You're in all Blogs Section

Fooled again? Let’s use tech to reform real estate / BLIND biddings wars

After nearly two months on the road, this April Fool’s Day finds me playing the Who’s classic to psyche myself up:

Won’t be fooled again! / http://bit.ly/FooledAgain1978

As aging baby boomers know, the lyrics are a mix of contradictions – “meet the new boss, same as the old boss.”  Is there an unwritten, timeless truth — the more things change, the more they stay the same?  Or are we really at an inflection point, where there is new hope for new laws, new consumer-centric “revolutions”?

New technology? (Learn about The Intention Economy, video from WSJ)

If you are a Christian or Jewish, this is a week to follow the Who’s instructions:  “get on your knees and pray” for deliverance, renewal, and liberation!  And as Holy Week unfolds and Passover approaches, the tech calendar in Boston offers a hopeful answer to “Why is this night different from all other nights?”

​Ironically, on April Fool’s Day!​

First, at 4:00pm today, the Institute of Politics at Harvard’s Kennedy School of Government hosts a conversation with the Chief Information Officer of the City of Boston entitled, Citizenville: Government as a Platform.

Then at 5:30pm, Microsoft & the Venture Cafe hosts an interactive conversation on Civic Innovations for Neighborhoods at District Hall:

http://bit.ly/NeighborTech (share if you’d like to TweetUp this evening)

Beyond that talk, is there hope we may witness another “British Invasion?”  Will a new Consumer Rights Act in the UK raise the bar and inspire new consumer protections in the US, specifically a Real Estate Consumer Bill of Digital Rights in the US.

As the Boston Globe writes yet another front page story on BLIND bidding wars, hope the call to reform the real estate industry echoes on both sides of the pond.  Please share these links so millions of homebuyers — particularly millennials and seniors — won’t be fooled again!  Please share these:

Victims or fools, time for Emergency Bidding War Transparency Act

Will Bidding Wars trigger local regulation or global reformation?

If it’s too late to join either of the events today in Boston, mark April 13th.  Author Malcolm Gladwell will be speaking in Cambridge about his book, David and Goliath: Underdogs, Misfits, and the Art of Battling Giants.  Let’s see what we can learn from that past 22 years, and make another pass at waking the sleeping giant of the consumer movement.

April 2 & 3rd marks the 22nd anniversary of the Consumer Revolution in Real Estate, a two-day event in Boston featuring Ralph Nader, Steve Brobeck of the Consumer Federation of America, and real estate consumer advocates from around the country.  Should we cohost an unconference or hackathon with app developers to disrupt real estate / co-create an open ecosystem capable of delivering billions in consumer savings annually?

Posted in Bidding wars, Consumer protection, Defensive Homebuying, Disrupt Real Estate, IntentCasting, RE2020, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance, reVRM, Unconference

Conflicts of interest beg for Real Estate Consumer Bill of DIGITAL Rights

FiduciaryReformTweet

Seventy-two hours apart, a leading real estate technology news site begins by reminding real estate professionals of their fiduciary duties (Agency = Expertise + UNDIVIDED Loyalty), then another article advises would-be listing agents to farm for sellers with a “Join my buyers waiting list” hook.

Will this “help you get more sellers for that particular neighborhood,” or increase awareness of the heighten threat of conflicts of interest in real estate?

Last week, one of the panels at the Consumer Federation of America’s annual conference was entitled, The Digital Revolution and Personal Information: Consumer Benefits and Concerns.  In fact, one of the panelists, Frank Torres called for a Real Estate Consumer Bill of Rights in Congress nearly 15 years ago when he was with Consumer’s Union.  As you can see from the link below, the call to protect real estate consumers has a long history and a coalition of consumer advocates around the country — still real estate is the sleeping giant of the consumer movement:

http://bit.ly/REBillRights (please share tiny link via social media)

As the release of the Apple’s iWatch brings wearable apps into the mainstream, questions about privacy — who owns data, who can access or share it, and how it can be used with or without my permission — should renew calls for Real Estate Consumer Bill of Rights, DIGITAL rights.

