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Beyond blockchain: Elevating real estate, delivering billions in consumer savings

uLab_Ego2Ecosystem

“What’s Next?” was one of the themes at #ICNY / #ICNY16 and a day after two blockchain gurus wow’ed that audience in NYC, a blockchain-enabled Bidding War platform quietly won an MIT Hackathon!  Here’s the problem statement:

http://bit.ly/BidWarHackIntro

What’s next for blockchain in real estate?  The Realtors have started an impressive lab — @CRTLabs — that’s Powering the Internet of Things for Realtors.  Does that present an opportunity to collaborate or are consumers better served by their own lab?  What role might innovators in Boston play?

http://bit.ly/RE2020Lab

BACKGROUND

Building a multiple offer / bidding war prototype is just one point of entry for dozens of blockchain-enabled use cases in the real estate ecosystem.  RESO — Real Estate Standards Organization — is also exploring blockchain as a solution to their PUID (Property Unique ID) — arguably the digital cornerstone of the MLS.

For unofficial background on this baseline opportunity, visit the wiki from the Future Commerce Hack at MIT in November 2015 to see slides, links, and (dated) discussion of PUID:

http://bit.ly/REBlockScribbles

COLLABORATION

Three opportunities are emerging:

1.  First, if you would like to seed a Blockchain in Real Estate MeetUp in Boston, join one in Washington, DC, or start one in your local community, please let us know.  We’d like to see cross-sector groups of consumer / civic tech / OpenGov advocates, as well as real estate innovators and app developers form nationwide, even internationally.

2.  Second, if you’re a real estate innovator who would like to co-create an open ecosystem in real estate industry capable of delivering billions in consumer savings annually, that’s the goal of #RE2020.  Please follow that hashtag on twitter, and share any time one of your clients (or DIY homebuyer / sellers) saves money!  Our goal is $30 billion annually by the year 2020.

3.  Finally, the National Association of Realtors is bringing their annual convention to Boston during November 2018.  Traditionally, they’ve placed the real estate agent at the center of the transaction, but consumers need a “New Deal on Real Estate Data” that places personal data at the center of the transaction.  Want to participate in a series of activities over the next three years to address this question:

Reform or disrupt? Where will real estate be in 5 years?

What opportunities do you see, and how can we work together?  The headwinds that face the housing industry in the emerging future need cross-sector collaboration. What to contribute to the conversation, online and off, on the road to Boston in 2018?  We need your insights to elevate the conversation!

http://bit.ly/ElevateRE_Tour

Posted in Bidding wars, Blockchain, Consumer protection, Disrupt Real Estate, IoT: Internet of Things, RE2020, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance, Savings & Rebates, VRM

2016: Will Blockchain enable “New Deal on Real Estate Data”?

NewDealOnREData_2016

In what amounts to a New Year’s forecast, Brad Inman, publisher of Inman.com wrote on Facebook:

“This coming year, more disrupters will claim a stake in real estate.”

The question isn’t whether disruption is coming to the real estate industry, it’s what OTHER disruptive changes are coming to housing, demographics, climate and cities over the next decade that will need a new kind of real estate ecosystem (as well as digital + human agents) in the future?

Will other sectors of both the economy and society respond to multiple disruptive changes in general, and embrace new technologies that will enable a “New Deal on Real Estate Data” — wearable devices, driverless cars, SmartCities, SmartHomes & the Internet of Things that connects them?  These are cross-sector challenges / opportunities that need a collaborative effort by multiple stakeholders to maximize their potential benefit.

Shall we start with providing enough affordable housing, so that families and parenthood itself don’t become sustainability issues? There’s not a single county across the U.S. with enough affordable housing!  Or would you prefer to start with the Great Senior Sell-Off?

While some may expect real estate’s “big tent” to contain the evolution of the industry, others — including new players from OUTSIDE the traditional industry — are poised to pioneer new business models, some enabled by blockchain, that could turn the big tent into an “open air marketplace.” Think of a more efficient, consumer-centric alternative to what Brad Inman describes as an “insanely fragmented industry.”

Billions of dollars are at stake, and my hope is that an informal coalition of money-saving innovators will deliver $30B annually in consumer savings by the year 2020, hence the hashtag #RE2020.

Any start-ups / app developers / innovators want to join a Blockchain in Real Estate Cross-Sector Working Group? Collaborative process begins online and offline in Boston in January 2016 ramping up to and beyond the National Association of Realtors annual convention arrives here in November 2018.

