LAS VEGAS -- What is Web 2.0 and what does it have to do with real estate? How do real estate brokers make sense of new applications while dealing with changing market conditions? Many today are still struggling with these questions.
Sherry Chris, CEO of Better Homes & Gardens Real Estate, the latest brand to join the Realogy real estate empire, gave some sage advice this morning to brokers interested in how to navigate the fast-changing world of real estate and the increasingly complicated and crowded world of Web 2.0. With 70 million blogs, 400 million social network accounts, and 400 million instant messaging users, the participatory world of Web 2.0 can't easily be ignored, she said.
Brokers should remember that technology is a business enhancement, and they should create a strong but simple technology strategy that's not overly complicated or full of layers, she said. Pay attention to what the research shows you about your consumers and be transparent in the way you provide information to them, she added.
What is Chris' formula for a 2.0 real estate company that's ready for the future? Know your customers, learn their habits, "rightsize" your company by cutting unnecessary expenses and overhead, spend as much effort on generating revenue as you do on cutting costs, and develop a strong yet simple technology strategy.
Brokerage companies most vulnerable to collapse in a tough market are those with high fixed costs, empty desks and unproductive agents, those lacking experience in shifting market conditions, those lacking supportive affiliations and those that are unable to make quick decisions, Chris said.
Chris identified brokerages that will benefit in changing times as those that have capital set aside for opportunities, know their competitors' vulnerabilities, are prepared for unforeseen influxes of agents, and have strong recruiting strategies in place.
Here's a tidbit from Sunday's San Francisco Chronicle on the benefits of sellers offering a higher commission for the sale of their home. It makes sense; money motivates in a work setting so it comes as no surprise that real estate agents would be more motivated to show a house offering a higher commission than one offering a lower or no commission.
However, is there a gray ethical area here for buyers agents? If the buyer rep gravitates toward homes with higher commission splits, is the buyer getting the best representation in his own interest? Some Inman News readers have said before that this very situation points to the need for buyers to pay their own agents separately.
Any predictions on where commissions and brokerage business models are headed as the downturn continues to shake out the loads of people who entered during boom years? Will more sellers motivate with cash or brave the new world of Internet offerings for less? Will brokerage models take on new shapes? Tell us what you're seeing.
"We are creating an alternative to the MLS because we think there needs to be a new model, and because we thought you should be able to list for free. We don't walk both sides of the fence. There are hybrids and discounters, but we are a fresh start. We wiped the slate clean and started a 2nd national database - only this time it's free and intended for the by-owner community."
That's from the "About Us" page of a new online service called Choice A, which as you might have guessed is taking aim at the real estate industry, hoping to circumvent the MLS and give consumers the option to buy and sell real estate without paying broker commission fees.
True, consumers deserve choice. But to declare this is something new shows a lack of research into the current market. There are dozens of national for-sale-by-owner Web sites out there, including ForSaleByOwner.com, Owners.com, ByOwner.com, and at least one brokerage model has lived outside the MLS for decades (Assist2Sell).
Many of these FSBO sites were created in the late '90s, which means they haven't really lived through a downturn, similar to many real estate agents who until recently had only worked in booming housing markets.
What happens to the FSBO market during a downturn? Two possibilities are arguable: 1) it grows larger because more owners are getting stuck with less equity and in some cases it's not enough to even cover the costs of using an agent; and 2) it becomes moot in many areas where sellers are willing to pay top dollar to have someone working night and day to sell their home at the best price as fast as possible.
Unfortunately, there's not a lot of data to support either hypothesis.
With the way things are currently going, it wouldn't be surprising that many owners who bought with no money down and need to get out would need a commission-free alternative. But will it result in a deal fast enough to keep them from foreclosing?
Would love to hear what's happening in readers' markets. Drop us a comment here.
Foxtons, the discount real estate company that announced Sept. 26 it had terminated 350 of its 380 remaining workers, stated in a Web notice this week that it plans to seek out another real estate broker to take over its active listings. The company had about 4,400 active listings as of Sept. 26.
"As part or the liquidation of its assets, Foxtons is asking the bankruptcy court to authorize the assumption and assignment of your listing agreement with Foxtons to another broker. The identity of the proposed successor broker has not yet been determined. If the bankruptcy court grants this request, and if a successor broker makes a sufficient bid for Foxtons' listing agreements, then the listing agreement for the sale of your home would be assigned to another real estate broker. With the exception of the identity of the listing broker, all of the terms of your listing agreement with Foxtons would remain the same. We hope to have this assignment process completed within fifteen days. You will receive further information from the bankruptcy court concerning this proposal," the notice states.
Also, two former Foxtons employees have filed a lawsuit, seeking class-action status, alleging that the company violated federal law by failing to provide sufficient notice and benefits to the terminated workers. (See Inman News.)
The Wall Street Journal's June Fletcher reports that home buyers and sellers these days are asking real estate agents to perform a variety of tasks -- including some very menial ones -- that would have been out of the question during the boom years.
"Both buyers and sellers are demanding more from their brokers, and getting it," the article states, with some exceptions.
There are examples of agents asked to pick up doggy doo, remove goldfish from an indoor tank, pet-sit a pair of rats, scrub floors, vacuum flies, and retrieve a set of false teeth, among other requests. (Disclaimer: The agents complied with most -- but not all -- of the request listed here.)
Any stories you care to share about instances in which you went high above and way beyond your typical level of service to accommodate their clients?
In case you're wondering how to keep the income rolling in during a slow real estate market ...