With Big Data Comes Big Responsibility, that’s what MIT’s Sandy Pentland told Harvard Business Review the Harvard Business Review last Fall, and IMHO his call for a “New Deal” on data should be extended to a New Deal on Real Estate data — particularly personal data.

http://bit.ly/BigDataDeal (please share tiny link via social media)

Real estate commissions are so high, it’s not hard to imagine consumers saving billions of dollar annually by leveraging their personal data in the emerging open eco-system in real estate.  If you’d like to help co-create that money-saving ecosystem by the year 2020, or benefit from it as a DIY homebuyer or seller, please follow #RE2020 online (or contact RealEstateCafe@gmail.com)

As shown on the tweet above, we hope to collaborate with a powerful new coalition of consumer advocates (which includes AARP and the White House) to extend their call for fiduciary reforms from financial services into real estate.  For more information, visit http://SaveOurRetirement.com or follow the hashtag #SaveOurRetirement .

Posted in Consumer protection, Defensive Homebuying, Disrupt Real Estate, Dual Agency Detective, Investigative Reporting, RE2020, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance

CFPB & FTC protect options, empower real estate consumers to save money

ZillowAntiTrust_FTC1

What a week!  Inman News just caught the government doing it’s job, again!  As regulators from the CFPB are taking heat from bankers to take down their new site encouraging homebuyers to exercise their right to make informed choices, the FTC is putting the heat on the Zillow-Trulia merger because the sweetheart deals that Zillow has negotiated with giants in the industry have a detrimental impact on choices homebuyers may be able to make, too. Check out their deal with Realogy below:

Regulators may be weighing impact of Zillow-Trulia merger on small brokers

The article above is limited to subscribers, but sharing my comment here so consumers better understand the way public and private policy decisions ignore their needs, limit their choices, and deny their rights.

COMMENT: Thank goodness the FTC is raising these issues, but it’s more than just the price agents pay for ads.

1. First, giant real estate franchises and brands are not introducing money-saving alternatives for homebuyers and sellers, smaller start-ups and “SOLOpreneurs” are — particularly those of us offering fee-for-service real estate consulting models.

2. It’s been six months since SeekingAlpha republished Citron Research’s statement below. At that time, we were able to document via screen captures that no competing agent ads appeared on Coldwell Banker listings locally. Has anyone else noticed the same pattern in their market?

“Zillow/Trulia already have in place a rock bottom deal with Realogy, the largest real estate agency in the world, that prohibits ALL OTHER agencies from advertising on their listings … and for this they pay a fee 95% less than any other agency pays. Not only is this deal unsustainable in the industry, we’re not at all sure if it’s even legal from an anti-trust perspective.”

http://bit.ly/ZTCoverUp

3. From the FTC’s perspective, that should raise issues about anti-competitiveness and rightly so. However, consumer advocates like CAARE might be equally concerned that Zillow’s preferential policies steer homebuyers into conflicts of interest without informed consent — a high legal bar that is rarely attempted in real estate, online or off!

http://CAARE.org/designatedagency

Regardless of how the Z-T merger proceeds, hope the FTC investigation underscores the long overdue need for “Smart Disclosures” at the browser level to replace paper disclosures that real estate agents routinely ignore offline with impunity.

+ + +

If you’d like to be part of efforts to reform the real estate industry and empower consumers to save billions of dollars annually, please visit http://bit.ly/JoinRECALL and follow #RE2020.

Posted in Consumer protection, Defensive Homebuying, Dual Agency Detective, Fee-for-service, Fee-for-service real estate, Investigative Reporting, RE2020, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance, Savings & Rebates

Collaborating with housing & real estate labs to save BILLIONS annually!

