The global service economy is currently being transformed by five powerful forces. These forces include government policies, social changes, business trends, advances in information technology, and globalisation (Wirtz et al., 2012). Being aware of these and how they effect the real estate industry will help realtors strategically plan for the future.
Government Policies
Whether organisations like it or not, government institutions do have a hand in effecting the service economy. By implementing regulations and policies, governments can change the way an industry is run. For example, government policies effected the real estate industry in the United State by enforcing a new lending law, TRID, in October of 2015. Before TRID real estate transactions were able to close quickly, even with changes to buyer’s closing costs. After the law was implemented, transactions take three to five business days longer if any minimal changes were made to closing costs (Winzelberg, 2015).
Social Changes
As society changes the service industry follows. Social changes can include consumer expectations and lifestyles (Wirtz et al., 2012). In the real estate industry, social changes can clearly be seen between generations. As the world’s baby boomer generation ages, more people are likely to purchase homes in retirement communities or sell their current homes in order to afford assisted living. Additionally, Generation Y’s are not purchasing homes as a result of school debt and an increased desire to purchase experiences and travel internationally.
Business Trends
The third force that is transforming the service landscape are business trends. Considering a major business trend is moving toward self service technologies, it is extremely crucial for realtors to showcase why being represented by a real person is worth the extra money. Another business trend that is growing is the importance of networking and building business allies (Wirtz et al., 2012). Many real estate brokerages have strategic partnerships with home warranty companies, title agencies, lenders, handymen, and electricians.
Advances in Information Technology
Arguably the strongest force that is effecting the service economy is the rapid advancement in information technology. The internet and mobile devices make it possible for consumers to have endless knowledge at their fingertips. Realtors are adapting to this force by offering free home searches on their websites. Consumers are enjoying the power of being informed and have come to expect it. Continuously, offering extended services that are embedded in technology is a great way to build relationships with your consumer.
Globalisation
In today’s economy, it is normal and quite easy for a customer or businesses to look outside of their own country in order to satisfy a specific consumer need. This factor is the reason why globalisation is the final force shaping the service economy. Never before has global travel or the transfer of information across continents been so convenient. The real estate industry needs to be prepared to interact with foreign clients on a more frequent basis. Global citizens expect real estate professionals to be able to work with international banks and entities.
References
Winzelberg, D. (2015, October 26). The Impact of TRID. Retrieved July 23, 2016.
Wirtz, J., Chew, P., & Lovelock, C. H. (2012). Essentials of Services Marketing (2nd ed.). Pearson.
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