The 21st Century Cottage Industry
by John Fleming
The term "cottage industry" probably originated in England, where such enterprises were common before the industrial revolution. Those of you who read Silas Marner (it was once the standard novel for 10th grade English) remember that Silas was a weaver who had his loom right in his cottage. The village blacksmith had his smithy, if not in his cottage, at least on his grounds. It was customary for many small shop owners to live over or behind their shops. And what was the family farm but a cottage industry?
Business in America started out the same way. The family farm, the corner grocery, and the blacksmith are all examples of early cottage industries.
The Industrial Town
The Industrial Revolution drew laborers from the country to the larger cities, where the factories were. But then low pay, poor education, poor working conditions, and environmental problems drove many industries to the countryside for the creation of company towns, where there was essentially one industry and everyone in town worked for it—in a idealistic symbiotic relationship of workers and factories in a pastoral /industrial setting.
This model has worked for many years. More recently, through worldwide competition, NAFTA, and free enterprise, the industrial town has become less competitive, and many of these jobs and industries have moved overseas for a more profitable bottom line. Products can be made more cheaply elsewhere, and our industrial workers will be out of a job.
What to do? The Cottage Industry.
One solution has been for unemployed workers to start their own businesses. Between 1994 and 1998 small business-dominated industries provided 11.1 million new jobs. Non-farm businesses employed 52 percent of the private workforce and accounted for 51 percent of the nation’s sales. Contrary to popular belief, most small businesses do not fail during their first 5 years of operation. In fact, they stay in business and generate jobs for young workers, older workers, disabled workers, and women. Some examples of successful cottage industries are accounting, auto body repair, catering, child care, free-lance writing, used clothing sales, and weed control. The types of businesses that people can operate are limited only by their imagination.
What does all this mean for real estate?
Real estate in the past has typically been a cottage industry. Even though individual agents must work through a broker, they are classified as independent contractors, not employees. And even though large companies rely on name recognition and the services they furnish to attract clients, it is the individual agent, not the company, that clients see and rely on.
Traditionally a large company or franchise will furnish agents with office space, a training program, and marketing tools to make the invisible visible. But today's successful agents need less office space; they are out in the field going to clients and customers personally and electronically—their links to the office and their marketing tools are now in her purse or on his hip.
The brick and mortar office has become an electronic cottage.
The Electronic Cottage
The growth of the communications industry--e-mail, fax, Internet, data bases, cell, web and video phones--all make it possible for agents to maintain contact with their clients, their offices, and each other. Where once a large office or a franchise housed rows of desks and telephones, the large company is now developing into a virtual office, a network of agents, each in his or her own electronic cottage, linked together and doing business electronically.
But agents are not the only participants in this developing network. With these electronic links, offices are able to consolidate services related to real estate: escrow, title insurance, financing, home inspection, building. John or Jane Doe, sitting in a home office, can converse with clients, show them videos of listings and neighborhoods, pre-qualify them for loans, and transmit documents to a title company, performing all of these tasks from their living room, car, or swimming pool.
And networks are not only local, but national, and indeed global. A real estate broker in New York may soon be selling Arizona property to a buyer in Wisconsin with financing from Colorado and title insurance from Alabama. We already have a national portion of the real estate exam given in many states. How much longer will it be until we have a national real estate agent's license? At present, we have licensing in all the states of the U.S. Now Mexico, or at least the state of Sonora, is developing licensing and education requirements. Before too long that broker in New York will be helping clients buy beachfront homes in Puerto Peñasco with title insurance from Canada, financing from England, and escrow services from Costa Rica.
Some Predictions for The Real Estate Industry.
Since the world is now wired and communication speeds are doubling each year, video production and video conferencing will be more commonplace.
Agents will be able to present properties 24 hours, 7 days a week to an international audience, and be available when needed, using video conferencing. They will be able to tour a home and its neighborhood in a video production. Or they can have their clients tour the property with virtual reality, making directional choices with the click of a mouse.
Real estate franchises and large corporations will be the developers of technology on a large scale. The successful ones will promote the individualism of the real estate industry by furnishing agents with the technical, educational, and marketing tools for the future.
Individual agents working on their own will have an opportunity to expand their market by using the cost-effective technologies now available. But they need to learn how to use the tools for today and tomorrow. Technology is here, and there is no going back.
