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Hack the #RETransferTax:  What would MLKing do?

Housing Justice is emerging as a political issue, and real estate transfer taxes present an opportunity to redistribute wealth.   Cambridge, Somerville and Boston are first movers on a real estate transfer taxes proposed in cities and towns across Massachusetts, as documented in the lead story in the Boston Globe above.  Could real estate transfer taxes help the state live up to it’s name — the Commonwealth of Massachusetts?  What role might faith communities play developing and implementing potential options?  That question generated our highest engagement rate on twitter ever!

What if faith communities worked with the FinTech / RETech / PropTech community to explore options and policy implications?  What would MLKing do?  We asked a similar question 5 years ago but policymakers failed to act then:  Will runaway bidding wars create real estate refugees in Cambridge? What would MLK do?

Hackathons are creative ways for anyone to generate ideas — time to invite multiple stakeholders to Hack the #RETransferTax?

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Dear members of the City Council,

From my perspective as an affordable housing advocate, the proposed real estate transfer tax is:

Not new,
Not bold, and
Not enough.

Those three strikes do not mean you should count it out. To the contrary, it’s a rallying cry to count more than luxury real estate transactions. Count on data in the MLS and count on people of God and goodwill. Really, data points to opportunities and scripture points to social justice teachings on redistributing wealth (and the roots of Habitat for Humanity).

Some might be impressed that a 2% transfer tax on 73 MLS sales over $2M last year in Cambridge would have generated nearly $4.4M in revenue, or approximately enough to build nine affordable housing units at $500K. What’s more impressive — or maybe depressing — is that the 7 homes in Cambridge sold $500k over their asking price last year. Yes, a half a million dollars over asking price generating bidding war premiums totaling $5M. In other words, bidding wars on just 7 luxury homes in @CambMA could build 10 “affordable properties” at $500K each.

Need one argue that the “Gilded Era” of Cambridge real estate has reached unthinkable heights? When winning bids soared $50K over asking price five years ago, some called it “crazy;” now that winning bids are soaring 5 to 10 times that amount, is it time to call it a moral crisis — or market opportunity?

Your answer may depend on whether you think Cambridge is blessed or cursed with an embarrassment of riches. You need not be a member of the clergy or a billionaire to answer that question. We can cocreate innovative responses by engaging multiple perspectives.

In a handful of hotspots around the world, 15% transfer taxes are foreign speculators are finally beginning to tame housing prices. Should Cambridge follow their lead or can we engage the local FinTech / RETech community to do something new, something innovative, and something that leverages the “holy use of money?” For some in the faith community, that’s a moral imperative; for others in the social good community, it’s an opportunity to demonstrate the innovation economy that’s attracting global wealth to Cambridge.

That concentration of wealth begs for a response of biblical proportions. Let’s show the world what’s possible in this City of God and civic good. It’s a fitting rallying cry as we approach Martin Luther King Day.

If God-talk tunes you out, then tune into this: Last year, the PropTech sector attracted $12 BILLION in funding. Can we count on their participation if we begin redistributing real estate wealth, not by focusing solely on a real estate transfer tax but by envisioning and leveraging financial incentives that work within and outside the existing real estate ecosystem?

Let’s see if we can do something new, something bold, and something that exceeds our expectations. Thank you for the opportunity to share my perspective.

Posted in #SpeculatorsWithoutBorders, Affordable housing, Crowdfunding, Crowdsourcing, Housing Justice, Housing policy, Idea Bar, Impact Rebates, Luxury buyer agent, Real Estate Roundtables

Want an EFFECTIVE Buyer Agent (or Listing Agent)? Better Shop Around

Shop_Around_Lyrics

Eating lunch at the Cambridge Common near the Harvard Law School, and the overhead speakers are playing a 1960’s classic from Smokey Robinson & The Miracles with the prudent advice above, “you better shop around.”

