Counter Intelligence: The Real Estate Cafe Weblog

RSVP: Private research LIVE from Realtors EXPO

Home buyers, sellers, and fellow real estate innovators:  Wish you could attend the National Association of Realtors convention in Orlando this weekend but can't?  Interested in participating virtually?

I arrive Friday mid-afternoon and plan to spend all four days visiting 500+ vendors at the Realtor Expo to identify "best of breed" money saving opportunities for home buyers and sellers. Last July, I acted as the LIVE BLOGGER at Inman New's ConnectSF08 and am willing to provide private market research reports LIVE from the floor of the exhibit hall for a few select clients.

Are there are any vendors or competitors on this interactive floor plan you'd like me to check out?

As in the past, I can provide feedback by phone, email, text. This weekend, I hope to experiment with video, live or recorded, as well as screen sharing and video conference calls.

Fees begin at just $25 – $50 per vendor you'd like me to investigate depending on the research question and how you'd like the results presented. That modest fee would cover 15 to 30 minutes, additional time is negotiable.

WBUR/NPR debate: Do buyer agents really help consumers save money?

Having already posted one comment to WBUR's heated discussion about "what caused the housing crisis and how to fix it," I was content to watch the debate unfold yesterday until several posts began spreading misinformation about the role of buyer agents and whether they help clients save money.

First, there is some truth that the current two-sided real estate commission does not align buyer agent compensation with performance. That's why some in the industry offer rebates and others are calling for commissions to be divorced. If that single reform comes out of this crisis, conflicts of interest would be reduced, competitive options would increase, and consumers would save billions of dollars as argued in these blog posts written two to three years ago:

$60 Billion question: How do consumers uncouple real estate commissions?

10 Mega-tends push real estate commissions to a tipping point

Contrary to assertions on WBUR's blog, some REAL buyer agents, not counterfeit buyer agents or "designated agents," actually do save their clients money by (1) rebating some or all of the buyer agency fee built into sales prices, and (2) by helping their clients shop wisely, time the market, and negotiating aggressively on their behalf. For tangible evidence, see Wall Street Journal article on the 100% commission rebate offered by The Real Estate Cafe, our menu of fees & rebates, and map of client savings totaling over $1 million during a twelve month period.

At least one other buyer agent in Chicago has helped clients save more than $1 million during a twelve month period and there are probably others. More importantly, new referral sites like http://www.ProOffer.com and conversations like this could bring performance based compensation into the real estate industry.  My guess is that millions of real estate consumers, both home buyers and sellers, would agree that reform is long overdue! 

What's your opinion?  Do buyer agents really help consumers save money?

What regulatory reforms are needed to protect real estate consumers?

"Real Estate Olympics" Redo: Call for Best "Do-it-yourself" money-saving tools at each step in the home buying / selling process

A leading group of real estate technology innovators is using a sports metaphor, the "Real Estate Olympics", to launch a compelling, timely competitive for the "Real Estate Pacesetter of 2008."

However, the first nomination (Zillow.com) and next week's run off between eight companies to pick a single winner suggests that this competition will be a battle of the GIANTS. Compare that with Seth Godin's presentation on "Small is the New Big" to the same group of innovators at ConnectNYC07 and  Time Magazine's Person of the Year in 2006: "YOU".

If you translate those MEGA-trends into an Olympic metaphor, you get a different kind of competition and a different call for "Best of Breed." Just as the Olympics have 302 events, there are hundreds of steps in the home buying and selling process and real estate innovators empowering consumers with money-saving, do-it-yourself tools at EACH STEP in the process.

For more than a decade, The Real Estate Cafe's has maintained a list of "Best of Breed" innovators at each incremental step, and we are eager to share them with our clients and others.  Real Estate innovators, if you think you should be on the list, please send us an email:

1. Nominating yourself for the appropriate step in the home buying and selling process, and

2. Explaining how you help do-it-yourself home buyers or sellers save money (or time).

Any nominations we receive before this weekend from innovators, or consumers who rave about them, will be showcased at our first "FSBO Trade Mart," tentatively scheduled this weekend at TogetherInMotion.com, One Broadway, Arlington, MA.  Watch Twitter & FriendFeed for more details.
http://Twitter.com/RealEstateCafe
http://friendfeed.com/realestatecafe

Organizing real estate rebels, educating home buyers & sellers

Richard Howe's blog post, "Urban Rebels," provided a timely opportunity to use the 4th of July to update our rallying cry for a consumer revolution in real estate.  Howe is Register of Deeds for the Middlesex North District in Massachusetts, and has written extensively about foreclosures and their impact on neighborhoods and communities. 

Excellent, timely post. With three million households behind on their mortgage payments, and a projected two million headed towards foreclosure, could the time finally be ripe for a consumer revolution in real estate?