 

Concept Drawing:  reVRM2020 Ecosystem

Concept Drawing: reVRM2020 Ecosystem. Open ecosystem in real estate will be informed by personal data and create unprecedented money-saving opportunities for DIY homebuyers and sellers. Concept drawing shows one of 22 idea starters included in reVRM-Minifesto.

This morning, NPR listeners in Boston were greeted with news of one of the largest gifts ever given to MIT — a $118 million gift to MIT’s Center for Real Estate (MITCRE) to “advance socially responsible and sustainable real estate development.” MITCRE calls the gift “transformative” because it addresses inter-disciplinary challenges and presents an opportunity for existing academic initiatives to co-create solutions.

For decades, MIT’s Department of Urban Studies & Planning (DUSP) has championed citizen participation, so hope this gift also seeds a ripple effect in local communities. Here are four idea starters that could begin immediately in Greater Boston and beyond:

1.  Headlines from the annual Consumer Electronic Show say a race has begun to control the data from SmartHomes:  Why not extend the buzz from SmartHomes to SmartNeighborhoods by seeding a network of local user groups through sites like http://NextDoor.com

2.  When it comes to personal data, MIT’s Media Lab is a global thought leader.  Why not give academics there an opportunity to field test their work by using real estate as a use case? Pointing to Sandy Pentland’s article in the Harvard Business Review, this post extends his call for a New Deal on Data to a new deal on real estate data.

Invitation: Using Real Estate as use case for Personal Data (share http://bit.ly/reDataUse)

3.  Finally, when one in four homes sells for $100,000 over asking price, think it’s time for a Bidding War Lab? That’s what happened last June in Cambridge, MA, and price distortions in other cities caused the New Yorker to write about the negative impact global real estate is having on local markets — including making homeownership IMPOSSIBLE (emphasis added) for much of the city’s population..

Will Bidding Wars trigger local regulation or global reformation? (share http://bit.ly/BidReform)

4. Finally, Boston’s new mayor Marty Walsh is fond of asking what will Boston look like in the year 2030.  Before too many of the proposed 53,000 new housing units break ground, why not ask what will the real estate ecosystem look like in 2020 and co-create ways to reduce housing transaction costs?

When a representative from Zillow was asked where the real estate industry would be in five years, he predicted a “completely open ecosystem.” As that happens, consumers — both buyers and sellers — will save billions of dollars annually as diagrammed in the concept drawing above. Those savings will dwarf the $118 million dollar gift MIT just received. Respecting the extraordinary generosity of MIT’s donor, perhaps a generation of DIY homebuyers and sellers should crowdfund their own innovation lab to work on the ideas above.

How realistic is that? Here’s some math that might surprise you. Last quarter (4Q2014), approximately 15,600 residential properties failed to sell across MA, so those MLS listings were canceled or expired. If those properties were sold “for sale by owner” (or FSBO), that would save nearly one quarter billion dollars or twice the gift to MIT. If sellers used new money-saving real estate business models to reduce commission by half, they would still save an estimated $127M.

With such a large payback in one state, during one quarter alone, why aren’t money-savings real estate business models attracting more attention in the media and marketplace? (link)

With Bloomberg Philanthropies $1.35M to fund Boston’s new Housing Innovation Lab over three years and Samuel Tak Lee donation of $118M to fund MIT Real Estate Entrepreneurship Lab, what would happen if a generation of DIY consumers, tech innovators, and real estate consumer advocates collaborated with those new labs to transform the real estate industry?

If you’d like to join or follow that conversation, using hashtag #RE2020 on Twitter, Google+, and Facebook.  Glad to meet anytime on short-notice to address this question:

Reform or disrupt? Where will real estate be in 5 years? #RE2020 (share http://bit.ly/SeedRE2020)

And invite tech innovators and consumer advocates to meet during MIT’s IAP to discuss these game changing idea starters:

reVRM-Minifesto: 22 Game Changing Idea Starters (share http://bit.ly/reVRMgameChanger)

What’s your vision of the future of real estate?