Note: As the email above shows, this idea flows from a proposal first submitted to the #Inman25K competition announced informally by Brad Inman on stage at #ICSF15.  Since he’s not selected a winner yet, we’ll start 2016 by seeding a real estate working group within the Boston Blockchain MeetUp without the $25K in prize money. Still, with $3 billion invested in real estate-tech startups over the past three years, we’re working with a large systems change consultant to package a proposal to involve multiple stakeholders.

Inquiries and seed funding welcome via RealEstateCafe@gmail.com.  Happy New Years!

Posted in Affordable housing, Blockchain, Commission Reform, Disrupt Real Estate, IoT: Internet of Things, RE2020, RECALL: Real Estate Consumer Alliance, reVRM, Unconference, VRM

Back to the Future: Save billions in real estate fees by 2020?

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:

  1. Co-creating an open ecosystem in real estate capable of delivering $30 billion in consumer savings annually by the year 2020; and
  2. 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)

Next Steps

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 realestatecafe@gmail.com.

Posted in Blockchain, commission rebate, Disrupt Real Estate, Impact Rebates, RE2020, RECALL: Real Estate Consumer Alliance, reVRM, Savings & Rebates, Tech Trends, Unbundling the Commission

Out Bid or Out Dated: Industry & media hype missing Bidding Wars trends?

 

This started as a comment on BostonBubble, a decade old forum that’s enabled homebuyers in Boston to share headlines and perspectives about what’s really happening in the Boston market.  A recent article that predicts the Boston housing market will cool this Fall has attracted more than 400 views and talk about meeting offline meet offline for a “Bubble Hour.”

Nothing is planned yet, but this Boston Globe story might be reason enough to meet sometime next week:

Outwit, outbid, outlast
For today’s buyers, the housing market is a lot like a reality TV show. There are multiple players, big money at stake, and dashed dreams. But keep at it, because procrastinating might wind up costing you more.

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

+ + +

From my perspective as a buyer agent who has written numerous stories on the need to reform BLIND bidding wars, there’s much more to the phenomena than reported. Opinions aside, the story is also flawed in a number of other ways. For starters, the Globe used sales statistics from 1Q2015 rather than the second half of summer which one Belmont listing broker recently describe as “dead.”  It’s not hard to imagine that price reductions might be outnumbering over asking price offers since the stock market plunged in late August.  Perhaps those more recent trends might explain the disconnect between the Curbed Boston’s predictions for Fall 2015 and the Globe’s story.

My sense is that readers of Boston Bubble could crowdsource a more accurate story. Should they try?

Or should homebuyers take a different, more quantified approach? Here’s a flashback from April Fool’s Day 2015:

Fooled again? Let’s use tech to reform real estate / BLIND biddings wars
http://bit.ly/REformFools  (please share link via social media)

As we know from the past three years, it takes time to do the investigative reporting necessary to expose what’s going on behind bidding wars, but here’s an example of what’s possible:

Bidding War Drone: In-House Intelligence Report raises questions
http://bit.ly/BidDrone  (please share link via social media)

Would any BostonBubble readers be willing to crowdfund a Bidding War Lab so the Boston Globe never has to write, “Statistics on the number of homes that trigger bidding wars — and hence disappoint multiple families in a single swoop — are hard to come by, …”

It appears that they’re unaware of our blog, or choose to ignore the track record we’ve demonstrated with posts like this:

Will runaway bidding wars create real estate refugees in Cambridge? What would MLK do?
http://bit.ly/BidWarLab  (please share link via social media)

Posted in Bidding wars, Bubble Hour, Consumer protection, Crowdsourcing, Defensive Homebuying, Housing bubble, Investigative Reporting, Market trends, Seasonality, Timing the market

#ImpactREbates: Can we crowdfund social good out of real estate rebates?

Historically, September has been a big month for Real Estate Cafe, and this year a series of anniversaries are aligning with an exciting opportunity:

10th anniversary of feature story in Boston Magazine,
20th anniversary of Real Estate Cafe, and
25th anniversary of our predecessor — Mass. Homebuyers Club.

Rather than focusing on the past 20-25 years, we’re asking “where will the real estate industry be in five years?”  More specifically, we’d like to answer that question by inviting innovators and consumer advocates to co-create an open ecosystem capable of delivering $30 billion annually in savings by the year 2020 — a campaign we’re calling #RE2020.

