Counter Intelligence: The Real Estate Cafe Weblog

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?

Limited time: "Bailout Bonus" for 4th quarter bargain hunters

As the housing market enters the final quarter of 2008, The Real Estate Cafe is contacting new and long-time clients to get an update on their home buying plans.  Can you believe that one member of our 1,000 Click Club has viewed 6,247 MLS pages via The Real Estate Cafe’s MLS access system during the past 2.3 years?  More than half of those page views (3,847 pages) have been since the start of 2008 and about a third (1,270) were during the 3rd quarter.  If you're bargain hunting during the final quarter of 2008 and early 2009, can The Real Estate Cafe help you save money by serving you "a la carte"?

SPECIAL BAILOUT BONUS:

To encourage you to take advantage of falling prices during the current financial crisis, we’re willing to reduce our hourly consulting to just $50 for any work requested before close of business TODAY (offer extended through Wednesday, October 8, 2008 if payment made online by 5pm). That’s a savings of 50-67% off our current billing rate of $100-$150 per hour. So, if there is any work we can do to help you — for example, download & forward MLS listing data so you can analyze price trends — please let us know ASAP. At a minimum, would you like us to add expired listings to your daily email of MLS listings? An amazing, 1,136 single family listings expired across MA last week (9/27-10/3/08) alone; and surprisingly, 498 listings were priced UNDER $319K!

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.

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.

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.

Web 2.0 makeover in progress @ RealEstateCafe.com

Added this note to The Real Estate Cafe's original (increasingly obsolete) Web 1.0 site.  Still trying to decide which content management system (CMS) to integrate fragmented Web 2.0 pieces below.  Any feedback on SquareSpace.com or other recommendations for a user-friendly CMS?

UPDATE: January 3, 2008: Web 2.0 makeover in progress. Please watch our blog, social networking sites (RealEstateCafe & ChangeAgents), public and private wikis, fund raising campaigns (community commission & ASAP), and award-winning interactive real estate bubble maps.  Our latest map, St. Joe 2.0, invites real estate consumers, particularly those with expired listings, to reinvent a misguided spiritual practice (see one minute video).  Watch for our ice cream van turned mobile podcasting studio in 2008.

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?

If airlines have fare sales, should real estate agents?

If airlines have fare sales, should real estate agents?  We think so.  We understand buyers are waiting for prices to fall, but candidly, that's translated into a cash flow crisis for The Real Estate Cafe.  Still, as one of the nation's first fee-for-service real estate concepts we've had the experience to develop a menu of fees and rebates to get through slow times.  The key is offering compelling saving opportunities for clients -- so compelling, we hope at least one new or existing client decides to select one of our "flat fee" options the next three days.  So, if you think you'll be buying a home in the next six months and want to "buy down" your hourly consulting fee, we'd be glad to explain how you to save up to $75 per hour.  (Current client case study available upon request or just read what the Wall Street Journal said about our 100% rebate options.).  If our $3,000 to $5,000 flat fee options are beyond your budget, consider these SPECIAL OFFERS:

• Prepay for 5 hours of consulting service ($500), get one hour FREE ($100 savings). 
• Prepay for 10 hours of consulting service ($1,000), get three hours FREE ($300 savings).

Limited to the first three existing or new clients to respond.