Posted in Bidding wars, Commission Reform, Crowdfunding, Disrupt Real Estate, FSBO: For Sale By Owner, IntentCasting, RE2020, RECALL: Real Estate Consumer Alliance, reVRM, VRM

Using calls to “disrupt real estate” to raise awareness of money-saving alternatives

Cocreate_Disrupt_Roadmap

Greetings, fellow real estate consumer advocates and DIY homebuyers and sellers (particularly those hoping to sell for-sale-by-owner ),

Have you seen the article this week in Entrepreneur Magazine:

Who Will Step Up and Disrupt the Real Estate Industry?
http://bit.ly/DisruptREAL (please share this URL via social media)

Like it’s predecessor below, published six months ago, it’s creating a lot of buzz outside the industry:

Could someone disrupt real estate, please?
http://bit.ly/DisruptPLS (please share this URL via social media)

Visiting the press links below, it’s encouraging to see how much momentum was generated a decade ago, but the absence in recent years leaves one might wondering if the press went easy on the industry during the real estate recession:

http://www.areba.org/news.html  (please share this URL via social media)

Harnessing the winds of change

Thankfully, the winds of change are blowing again, and calls for change are coming from inside and outside the industry. For example, the recent REBarCamp in Boston generated a Facebook group called Real Estate is Broken. Compare this hard-hitting, insider’s expose of 25 ways real estate is broken to softball questions directed at talking heads during industry conventions, or not addressed at all:

http://bit.ly/BrokenRE (please share this URL via social media)

There was a time when consumer advocates and technology innovators intent on changing the real estate industry gathered on Real Estate Connect conferences in New York and San Francisco, but Brad Inman’s post last April reveals the growing disconnect with the most disruptive business models and a new generation of FSBOs (technology enabled homeowners seeking to save money by selling for-sale-by-owner):

Real estate disruption may not be what you think it is
http://bit.ly/NotDisrupt (please share this URL via social media)

“I have never believed that real estate disruption comes from consumers selling their own houses. Individual real estate agents are here to stay. They provide an invaluable service that most of us need and want.”

Historical context

Efforts to reform the residential real estate industry reform span more than 30 years, beginning in 1983 when the Federal Trade Commission (FTC) investigated the industry and then rose in frequency eight years later when the Consumer Federation of American first called the industry a “cartel.” In 2006, the FTC, US Department of Justice held hearings and brought legal action against the industry and individual MLS’s to create a more open, competitive real estate marketplace. Some, including members of this group, predicted that the fruit of those reform efforts, market innovation, and web-savvy consumers would yield $30 billion annually in consumer savings.

How do we rekindle that spirit and deliver those savings? Several times over the past two decades, alternative real estate business models have struggled to organize three different groups: (1) buyer agents, (2) fee-for-service real estate consultants, and (3) LEOs: Listing Entry Only services. Is there enough membership / infrastructure left in any of those groups to rekindle the reform movement?

One non-profit — http://CAARE.org — Consumer Advocates in American Real Estate — is underfunded, but is a credible source that the press, including Inman News, seeks out for the consumer’s perspective. RECALL (Real Estate Consumer Alliance) is a related but an informal group that has mobilized in the past on an ad-hoc basis to address a variety of issues that negatively impact consumers, like designated agency legislation.

Co-creating Synergy

If you’d like to reconnect with fellow change agents and follow or participate in disruption related conversations please visit the link below.

http://bit.ly/JoinRECALL

Alternatively, simply follow the hashtag #RE2020 to see if a new coalition / new generation of real estate consumer advocates and geeks can make progress towards an open real estate ecosystem by 2020.

NEXT STEPS

1. SPEED NETWORKING online this Friday, October 10 at noon (EST). Contact realestatecafe (dot) com for details.

2. BARCAMP BOSTON offline Saturday & Sunday October 11-12.  Want to meet offline and continue the collaborative mapping exercise on the image above:  (1) Where is real estate broken or (2) vulnerable to disruption, and (3) where are new start-ups already making inroads?