The same words could apply to homebuyers and sellers according to a new report by the Consumer Federation of America on the Agency Mess in real estate.  It’s creating a ripple effect around the country, in part because real estate consumers too often work with the first agent they meet or a friend who may be new to the industry. You can skip all of the broker babble and get quickly to the bottom line by following the money.

Ask anyone — friend or stranger who offers to serve as your buyer agent whether their office offers a zero tolerance conflict of interest policy and what their track record is as a buyer agent.  Don’t let anyone trick you into working with a fake buyer agent (aka. Designated Buyer Agents), ask for MLS stats to prove they’ve been an EBA — EFFECTIVE Buyer Agent when it comes to the bottom line.

Our measure of that effectiveness is simple:  have you helped homebuyer clients save money?  Here’s a summary of our performance since 1995:

Summary:

1.  Sales volume:  Approx. $50M in sales over 48 MLS sales since 1995 — 23 years ago (excluding non-MLS transactions, eg. Proactive House Hunting).

2.  Approx. $1.2M in gross commissions over 23 years, most of which has been rebated to buyer clients who pay hourly fees for services as they are rendered. Rebates effectively allow DIY homebuyers to get a return on the time they invest during their house hunt.

3.  Bill Wendel, broker at Real Estate Cafe, has saved homebuyer clients $6M or 5 times his gross commissions.  Rebates are in addition to the $6M saved by advocating for homebuyer clients.

Savings:

1.  Negotiated $2.6M off the last listing price or a median of $15,200 in savings (before buyer agency commission rebate built into the sales price).  The average amount negotiated off was considerably higher, $55K per transaction.

2.  When price reductions and negotiated concessions are combined, the savings total nearly $6M.  That translates to a median total savings of $40,700.  Once again, the statistical average is three times higher — $124,109.

3.  1 in 4 homebuyers represented by Real Estate Cafe saved over $100K, when price reductions & negotiated savings are combined.

4.  Only 1 in 7 paid over asking price, with a COMBINED total of $81,000 or just a median of $7,000 over asking price.  In contrast, 1 in 4 homes sold for $100K over asking price in Cambridge, MA in June 2016.

5. Over nearly 50 transactions, homebuyers have paid an average of 92.4% of the original asking prices.  Median sales prices are even lower — 91.5% or a savings of 8.5%.

6. Nearly 1 in 3 homebuyers represented by Real Estate Cafe have saved 10% or more off the original asking price.

7. 1 in 4 has paid LESS than the assessed value of the property (as determined by the local tax assessment office not Zillow or any other automated valuation model).

Disclaimer:  Past performance does not equal future savings, but we’ll do our best to help buyer clients save money and avoid the 10 Hidden Costs of Reactive House Hunting.

 

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Listing Agent Report Card

 
If you’re on the seller’s side of the transaction, we can also make it easy to shop around.  Because we’re not competing to market your home, we use MLS data to identify the best candidates to interview.  We can also try to help you negotiate a lower commission, and if nothing else, guarantee some savings by rebating part of our referral fee to more than cover the modest cost of our Listing Agent Report Card.

Alternatively, if you want to try selling on your own as a FSBO — For Sale by Owner, we can offer a limited range non-agency services “a la carte” or act as a finder.  Either way, we won’t engage in any conflicts of interest.

Let us know how we can help you shop around, and save as a DIY homebuyer or seller.

Posted in Buyer agent, commission rebate, Discount real estate, DIY Homebuyers, FSBO: For Sale By Owner, Listing agent report cards, Luxury buyer agent, Proactive househunting, Real estate rebates, Savings & Rebates

Back to the Future: Do buyer agents really help consumers save money?

BidWarScorecard_Sample

Only one previous blog post during 2018 — is this another abandoned real estate web site?

Hardly.  While the housing market has been grossly overheated, and irrational exuberance drove bidding wars $100,000 over asking price; our attention as buyer agents, and leading industry reformers, has focused elsewhere.  Over the past three decades, Real Estate Cafe’s mission has moved from reforming real estate transactions to cocreating a new money-saving real estate ecosystem to addressing sustainability issues.

