A week after it was published, a story about Groupon’s first real estate offer is still the most forwarded article on Inman News, the leading real estate technology web site. Beyond that, my Google alerts continue to forward a flurry of news stories, including one on AOL which questions whether the coupon is a good deal for buyers and another which asks if Groupon can save the real estate market.
My own reaction, as quoted by Inman News, was less enthusiastic:
“While there may be some bragging rights to being selected as the first-ever Groupon ad for real estate, that doesn’t translate into offering the most value or best savings proposition if competing companies routinely offer rebates on buyer agency commissions or flat fees on MLS listings,” Wendel said in an email. “Hopefully, any homebuyer or seller tempted to pay $25 should stop long enough to do some comparative research.”
If they do, he said, “they are likely to conclude that it doesn’t make sense to pay to go into anyone’s lead generation system when competing real estate companies offer greater savings opportunities with no upfront cost.”
Teachable moments like that are valuable, but the real payback of Groupon’s entry into real estate isn’t about coupons; it’s the opportunity to seed systemic change by refocusing industry innovation on consumer savings, an estimated $30 billion dollars annually. Just as ordinary citiizens are making their voices heard as Congress debates what kind of government will emerge from the “Great Recession,” consumers and change agents should ask what kind of reforms and new business models are needed to deliver billions of dollars in savings to homebuyers and sellers annually.
A year after the near collapse of Wall Street, it looked like real estate innovators were refocusing on that mission as described in our blog post, Comeback of the Consumer Value Proposition in Real Estate. (Ironically, the government got into the game, twice, but their $8,000 tax credit actually caused overeager homebuyers to miss larger savings — an estimated $38,000 in Boston — simply by waiting for price reductions.)
But back to the bottom line: how much is $30 billion? My guess is that it took Bill Gates a decade or two to amass a $30B net worth; and last week, the Democrats and Republicans nearly shut down the US government before agreeing to cut $38B in spending (the largest real dollar spending cut in American history according to the NYTimes). Hard to believe that real estate consumers could save $30 billion annually, but a number of studies have estimated that number (for details, see footnote #1 on Mark Nadel’s Critical Assessment of the Traditional Residential Real Estate Commission Rate Structure).
If home buyers and sellers realized their economic value as a lead, they would ask real estate companies how much they’d be willing to PAY THEM upfront, rather than paying Groupon or anyone else $25 to get a discount at closing. Towards that end, new technologies and business models are being developed to enable homebuyers and sellers to issue Personal RFPs, or requests for proposals, to generate customized money-savings proposals, rather than group discounts, from competing agents based on specific services requested in their RFP.
What consumers need is a way to aggregate savings opportunities that already exist in the marketplace or that they can create through PRFP’s from a wide range of sources including sellers, lenders, brokers, vendors as well as government agencies. What’s the best way to coauthor a folksonomy or tagging system of savings opportunities (not just coupons) to deliver billions of annual savings to home buyers and sellers?”
For more information, see our previous blog post, Groupon for Real Estate or GroupCon? Choose MEGA-savings, not marginal coupons!