3.  MEET next week October 16 at http://DisruptCRE.com in Boston, and explore best ways to build traction for disruption, reform and realignment in residential real estate, too.

4.  SHARE link to our related blog post, Disrupt, reform or realign real estate: Opportunities to connect dots & build synergy

http://bit.ly/REDots

Posted in Change Agents, Commission Reform, Consumer protection, Disrupt Real Estate, Fee-for-service, FSBO: For Sale By Owner, RE2020, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance, Savings & Rebates

Disrupt, reform or realign real estate: Opportunities to connect dots & build synergy

DisruptRE_Map_091814

A question asked yesterday in Entrepreneur Magazine has been echoing across the internet this year:  “Is it time for real estate to be disrupted?” The question is appropriate but too simplistic if it fails to recognize decades of failed reform efforts and that hundreds of millions of dollars have already been spent on start-ups that have failed to break up the real estate cartel.

That’s not a defense of the existing business model, hardly.  It’s a plea to step back and engage in some “smart failing” — learning from hard earned lessons of the past, so that any effort to disrupt or realign the industry NOW can be more efficient and effective because it’s informed by a more comprehensive perspective.

To do that means starting pre-internet.

After calling the industry an informal cartel in 1991, the Consumer Federation of America called for real estate commissions to be uncoupled or divorced predicting it would save home buyers and sellers billions of dollars per year.

That was nearly a decade after the Federation Trade Commission began pushing for agency disclosure laws following their landmark study in 1983.  While those regulations were enacted, they are routinely ignored and the industry passed laws — that should be repealed — to normalize conflicts of interest.

The recognition that real estate consumers have rights which were being denied by deceptive and anti-competitive business practices caused the Consumers Union, publisher of Consumer Reports, to call for the creation of a Real Estate Consumer Bill of Rights in Congressional testimony in May 2001.

None of those calls for reforms has been realized nor were they predicated on technology or a single entrepreneur; so an opportunity still exists for a group of new startups to use emerging technologies to co-create an open eco-system in real estate that aligns with first principles — consumer rights.

To begin, start with where Real Estate is Broken — http://bit.ly/BrokenRE — a new group on Facebook, that was amazingly, started by real estate professionals after REBarCamp Boston not by industry critics or innovators outside the real estate industry.  Still, both those latter groups as well as real estate change agents who are willing to rethink their future, are invited to start following #RE2020 on Twitter.  #RE2020 is a campaign to co-create a an open ecosystem by the year 2020 so real estate consumers can save BILLIONS of dollars annually.

If you share that goal, let’s meet online or off to explore potential synergy and collaborations. If you’re in New England, here are two local suggestions and two national events:

REGIONAL:

October 11-12, 2014:  Want to meet offline at the BarCamp Boston or IndieWebCamp, both this weekend at MIT to continue the conversation from REBarCamp Boston?

October 16, 2014:  Even though it’s the commercial side of the business, sign-up for DisruptCRE.com and let’s continue working on the diagram above.

NATIONAL:

October 27-30, 2014:  VRM Day and Internet Identity Workshop (IIW) are meeting at the Computer Museum in the Silicon Valley.  If there is interest, a working group that will meet online before and after those events to maximize the momentum from those twin events.

November 7-10, 2014:  Finally, two weeks after that, the National Association of Realtors (NAR) hosts it’s annual convention in New Orleans.  Want to use that event to continue identifying collaborators and mapping vulnerabilities, disruption points and reforms in the existing real estate marketplace (see photo above)?

If you’re really motivated to disrupt, reform or realign the real estate industry, there are some other professional events and formal and informal groups — like CAARE and RECALL — that might interest you, on and offline, so please contact us for more details.  We’ve been trying to change the industry since 1993 — see timeline and two day event in Boston entitled Consumer Revolution in Real Estate.

 

Posted in Change Agents, Consumer protection, Dump Dual Agency, Real Estate Consumer Bill of Rights, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance, Savings & Rebates, Unbundling the Commission, VRM

Bidding War Scorecard: Is Designated Agency having a bipolar impact in Cambridge?


