• The house that roared

    It may look like your typical American home, but when this property in Trussville, Ala., changed hands for $187,000 in 2004, the stage was set for a legal battle that could have implications for every real estate brokerage's business model.

    The buyer, Vicki Busby, was charged a $149 "ABC fee" (administrative brokerage commission) on top of the $4,675 commission she paid her agent (the agent's split of the 5 percent commission on the sale -- see the HUD-1). Busby's agent didn't see any of the ABC fee -- it all went to the brokerage, RealtySouth, which is now facing a class action lawsuit alleging it violated RESPA by charging an unearned fee.

    Such fees are becoming increasingly common in some markets, and often they're even bigger. In a three-part series beginning today, Inman News looks at the legal, ethical and competitive issues involved in charging such fees.

    Defenders of the fees say brokerages have instituted them in order to cope with the rising cost of providing services and smaller commission splits with agents. As long as they're properly disclosed, they are both legal and ethical, they say.   

    But brokerages that decide to charge the fees seem to be running the risk not only of lawsuits by consumers, but of alienating their own agents, many of whom see them as "junk fees" (see Part I).

    The particulars of the Busby case will be discussed in Part II of the series tomorrow. For a taste of what's in store in Part III -- which details the backlash by consumers and agents -- check out this Q&A that RealtySouth prepared in 2003, in hopes of defusing the protests it expected from agents when it implemented an ABC fee. Questions addressed included:

    Wasn't Realty South "being greedy by imposing such a fee?" Would competitors use the fee against the company? What if a potential client decides to look for a company that doesn't charge the fee?  "Why do you keep putting these roadblocks in the way of of my doing business?"

    Agents continue to voice similar concerns today, as the fees become more common and larger.

    Incidentally, Busby's home is back on the market. It's listed for $169,900 -- less than it sold for in 2004 and 2001. Needless to say, the listing is with another brokerage.

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  • Tempted by 'temp-to-hire?'

    Got a real estate license and a car? Temp agency JWilliamsStaffing says homebuilders in California, Nevada and Arizona want you on a temp or "temp-to-hire" basis -- "no experience necessary."

    The company says it supplies "temporary sales assistants" to more than 350 homebuilders, "from the largest national builders to regional and local companies."

    Right now, they've got openings in Phoenix, Las Vegas, Reno, and a bunch of California markets -- Orange County, Inland Empire, Visalia, Imperial Valley, Marin, South San Francisco, Yuba City, Pittsburg, San Ramon, Bakersfield, Fairfield, and Daly City.

    This posting for an opening in scenic Marin suggests you might be interested if you are "tired of resale and loans" or have "ever wondered how to become a new home sales agent."

    Anybody who's taken this route have advice for those who are considering it?

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  • DOJ vs. NAR settles ...

    From U.S. Justice Department announcement today: "The Department of Justice announced today that it has reached a proposed settlement with the National Association of Realtors (NAR) that requires NAR to allow Internet-based residential real estate brokers to compete with traditional brokers. The Department said the settlement will enhance competition in the real estate brokerage industry, resulting in more choice, better service, and lower commission rates for consumers. NAR has agreed to be bound by a 10-year settlement to ensure that it continues to abide by the requirements of the agreement."

    From National Association of Realtors announcement today: "The National Association of Realtors has reached a favorable settlement with the U.S. Department of Justice, resolving litigation between them regarding how listings from multiple listing services are displayed on brokers' virtual office Web sites. The proposed final order, to be filed with the federal district court in Chicago today, validates NAR's longstanding Internet Data Exchange (IDX) policy and strengthens the rule governing participation in multiple listing services."

    See Inman News article.

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  • Recruiting the 'Yutes'

    As if recruiting real estate agents in a downturn weren't hard enough -- Lori Cox asks in an Inman Groups discussion how one goes about recruiting younger, Gen Y agents.

    I've affectionately called them "Yutes" here because I saw a rare opportunity to quote Joe Pesci from "My Cousin Vinny" in a real estate blog post, and because it starts with "Y" - get it?

    This discussion will likely become an ongoing thread for brokers. The National Association of Realtors released its latest member survey last week, which showed the typical Realtor is 52 years old, a world apart from the coveted Gen Y consumer who is somewhere in his or her mid-20s.

