are flooded with 2,000-sf leases in South Carolina, as if someone in California will be interested in it," he says.
Wilcox is not downplaying the importance of the Internet in marketing properties, but he argues that some property types are better suited to a national Internet audience than others. Using the correct property niche helps the small offices play on the same field as the big guys. For example, he's found success with single-tenant properties. "The single-tenant niche is a little bit more commoditylike," he says. "You're evaluating the credit of the tenant as much, if not more than, the property itself, so it's conducive to Internet marketing."
Wilcox does have a point about using the Internet effectively. "I like to create a thoughtful e-mail," he says. "When I send out an announcement about a property, I include all the basics about the property in the body of the message. Then I give the opportunity in the e-mail to respond back to me to receive a package in Adobe Acrobat format. I either set up an auto-respond feature or, if the deal is more sensitive than that, then I'll review each response. I also give the opportunity that if people aren't comfortable with an electronic package, then I'll forward it to my assistant who will fax it out or mail it out."
Similarly, Dave Gilbert, CCIM, president of Penn Realty Advisors in Pottstown, Pa., culls his broadcast e-mail messages for income-related transactions ("anything that has a cap rate on it") and e-mails the sender with information about contacting his company for financing opportunities. His specialization is another good niche for the Internet; he says that licensing is not a problem with financing in most states.
Broadcast e-mail lists such as the Real Estate CyberSpace Society's list (http://www.recyber.com/), Dealmakers (http://www.property.com/), and the CCIM list have become popular among commercial brokers. However, these national and international lists may not work with that 2,000-sf South Carolina lease that seeks a South Carolina tenant. What to do in this instance? The answer will vary from region to region. Some state CCIM chapters — such as Florida and Oklahoma — have their own broadcast e-mail lists, which are a good way to target messages.
Brokers without access to regional or state broadcast lists can indicate the property's location in the subject line, highlighting it for people who can take advantage of it and letting people elsewhere know they can delete the message.
When marketing properties online, Rohde goes beyond the official lists and uses his access to sites such as the CCIM database to search designees in the online Red Book and then e-mails them directly from the Web.
In addition, tax-deferred exchanges in some ways are uniquely qualified for the Internet. They often have a short time span in which to find a qualifying property, but they also often are open to a wide range of properties and locations. When Gilbert receives e-mails from brokers seeking to fulfill 1031 exchanges, he offers his services.
McDonald, who focuses on shopping center sales, has used e-mail to find buyers with exchange money to place. When he finds someone, he e-mails a short executive summary that is "enough to let them take the next step."
Building Online Relationships
Some real estate professionals have been hesitant to do business online because it doesn't always allow them to meet the person with whom they are doing business. This eliminates the ability to pick up cues about the person from eye contact, posture, and facial expressions. "We're becoming so impersonal," Rohde says. "I'm doing business every day with people I've never met."
That's a wake-up call to everyone who hasn't already learned to be wary of being taken for a ride by Internet scammers.
Until formal guidance comes along, brokers should remember caveat emptor , and that good reputations are no less worth cultivating today than in the more face-to-face era of doing business.
Though an occasional broker gets burned by the anonymity of the Web, McDonald suggests that proper caution can lessen the likelihood of it happening. "When you look at the information that is being offered and the secrecy of what is being offered, it can lead you to believe [the people advertising a property online] don't control it. One of the challenges we all have is to make sure we have the network to find out who it is we're dealing with." By that, McDonald means both human networks of other brokers and technological networks (such as the proprietary one available to him through his company) in which brokers can learn about a potential client's past performance.
Wilcox has been active in using technology in general and the Internet specifically to do commercial real estate deals, but he acknowledges that it doesn't change all of the rules. His colleagues and customers still rely on his reputation. "The reason I think I've been able to get several deals done over the Internet recently is because I control the properties," he says. "People know I can deliver the properties." Wilcox reports completing a deal in which he worked with an Austin, Texas, broker and a Houston buyer for a property in Massachusetts, and says "that's more typical than not." The transaction was completely via telephone and the Internet, but the relationship wasn't all technological. "That's not to say I didn't know my seller; I've known him for years," he says. In his case, technology allows him to augment a long-standing personal business relationship.
One way large companies have been building or retaining trust with their clients is by giving them access to pertinent information through their extranets. Smaller companies — and even one-person shops — will find it harder to offer the same depth of online access for clients that the large firms give them. However, anyone can set up downloadable files or readable documents on a Web site on pages that are password protected. Depending on the sensitivity of the material, it could be placed on a "lost" page on a Web site that is not linked to any other and the only way to find it is to know the URL, which is supplied to the client.
Getting people's trust is only one side of the coin. How can brokers know to trust the people with whom they are working? (See "Beware of Internet Imposters," CIRE , March/April 1999.) Is the information on the Web truthful or not? Here, users may need to make choices, or like McDonald, at least stay alert when getting information. Going to a wide-open commercial property information service, such as LoopNet, offers a much wider variety of product. One drawback is that brokers may find themselves doing business not only with non-designated professionals, but with nonprofessionals. For a smaller selection of product, brokers should seek a property information service that caters to designated professionals, such as SIOR (http://www.sior.com/property/index.html) or CCIMNet .
Also, the reputation of companies such as DemographicsNow.com or Comps.com. rests on the reliability of their information.
The risks of doing business online are many: bad information; a loss of personal contact with customers or colleagues; software that doesn't work the way it was advertised; and so on. But there also are the risks of not doing business online: missing out on the time and money savings of online preparation of property packages; not finding a buyer on the other side of the country who wants a property; and losing out to competitors who are doing business online.
As technology continues to change the commercial real estate industry, it has become vital for brokers to enhance their business by jumping on the Internet and moving ahead into the 21st century.