BiddingWar_Camb_July2014

BiddingWar_Camb_Sept2014

Has the housing market reached a tipping point, even in grossly overheated Cambridge, MA? Too early to answer that question, but our Bidding War Scorecard keeps revealing interesting data points about conflicts of interest in real estate. For example, during August 2014, four of five bidding wars selling $200K+ over asking price involved in-house sales, adding more fodder to our goal of repealing or neutralizing Designated Agency in 2015, the 10th anniversary of this flawed counterfeit buyer agency.

But as the Wall Street Journal reported earlier this year, designated agency can turn against sellers, too.  Designated agency and dual agency can have a bipolar impact on the housing market, because, “Having an agent represent both buyer and seller can either raise or reduce the final selling price, depending on the timing of the transaction.”

So what’s happening now in Cambridge?  Overall, MLS data reveals that sales in Cambridge have dropped a stunning 42%, falling from 122 in July to just 71 in September. One in 4 to 5 MLS listings continue to sell in-house, but during September one third of in-house sales resulted in savings of $50K or more off the listings price. In fact, half of the 10 listing selling $50K or more under the original asking price were in-house sales — all listings that had been on the market at least 40 days up to 146 days.

Our Dual Agency Detective says sometimes in-house sales result in buyers overpaying in bidding wars, other times sellers are shortchanged on stale listings. The only thing that is certain is the brokerage practicing designated agency collects both sides of the commission.

That raises policy questions, as we blogged in January 2014 before our real estate peers created a website to expose 25+ ways Real Estate is Broken:

Beyond the costs and opportunity costs to individual buyers, are complex questions with widespread public policy implications: “What impacts are conflicts of interest having on the housing market?” The question extends beyond individual budgets, to the composition of communities, and potential cost to tax payers who are insuring 90% of mortgages; even beyond the legal obligation of real estate brokerages, to the games agents play and the potential for a bidding war backlash, regulatory reforms, or worse, lawsuits.

What’s your take, homebuyers and new homeowners? If you felt “forced” to bid way over asking price in a bidding war during the first half of 2014, are you beginning to second guess that decision? What role did “your” real estate agent play encouraging to pay over asking price, or including an escalator clause? If you’re one of the four new homeowners who suffers from buyer’s remorse, you may want to read how buyers responded in the past:

http://bit.ly/Misled2014

Posted in Bidding wars, Buyer agent, Consumer protection, Defensive Homebuying, Designated Agency, Dual Agency Detective, Price reductions, Real Estate Bubble, Seasonality, Timing the market

CALLING ALL ANGELS: Can homebuyers separate real estate predators from protectors?

 
st_michael_slaying_satan

Created after the Second Vatican Council, today’s Feast of the Archangels is a very modern feast day and points to the Feast of the Guardian Angels on Thursday October 2. Is there a way for CruxNow — a new publication launched by the Boston Globe to reach approximately 3 million Catholics across Massachusetts — to use the next four days to demonstrate the contemporary nature of these twin feasts by talking about the role of / need for PROTECTORS in both our ordinary lives and struggles between good and evil worldwide?

Revisit the Homily of the Holy Father at the Inauguration of his Papal Ministry, and you will see that he uses the root word “PROTECT” thirty-three times in his thirteen paragraph address:

http://bit.ly/FrancisProtect33

Tragically, there are too many examples of predators prevailing over protectors in the 50 years since Vatican II. For example, Citizens Rising Anti-Corruption Weekend at MIT exposed “how a predator elite took over the country politically,” and Charles Ferguson’s book addresses the same phenomena from another perspective, Predator Nation: How Wall Street Crashed the Economy & Got Off Scott Free

Is there a way to develop this predator vs protector theme by inviting @Crux readers to share their own stories, or to point out examples in their own lives — personal and professional — where guardian angels / human protectors have made a difference or are urgently needed?