We’d like to close 2018 by asking a question we addressed a decade ago:  Do buyer agents really help consumers save money? 

http://bit.ly/RESaveEBA_2008 (Share link via social media)

The question is more urgent than ever:  One in three real estate agents has less than two years experience, so if you’re working with one of them, it’s unlikely that they’ve ever seen a down market.  In contrast, Real Estate Cafe has a track record of helping buyers save money during past market cycles, and like other seasoned observers, we see another coming.

If you’re thinking about buying a home during 2019, we invite you to talk about how to use both defensive homebuying and proactive househunting strategies to avoid the 10 hidden costs of reactive househunting.  Regardless of whether you employ those money-saving strategies, know that the real estate press is unlikely to document the leading edge of price changes that could save you save your tens of thousands or prevent you from engaging in a bidding war.

To fill that void, Real Estate Cafe offers research “a la carte” to help you make more informed decisions by analyzing MLS data to suit your needs.  Prices start at $99, and if you’re already working with another buyer agent we’re glad to explore agent-to-agent collaborations or simply offer a second opinion through RECafe-PRO.

Research a la Carte

Before we took a time-out, we developed a Bidding War Scorecard (see sample screenshot above) to protect our clients from overpaying for properties.  Our most recent market snapshot revealed some mega-savings opportunities in the luxury price range; more specifically, single-family homes priced above $2.5 million across Massachusetts during the 4Q2018.  Generally, it follows a pattern identified in this infographic from the Wall Street Journal:

WSJ_DualAgencyCosts

If you’re a buyer, and would like access to the research above on Real Estate Cafe’s intranet, we can provide access to some discussions.  If you become a client, we’ll draw from a wider knowledge base developed over past boom / bust cycles and invite your perspective to help make sense of the changing housing market in 2019.

If you’re a DIY homebuyer who’d like an industry leading rebate, or just advice “a la carte” from a buyer agent with nearly 25 years experience helping clients save money; call or text Real Estate Cafe at 617-661-4046 and we can discuss your needs over coffee or a beer.  See you at the next #REonTap?

Posted in #REonTap, Bidding wars, Buyer agent, Consumer protection, Defensive Homebuying, Housing bubble, Luxury buyer agent, Proactive househunting, Savings & Rebates, Seasonality

Controversial practices used by incumbents & innovators renew call for Real Estate Consumer Bill of Rights

Redfin_Switch

“Upstarts are beating incumbents at their own game” the headline shouted this morning in a leading #RETech news service; but within minutes, comments fired back with a screenshot raising questions about controversial business practices.

http://bit.ly/RETables

Privately, real estate consumer advocates have shared unrelated video with regulators documenting misrepresentations made by another real estate giant. With an FTC / DOJ workshop on anti-competitive business practices on June 5, the stakes are high in this incumbents vs #REStartUps battle – a potential $30 BILLION dollars annually in consumer savings.

If practices used by incumbents and startups are both raising questions, what’s the best way for ordinary consumers to decide who’s right and who’s wrong? Understand and assert your rights, consumer rights.

Against that backdrop, it is both ironic and appropriate that this controversy is unfolding on the 17th anniversary of the call for a Real Estate Consumer Bill of Rights. On May 1, 2001 a petition signed by 38 real estate consumer advocates was submitted to the Federal Reserve Board to form a Real Estate Consumer Alliance and draft a Real Estate Consumer Bill of Rights:

http://bit.ly/RECALL2001

The next day, an attorney for Consumer Union, the non-profit publisher of Consumer Reports, echoed the call asking “Are consumers being treated fairly by real estate brokers? Are commissions priced fairly?” in his testimony before the Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit.