Some of use have been talking about that for more than a decade, but as Glaeser writes, industry insiders have had "strong incentives to fight for their regime.”  (See WSJ editorial originally entitled "The Realtor Racket" and download study on "Bringing More Competition to Real Estate Brokerage.")

Collaborating with fellow real estate change agents, we hope to invite home buyers and sellers in Greater Boston to restart conversations begun 15 years ago at the “Consumer Revolution in Real Estate” at our experimental new location: One Broadway, Arlington, MA.

We’ll experiment with seminars, real estate round tables, and web site demos. I’m particularly excited about reviving our Bubble Hours and hosting support groups for FSBOs & households facing foreclosure. Perhaps you can join us at an upcoming real estate unconference, or even present a topic / lead a discussion.

Billion dollar break-up: Protecting rebates vs divorcing two-sided real estate commissions

Redfin's corporate blog is cheering because an "Anti-Rebate Bill" introduced in Illinois that would have banned real estate rebates has apparently died in committee, or in Redfin's words, been "crushed."  Other sources report that the bill has changed focus, and as The Black Knight in Monte Python's Holy Grail famously said, may not be dead yet.  According to sources, there may still be an attempt to morph the anti-rebate bill into a procuring cause bill before Friday's deadline, which could be extended.  What's at stake is the definition of procuring cause, a legal concept which Realtors use to decide who procured the buyer, and therefore who is entitled to collect the buyer agency fee under their guidelines.  Although the exact language has not been shared, Redfin and other sources allege that the reworded bill would require a buyer agent to accompany their client to property showings to collect the buyer agency fee offered through the multiple listing service (MLS).

Buyer agency compensation is an old family fight in the residential real estate industry, one the consumer has been dragged into because a growing generation of discount business model use rebates to hook home buyers.  What most home buyers don't realize is the two-sided real estate commission is obsolete, and some critics have likened it to a real estate transfer tax (hence our photo above).  So, IMHO, firms discount business models like Redfin are actually propping up an artificial pricing structure and reinforcing a barrier to competition and consumer savings.  While a recent Redfin blog post called the 3% buyer agency fee "boring," it did not challenge it or call it unnecessary or anti-competitive.  In fact, the blog post says "Redfin has always been careful when listing a home to encourage our clients to offer the buyer’s agent 3%..."

I agree with Redfin, the proposed IL bill is not the answer, neither in it's original form, which sought to ban rebates; nor it's amended form, which may seek to define procuring cause.  However, there is a long overdue reform that would reduce real estate commissions by billions of dollars annually:  separate fees for listing agents and buyer agents.  Think of it as a real estate version of BYOB: Bring your own broker.  That's the only way to create an open, competitive market place in residential brokerage, where as one attorney wrote:   "the ability to freely price one’s service is a pretty basic, bread and butter tenet of competition." The Consumer Federation of America first proposed that reform 16 years ago, and there is growing interest in "divorcing" the commission even within the Realtor community.  You can learn more by viewing this 90 second slide show:

Uncoupling the traditional two-sided real estate commission:  10 Mega-trends leading towards a tipping point (click to see video)

As the real estate industry transitions to a more competitive marketplace, The Real Estate Cafe's will continue to offer a menu of hourly and flat fees plus rebates, including a 100% rebate option.  However, we'd prefer to work with other change agents to unlock billions of dollars of consumer savings annually by compensating buyer and seller agents independently.  If you are interested, please use this wiki to brainstorm about building a coalition and action plan to divorce real estate commissions.  If you'd like to meet in person in Boston, no need to BYOB -- we'll buy the beer.

Best money-savings tools & trends for home buyers in 2008?

The Real Estate Cafe's "Booth Sleuth" is eager to attend the leading real estate technology conference in New York this week so we can identify the latest tools and trends to help clients save money.  To raise funds, we're repeating the "fare sale" we offered in November 2007.  If you think you'll be using our services anytime in 2008, we encourage you to prepay for them now so you can enjoy savings of up to 50%.  More details upon request.

If you're looking to develop a new product or service to help real estate consumers save time and / or money, we're also willing to conduct sponsored research at the conference.  For examples of our work, see Twitter posts and "Live Notes" from last real estate conference on The Real Estate Cafe's public wiki.  Confidential inventory of Web 2.0 applications in real estate also available.

Billions in savings: Will real estate consumers extend a helping hand?

It's Christmas 2007, and I am visiting extended family in St. Louis, my beloved boyhood home. Missouri is the "Show Me" state, so it's a fitting setting to ask how much money have real estate consumers really saved since McKinsey & Company predicted that industry restructuring could deliver $30 billion in annual savings ten years ago?

Last week, BusinessWeek's real estate blog, Hot Property, reported that home buyers and sellers paid $55 billion in commissions in 2007, down $13 billion from the peak in 2005. They attributed the decline to falling sales and noted that consumers paid $19 Billion more than 2000 "largely because of the surge in home prices during the boom."