Better yet, we’d like extend the benefit of those savings by asking recipients to donate a portion of their rebates to non-profits or initiatives promoting Social Good.  We need social entrepreneurs to help us develop a strategy to crowdfund their own efforts through real estate rebates.

That’s why we’re so excited that the Real Estate Cafe’s 20th anniversary aligns with the start of #uLab. Knowing that nearly 30,000 people from 182 countries have already signed up to participate in this MOOC (massive online open course), we invite social entrepreneurs and real estate innovators to explore collaborations.

Think of it as pay-it-forward or rebate-it-forward meets money-saving real estate business models. That’s why we call them #ImpactREbates

Here’s an example of what we’ve done in the past with our “Community Commission” and an open fundraising idea submitted to the MIT Ideas competition called ASAP: AIDS Shelter Alliance Partners.

If you’re a dreamer, doer or reincarnation of Don Quixote, how can we help rebate fund your #uLab dream?

edX_uLab_DonQuixoteSketch

Posted in "We" companies, ASAP: AIDS Shelter Alliance Partners, commission rebate, Crowdfunding, Impact Rebates, Pope's Encyclical, RE2020, Real estate philanthropy, Real estate rebates, Savings & Rebates

Disrupting real estate: What’s Pope Francis got to do with it?

READ_Encylical_iPhone

Calls to disrupt residential real estate have echoed inside and outside the industry the past year, but no change will come close to the impact of climate change.  The Pope’s encyclical — On Care for our Common Home — begins with the environment but goes further, calling for a wholistic or “integral ecology” – a change of heart that grows into a community of care.

What implications does that call for conversion have for lifestyles, housing, and cities?  Last month, the Pope invited 60 mayors from around the world to discuss those questions, and pledge their commitment to address climate change and inequality.  What role can and should housing activists and real estate professionals play?

Is the industry ready for a reformation movement, or will it reject the Pope’s message?  After reading the only story so far in Inman News, the leading real estate technology news service, we sent the following Open Letter to them asking for another story on the Pope’s visit from more important angle.  We look forward to their continuing coverage.

Short-term rental owners set to profit from upcoming East Coast pope visit

http://bit.ly/AirBnPope
+ + +
OPEN LETTER TO INMAN NEWS

Greetings, Inman News,

I’ve been a long-time reader, sometime contributor and one of the leading voices over the past 20 years calling for industry reform or in more recent lingo — “disruption.” See most recent guest opinion just over a year ago:

Harnessing the winds of change (10/9/14)
http://bit.ly/REWinds

During the past two decades, nothing — NOTHING compares to the disruption the Pope is and will be talking about. Whether it’s preparing for devastating changes that will disrupt cities like Boston — where today’s 100 year flood will be an annual occurrence in 2050 and a twice a day tide by 2100; or calling for an integral ecology that values a “community of care” more than luxury real estate, the Pope’s visit will be a teachable moment for the industry.

In today’s MOOC “Massive Open Online Course” world, one could argue that teachings are best absorbed when content is broken into easily digested modules that can consumed overtime. One could also argue that we look more to peers, than to authority figures, to facilitate learning by peer-to-peer discussion. With that in mind, I ask you to consider this Facebook thread, and to think about what role Inman News might play:

http://bit.ly/CommonREAD

Note, there are nearly 70 million Catholics in the US, or one in five people. Percentages are higher in some states, like Massachusetts where nearly half the state — or roughly 3 million people — are Catholics. More importantly, the Pope has a 90% approval rating and is a moral leader who champions the needs of the poor by consistently speaking truth to power.

Like Al Gore’s movie, An Inconvenient Truth (2006), the Pope’s encyclical has some truths that make make real estate elites squirm — like the fact that not one single county in the US has enough affordable housing (see recent headline in Fortune magazine):

http://bit.ly/Not1AffordCounty

It’s a message that Inman readers need to hear more than who’s profiting from short-term rentals because the long-term implications of that imbalance, and numerous other themes in the encyclical will help shape the future of housing, cities, and the planet itself.

What’s the best way to get the real estate industry into that conversation?

CARPE DIEM: In advance of his visit to the US, September 22-27, 2015, Pope Francis has called for a “World Day of Prayer for Care of Creation” on Tuesday, September 1. My goal is to invite fellow real estate agents to begin reading the encyclical the next day and to continue reading for 40 days: 20 days before and after the Pope arrives in the US. This should be a team effort, so readers are invited to contribute to this working proposal…

+ + +
CALL TO ACTION:

Posted in Consumer protection, Disrupt Real Estate, Housing Justice, Impact Rebates, Luxury homes, Mlllennials, Pope's Encyclical, RE2020, RECALL: Real Estate Consumer Alliance, Spiritual Home

Cross-examination: Has Redfin lost it’s religion?

