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.

"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

CARPE DIEM: Expired & canceled listings create "commission-free holiday" for buyers & sellers

Massachusetts home buyers, if you have been waiting for housing prices to slide into your acceptable range, this could be time to "carpe diem."  As shown in the graph above (click for larger image) of MLS activity during June & June over the past 15 years (1994 to 2008):

• The number of off-market properties -- expired, canceled & temporarily withdrawn listings -- surged to a new record of 16,319 properties just after midnight.*
• In contrast, sales have fallen from a peak of 19,180 in 2006 to 12,335 in 2008 (as of 12:30am, August 1). 
• That means that sales are down by about a third, while off-market listings have nearly doubled since 2005 when we first wrote that expired listings were a leading indicator of the real estate bubble.
• Over the past three years (2006-2008), more properties have been pulled off the MLS than sold during June & July.  For every three listings closed in the past two months, four were pulled off the MLS statewide in Massachusetts.

What do these raw numbers mean to buyers and sellers?  Think of expired and canceled listings as a two-sided window of opportunity, or the real estate equivalent of a "tax-free holiday."  Sellers can accept an offer about 5% less than their last asking price and still net the same profit because they are no longer obligated to pay a traditional real estate commission.

Will this "commission-free holiday" be enough to motivate buyers to make offers, or will motivated sellers in Greater Boston begin making offers to well-qualified buyers as is happening in other markets? 

The Real Estate Cafe is advertising buyers on Zillow to make it easier for motivated sellers, particularly those who have received pre-foreclosure notices, to find them. If none of our buyers wants to purchase your home, we offer seller services "a la carte" on a fee-for-service basis.  If you'd like to learn more about how to sell your home "for sale by owner," we're organizing a FSBO support group and invite you to see our "FSBOs on Steroids" presentation.  If you're not interested in selling on your own, we'd also be glad to do a Listing Agent Report Card to help you select a new listing agent and try to negotiate a reduced commission.  Email for more details.

* Technical note:  Includes all residential property classes in MLSPin:  single family, multi-family, condominiums and land. Temporarily withdrawn listings available for 2008 only.

If airlines have fare sales, should real estate agents? Part 2

Poking fun at the current cover story in Barron's Magazine, "Bottom's Up: This Real-Estate Rout May Be Short-Lived," Bill Apgar of the Harvard's Joint Center for Housing predicted, "There will be 10 articles a month [like that] until we hit the bottom, and the last one will be right."

When will it be the right time to buy?  That's what all The Real Estate Cafe's clients are asking.  Some of their house hunts began two years before the market peaked, and are now into the third year of falling prices.  Nearly 50 of our active buyers have looked at more than 1,000 MLS page views. Twenty-one have looked at more than 1,000 MLS pages in the past year alone, but only four of them have paid any fees to The Real Estate Cafe.

Unlike listing agencies who represent sellers and charge 5% to 6% commissions, or dot.com start-ups that are venture funded, The Real Estate Cafe pays it's overhead almost entirely from hourly consulting fees paid by clients.  With so many buyer waiting out the housing bubble, those fees have slowed to a trickle.  Now, after 13 years, we need your financial support.

We constantly look for ways to help you save money, by learning more about the housing bubble and the latest technologies.  Today, for example, we attended a seminar on State of the Nation's Housing and a Foreclosure Prevention Workshop. This weekend, we'll participate in PodCampBoston (for the third time.)  Next week, we'd like to participate in two real estate technology conferences in San Francisco:  REBarCamp and Real Estate Connect.

To do so, we need to raise $2,000 to $3,000 quickly.  You can help us, help you save money by selecting one of the following special offers:

Money-saving offer #1:  Fare sale
Repeat the Fare Sale we used successfully in 2007 to get two to three clients to prepay $500 to $1,000 in exchange for 1 to 3 hours additional work for FREE.  Email for details.

Money-saving offer #2:  Experiment with monthly fees
Introduce an optional monthly subscription fee. If you agree to pay $250 per month, we’ll slash our our consulting fees, normally $100 to $150 per hour, to $50 per hour for five hours—that’s a savings of 50% to nearly 70%! Like frequent flier miles, hours you prepay accumulate and you can use them any time you like.  Email for details.

Money-saving offer #3. Attend educational seminars
Host a technology debriefing after our trip to San Francisco to share best money-saving tools and tips from the two real estate technology conferences. We would like to host two events, one for buyers and the other for FSBOs ("for sale by owner") within 10 days of the conferences at TogetherInMotion, One Broadway, Arlington, MA.  $49 per household, per event.  Email for details.

Finally, your best savings opportunity may already be part of our normal menu of fees & rebates.  For example, one of our $3,000 flat fee options enables you to buy down our hourly consulting fee from $150 per hour (without retainer) to $75 for 40 hours - that's a 50% savings before payment of any performance bonus.  (Contact us for more details on this option and others.)

We encourage buyers to wait for the housing prices to correct, but don't wait to take advantage of these savings opportunities. Once we raise $2,000 to $3,000, they'll be gone.

Fee-for-service real estate: professional advice without cartel pricing

Comment posted to debate on USNews & World Report's real estate blog, Home Front, asking: "Do you need a real estate agent to sell your home?"

More than a decade after the former chief economist of the National Association of Real Estate said...

"The next major revolution in real estate will be fee-based services replacing the blanket commission pricing that has dominated the industry for so long."

...it's discouraging to see this debate reduced to two options:

"There are two general ways to sell a piece of real estate. You can do it yourself (usually known as doing a for sale by owner, or FSBO), or you can utilize the services of a real estate agent."

