— Bill Wendel (@RealEstateCafe) October 28, 2015
Twenty-three years ago today, Ralph Nader energized a budding buyer brokerage movement with his first speech on real estate. Since then real estate consumer advocates have suffered numerous defeats, and homebuyers and sellers are literally paying the price… cartel pricing on real estate commissions in an industry that’s been able to avoid disruption.
Can a new crop of money-savings real estate business model push the industry to a tipping point? Maybe — even the real estate industry admits there are fifty ways they’re vulnerable to disruption, see http://DangerReport.com
Back to the Future
The Consumer Federation of America first called the real estate industry a cartel in 1991, and predicted that consumers would save ten billion dollars annually simply by uncoupling the two-side commission (something that still has not happened). That was pre-internet. By the end of the decade, McKinsey & Company estimated that potential savings could rise to $30 billion annually because online real estate transactions would create efficiencies and reduce fees from real estate agents and mortgage brokers. Regrettably, that still has not happened.
In retrospect, maybe it was fitting that Nader’s 1992 speech was on October 28, the Feast of St. Jude — the patron saint of lost or impossible causes. Rather than hiding from our shortcomings, innovators are invited to engage in smart failing exercises. Further, All Saints Day and Day of the Dead provide an opportunity to honor fellow real estate consumer advocates who devoted their lives to changing the industry. In his new book, Nobel prize winning economist Robert Shiller criticizes overly enthusiastic perceptions of FREE markets; and highlights the importance of unknown “heroes” willing to step in and protect consumers when regulatory agencies and politicians sit on the side lines — silenced by politics or legislation written by industry lobbyists. That certainly was the case for Bill Dennison, Ken Knapton, Jerilyn Coates, and Becky Swann.
Our shared money-saving mission
Finally, we’re not given up hope on our own life’s work. For our 20th anniversary, Real Estate Cafe has set twin goals:
- Co-creating an open ecosystem in real estate capable of delivering $30 billion in consumer savings annually by the year 2020; and
- Redirecting 10-20% of those savings to non-profit initiatives or impact investments.
We’d like to invite the next generation of money-saving real estate business models, DIY homebuyers and sellers (FSBOs) to join us in that five year campaign by using the hashtags #RE2020 and #ImpactREbates every time they save money, make a donation or an impact investment.
New opportunity to hack real estate?
What’s more likely to happen first, the Chicago Cubs will win the World Series as predicted in the movie, Back to the Future II, or a consumer advocates will break-up the real estate cartel? Thankfully, after twenty-thee years, we’re not the only ones still excited about the potential for new digital technologies to transform the real estate industry. In this May 2015 article in FastCompany, @Ideofutures says “real estate tops the list of industries that blockchain could disrupt”:
http://bit.ly/BitcoinRE (please share this tiny URL)
Real estate consumer advocates and technology innovators inside and outside the industry may have the opportunity to test that hypothesis at a hybrid online and in-person hack at MIT called FutureCommerce:
http://futurecommerce.civics.com (please share this tiny URL)
Real Estate Cafe is eager to seed a real estate track within the event and have offered to facilitate visioning exercises to help participants think beyond the existing real estate business model to an open eco-system capable of delivering billions annually in consumer savings. If there is sufficient interest, we’re willing to begin real estate working group BEFORE the actual event on November 20 -22, 2015. Let us know if you’re interested by emailing firstname.lastname@example.org.