{"id":161,"date":"2008-05-09T18:10:46","date_gmt":"2008-05-09T18:10:46","guid":{"rendered":"https:\/\/bhgrealestateblog.com\/long-fuse-big-bang-part-2-of-3.html"},"modified":"2024-12-30T14:54:59","modified_gmt":"2024-12-30T19:54:59","slug":"long-fuse-big-bang-part-2-of-3","status":"publish","type":"post","link":"https:\/\/bhgrecareer.com\/bebetterblog\/long-fuse-big-bang-part-2-of-3\/","title":{"rendered":"Long Fuse, Big Bang (Part 2 of 3)"},"content":{"rendered":"

Posted by Nicolai Kolding<\/em><\/strong><\/p>\n

In my April 11th<\/sup> posting<\/a>, I raised five broad questions of what could be asked in each of the STEEP (S<\/u><\/strong>ocial<\/strong>, T<\/u><\/strong>echnological<\/strong>, E<\/u><\/strong>conomic<\/strong>, E<\/u><\/strong>nvironmental<\/strong>, and P<\/u><\/strong>olitical<\/strong>) categories for building a Scenario. Let’s now work this down to two and make the questions more industry-specific. Remember that we’re trying to ask questions about the world sometime in the not-too-distant-future that are specific yet far-reaching in their implications. Being able to plan for the Scenarios created is intended to give you a distinct competitive advantage.<\/p>\n

Economic: Is it possible that a major “outside” corporation (one that is not currently in residential real estate brokerage but with the ability to quickly enter on a national basis) jumps in?<\/p>\n

Political: Is it possible that a state or federal government agency moves to regulate the industry through a restrictive measure such as a commission cap?<\/p>\n

Think for a moment about the two questions raised here. Remember that you don’t want to limit yourself to questions you know the answers to (for example, why pick a Social question like: “Will the local population increase?” You don’t have to search too hard for reliable demographic data so the answer is predictable). Ask questions about possible<\/em> scenarios that would represent a dramatic<\/em> shift in the landscape.<\/p>\n

Most brokers I know have had at least a few sleepless nights thinking in some way about the two questions I’ve posed. I hear the Economic one playing something like: “My gosh, imagine if XYZ company entered the direct brokerage business!” In fact, let’s call our imaginary company Goozillsoftmart. A silly, nonsensical name, of course. I just like the sound of it, nothing more. On the Political side, ask yourself if it’s at all possible that somewhere someone in power is now thinking: “I know what’ll fix housing – let’s force a cap of 2{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} on all broker commission rates! Sellers will lower their prices with no further pain and inventory will zip right along!”<\/p>\n

To build four Scenarios, take the two questions and line them up against each other like so:<\/p>\n\n\n\n\n
\u00a0<\/td>\n\n

“Outsider” Stays Out<\/p>\n<\/td>\n

\n

“Outsider” Jumps In<\/p>\n<\/td>\n<\/tr>\n

\n

No Regulation<\/p>\n<\/td>\n

\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n
\n

Regulated 2{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} Cap<\/p>\n<\/td>\n

\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/table>\n

Our questions have now created four hypothetical Scenarios each with its own implications. The upper-left quadrant represents the status quo (at least as far as these two questions are concerned). No Goozillsoftmart, no government cap. On the flip side, the lower-right quadrant is quite a doozy isn’t it? In a capped environment that would doom many “traditional” brokers, there’s also a powerful new player – one with near universal market penetration, tons of funding, and a completely different value proposition. The other two quadrants have one “bad” answer and one status quo answer.<\/p>\n

What now? We need to put our best estimate to the probability of each of the four Scenarios. Go one question at a time. For arguments sake, let’s decide that there’s a 40{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} chance that Goozillsoftmart braves the waters and jumps in. Let’s also guess that there’s only a 10{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} chance that broker commission rates are artificially capped. Let’s now revisit our table:<\/p>\n\n\n\n\n
\n

 <\/p>\n<\/td>\n

\n

“Outsider” Stays Out<\/p>\n<\/td>\n

\n

“Outsider” Jumps In<\/p>\n<\/td>\n<\/tr>\n

\n

No Regulation<\/p>\n<\/td>\n

\n

60{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} x 90{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} = 54{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c}<\/strong><\/p>\n<\/td>\n

\n

40{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} x 90{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} = 36{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c}<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Regulated 2{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} Cap<\/p>\n<\/td>\n

\n

60{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} x 10{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} = 6{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c}<\/strong><\/p>\n<\/td>\n

\n

40{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} x 10{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} = 4{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c}<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/table>\n

For our two example questions, we’ve now decided that there’s little more than a 50\/50 chance that our world will stay the same. If you knew there was a 50\/50 chance that there would be a dramatic change to the landscape five years from now, would you start planning for it?<\/p>\n

For my final post on this topic, I’ll discuss what you do with your Scenarios so that you can build the foundation for a solid long-term strategic plan.<\/p>\n","protected":false},"excerpt":{"rendered":"

Posted by Nicolai Kolding In my April 11th posting, I raised five broad questions of what could be asked in each of the STEEP (Social, Technological, Economic, Environmental, and Political) categories for building a Scenario. Let’s now work this down to two and make the questions more industry-specific. Remember that we’re trying to ask questions […]<\/p>\n","protected":false},"author":181,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[181],"tags":[38001,41151],"class_list":["post-161","post","type-post","status-publish","format-standard","hentry","category-real-estate","tag-scenario-planning","tag-steep"],"yoast_head":"\nLong Fuse, Big Bang (Part 2 of 3) - Better Homes and Gardens Real Estate Be Better Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/bhgrecareer.com\/bebetterblog\/long-fuse-big-bang-part-2-of-3\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Long Fuse, Big Bang (Part 2 of 3) - Better Homes and Gardens Real Estate Be Better Blog\" \/>\n<meta property=\"og:description\" content=\"Posted by Nicolai Kolding In my April 11th posting, I raised five broad questions of what could be asked in each of the STEEP (Social, Technological, Economic, Environmental, and Political) categories for building a Scenario. 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