There are dozens of tasks in both the home buying and selling process that web-savvy real estate consumers can purchase "a la carte" to meet their specific needs, without incurring a five to six percent real estate commission.

IMHO, presidential debates should not ignore credible third party candidates, and this residential debate should not exclude alternative fee-for-service business models either.  Those business models -- together with long overdue industry reforms -- will enable buyers and sellers to save billions of dollars annually without sacrificing the benefits of professional advice.

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

If you live in New England and would like to join our experimental "FSBO Support Group," please contact us by phone (617-661-4046) or email.

Alternative fees for home buyers: Still the "Unfinished [r]Evolution"?

Four years ago, June 7, 2004, Banker & Tradesman quoted The Real Estate Cafe in a page one story entitled, "MLS Policy Statement Fuels Commission War."  The skip page read:

Unfinished Evolution

During the last decade or so, alternative services -- such as flat-fee, listing-only or fee-for-service models -- have been offered to home sellers, but there haven't been a tremendous amount of choice for buyers, according to Wendel. 

This is one of the untold and unfinished pieces of this [real estate r]evolution," he said.  Wendel, who charges $100 an hour rather than charging a commission, has been offering a full menu of services to both buyers and sellers for the last 10 years.

Do you think the residential brokerage community now offers enough alternatives to the traditional real estate commission?  What kind of money-saving options would you like The Real Estate Cafe to add to it's Menu of Fees & Rebates?  Should we bring back our $3,000 and $5,000 flat fees, first offered when we opened in 1995, or continue to focus on hourly fees?

Would you like to see the traditional, two-sided real estate brokerage commission uncoupled so home buyers and sellers can BOTH maximize savings in an open, competitive market place?  If you are not familiar with the issue, watch this 90 second video.  Why hasn't this happened already, and what will it take to get there?  Your ideas are welcome on the "divorcing" commissions section of our wiki, or in the comments section below. 

See what we mean about the "Unfinished [r]Evolution" in real estate brokerage fees?

How can we improve our money-saving Menu of Fees & Rebates?

It's been more than a year since we updated our Menu of Fees & Rebates, so we'd like to invite home buyers to meet in person to discuss possible improvements.  Our current options are shown above (click on arrowheads in outline for more detail) and on our wiki.

• We offer three basic options:  traditional commissions with limited rebates, hourly fees with full rebates, and flat fees with performance bonuses
• Our most popular options include a 100% rebate of the buyer agency commission included in the sales price. 
• Our hourly fees range from $75 to $125 per hour depending on the size of retainer prepaid (or $150 per hour with no retainer or minimum fee).
• Limited availability:  Flat fees start at $3,000 plus performance bonus.  Each performance bonus is negotiated individually to motivate us to help you maximize saving (see map of savings totaling over $1 million).
  
• We're also willing to work with a few buyers on a 1% fee option, some restrictions apply.
• Finally, you can propose your own fee / rebate, particularly if you are selling "for sale by owner" and would like us to represent you as a buyer.  That way you can maximize savings both buying and selling.

Our ideal is a mix of fees -- hourly, flat fees, and traditional.  If you select option 3.3 and prepaid $3,000 in the next few days, we'll cut our hourly rate by 50% for the first 40 hours.  We're pushing this special offer so we can attend the National Association of Realtors mid-year convention next week to identify the best new money-saving tools and trends for home buyers and sellers. 

Should we host a series of webinars or meetings off-line to discuss the benefits of each fee / rebate, and to help new clients decide which money-saving option best meets their needs?  We can meet on short notice at a local cafe or in the privacy of your home.  We're also eager to begin meeting at  TogetherInMotion in Arlington, MA so working parents can talk over food while their kids play.  Please contact us for additional information.

Using Twitter to introduce home buyers to FSBOs

This time of year, most real estate agents are helping sellers prepare their homes for the Spring housing market.  But as fee-for-service real estate consultants who specialize in representing buyers, The Real Estate Cafe wants to introduce our clients: 

• To sellers BEFORE they list their homes in the Multiple Listing Service (MLS), and
• To homeowners who are selling "for sale by owner" (FSBO).

That's why we celebrated the Boston Marathon Monday by updating some buyer profiles from our 1,000 Click Club, a highly-motivated group of buyer clients who have viewed at least 1,000 pages on the MLS.  If you're a seller who falls into either category above, we'd be glad to introduce you to our buyers.  We assure you that our menu of fees are quite modest by comparison to traditional real estate commissions, and the potential savings are substantial.

For example, one of the buyer / sellers matches we helped earlier this year will save approximately $80,000.  We can't guarantee those kinds of savings, but if you're a seller who's struggling to get your home ready for the Spring market, we can offer you three hours of decluttering / organization / home staging for just $99 for three hours (limited offer).  We'd also like to invite a limited number of sellers to attend one of our upcoming "for sale by owner" seminars, most likely in Arlington, MA or to schedule an in-home presentation.  (One of our dreams is to teach 50 to 100 sellers how to save $1 million as a group.  We passed that milestone for buyers during one recent 12 month period, see map of client savings).

We'll publish more buyer profiles, special offers, and seminars for buyers and sellers in the future.  You can receive updates by following us on Twitter.com/RealEstateCafe

New banner ad features map of client savings totaling over $1 million

Looking for feedback on our new banner ad directing Boston.com readers to a map of client savings totaling over $1 million during a recent 12 month period, plus a Wall Street Journal article featuring The Real Estate Cafe's 100% commission rebate option. We'll post a link to Boston.com's newly redesigned real estate section after it goes live.

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.