Redfin_BiddingWar

Excellent article by VOX on the evolution of Redfin, but it would be improved by a critical cross-examination of statements like this from Redfin’s CEO Glenn Kelman:

EXCERPT:  Redfin set out to change real estate. Then real estate changed Redfin.

“…the original, bare-bones [Redfin] brokerage model would never appeal to a mass audience. So in November 2008, as the real estate market was imploding, Redfin took the plunge.

‘Redfin started life as a cult,’ Kelman wrote on the Redfin blog. ‘But our goal has always been to become a religion.””

CROSS-EXAMINATION:

Discussion point #1:

The article goes on to talk about how Redfin reduced it’s commission and began taking listings which from my perspective as an believer in the Common Law of Agency, is the equivalent of losing their religion.

Is that too critical an assessment, or do others share that perspective?

Discussion point #2:

No doubt Redfin’s brand has loyal followers — an estimated 6 million unique site visitors each month:

http://www.ebizmba.com/articles/real-estate-websites

But like other Mega-Brokers, does their desire to build market share undermine their capacity to act as a fiduciary for individual homebuyers, when there are fundamental conflicts of interest?

1. Dual agency / Designated Agency
It’s impossible to simultaneously try to get the highest price for home sellers and the lowest price for homebuyers, and

2. Competing buyers in-house
How does an individual homebuyer benefit when their brokerage is representing competing buyers interested in the same property?

Discussion point #3:

To what extend does the mainstreaming of Redfin’s business process and reduction of their rebates reflect pressure from outside investors who together have put $165 million into the company over the past decade?

Does their desire to become a national brand leave them vulnerable to more nimble network of independent brokers who can offer both deeper discounts / larger rebates without conflicts of interest?

CREDIBILITY CHECK:

To underscore the benefit of working with small independent brokers or “indie” agents and Redfin’s lack of credibility as a a religion one simply needs to question two assertions on their home page:

1.  Can you really tell competing buyers you are going to put them first when you’re submitting competing bids on the same property?

2.  If I am a buyer, particularly one who has been burned repeatedly by bidding wars, do I really want to work with a buyer agent who’s website boasts, “Turn one offer on your home into a bidding war?”

OUR CRUSADE:

From our perspective as consumer advocates over the past 20 years, those questions expose some of Redfin’s conflicted beliefs.  If you’ve lost faith in their brand, you’re not alone and we invite you to learn more about our crusade — #RE2020. Our mission is to raise awareness about money-saving real estate business models who collectively could empower homebuyers and sellers to save $30 billion dollars annually by the year 2020.

Redfin set out to change real estate. Then real estate changed Redfin.  Real Estate Cafe has remained true to it’s original mission and our DIY homebuyer clients.  And we’re not alone.  There are other money-saving business models who still walk their talk, plus some impressive new start-ups who have responded to calls to disrupt real estate.

Follow #RE2020 on Twitter to learn more.

Posted in Bidding wars, Buyer agent, commission rebate, Disrupt Real Estate, Dual Agency Detective, Fee-for-service real estate, RE2020, Real estate rebates, RECALL: Real Estate Consumer Alliance, Savings & Rebates

WANTED: Innovators & advocates to help real estate consumers “save tens of billions annually” in fees

BostonRealtyParty_121614

If you scan the months listed on the right side of this page, you’ll see a gap between blog posts during October 2014 and January 2015:

10/07/15:  Disrupt, reform or realign real estate: Opportunities to connect dots & build synergy

10/09/15:  Using calls to “disrupt real estate” to raise awareness of money-saving alternatives

GAP

01/08/15:  Collaborating with housing & real estate labs to save BILLIONS annually!