As mega-brokers morph into data companies and Facebook failings underline the need to protect personal data and privacy, let’s use the anniversary to update the #REBillOfRights. Here’s a partial history of attempts to draft a real estate or homebuyer bill of rights, including one by Redfin, dating back to 1999:

http://bit.ly/REBillRights

While some may prefer to focus on playing defense against unfair and deceptive business practices, other innovators outside the real estate industry are eager to help consumers leverage new digital “superpowers” to manage their digital identity and save money. To join that open collaboration, visit #RE2020:

http://bit.ly/ConsREvRights

Join us virtually or in person at ImpactHub Boston’s Open Project Night, this evening at 50 Milk St in the Financial District, 6:00-8:30pm.

http://bit.ly/BosOPN_May2018

Posted in Consumer protection, Defensive Homebuying, Designated Agency, Disrupt Real Estate, DIY Homebuyers, Dual Agency Detective, Fee-for-service real estate, HousingID, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance

The Future of Real Estate: Moon shots or consumer movements? #RE2020

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Yesterday, a leading real estate tech conference announced that Realogy’s new CEO, Ryan Schneider, would be making his public debut at their event.  His topic: “How Technology and Data Can Send Your Business to the Moon.” Before reading our response, understand the scale of this giant real estate brokerage holding company is unrivaled and some would argue troublesome:

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Ryan, Welcome to the real estate industry. Your perspective as an industry outsider should be insightful, but before you launch the industry’s expectations towards the moon, can we use ask some basic questions pre-countdown?

As others may have told you, real estate agents can be fiercely independent, many preferring to work solo orbiting neighborhoods when and where their clients need help. Should “indie brokers” and individual agents be more concerned about getting to the moon or getting clients the best price and terms on homes that launch their preferred lifestyles not the agent’s ego?

If you’ve not been house hunting in an overheated housing market like Boston, you may be surprised that some smart people might think getting to the moon is easier than finding affordable housing. It’s not just the price, lunar missions have a distinct competitive advantage — an internal GPS guided by mission control, whereas homebuyers are routinely manipulated in BLIND bidding wars. Want to work on something together? Let’s start with data-driven insights that protect homebuyers from missing their target, or at a minimum make offers in conflict-free, transparent process so they don’t overpay for the “wrong” house?

Back to your topic and other things we can work on: There are unverified reports that retailers pulled in a record 700 terabytes of consumers’ personal information on Cyber Monday, but we don’t need The Onion (or a director of the CFPB worthy of that title) to tell us that’s wrong. There’s clearly a difference between big data and personal data; the moon shot is asking whether there’s a way to anonymize, share, aggregate and analyze both to benefit consumers, brokers, smart cities and society? How do we get there?

Here are some questions others have been thinking about, and invite your feedback before you take the stage at #ICNY18:

1. Who’s data is it and how can they leverage it?

2. What ethical obligations do real estate agents and brokerages have with regard to personal data?

3. Do we need to extend fiduciary rules, rights and disclosures beyond the transaction into a future where smart homes operate autonomously and consumers manage their own digital identity?

Speaking of autonomous, anyone in InmanVille on NAR Stratregic Thinking Advisory Group want to share their concerns about autonomous homebuyers, and what implications they might have for the rocket fuel (revenue) necessary for Indie brokers or mega-brokers to stay in orbit?

While some fear an autonomous future, others dream about autonomous vehicles as solutions to urban problems. Before writing that off, let’s not forget that unmanned space crafts were instrumental in America’s quest to reach the moon before their Russian rivals and continue to this day. Further, for nearly 20 years those rivals have collaborated on international space station. Can you see a way for industry competitors to share data that will improve the housing ecosystem worldwide in our lifetime? Any lessons we can learn about data sharing from your innovations at Capital One, or from your former rival, MasterCard’s City Possible Movement — a systemic vision to solving problems on this planet? Wouldn’t that make more sense than shooting for the moon?

Want to inspire another movement — something akin to President Kennedy’s challenge in 1961 to put an American astronaut on the moon by the end of the decade? Let’s clean-up the industry and invite others to cocreate a money-saving real estate ecosystem, so consumers — some of whom can scarcely afford to gaze at the moon — can achieve their dream: landing in a safe, affordable neighborhood their families can call home.