    Since much of Gen Y speaks in weird text and instant messaging speak (do you know what TTYL, BFF and FTW mean?), it will be pretty important that agents know what the heck they are talking about. The obvious connection and reach for brokerage longevity will be to bring on more Gen Y agents. But that's easier said than done.

    If you have some insight into recruiting "Yutes" into brokerage offices, cruise on over to the thread in the community section here.

    Inquiring minds want to know.

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  • Stormy seas or smooth sailing for real estate search?

    There are quite a few maritime references in a paper about the state of online real estate search, and even a reference to "a sea lion coming over the next wave" as a parallel to the industry standby "lion over the hill" metaphor for new competitors in the real estate arena.

    "Tales of an Industry Lost at Sea," prepared by three industry consultants including the principals at Larson/Sobotka consulting firm and Focus Forward Consulting, highlights the many unknowns about the value of a variety of online search sites (see Inman News article).

    For example, the paper poses, "No one has demonstrated the impact of national aggregator sites on broker site traffic, whether good or bad," "The true impact of public MLS sites remains unmeasured," and "Consumer expectations, preferences and behavior in the real estate search environment have not been studied."

    In March, another real estate consulting group put out a paper that focuses on a public-facing MLS search site maintained by the Houston Association of Realtors, though the report released this month suggests that more study is needed covering many market areas to get a better grasp on the value of various search sites to industry participants and consumers alike.

    The report suggests that Realtor trade groups, MLSs and brokers "still have not united behind a strategy regarding consumer real estate listing search on the Web," and that MLSs and associations should provide tools to make brokers the best source of real estate information for consumers.

    In realizing the vision put forth in this paper, MLSs and associations could "assist brokers in making the best use of new communication channels, such as blogs, widgets and user-generated content."

    So is the industry's approach to consumer-focused online property-search destined to be a total shipwreck, or are calmer seas in store?

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  • Agents trade gas guzzlers for 'Easy Rider'

    The Morning News of Northwest Arkansas reports that some agents are battling high gas prices with two wheels.

    "Obviously, I can't take clients house-hunting on the back of my bike, but I do a lot of scouting, previewing, flier-running and business related errands on a daily basis," said Tami Fagan, a Realtor in Fayetteville, Ark., who increasingly favors a motorcycle over her Mazda minivan in real estate work, the article states.

    "It is doable now that the weather is getting warmer, and though it doesn't do much for my hairdo, my pocketbook loves it."

    The Morning News article also noted that another agent in Springdale, Ark., parks his Land Rover in favor of a motorcycle, when possible, and another agent traded in a sport-utility vehicle for a Toyota Prius gas-electric hybrid.

    Inman's Jessica Swesey asked readers to weigh in on the rising cost of driving (see the blog post here), with one real estate professional reporting a $61 fill-up and another working in a multiple listing service area that spans 10,000 square miles.

    We've seen real estate companies that build a brand around a fleet of Mini Coopers and Volkswagen Beetles. Which real estate company will be the first to use a fleet of Harleys? Note: MotorcycleRealtor.com is already taken (it belongs to Paul Morand, a Florida Realtor). And then there's BikerAgents.com, a "Referral Network for RE/MAX Biker Agents."

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  • Take it from an agent -- sell by owner

    Foreclosure/investment guru "Dr. Dani" Babb claims real estate agents' commissions are hindering the recovery of housing markets.

    "Their added fees are creating inflated home prices, keeping sellers and buyers from reaching deals," Babb says.

    What can you expect if you hire an agent to help you buy or sell a home?

    "Wasted energy and time, which could be spent house hunting, financing or moving," the Newport Beach, Calif.-based "technologist, consultant, author and professor" says.

    The kicker is that Babb -- who earned her PhD online and teaches a course on finding foreclosed properties at UC Irvine Extension -- also happens to be a licensed real estate agent.

    "Bottom line? From an agent?" Babb asks. "Sell by owner. Putting your house on the MLS is as easy as going to housepad.com. Unless you have some overly complicated situation, don’t waste your time or money with agents."

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  • Soft selling "the Windermere"

    Windermere Real Estate has launched a recruiting site that, according to a press release, allows agents to read about "the Windermere’s state of mind .. the company’s organic growth and ... Windermere’s 'secret formula' for being the leading real estate brand in the West."