01/17/15:  CFPB & FTC protect options, empower real estate consumers to save money

During that gap, we weren’t idle…. Like many other real estate innovators, we were repeatedly posting comments on a controversial article in Enterpreneur Magazine entitled:  “Who will step up and disrupt the real estate industry”?  In the background, we were also quietly organizing an event to introduce innovators to leading real estate consumer advocates.  As the image and text above shows, we used the 262 anniversary of the Boston Tea Party to host a conversation about co-creating an open ecosystem in real estate by the year 2020, capable of delivering billions in consumer savings annually. (Hashtag:  #RE2020)

As we blogged yesterday, we hope to use a number of upcoming anniversaries to expand that conversation and continue to respond to calls for change coming from inside and outside the real estate industry.  Our goal is to encourage innovators, reformers and money-savings real estate business models — not to mention millons of DIY homebuyers and sellers — to think of themselves as a movement and to explore ways to create synergy to expand consumer savings.  As an informal group or adhocracy we call RECALL:  Real Estate Consumer Alliance, our hope is to deliver $30 billion annually by the year 2020.  Want to know where that figure came from — see the use of the phrase “tens of BILLIONS” (emphasis added) in the transcript below:

Congressional Hearing:  The Changing Real Estate Market

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

FLASHBACK: Congressional Hearings on Anti-Competitive Real Estate Practices

Saturday July 25 is the 9th anniversary of congressional hearings on anti-competitive business practices in the real estate industry.  Industry insiders have been digesting an extensive report by Inman News on the possible impact of the current wave of money-saving real estate start-ups.  You can learn more about why survey results should catch the attention of anti-trust regulators again by reading this blog post and scanning the Facebook comment below:

07/17/15:  Will fee-for-service movement launch “Agency Revival” or DOJ/FTC inquiry into real estate?

 

CongressionalHearings_InmanScreen071315

 

IDEA STARTER:  Should we host a virtual conversation to take a look back at the Congressional Hearings on Anti-Competitive Real Estate Practices and a look forward at the impact hybrid real estate models may have on the industry?  You can begin engaging that topic on the link below.  What other questions should we seed beforehand and who should we invite to participate?

Will “hybrid” real estate startups cause an “Agency Revival”?

Posted in Commission Reform, Consumer protection, Disrupt Real Estate, Dump Dual Agency, RE2020, Real Estate Consumer Bill of Rights, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance, reVRM, Unbundling the Commission, Uncategorized

#SmartFailing in Real Estate: Rebates, flat fees & fee-for-service over past 20 years


RECafe_1996

SMART FAILING: Trying to develop a new real estate business model to downsize commissions?  Whether you’re trying to reward DIY homebuyers with rebates, or help FSBOs — for sale by owner properties — avoid the real estate industry’s bloated commission structure, what can you learn from the past 20+ years of efforts to disrupt the real estate industry?

Real Estate Cafe is marking it’s 20th anniversary by seeding a conversation about what real estate will look like in the year 2020.  Our goal isn’t to dwell in the past, but to help develop an informal coalition dedicated to helping real estate consumers save an estimated $30 billion annually by the year 2020.  We call it #RE2020 — and invite you to follow that hashtag on Twitter and other social media.

Why should a new breed of money-saving business models succeed where others have failed?  Let’s begin that conversation by taking a look at a couple of items for the RECafe time capsule:

  • First the photo of what a home page looked like in July 1996 when we hosted a round table at the Real Estate Cafe with Ralph Nader and other leading real estate innovators (more on that later), and
  • Second what industry pundits were saying at the time about the coming downsizing in real estate.

Here’s one of the relics in the Real Estate Cafe’s time capsule — it is a dead document or does it contain secrets about roads not taken, or opportunities that were ahead of their time?  We’ll unfold that theme in coming weeks and months.  Join us by following @RealEstateCafe on Twitter.

The Coming Downsizing in Real Estate: The Implications of Technology

The implications for the real estate industry are potentially enormous. In January, 1995 there were approximately 100 real estate Web sites that offered real estate for sale. By year-end, there were over 4000 real estate related Web sites. Exhibit 6 provides a sample selection of 36 randomly chosen Home Pages and a brief overview of their services offered. While some sites are Home Pages of individual properties for sale, others include offerings of over 500,000 listings across the country. Complete marketing and purchasing information is lacking in the majority of the Web sites, but it is looming on the horizon of this new real estate frontier.

Full report: http://www.cob.unt.edu/firel/baen/downsize.htm

CALL TO ACTION:

Want to participate in our SmartFailing adventure or have some fun with futuristic predictions that missed the mark?  Here are three things you can do:

1.  Scan Smartfailing the vintage future and enjoy the photos.  Got some of your own for real estate, should we co-create a slideshow — maybe for REBarCampSF (August 3, 2015)?