Invite you and others, particularly consumer advocates and innovators from #RETech, #FinTech, #CivicTech & #LegalTech communities, to discuss the future of the real estate industry using #RE2020.  Let’s see how far we can get by the end of this decade:

http://bit.ly/BenefitREConsumers (share via social media)

Posted in Consumer protection, Crowdsourcing, DIY Homebuyers, Dual Agency Detective, HousingID, Personal data, RE2020, Real Estate Consumer Bill of Rights, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance

Real Estate: Change benefits consumers, invite multiple stakeholders to collaborate

Share moneysaving crowdfunding campaign w/ #DIY homebuyers using http://bit.ly/CrowdREfund

Twenty-five years ago, Ralph Nader said you call tell a lot about an industry by the way members talk to each other.  To dramatize that point, here’s a revealing update from agent-to-agent Facebook group called, Real Estate is Broken — What Are We Gonna Do About It?


Responding to the crowdfunding proposal above, @RealEstateCafe wrote:

Based on the list you shared three years, it’s clear we agree the industry needs to change.  That recognition is good for both the industry and consumers:

http://bit.ly/LindaList091914

Beyond those issues are more fundamental concerns about the future of the real estate ecosystem.  Questions asked in NAR’s Strategic Thinking report point to an existential crisis; and to my surprise, now say the CONSUMER — not the Realtor — is at the center of the transaction.  That report also points to “autonomous consumers” — primarily homebuyers, are using “inventive ways to find homes for themselves” (Source:  Zillow Group Consumer Housing Trends Report 2017).

Amazon.com drove small independent booksellers out of business only to open their own bookstore.  Zillow attracts 160 million visitors per month, but they’d risk undermining their Realtor-advertising business model if they open a storefront.  Nonetheless,bricks & mortar are increasingly an unnecessary drag on traditional offices, virtual brokerages need an alternative to meetings at Starbucks, entrepreneurs and #RETech innovators working solo need a place to gather.  What’s are the options?  Here’s one idea starter — feedback welcome:

Think Apple Genius Desk meets DIY consumers meets CoWorking Space for Best of Breed moneysaving apps & innovators:

http://bit.ly/RECrowdCafe

NAR’s new leadership wants to “embrace” disruptors and @CRTLabs — the Center for Realtor Technology embodies their evolutionary approach.  To focus on new technologies, NAR announced a new Strategic Business & Technology Group at their recent convention in Chicago.  Suggested background reading from Inman News:

NAR CEO Bob Goldberg: Disrupters aren’t ‘the bogeyman’

http://bit.ly/EmbraceREFuture

NAR’s leadership clearly recognizes the industry is changing as vendors, large and small, create new ways for consumers to act “autonomously.”  That doesn’t mean that traditional brokerages like yours need to change, it does mean innovators — including Amazon and Facebook — are developing new tools for resourceful, tech-savvy buyers, sellers, homeowners and landlords to save money.  We want to offer those change makers — as well as virtual brokerage ALREADY in the market like Redfin —  a state of the art location where they can meet clients or CoWork on subscription or on demand basis.  It’s a compelling opportunity for #REStartUps to test their ideas and gain visibility — at the street level — in a Top 10 Realtor.com market!

The space would be Realtor-friendly, but not Realtor-centric; and RETech partners are invited to demo their products and services to listing agents, buyer agents as well as DIY consumers.  Like your list of what’s broken and needs to change, my hope is that you, as a recognized industry leader, will applaud if not participate in the some of the programming we envision and invite others to cosponsor.

