Counter Intelligence: The Real Estate Cafe Weblog

Will real estate consumers begin comparing hourly fees to savings?

What's a familiar story about agents vs "for sale by owner" properties doing "above the fold" on page one of the New York Times?  Because:

"The findings [-- that "One City'€™s Home Sellers Do Better on Their Own --] fly in the face of studies by the National Association of Realtors. The group has said that houses sold via its members' local multiple listing services get a 16 percent premium over homes sold by their owners."

The timing of the story is also important because it echoes a Wall Street Journal headline this week cautioning "What You Don't Know About Real Estate May Cost You."

One of the stunning findings in research conducted by the AARP and Consumer Federation of America is that "Only about one-quarter of respondents knew that they can negotiate broker commissions." Apparently another WSJ story three years ago which advised consumers that "It Pays to Negotiate Your Agent's Commission," has had little impact (despite a reference to The Real Estate Cafe's 100% rebate model ;-)

So how can an enlightened homebuyer or seller compare the value added by real estate agents versus their level of effort and cost of doing business?  One of the researchers in the NYTimes article concludes that real estate consumers will begin asking for time sheets:

"...sellers [and homebuyers?] will begin to examine more closely the cost of all the small tasks handled by agents. To justify a $12,000 fee on a $200,000 house, he said, "you'd have to have a very high hourly rate" for an agent's work."

Another industry critic, Mark Nadel, says that kind of disclosure could help deliver an estimated $30 billion annually in consumer savings.  Yes, existing fee-for-service business models like The Real Estate Cafe would benefit greatly from such a regulation, but if "unit pricing" is now commonplace in supermarkets why not require similar transparency in real estate so homebuyers and sellers can compare effective hourly rates? 

Want to see time sheets for our past clients and compare their total hourly fees to savings last year?  Ask our competitors -- traditional full commissions or competing rebate business models like Redfin -- for the same information so you can compare hourly fees and savings side-by-side.  (Our goal is to help you save so much money, you're GLAD to help save a life as well.)

Gates call for "creative capitalism" stirs real estate philanthropy dream

After delivering his challenge today at the Harvard commencement, wonder what Bill Gates would think of the viability and fundraising potential of "Discount brokerages band[ing] together" to raise funds for AIDS orphans?

We can make market forces work better for the poor if we can develop a more creative capitalism—if we can stretch the reach of market forces so that more people can make a profit, or at least make a living, serving people who are suffering from the worst inequities. ...

If we can find approaches that meet the needs of the poor in ways that generate profits for business and votes for politicians, we will have found a sustainable way to reduce inequity in the world.

This task is open-ended. It can never be finished. But a conscious effort to answer this challenge will change the world.

Could start-up funds from the Gates Foundation seed a coalition of money-saving real estate business models, which could collectively capture a fraction of the estimated $30 billion dollars real estate consumers will save annually to save lives?  Here's my own real estate philanthropy dream. What's your response to Gates' call for "creative capitalism?"