Fifteen years ago this summer, a young and brash New Jersey entrepreneur cornered me at the Real Estate Connect conference and said with memorable confidence, “You don’t know me, but next year at this time you will, because I am going to change the real estate industry.”
Indeed, though he fell short of revolutionizing the real estate industry, he did put a brief scare in the old guard. He started a controversial, tech-driven real estate discount firm, Your Home Direct (YHD), which started in New Jersey and later moved into New York City. With an unapologetic discount mantra, Glenn Cohen’s agents drove Mini Coopers, and his ads for lower commissions were plastered around the tri-state area, including on umbrellas in Manhattan over hot dog and newsstands. You could not miss the ads.
In its first full year, the company had listed nearly 2,700 homes and sold more than 1,400 listings. In one single week in March of 2001, the discount firm sold 71 homes and took in 91 listings. During that same month, the super savvy Cohen raised a $20 million investment from U.K. real estate firm Foxtons. With a pile of new investment capital and significant market traction, the discounter was poised to take over the real estate world. YHD offered innovative technology for the time, including online pictures, virtual tours and CRM tech.
The company did $40 million in revenue in 2004 but faltered after that as management changed and the original business model was adjusted.
In 2015, you can occasionally spot a tattered umbrella with the YHD ad. But that is all that is left of the short-lived real estate discounter. The firm filed for bankruptcy in 2007. Cohen now lives in Florida where he founded and runs a treatment center for alcoholics and drug addicts.
Today, a new crop of entrepreneurs are trying to “upend the real estate industry.” To keep our readers up to speed on this trend, we are conducting an exhaustive report on the latest crop of these broker hybrids.
“Nothing is different today,” said Cohen who had a sell-side model, and got his labor costs down to 30 percent, and centralized lots of tasks including showing. “In a downturn, you are screwed because you have all of this overhead.” He does not believe a buy-side model will work. If anything will possibly work, Cohen believes it will be a sell-side discount model.
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Speaking of ad wars …
Only 1 percent of homebuyers found their homes in a newspaper last year, but real estate agents still spend $1.5 billion on newspaper ads.
Last year, innovative Beverly Hills luxury superstar Mauricio Umansky bought 60 pages of print ads from the Los Angeles Times. “Print ads?” I asked Umansky. “Really?” He is big on technology but revels in not traveling with the (real estate) pack.
And in New York City, the advertising faceoff between two realty powerhouses — Douglas Elliman and Corcoran — is enriching both The New York Times and the New York Post. Not only are they spending lavishly on print and digital, but they are also putting together some rather creative ads focused on houses, agents and celebrities.
You be the judge — who is winning the hearts and minds of New Yorkers? (Maybe it’s digital listing service StreetEasy, which doesn’t run ads.)
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