Counter Intelligence: The Real Estate Cafe Weblog

"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• The number of off-market properties -- expired, canceled & temporarily withdrawn listings -- surged to a new record of 16,319 properties just after midnight.*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.

BUBBLE HOUR: Slowest real estate sales since 1991 got you cheering or crying in your beer?

Bubble watchers in Massachusetts, time to pull out the beer googles and celebrate today's headline in the Boston Globe about the slowest pace in real estate sales since 1991 with a Bubble Hour?

Sellers, does the same news have you crying in your beer, prepared to drop your price again, or tempted to drop your real estate agent (once your listing contract expires, of course) and try "for sale by owner" this Fall? 

If you're one of the 15,000 sellers across Massachusetts who's listing has already expired, been canceled, or temporarily withdrawn from the MLS during the past two months, The Real Estate Cafe is eager to talk to you about selling for sale by owner, or help you evaluate and select your next listing agent. 

We've just returned from LIVE BLOGGING the leading real estate technology conference in San Francisco, and are eager to demonstrate new money-saving tools and web sites. Do-it-yourself home buyers and sellers, would you like to see those demos in a small group or a personalized one-on-one presentation?  We're eager to take advance reservations for a "FSBO Cruise" in Boston Harbor aboard the Yacht Starship: $99 includes a private, one-on-one presentation of our "FSBO on Steroids" seminar plus a lunch buffet with four-star cuisine.

Sellers:  we don't see the housing bubble through rose-colored glasses, so if you are intimidated by selling "for sale by owner," The Real Estate Cafe can prepare a "Listing Agent Report Card" instead and try to negotiate a reduced commission.  If you pay in advance for our analysis, we'll rebate one-third of our referral fee.

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.

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.

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

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.

Newspapers + FSBOs + fee-for-service = consumer savings

When Jeff Jarvis of BuzzMachine wrote, "Tribune Company just bought ForSaleByOwner.com. That’s a bigger deal than it may appear in the rearview mirror" wonder if he was aware of these stunning statistics?  In less than a year, the online real estate section of The Boston Globe has seen pageviews rise from seven million to nine million per month, and property searches rise from one million to three million per month. 

Nearly as impressive, Boston.com's real estate section has over 150 user generated forum topics.  What that tells me is that newspapers, at least the one here in Boston, are trusted middlemen in the real estate industry.  Realtors would love to position themselves as "Someone You Can Trust," the title of one of their new spots in a $23.2 million television advertising campaign to enhance their brand name.

Unlike listing agents, who have a duty to offer a range of fiduciary services to their clients, the Tribune is going into the FSBO business -- not the brokerage business as Jarvis recommended a decade ago.  If smart FSBOs already advertise in their local newspaper, an obvious best practice recommended a year ago, how will that be different from placing an ad in a FSBO website owned by a newspaper?  My guess is that the newspaper owned-FSBO website will bundle a variety of financial incentives to consumers, and sell buyer and seller leads to brokers for a referral fee.  Otherwise how will they recoup their potential lost revenue?  Do the math:  ForSaleByOwner.com listing packages start at less than $90 per month, or $249 until the property sells.  Compare that to the cost of a print ad in The Boston Globe: it's nearly impossible to write a meaningful print ad for less than $150, and arguably it to be effective, it needs to appear weekly.

If there is a financial upside here for the Tribune, it appears to selling leads to the brokerage community, something newspapers traditionally have not done.  That's changing.  In July 2005, Classified Ventures, a joint venture of leading newspapers including the Tribune and Washington Post, acquired HomeGain.com,"the #2 leading website in the real estate industry" with 4.5 million monthly visitors.

But one needs to ask where is the financial upside for home sellers?  If Boston.com already generates three million property searches per month and delivers nine millon page views, do FSBOs really benefit from being sold to a full-service or flat-fee listing agency who will put them in the MLS if it costs them half or full commission?  Or is advertising on sites like Boston.com and purchasing advice "as needed" for an hourly fee from a new generation of fee-for-service real estate consultants a better value?

Got homebuyers? GO FSBO

Got snow?  In sharp contrast to blizzard conditions this time last year, people were driving around Boston today with their convertible tops down.  Wonder if the January thaw will create a spike in home sales compared to 2005, or at least an increase of new MLS listings.  Although MLS statistics reveal that unsold homes are up 54% in suburban Boston, NEW MLS listings across Massachusetts are up less than 8% over the same period last year:  January 1-15.  Does that suggest that sellers are waiting for the Spring market to list their properties, or that more people are thinking of selling outside the MLS to avoid paying traditional commissions?

If you're one of those homeowners who'd like to take advantage of the unseasonably warm weather to get ready, The Real Estate Cafe is planning a seminar on "Getting Organized to Sell For Sale by Owner."  Rather than formal classroom instruction, what would you think of meeting at someone's house to offer recommendations and pick-up ideas for your own home? 

Selling a home or not, the New England Chapter of the National Association of Professional Organizers (NAPO) has a variety of resources online for GO (Get Organized) Month (January 2006).  To register for our upcoming course, email us at [email protected], or record your contact information on our blog reader line:  617-876-2117.

Should FSBOs underprice or overprice market?

Several weeks ago, a leading listing agent on Cape Cod in Massachusetts told the Wall Street Journal that sellers should underprice the market by 5% because of hurricane Katrina and an increasing inventory of unsold homes.  Then two weeks later, an article in the Boston Globe's "Big Move" told people trying seller their own home to overprice the market by 5% to 10%.  So, in less than one month, sellers have been given advice that could translate into a pricing gap of 15%.  More important than pricing strategies is the sellers' net profit.  A seller who underprices the market by 5% could actually net 10% less profit on their sale after paying traditional real estate commissions, right?  Anyone can discount your property, so why involve a full-fee, full-service real estate agent at all?

We'd like to hear your opinion about pricing strategies, particularly if you are thinking of selling "for sale by owner."  Just click on "Comments" below and begin typing, or call 617-876-2117 to record a 1 to 3 minute sound bite (which we may use in a future podcast).

Listen to conversation starter:  Should FSBOs underprice or overprice market? (MP4, 2 minutes, 1.9M)
Date Recorded: 29 September 2005
Subject:  Discussion about conflicting advice on pricing strategies given recently by industry experts in the Wall Street Journal and Boston Globe
Featuring: Bill Wendel (Real Estate Cafe) speaking with anonymous buyer agents in Massachusetts
Location: Massachusetts Association of Realtors, annual convention @ DCU Center, Worcester, MA