Change is inevitable and multiple stakeholders — including traditional players — are invited to collaborate:  what will the real estate ecosystem look like in the year 2020? Let’s cocreate it via #RE2020:

Posted in Blockchain, Change Agents, Commission Reform, Consumer protection, Crowdfunding, Crowdsourcing, Disrupt Real Estate, RE2020, RECALL: Real Estate Consumer Alliance, Savings & Rebates

“Consumer, Protect Thyself” with #CustomerTech, Enrich Thyself too

As our flurry of recent blog posts below attests, Real estate is the Sleeping Giant of the Consumer Movement! We tried sharing those links with the National Association of Real Estate Editors before their recent annual convention (#NAREE17) but thus far no one has developed any story ideas.  Requests to meet about our list of 10 issues / real estate consumer complaints were also brushed off by @MassAGO & @Mass_Consumer:

http://bit.ly/MassAGOv3 (share via social media)

In the #DysTrumpian Era of “Consumer, Protect Myself” is #CustomerTech capable of arming homebuyers and sellers with “First Party Terms?” This hard-hitting @CBCMarketplace expose about “real estate agents breaking the rules” points to the importance of that question, and the “Pledge of Allegiance” — a set of terms designed to protect homebuyers — released on Flag Day, June 14:

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BACKGROUND

Recent blog posts, most sent to #NAREE17

In #DysTrumpian era of “Consumer Protect Thyself,” powerful DIY tool for Homebuyers

http://bit.ly/ProtectRESelf (share via social media)

Will Wall Street cause Consumer Advocates to revisit Real Estate Cartel?

http://bit.ly/REvisitCartel (share via social media)

Open Letter to National Association of Real Estate Editors #NAREE17

http://bit.ly/OpenNAREE (share via social media)

From #FakeBuyerAgents to Smart Disclosures & Information Fiduciaries

http://bit.ly/FakEBA2FutureRE (share via social media)

Castle Doctrine: Protecting real estate consumers in DysTrumpian era

http://bit.ly/ProtectREra (share via social media)

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NEXT STEPS

National

Steve Brobeck, the Executive Director of CFA first called real estate a cartel in 1991, and MassPIRG’s Executive Director Janet Domenitz was reelected President of CFA.  We’ve requested a meeting with @MassPIRG to background their team and get the Sleeping Giant of the Consumer Movement back on the Consumer Federation of America / @ConsumerFed’s radar screen if not the front page of the Boston Globe through their new consumer column, written by an investigative journalist with a law degree!

At Harvard

As an alum, have had divided feelings about blowing the whistle on Harvard’s involvement, but prepared a comprehensive critique of their homebuying class four years ago and more recently asked the state to take disciplinary action against Coldwell Banker for this blatant mispresentation:

In Boston

The National Association of Realtors is coming to Boston for their annual in November 2018, and http://RE2020.Loomio.org / #RE2020 hopes to organize quarterly events, including unconferences or hacks, before that date. As Bloomberg reported, Real Estate is Ripe for Disruption and Boston / Cambridge can become a lab for that challenge:

http://bit.ly/OpenREDisruptMA (share via social media)

http://bit.ly/RE2020Lab (share via social media)

Dream Scenario

This Fall marks the 25th Anniversary of Ralph Nader’s first speech on the real estate cartel, and consumers — primarily in Canada at this point — are using the hashtag #RECartel to express their anger at the industry. Can we use that anger (and maybe get Nader involved) to turbocharge new #CustomerTech tools to deliver BILLIONS in savings in real estate? That’s the goal of #RE2020, hence our desire to cohost a #Hack4REGood during @HUBweek.

This evening I can demo TransitionBank, an IntentCasting concept a four person team produced at Hacking for Good event at Harvard’s @InnovationLab ten days ago. What else should we talk about?

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VOTE

http://bit.ly/PopUpRE2020_2Q2017 (share via social media)

Posted in Blockchain, Buyer agent, Consumer protection, Defensive Homebuying, Disrupt Real Estate, Dual Agency Detective, HousingID, IntentCasting, Investigative Reporting, RECALL: Real Estate Consumer Alliance, Savings & Rebates, VRM

Use #WorldRefugeeDay to seed #Hack4REGood / #InnovationMinistry?