Case study: Predators versus protectors in residential real estate

A recent “unconference” for real estate professionals hosted at District Hall in Boston exposed 25+ ways “Real Estate is Broken.” Ironically, real estate is the same industry that encourages hundreds of thousands of homeowners to bury St. Joseph, the protector of the universal church to bury statues upside-down to help sell homes. Can thinking Catholics and other believers demonstrate that we’re not interested in superstition, but that we are agents of social justice who are willing to protect people against injustice?

Right now in real estate, calls for disruption echoing insider and outside the industry point to the need for reforms and innovators to protect consumers. There’s no need to limit that quest to believers or type of real estate professional, but in an industry that has a system bias towards sellers, there is a special role for REAL buyer agents as guardian angels as this Google search reveals.

So two weeks after “Real Estate is Broken,” we’d like to host a real estate roundtable online and off on Thursday, October 2nd — the Feast of the Guardian Angels – to help homebuyers, particularly first-time homebuyers, under the difference between buyer agents and counterfeit buyer agents.  Significantly, too many of the 25+ ways real estate is broken can be traced back to the failure to understand and act in accordance with agency duties.

If there is interest, we’d also like to invite real estate consumer advocates to gather again at District Hall, or another local venue as well as online to acknowledge and celebrate our role as protectors, and to develop strategies to correct ways Real Estate is Broken.  Homebuyers, sellers and technology innovators are invited to participate in that ongoing conversation by joining us offline or following #RE2020 on Twitter.

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

Pocket Listings: Smoking gun outs conflict of interest in real estate

 
opposingteams

The first round of Real Estate is Broken, a hard-hitting agent-to-agent critique of the residential industry last week in Boston, began with this one-two punch:

“When I grew up in the industry, pocket listing was a bad word; now Zillow has a category for pocket listings called ‘Coming Soon.’”

That rant echoed a headline three months earlier in Inman News that predicted, Zillow’s new ‘coming soon’ feature puts pocket listings on steroids.

Given Zillow’s scale and market penetration, it’s not hard to imagine that “Coming Soon” will institutionalize a two-tier housing market: pre-MLS listings and active MLS listings. Like pocket listings that are shopped in-house at company meetings as described below, “Coming Soon” will pressure homebuyers into dual agency and designated agency relationships so they don’t miss their “dream property.” (And brokerages get to collect both sides of the commission.)

Think we’re exaggerating? Read this “smoking gun,” an excerpt from an email sent to one of our buyer agent referrals:

“If we do not sign “dual agency” I believe that we are doing you a disservice. Let me explain why. Our office has approximately 70 agents, we meet for weekly marketing meetings, we discuss our buyer needs, and many times an agent at the meeting has a seller who is then contacted and a deal is put together. This is before it has ever hit the “open market” or MLS. By us not being able to use dual agency we would not even be able to promote your needs at our company meeting!! I am willing to not personally represent you and a seller if that makes you more comfortable, but I think that if you don’t even want me to represent you if anyone in my entire company has a listing, then you may very well miss out on your ‘dream property’.”

If pocket listings result in class action lawsuits someday, as Sam DeBord posited in his column on January 22, 2014 in Inman News, think the explanation above meets the legal test of “informed consent”?

http://bit.ly/PocketLiability (please share this URL via social networks)

Rather than manipulating buyer with fear of loss, what if the law required agents to record themselves as they explain risks or loss of benefits of agency options before buyers or sellers give up their right to be represented by their own agent, without conflict of interest?  Think many agents could provide sufficient information to obtain informed consent — Or is the industry so immersed in conflicts of interest that they see nothing wrong with the picture above?

Or what if the tables were turned and homebuyers present their own contract terms which agents could accept — like the Pledge of Allegiance authored two decades ago by the State of New York.

http://www.caare.org/PledgeOfAllegiance (please share this URL via social networks)

Or better still, what if buyers and sellers could simply exchange their own IntentCasts pre-MLS and involve agents if and when they want, at a price the consumer sets?  To some extent, that’s already happening with and without the benefit of technology.

