SAN FRANCISCO – Money draws attention, and that might be what’s motivating a recent round of federal actions relating to antitrust allegations in the real estate industry, said Alex Perriello, president and CEO for Cendant Real Estate Franchise Group, one of the largest real estate franchise operations in the nation.

“I keep thinking of the phrase, ‘Follow the money.’ What do they have to gain by attacking us? I believe that a lot of this is about the banks,” he said.

Perriello was referring to recent investigations into competitiveness in the real estate industry. He noted that U.S. Rep. Michael Oxley, R-Ohio, who in March requested an investigation of industry competition, is also chairman of the House Committee on Financial Services. That committee figures prominently in the debate over the entry of federally regulated banks into the real estate industry, which the National Association of Realtors has aggressively fought against for the past several years.

Perriello, who spoke Friday during a “Power Brokers” panel at the National Association of Realtors conference in San Francisco, just days earlier participated in a public workshop hosted by the U.S. Federal Trade Commission and U.S. Department of Justice that focused on issues of competition in the real estate industry.

Both federal agencies have stepped up activity related to the real estate industry this year. The Justice Department is suing the National Association of Realtors, alleging that its policy for online display and sharing of property listings is too restrictive and violates antitrust.

The Justice Department and Federal Trade Commission also have opposed several state measures backed by Realtor trade groups that sought requirements establishing a minimum-range of real estate services that all real estate brokers must provide consumers in real estate transactions. The Justice Department also has taken action in two states this year to reverse bans on rebates to real estate consumers.

“The federal regulators think this is a club that isn’t open to competition and they’re comparing us to the airline industry (before deregulation),” he said, noting that many major airlines are now in dire financial straits. “This is supposed to be what we’re replicating? It just doesn’t make sense.”

Newspaper editors and federal regulators shouldn’t decide the fate of the industry, he said. “(This) is not war but it’s definitely trouble. I think the solution is education and public relations.”

John Featherston, of RIS Media, a moderator for the panel, said that it took antitrust issues to put the real estate industry at the top of the Wall Street Journal headlines. “For years nothing you did in your lives as real estate professionals ever hit the front page of the Wall Street Journal,” he said. “The media coverage,” he said, is “alarming and should be alarming to you because there are forces who want to take your livelihood away and they believe they can do (your job) better.”

Panelists also addressed some other timely topics in the real estate industry, from agent retention and training to online advertising and lead generation.

“This business is going to change. It has changed a lot. Man, you change or you die in this industry,” said Brian Buffini of Buffini & Co. While there are few barriers to entry in the real estate market, it’s a lot of work to stay afloat, he said. “The actual real estate transaction is a trip on the Poseidon Adventure. You’ve got all of these different legal landmines.” Internet companies are welcome to compete, he said, but it’s difficult to translate all of the fineries of the industry to the online environment.

“If you want to come into real estate, come on in — the water’s warm,” he said.

Buffini said some consumers may favor low price over quality of service, comparing a cup of coffee at Dunkin’ Donuts to a cup of coffee at Starbucks. “There are people who are always going to buy Starbucks coffee and people who are always going to go to 7-11 or Dunkin’ Donuts,” he said.

“If I’m a surgeon I’m not concerned about the discount guy working out of his garage. The majority of business in this industry today and 100 years from today will be that people are looking for someone to trust … and they’re willing to pay to have somebody serve them at a high level.”

Though his company, John L. Scott Real Estate, is approaching the 75-year-old mark, panelist J. Lennox Scott said he doesn’t view his company as traditional. “We’re progressive and I’d rather use that (term) than traditional. We’re evolving.”

Scott said his company recognized that a significant share of its agents had their own personal assistants, and the company took this strategy a step further in hiring transaction coordinators to help agents carry a real estate transaction to closing.

Sherry Chris, chief operating officer at Prudential CA/NV/TX Realty, said she has seen a trend in the number of large companies that have partnered with lead-generation companies, which gather online leads and sell them to real estate agents and companies.

Large, well-established companies can compete with new, Internet-savvy real estate companies by participating in online lead-generation and other forms of online advertising, she said. “We become the new business model,” she said, rather than being threatened by new competition.

While some lead-generation companies will not stand the test of time, others “aren’t going anywhere. They know this part of this business,” she said.

Other panelists encouraged companies to set up their own lead-generation systems in-house.

Perriello said that the real estate industry allowed third-party lead-generation companies to establish a market niche.

“They realized that the market was moving toward the Internet and none of us as progressive real estate companies were in the online space. So they said, ‘Ah-hah, customers are moving online yet the industry isn’t moving online. That’s an opportunity.”

Cendant has worked to establish a system to generate in-house leads for its agents, he said, adding that consumers will typically choose an established and recognized brand name over a name that is unfamiliar. “You’ve got to put your name where they’re going,” which is on the Internet, he said.


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