IMG_2100

Wish I had known about the Vatican’s new StartUp accelerator a month ago when the call was still open for entries to their first group of ideas / companies.

http://bit.ly/HolyStartUp (share via social media)

Have shared the link above with High School classmates because one of SLUH’s own — Greg Burke — is at the Vatican acting as the Pope’s spokesman. Like Jesuits students and alumni everywhere, we were all groomed to be “Men for Others.” As we approach our 45th reunion in 2018, can our collective wisdom still tap into #DivineSynergy to “save the world?”

If our class created an Ideas Competition at SLUH, what would you want Greg Burke to tell the Pope, or ask the Vatican’s partners in Silicon Valley to fund?

Or is it wrong to wait for their next funding cycle or even depend on them? Real estate is a wealth engine across the world but luxury real estate is also a favorite place to launder money. Should we use #WorldRefugeeDay to crowdfund a way for #RETech to transform money laundering into refugee relief? A stunning 30% of luxury transactions in six cities in the US involve suspicious transactions:

http://bit.ly/30PctLuxRE (share via social media)

If friends and family are willing to crowdfund attendance at the Economy of Communion meeting this weekend, I’ll try to seed that idea. See first seed planted with the nun who inspired the movie, Dead Man Walking:

IMG_2099

http://bit.ly/REfugeDay (share via social media)

What could we accomplish if we seeded #Hack4REGood events and #InnovationMinistry MeetUps across the country, if not the world?

http://bit.ly/SeedInnoMnstry (share via social media)

Posted in #SpeculatorsWithoutBorders, ASAP: AIDS Shelter Alliance Partners, Change Agents, Crowdfunding, Impact Rebates, Luxury housing, Pope's Encyclical, RE2020, Real estate philanthropy

In #DysTrumpian era of “Consumer Protect Thyself,” powerful DIY tool for Homebuyers

IMG_1754

In #DysTrumpian era of “Consumer Protect Thyself,” will real estate innovators step into the gap to help consumers make informed decisions? This campaign was launched today, #FlagDay and the first day of #NAREE17, to give homebuyers a powerful DIY tool: a compelling Pledge Of Allegiance they expect from their buyer agents. It’s designed to prevent conflicts of interest which means zero tolerance for dual or designated agency.

Credit where credit is due: Maureen Glasheen, then attorney at the NY Dept of State, created the original Pledge of Allegiance approximately 25 years ago; and Doug Miller, founder of http://CAARE.org updated the text several years ago. Frances Flynn Thorsen created the video magic this morning!

Sharing links here so others use:

(1) Watch video http://bit.ly/GetREPledge (share via social media)

(2) Print form http://bit.ly/PledgeCAARE (share via social media)

Finally, the blog post below explains why the newly revised agency disclosure form in Massachusetts is already obsolete and points to the future of #RegTech & #RETech:

From #FakeBuyerAgents to Smart Disclosures & Information Fiduciaries

http://bit.ly/FakEBA2FutureRE (share via social media)

Posted in Buyer agent, Consumer protection, Defensive Homebuying, Designated Agency, DIY Homebuyers, Dual Agency Detective, Dump Dual Agency, RE2020, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance

From #FakeBuyerAgents to Smart Disclosures & Information Fiduciaries

IMG_1705The official minutes are now online but they reveal little about the process or substance of the revised Agency Disclosure form in Massachusetts. As cited in complaints to the Attorney General’s Office and repeated follow-up with the Mass Office of Consumer Affairs (see excerpt and image above), the mandatory form was updated by a group of industry insiders who met at the Mass. Association of Realtors.  Here’s our recap of the board meeting nearly five months ago and our vision for an “Agency Revival.”