What caught my attention was an estimate that "‘for sale by owner’ sellers saved almost $9 billion in home value that they otherwise would have paid to real estate agents." That figure is just shy of the $10 billion in savings from real estate brokerage commissions predicted by McKinsey & Company in January 1998.

How much more money did home owners save by using a flat-fee MLS listings services in 2007, AND how much more money home buyers receive via real estate rebates?

My guess is that those savings also exceeded $1 billion in 2007, and will grow in the future. As a "Change Agent," my question is whether home buyers and sellers are willing to share some of those savings with charitable causes? (Think "pay-it-forward" meets real estate savings.)

ChangeAgents's goal is to create a voluntary coalition of money-saving real estate business models and to invite their clients to share fraction of their e-commerce savings with local, national, and international causes of their own choice. Here's one example of a "community commission."

If you're part of the new generation of real estate companies delivering billions in savings, or if you're hoping to sell "for sale by owner" or receive a real estate rebate check in 2008, would you like to join our conversation about ePhilanthropy & Cause Marketing in real estate?

Please let us know what about your own dreams for 2008 and a better world.

Back to the future: Real estate search centers 2.0

07/30/08:  Pull quote re FSBO Cruise, more information coming soon.  Email for advance reservations & special offers for 1st 5 responses:

Looking for coop ad partners and sponsors for three experiments in 2008:  our ice cream van, FSBO cruise, and voice-enabled listing search for cell phone users -- another vision of the office of the future!  As we wrote in September 2007, traditional walk-in real estate offices may be obsolete, as evidenced by the closing of 14 Carlson GMAC offices in Massachusetts.

The lead story last night on Inman News was Real Estate Search Stores - Coming Soon?, a blog post yesterday by Joel Burslem, the visionary behind The Future of Real Estate Marketing.  His enthusiastic support for the concept has re-energized me to update The Real Estate Cafe's business plan. (Part of me is also tempted to add some or all of our b-plan, old photos, and video on our wiki so others can learn from our decade plus experience, on and offline.)

As comments on Joel's post reveal, there have been a number of experiments with walk-in real estate centers over the past 13 years including The Real Estate Cafe (Cambridge, MA), SOMA Living (San Francisco, CA), DeWolfe Direct (Cape Cod, MA), @Properties (Chicago, IL), etc.  We've maintained a running list of them in our business plan since approximately 1994. If there is interest, maybe we can share that content on The Real Estate Cafe's wiki, and invite others, like Gabe Gross, to add local experiments we've missed, like the Cornish & Carey showroom in Palo Alto, CA, as well as their own learning experiences.

Having had two retail storefronts in the past, The Real Estate Cafe is now ready to experiment with the same vision "Portland Real Estate guy" added to Joel's post, "the office of the future or now has 4 wheels not 4 walls. Equipped with a wireless laptop, blue tooth everything, and a Starbucks frequent customer card."

Looking for coop ad partners and sponsors for three experiments in 2008:  our ice cream van, FSBO cruise, and voice-enabled listing search for cell phone users -- another vision of the office of the future!  As we wrote in September 2007, traditional walk-in real estate offices may be obsolete, as evidenced by the closing of 14 Carlson GMAC offices in Massachusetts. 

PS.  We've created a subgroup for anyone involved in a "real estate search store" -- past, present, or proposed --  to network on our Ning site.

Mobile podcasting studio seeks to turn open houses into block parties

Admittedly, an ice cream truck in Boston during the winter sounds a bit misplaced, but that's why we're using the "off-season" to convert this near-vintage vehicle into a mobile mapping / podcasting studio.

As we write a business plan and raise funds to repair the truck, we're looking for creative partners, special event proposals, and a place to park the truck.  The vehicle is much traveled and much loved -- think of it as the "Velveteen Rabbit" of ice cream trucks.  Some rust and needed repairs outside and in, but lots of makeover potential to become at least as appealing as this Hug Mobile.

We're seeking 10 to 20 "Best of Breed," money-saving real estate web sites and local real estate partners (lenders, inspectors, closing attorneys, etc.) to cosponsor the truck and a menu of marketing opportunities -- from site demos, to sidewalk seminars, to block parties and more. Our goal is to build a bridge between social networking sites and sidewalks by turning any open house into a block party.  (More details upon request.)   

Sorry we've missed the opportunity to serve hot chocolate during college tail gating season, but we'll be ready next year. If things come together quickly, maybe we can do a "Homecoming Blitz" in time to cheer the Patriots from the playoffs to the Superbowl.  If we're not ready in time for Christmas parties, the next marketing opportunity is Valentine's Day 2008.  We've got lots of creative coop advertising ideas and invite yours as well.

Anyone interested in sponsoring a design contest to turn this ice cream truck into a drive-by block party?