[This is the second entry of 18 in a game design journal series introducing Spheres & Farms™, a game about real estate brokerage branding in the Puget Sound region. Previous | Next]
Anyone who has ever purchased or sold a house is likely to have dealt with a real estate agent. The agent becomes the face of that listing—more than figuratively, as their face may appear on the sign posted in the yard, as well as on any of that listing’s advertising. Yard signs remain on the property for as long as it is marketed, and perhaps for weeks after its sale. All throughout, the listing agent engages with the seller to act on their behalf, and markets the property to prospective buyers, negotiating with them directly, or with their own agents to coordinate the sale.
In all this, the quality and location of the property are attached to the reputation of the listing agent and of the brand they represent. This happens for every property that that agent and their brokerage lists and sells.
Notably, the property is neither a product of the agent nor of the brokerage. An agent may surely recommend updates or improvements to the property. Few will involve themselves directly in delivering those improvements. The agent’s name and brand are only attached to the property by their listing of that property for sale. This may seem obvious, but tends to escape comment. It is worth underscoring and elaborating how homes are actually brought to market and how different they are from other goods.
Agents themselves sometimes confuse the language of retail product sales with residential real estate, especially regarding inventory. In retail product sales, such as of clothing or household goods, inventory is directly connected with production and warehousing. It can be relatively quickly adjusted to changing market conditions, keeping prices relatively stable. Products are uniform and mass-produced. Most manufacturers price their products at high enough multiples to allow sharp price reductions to clear inventory if necessary.
As similar as the familiar tract houses we all have seen might appear, homes are not so similar as manufactured products, and not so easily substituted. In general, they are not mass-produced on the scale of retail products. Market clearing is slow, involving a host of players. Some local builders will erect only a handful of houses per year in even the best of times. Older homes might last centuries. Even for newly constructed homes, rapid adjustments in inventory cannot easily be orchestrated for residential real estate, less so for resales of existing homes.
Central Bank open market operations to raise or lower interest rates are intended to expedite market clearing, but those operations are influenced by many considerations besides residential real estate. Quantitative easing after 2009 led to uncontrolled home price growth in many key markets across the country, with little response from the Federal Reserve despite widespread accounts of unaffordability and homelessness.
In the event of an economic downturn, a builder can halt construction on an existing project. If that project is a condominium tower with no presale commitments, they can repurpose it for apartments. In the resale market, wealthy homeowners can afford to postpone sales. If family circumstances force them to move, they can rent their new home and lease out the old, or simply keep it vacant. Less affluent, indebted single-family homeowners may have few options other than to reduce the price, even to take a loss. On the other hand, if homes are selling quickly, homeowners can shoot for the moon with price offerings. If neighboring homes, or homes in competing areas are few, it may take well over a year for new construction to close the gap.
Due to the market influence of leading homebuilders like Toll Brothers, Pulte, Lennar, and many other regional and local brands, we may allow that today’s homes are more of a manufactured product than homes built three or four generations ago. However, despite similarities in the plans of homes that these companies offer, the “products” are still distinguished by the same myriad factors that set each home apart from others next door, across town, or across the country.
Informed sellers and buyers will understand all of the above; but many market participants, including some agents themselves, may not be so well informed. For many, these aspects of residential real estate sales are invisible. All they know are what they have to sell, what they wish to buy, the prices of the latter, and which agents can help them with the transaction. The homes themselves vary widely; prices are abstract and always in flux. The agents’ and brokerage brands’ faces, names, and logos are visible and persistent.
So more than anything else, the constants in a local real estate market are the names of agents and branded brokerages. Even though the homes they sell are not their own products—even though the agents contribute little if anything to the qualities of the homes they sell—those homes are visibly tagged with their brands. Agents and their brokerage brands ambitiously promote this association by emphasizing quality of life in their advertising, rather than the nuts and bolts of agency practice that they really deliver.
Schedule of entries
- How price and place matter
- Visualization, testing, and learning
- Spheres & Farms™ game summary
- Game procedures and routines in the context of agency law and practice
- Game components; agent counters and cards
- Farming methods; market selection
- More about marketing spheres; the economic cycle track (ECT)
- Economic cycle effects on marketing spheres
- Location cards: the Spheres & Farms™ “game map”
- Location card contents, office locations and maintenance
- The prospecting/event card deck
- Prospecting for listings and incurring events
- P&CR points: promoting and selling listings
- Construction projects and pre-sales
- Visibility points: accumulation and scoring
- Sequence of play