PUBLIC COMMENT:

Asked if the RE Board had received comments from the Mass. Association of Buyer Agents (MABA) and the attorney Charles Kilb, said no. Said dozens of peers at MABA had collaborated during 1992 – 1993 to shape the original disclosure, and since they could not be here because of the weather wanted to address MABA’s two main concerns:

MABA Talking Points

1. MABA called for a formal, public comment period including a public hearing, so licensees, consumer advocates, as well as buyers and sellers could comment.

There was no response from the RE Board.

2. Graphically the choice of Designated Agency versus Non-Designated Agency now appears to be the focal point of the disclosure and is misleading.  By framing the undivided loyalty of real buyer agency as a negative (non-Designated Agency), the obvious conflict of interest in the cartoon below now appears to be highest good.  Beyond user design, added that lawyers in the buyer agency community believe designated agency is act of fraud because only Agency + Loyalty = Fiduciary.

Opposing Teams

Critique as real estate consumer advocate

Moving from MABA’s talking points to my own, showed exhibitor brochures from real estate tech conferences last week in NYC to make the point that real estate vendors collect so much personal data about buyers and sellers that we can no longer wait until the first point of contact OFFLINE to discuss fiduciary duties. In fact, law schools at both Harvard and Yale are already talking about the role of #InformationFiduciary

See http://bit.ly/GrandTrust (share via social media)

For that reason, the revised agency disclosure form is already obsolete because disclosure needs to be made at first point of digital interaction.

Use new graphic tools, if not AI, to create next generation agency disclosure

When I tried to argue that Designated Agency had become the new anchor point for the disclosure, working group chair Peter Ruffini noted that Designated Agency did not exist in 1992 and 1993 when the original agency disclosure process created a consensus document.  Since it’s controversial “passage”  in 2005, designated agency has become the default setting for mega-brokers.

To make the existing form easier for the public to understand, recommended using explainer videos (see one created later by MABA’s President Ronald Huth) and infographics online or on the back of the agency disclosure. To my surprise, Kimberly Allard-Moccia, an industry member of the RE Board, leaned into that comment and smiled approvingly!

After acknowledging that the committee had been asked to update the form based on the existing law, pointed to the Board to the future. Informed them that the National Association of Realtors will host their annual convention in Boston in November 2018 for the first time ever and we have the opportunity to engage the industry in the process, not just updating an old form, but creating an next generation agency disclosure.

Said Massachusetts was rightly proud of the document we created in 1993 and we can once again create a disclosure process which establishes best practices. Said it’s conceivable that chat bots, using artificial intelligence, could administer an online disclosure that results in a consumer who has truly given informed consent because they’ve been led through an interactive conversation that reveals the implications of agency choices.

Chair Kevin Sears received the comments well, thanked me for insights and suggested that I work with attorney Justin Davidson from MAR to move the conversation into the future.

CLOSURE & VOTE:

Sears asked the board attorney to comment on the past 10 minutes, and he said that the agency disclosure’s task had been to work within the existing context set by statute. “From my perspective as a lawyer, you did what you could; followed all of the steps.” Kilb said, “What I’m hearing here is what you might want to do in the future.”

That caused Sears to call for a motion on the revised draft of the form: “All in fair, say, I. All opposed say, no.”  The form was passed without any opposing votes.

Sears closed by thanking me for my comments and suggested I follow-up directly with attorneys Mike McDonough and Justin Davidson of MAR to explore the ideas I presented.

AGENCY REVIVAL IN THE FUTURE?

Pointing to new AI technology that has the possibility to automate parts of the transaction, suggested to the committee that agency duties will become more important in the future.

“If agents don’t want to be displaced by technology, they need to offer fiduciary level services. That could result in an “Agency Revival” and the disclosure needs to reflect the importance of loyalty — real fiduciary duties — not a conflict of interest that’s been papered over or agency fraud.”

Once again, board member Kimberly Allard-Moccia’s body language was that she was intrigued by the idea.

Posted in Buyer agent, Consumer protection, Designated Agency, Dual Agency Detective, Dump Dual Agency, Investigative Reporting, RE2020, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance, Tech Trends
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