Those are among the Idea Starters in our reVRM-Minifesto, a vision of an open ecosystem in real estate by 2020.  If you’d like to cocreate that future, follow #RE2020 or contact us to begin meeting on and offline.  You can help simply by sharing this URL via your social networks:

http://bit.ly/SeedRE2020

Posted in Bidding wars, Buyer agent, Consumer protection, Defensive Homebuying, Designated Agency, Dual Agency Detective, IntentCasting, Pocket Listings, RE2020, VRM, Whisper listings

Divorce real estate commissions, let homebuyers & sellers negotiate their own fees

Are the stars aligning?  Last Thursday, participants of @REBarCampBoston talked openly about how “Real Estate is Broken” and the conversation continues, agent to agent, on Facebook.  There a a list of 25+ industry flaws includes one that the Consumer Federation of America first proposed nearly 25 years old and it still has the disruptive power for consumers save billions of dollars annually —

divorcing or uncoupling real estate commissions.

If buyer agents and listing specialists have different skills, experience and value they bring to their respective clients, doesn’t it make sense to finally uncouple commissions and let buyers and sellers negotiate their own compensation agreements?  That’s the question that springs out of this morning lead story on Inman News entitled, “Listing specialists and buyer’s agents are not created equal.”

So today, the Equinox, is a good time to ask if buyer agent and seller agent should always get equal slices of a “one-size-fits-all” commission pie when listings can sell in days or weeks, but buyer agency relationships can extend over months or years because of unsuccessful offers on bidding wars.  Sometimes the opposite is true, and when listings expire or are canceled agents walk away empty handed.

How can real estate commissions be uncoupled / divorced to deliver BILLIONS in consumer savings annually, and unleash the potential of fee-for-service real estate business models so buyers and sellers can request proposals that meet their specific needs and willingness to pay?

The question has been asked before, but the debate is newly ignited by the combination of the Inman News article today and a REMax multiple office owner who told @REBarCampBoston that the prevailing real estate commission “antiquated” because it was…

“…designed when all agents represented seller, [and] now has Seller’s agents negotiating professional fees for Buyer’s Agent.”

Back to the future

Previous conversations about uncoupling commissions peaked sometime between 2005 and 2009, causing the RECafe to write the following about the slideshow above:

“At that time, 10 mega-trends were pushing the two-sided real estate commission to a “tipping point” and some real estate consumer advocates hoped the FTC / DOJ would require MLS’s to “uncoupled” or “decoupled” commissions in 2006, fifteen years after the Consumer Federation of America first called for that reform.

Although dated, here’s some of what Real Estate Cafe has written in the past on our blog and wiki about divorcing or uncoupling real estate commissions:

http://bit.ly/UncplRE

http://bit.ly/DivorcePosts

Next Steps:  Reform or Disrupt? Where will real estate commissions be in 5 years?

What appeared to be a tipping point a decade ago, did not pull the commissions apart.  We’d like to collect perspectives on why commission reform and money-saving options — like discounts or rebates — haven’t been more widespread, particularly when there was so much pressure for homeowners to preserve home equity following the real estate recession as stated so well by this video from the National Association of Real Estate Consultants:

http://bit.ly/SaveHomeEquity

If you’d like to participate in a round table discussion on commission reform, or join a working group / synergy circle to develop a plan to uncouple / divorce real estate commission with five years, contact us about participating.  Follow the hashtag #RE2020 to learn more about other real estate reforms and innovative new, money-saving business models.

Posted in commission rebate, Commission Reform, Do-it-yourself, FSBO: Best Practices, IntentCasting, RE2020, Real Estate Consumer Bill of Rights, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance, reVRM, Tipping Policy
Recent Posts
Recent Comments
Archives
Categories
Meta
HTML Snippets Powered By : XYZScripts.com

Switch to our mobile site