2.  Share resources on Smart Failing, here’s one:

5 Steps for a Better Innovation Culture through Experimentation and Failure

3.  Join a series of events we’re planning online and off in Boston and beyond.  Our recent tweets point to what we’re planning:

4.  Want to collaborate or co-host a local event focused on helping real estate consumers — both DIY homebuyers and FSBOs — save billions of dollars annually?  Join RECALL:  Real Estate Consumer Alliance

Posted in commission rebate, Discount real estate, Disrupt Real Estate, Fee-for-service real estate, FSBO: For Sale By Owner, RE2020, Real estate rebates, RECALL: Real Estate Consumer Alliance, Savings & Rebates, Tech Trends

Will fee-for-service movement launch “Agency Revival” or DOJ/FTC inquiry into real estate?

FeeForService_Time070115

Yesterday, Inman News — arguably the leading real estate technology news service — launched an impressive report on a new generation of money-saving, disruptive real estate business models.  What they call “hybrid real estate” others, including the former chief economist (shown above) of the National Association of Realtors, have called fee-for-service for two decades.  Is it a idea or movement who’s time has come?

Don’t ask Inman Select’s readers, because they’ve have gone silent — at least for day one.  That caused us to write this comment on their Facebook group:

Just passed midnight on the East Coast and puzzled as to why 5,336 members of this Inman Coast to Coast group have yet to check LIKE or post a single comment? Stunned into silence by survival questions or embarrassing findings like this? 4 out of 10 respondents said they are generally less inclined to cooperate with a hybrid brokerage than a traditional brokerage, and 56 percent said that many agents discriminate against hybrid brokerages.

It’s been 10 years, time for more DOJ / FTC hearings / trainings on anti-competitive business practices?

In the similar comment on this author’s Facebook page, an innovative attorney turned real estate professional wrote:

What’s a hybrid ? Is there a normal way to do RE business ? What is it ?

Here’s my 10 point response:

Good questions (I can see your legal mind at work).  Several thoughts on your question and more:

1.  Lumping a variety of alternative business models into the “Hybrid” catch-phrase is a disservice to consumers, both buyers & sellers, who are searching for money-saving options (real estate rebates, flat fees, etc.)

2.  If hybrid makes any sense, it’s only from the industry’s perspective.

3.  My recollection is that Brad Inman chose the word Hybrid because it wasn’t clear what agency relationship — if any — some of the new business models are offering buyers and sellers using their site.  (There’s some irony in that, see #8 below.)

4.  Asking if there is a “normal way to do real estate” and who should define it goes to the heart of the anti-competitive practice Inman’s survey has revealed.  (Hope someone from DOJ or FTC is reading the report!)

5.  The question also exposes some of the issues NOT addressed in the report, like why is the trillion dollar real estate industry still operating on an obsolete-two sided real estate commission that is set by the seller’s agent?

6.  If you turn the clock back 10 years, one of the government interventions considered at that time was uncoupling or divorcing real estate commissions, so buyer and sellers can negotiate their own fees.  Is it time to revive that conversation or let start-ups like SoloPro.com and veterans (no pun intended, see footnote) of fee-for-service continue to hack away at the dominant model as we have for the past 15 – 20 years?

7.  As some hybrid real estate models offer non-agency level services, will that cause an “Agency Revival” led by traditional real estate agents who want to justify their fees?  As we blogged before the release of the Inman report, we’d welcome that unintended consequence and use it to expose / repeal Designated Agency in Massachusetts!

8.  Ironically, conflicts of interest are already widespread in real estate because of the hypocrisy of Designated Agency.  Won’t forming teams — one of the responses recommended by the report to compete more effectively with #HybridRE and the last paragraph of the report — will only cause more conflicts and insider trading?

9.  No where in the report is there a hint that rebates offered by the featured companies are trivial by comparison to REAL savings REAL buyer agents can offer buyers.  That will become increasingly clear as the housing market changes, and we’ll write more about that on an ongoing basis.

10.  If you’re a real estate professional, what’s your take?  If you’re a consumer, want us to help you explore money-saving options to meet your needs as a DIY homebuyer or seller?

* FOOTNOTE:  SoloPro’s Founder has a formal military background, whereas long-time fee-for-service professionals like the Real Estate Cafe have been using guerrilla tactics on the ground and in cyberspace for decades.

Posted in Commission Reform, Consumer protection, Discount real estate, Disrupt Real Estate, Dump Dual Agency, Fee-for-service real estate, Hybrid real estate, Investigative Reporting, Real estate rebates, Unbundling the Commission
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