Tammy Wing Yan Tsui, 31, a Realtor for Macdonald Realty Westmar in Richmond, British Columbia, and her husband were arrested by the Royal Canadian Mounted Police and charged with growing marijuana for sale. The charges relate to a seizure of 1,126 marijuana plants from one home and 584 plants from an apartment.
A criminologist at the University College of the Fraser Valley who studies so-called "grow-ops" in British Columbia, said it's not surprising to see Realtors involved with grow-ups, according to a news report by Canada's The Province newspaper. "I would say they would know where most of the best properties are that could hold the grow. If you are a Realtor who is sort of connected to growers, you would also be mindful of what would be the most suitable property that would be exposed to the least likelihood of detection. Some Realtors seem to have a disproportionate number of grows related to their sales records."
In September 2006, Inman News reported that a mortgage broker in British Columbia was sentenced to a year in jail "for submitting forged documents with loan applications, some of which were used to buy homes that were used in indoor marijuana-growing operations"
Also that month, Inman News reported that Kevin Parker, a real estate agent with Prudential California Realty who was a "top producer" in 2005 at the company's Antioch office, reportedly had acted as a buyer's agent for 16 homes in the Sacramento, Calif., area that were allegedly converted for use in marijuana-growing operations. Parker had told a Sacramento-area news station that he was "shocked" to hear about drug raids at the homes and the homes' use in growing marijuana.
Beau Betts, a real estate agent for John L. Scott Real Estate in Lynnwood, Was., wrote a blog post this week about a property originally listed by Seattle-based brokerage company Redfin that is now listed for sale by Deborah Arends, a Realtor for RE/MAX Northwest Realtors in Seattle.
Betts stated in the blog that he "started laughing" when he discovered this information in the multiple listing service -- Redfin and Arends had both been featured in a "60 Minutes" television program segment that focused on commission practices in the real estate industry. The program focused on Arends as an example of a traditional full-service agent and Redfin as an example of an innovative high-tech real estate company that offers a low-cost alternative to some other real estate companies.
The home originally was listed on the MLS with Redfin about four months ago and was re-listed with Arends this month, Betts said. Arends was not available for comment. Betts titled the blog post: "Redfin vs. Deborah Arends." Redfin CEO Glenn Kelman said it's important to protect client privacy in such matters, and Redfin has no beef with Arends. "The client had very particular needs. We actually endorse Deborah for this particular situation. We've never pretended that we're the best service for every type of client."
SAN FRANCISCO -- Blogging is an integral part of the business model for Luxury Realty Group, a Las Vegas brokerage company.
Bruce Hiatt, broker-owner for Luxury Realty Group, said during a Broker Internet Strategy Session at the Real Estate Connect San Francisco conference today, "To stay with us everybody has to be able to blog. They have to be good writers. They must blog at least once every two weeks. I review it myself to make sure it's informative."
He also estimates that 30 percent of the company's business is related to blogging.
Quick: What's more difficult than being a real estate agent during a housing downturn? The answer would have to be being the recruiter for a real estate brokerage company during a downturn.
Everyone wants to sell houses during a boom when buyers are a dime a dozen and commission checks overlap in frequency. But of course, nobody wants this job when inventory hits record highs and consumers are in "wait-and-see" mode.
One recruiter's answer is to go where the agents are today -- and that seems to be in the blogosphere.
I found this blog (Exit Realty: Exit Scout Looking for Top Talent) among the Real Estate Blog Directory at InmanWiki: It's from Shawn Berry, a scout for Exit Realty. So far, he's only got one entry so it's hard to say where he's going with it.
Recruiting was competitive even during boom days. I remember seeing ads from brokerages offering free vacations, cars and TVs to prospective agents as sign-on bonuses.
Most people expect the agent population to deflate over the next year or so. Since many brokerage models seem to revolve around the premise of agent volume (more agents = more commission splits for the broker = more revenue = more potential for growth), brokers could be in for a much worse ride than agents. With sales slowing and agent ranks fleeing, this model no longer works -- or at least on paper it looks ugly.
What happens to the broker model over the next few years? Will this downturn force a change in how brokerages operate? Will brokers be more gung-ho on instilling new efficiencies like going paperless or office-less? Will they pull more marketing spend out of print (traditionally expensive) and instead invest it online (generally cheaper)? Or, will small really be the new big when it comes to brokerage?
Police in Berkeley, Calif., are seeking a man who allegedly steals items from open houses and has also allegedly impersonated a police officer using a stolen badge. The badge reportedly belongs to a retired Santa Barbara, Calif., policeman.
Paul McClung, 30, "has been making the rounds visiting real estate open houses and realty offices in the city of Berkeley, as well as many other cities in the (San Francisco) Bay Area," according to a Berkeley Police Department announcement.
McClung, police alleged, typically is accompanied by a white woman in her 50s and drives a dark blue four-door late-model Jaguar with light-colored interior. The duo, who have been dubbed "Open House Bandits," allegedly claim to be a mother and son who are prospective home buyers seeking to purchase homes for cash.
Police alleged, "While the woman distracts the Realtor with conversation, (the man) prowls the home or office for purses and wallets to steal." McClung was reportedly spotted in open houses in Berkeley on June 16 and June 17.
Police encourage anyone who encounters McClung not to approach him, and instead to call 9-1-1 or (510) 981-5911. Anyone with information about McClung's whereabouts can call (510) 981-5737.
McClung, pictured here (click photo for larger image), is 5-foot-10 with a thin build, brown hair and blue eyes. The identity of the woman who allegedly has accompanied McClung has not been released.
