Tuesday, September 20, 2005
Consumers and FSBO Companies, UNITE!
This blog has been quite astir the past week or so, with some very interesting posts and comments. One comment stands out over the others, as demanding some action. Bruce Hahn, President of the American Homeowners Grassroots Alliance, commented here that many of the innovations being called for won’t happen until buyers, sellers, and innovative companies “come together to overcome the political might” of the entrenched full-commission broker industry.
In many ways, Bruce is right. So, I want to be the one to officially sound the call:
1) Buyers and sellers: if you want to have any choice in the type of company or method you use to buy or sell real estate, you have got to stop standing by idly while state governments take away those options through regulating a monopoly into existence!
2) FSBO Companies: you are all fighting over a grand total of 3% of the annual real estate market who use a company like you! Come together, as an industry - cooperate and join forces.
3) Discount brokerage companies: you’ve got to ally with FSBO companies for a while. You need the momentum and weight just as badly. The National Association of Realtors does not represent your interests, or the interests of consumers.
Everyone, UNITE!
Work together. Most new, innovative real estate companies are trying to be the lone cowboy, riding in to change the world by themselves. I’m sorry, but that’s just not going to happen. Others are content to just sit still, not rock the boat too much, and collect money for their established niche business. That won’t work either, for much longer. Realtors have long since figured out the necessity of grouping together to accomplish something, and that’s where the National Association of Realtors came from - with its 1.2 million members.
BUSINESSES: If you proceed like you don’t need anyone, you just may be legislated right out of business. You’ve all got your own independent lists of properties…again, I’m sorry, but that has got to stop too. Agents have the MLS going for them. Embrace some of these new consolidated (”MLS-like”) services that let you share a database. Make it easy for consumers to find and use you. Don’t make them hunt you down.
I suggest Bruce Hahn’s American Homeowners Grassroots Alliance (AHGA), as a uniting organization. They have existed for longer than most companies this message is addressed to, and have no competitive interest in this cause, so they can objectively fight for the consumers without being partial to certain businesses. The AHGA already has the resources, expertise and connections to represent the interests of consumers in government, so those things won’t have to be rebuilt from scratch. All the AHGA lacks is input from consumers and companies, and they would love to have it.
Give Bruce a call in D.C. at 571-214-1013, and talk to him about what AHGA is doing, the kinds of things they could do with more input and support from consumers and the industry, and about how you can help.
If you want to propose a different method of uniting, let’s all hear it. Otherwise, tell me how your conversations go with Bruce!
– katherine ellie
Tags: fsbo, real estate, realestate, home, homes, investing, for sale by owner
September 21st, 2005 at 11:14 am
Great post. We agree completely. The free market will prevail!
Please visit http:www.uscondex.com . We are developing a national listing platform for brokers buying and selling Condominiums. Our next version of the US Condo Exchange will be targeted to bringing together all the participants in the market in a holistic open marketplace.
All the best,
jh
September 25th, 2005 at 6:19 pm
Great post Katherine. I couldn’t agree more.
Discount brokers must embrace FSBO resources. Separately, discount brokerages and FSBO resources will not be able the threaten the strong hold that the National Association of Realtors holds on the residential real estate market. However, they are both building momentum. Together they can begin to make consumers rethink the process.
Mainstream consumers will always seek the path of least resistance. To some this may mean sticking a FSBO sign they purchased at Home Depot in their yard. Others will find the path of least resistance to be to list with a full commission realtor. Discount brokerages and FSBO resources can often seem confusing. There is always fear when it comes to the unknown. Fear is not easy to deal with. Thus, resistance.
Consumers fear that they will not receive the counsel they need if they choose to use a discount broker. They do not understand the process of selling a home. Discount brokerages must supply an environment in which the consumer can educate themselves on the home selling process.