    It's a pretty slick site, that soft sells the company with pages like:

    --Getting to Know Us: "Windermere is not for everyone ... salespeople need not apply."

    --Our State of Mind: "...we never lose sight of what's important when it comes to this thing called real estate."

    --Our Truths: "We understand that a house is more than a box where people do their living."

    --Our History: The story starts in 1972, when John Jacobi "didn't set out to revolutionize the real estate industry."

    --Our Growth: "Choosing to be better not bigger, has meant that we have grown more slowly than other real estate companies" (to 350 offices and 9,000 agents in 10 states).

    --Our Secret Formula: "A great associate is the person who enjoys connecting with his or her customers and community."

    And that's just the introduction -- there are three more "chapters" in the tour.

    Windermere says it's also created an internal "recruiting and retention intranet site" that's accessible only to Windermere managers and owners, that provides resources for recruiting, evaluating and training agents.

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  • Inman Q&A with "Super Mike" Minervini

    Inman News tracked down Mike "Super Mike" Minervini, a broker-associate for RE/MAX Champions in Matawan, N.J., for this Q&A. E-mail us if you or someone you know would be a good candidate to feature in this recurring Q&A segment.

    Q: How many years have you worked in the real estate business, and how long ago did you begin marketing yourself as Super Mike?
    A: I have been in real estate since 1998. I began marketing myself as "Super Mike" since the beginning of 2007.

    Q: I read that a child's drawing (pictured here) served as inspiration for "Super Mike." How have your clients responded to your "super" branding? What sorts of feedback do you get?
    A: My clients, along with real estate agents, usually begin by laughing. This is the point. My goal is to make them laugh, but also to remember the brand. They all think it is unique.

    Q: What superpowers do you believe you bring to your clients? What superpower do you sometimes wish you possessed to assist your clients in real estate transactions?
    A: The superpowers that my clients usually mention: extreme accessibility, knowledge of the marketplace, patience and enthusiasm. I wish I were able to see into the future to have my clients avoid any pitfalls with home inspections.

    Q: Who or what is your nemesis in the real estate industry, and how do you confront or defeat this foe? What is your weakness?
    A: I don't have a nemesis, however my biggest weakness is the fact that I am always trying to keep up with and answer my cell phone.

    Q: Have you ever changed in a phone booth or worn a cape?
    A: Nope. No cape, just T-shirts that I give out to clients!

    Q: Describe your overall approach to marketing.
    A: My overall approach to marketing is mostly Internet-based and reliance on past clients, friends and family for referrals. I work my database to put buyers and sellers together. I sent out a monthly e-mail newsletter that focuses on the marketplace and featured listings.

    Q: Describe any niches or specialties that you have in the housing market.
    A: I am a multi-family specialist. I thoroughly understand the investment market and can effectively assist my clients with this market.

    Q: What is the most important lesson you have learned during your time in the industry that you can share with other agents?
    A: Keep in touch with all of your past clients! Offer guidance and advice to clients and ask for referrals!

    Q: What is the most important lesson that you can share with buyers and sellers?
    A: Listen to your agent for expectations to be set. Let your agent guide you and when you are unhappy, communicate this to your agent.

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  • 'Put this on my NAR card, please'

    From a National Association of Realtors brochure: a planned Web-based Realtors Federal Credit Union will offer "a full range of products and services for its members, including: deposit and financial services, personal and business savings (including tax accumulation accounts), personal and business checking, courtesy pay (overdraft protection), direct deposit, money market accounts, health savings accounts, CDs, IRAs, loans, personal unsecured, commission advance, open lines of credit, new & used vehicle loans/leases, new Realtor start-up (up to $50,000), home equity loans, first mortgage (to members only), business and investment property loans, Realtor-branded debit cards with rewards program, links to NAR products and Realtor benefits publications, business payroll."

    The brochure also notes, "No, it's not a bank." Credit unions have a select group of participants -- in this case Realtors, Realtor association staff and their families. (Read more here about the proposal.) This emphasized distinction from banks is to be expected, as NAR has aggressively lobbied to keep federally chartered banking entities from providing real estate brokerage services. If approved, the Realtors credit union would be a wholly independent member-owned legal entity.

    There are already examples of other local credit unions established to serve Realtors.

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