Many smaller discount brokers operate on such a budget that the their appearance to the consumers, their brand, does effectively communicate their mission. Realtors are the most hated profession. (Just last year they passed used car salesmen and attorneys to reach the top spot.) Discount brokerages must break the stigma attached to realtors. Most discount brokers do not fit this mold. I think the anger with realtors is caused by their sense of ‘entitlement’. They feel that they are entitled to 6% when a home sells. Most discount brokers simply want to be compensated justly for the service that they provide.
FSBO resources (websites, magazines, etc.) lack the personal touch that consumers need. The sale of their home is the biggest transaction of the consumer’s life. Shouldn’t they have someone there to answer their questions? These companies need to integrate a personal touch into their technology.
I realize web savvy consumers generally do not want to pick up the phone to talk to someone. That’s not my objective when I say ‘personal touch’. These resources must be local. Local is personal.
I am currently in Mansfield, OH. There are approximately 150 FSBO homes within a 20 mile radius of me. How many of these do you think I can find online? About 20. It’s sad. National sites are too big. They miss small markets like this one (150,000).
But how can an online FSBO listing overcome the overhead created by local offices and personnel? The answer is two fold. First, they must control their growth. I know, it’s tough to resist growth. Every online entrepreneur wants to ‘take over the world’. The first technology boom and subsequent bust is testament to this. The first boom was created by the spawn of new industry that technology allowed. These companies grew fast, they grew national/global, then they fell. They had no substance. They had no personal touch. They had no local presence.
The next boom in technology will be lead by companies that put a high personal touch on their technology that they integrate into existing industry.
Technology will take hold on the real estate industry. It’s just taking a little more time. Much like Wall St., the travel industry, and the insurance industry, real estate will change.
This is where the U.S. Dept. of Justice’s Anti-Trust Division comes in to the picture. They realize that the industry has been slow to embrace technologies that benefit the consumer like the afore mentioned industries.
They are moving forward with their investigations now for good reason. With a housing recession looming, eliminating the 6% ‘entitlement’ would soften the blow to consumers. If more consumers used alternative services, they would keep more equity in their pockets. This would allow them to spend more on their next home, put more gas in their car, spend more money at WalMart… you see where I’m going.
The DOJ’s current investigation focuses on opening up the flow of data. It is not in the consumer’s best interest for a realtor to keep listing information private in hopes of making 6% instead of 3%.
This ruling will allow all real estate web sites to show the same listings.
Who will stand out? Who will find a way to provide value to the customers?
Those who provide touch. Touch can come in many forms; local offices, education, proper follow up, etc.
How about a site that integrates all of the FSBO’s in a market plus all of the MLS listings? Since all MLS listing web sites will hold the same information, wouldn’t it be advantageous for a company to have 600 listings when every other site only has 450?
Enter LISTFREE. LISTFREE integrates FSBO resources with discount brokerage services.
Consumers can choose to list their home For Sale By Owner and pay absolutely nothing. No contracts, no commissions, no fees. They receive a web page for their home, a 24″x36″ yard sign, digital photography, weekly web traffic reports, a comparative market analysis, and, of course, a real person to talk to whenever they have questions.
Consumers can also choose to use LISTFREE+. This provides all of the services that the free package includes, plus MLS listing, contract preparation, negotiating service, offer review, and more. A $2,000 flat fee is paid at closing for this package.
LISTFREE only operates where there are local representatives to assist customers. This provides the ability to capture a majority of available FSBO listings. Since the service free, very rarely do consumers choose not to use LISTFREE if they are approached by a representative. This comprehensive FSBO list provides tremendous value to buyers.
In test markets LISTFREE was able to establish as much as a 30% market share of listings. This provided a whole new outlet for buyers to access listings.
In the near future LISTFREE will integrate this ability to provide FSBO’s to buyers with the liberated MLS database. It will be the most comprehensive resource for finding a home.
The biggest obstacle that LISTFREE has had to overcome is finding people to run the system. It’s difficult to find brokers that have let go of their sense of entitlement.
If you share the ideals expressed on this blog, please contact me