60 Minutes put our knickers in a twist. So what?
May 15, 2007
I did not catch the 60 Minutes real estate saga Sunday night as I had my favorite "mother" out on a date. If I get time maybe I'll catch up. It really doesn't matter. There is enough buzz around the Internet for me to pick up on the general gist of the investigative analysis. Redfin got lots of time, NAR did not. The simple fact of the matter is that consumers are being educated by the big world wide web. Consumers are becoming more demanding and want to know what they are paying for in the real estate transaction. The current system is a bit less than transparent. There are a ton of full service brokers but, in reality, full service is what an agent gives or does not give his or her client.New players in the industry are "experimenting" with different business models. Some will die a natural death, others will survive. Most of these challenge the status-quo of the real estate industry. In my mind, that is not a bad thing. Serious challenges in any industry will have one of three possible outcomes for the incumbent: 1) the incumbent chooses to change for the better and survives, 2) the incumbent digs their heels in, is defensive, ultimately made to look foolish and dies or, 3) all live to coexist and thrive based on the articulation a value proposition that consumers can understand and choose between. This may be somewhat of an over simplification but true. Happens all the time.
So, here are my conclusions:
- 60 Minutes didn't want to
herehear from NAR for whatever reason. Maybe they already heard too much. Maybe it was a David and the Goliath thing. - Where do we go in the media to get fair and balanced?
- The "sacrosanct 6% commission" gets more viewers and higher ratings than "we found out NAR is doing a good job."
- NAR should stop whining and encourage their members to embrace change instead of fighting it.
- Regardless of any good intention, minimum service laws look like protectionism.
- Virginia addressed minimum (or limited) service by requiring a disclosure of exactly what services are being provided and what services are not when it comes to limited service. The consumer gets to choose and lives with the consequence, good or bad. Seems logical to me.
- New business models will be embraced by consumers until consumers get screwed. Those new businesses that don't screw consumers (as in really do a good job at whatever fee) will prosper and set a new benchmark for the industry. Assuming, of course, the new business model can actually turn a profit.
- Consumers sometimes forget the law of Cheaper, Better, Faster, The law says you can't have all three simultaneously (example: McDonalds).
- I got an email from NAR asking me to send a note to CBS to complain about the unfairness. Uhhh, what's the point?.
- Consumers aren't dumb, they just look that way when we are losing their business.
- We are looking pretty dumb too (well, I can't speak for all of us).
- I have talked about transparency in the transaction ever since I started Blogging. Why don't we take this up as our "battle cry" and then practice it? Then, maybe we would look a bit smarter.
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Cave, I couldn't agree more! That's exactly what our fee for service business model is all about.
It is all about choice for consumers. Some consumers want full service, others want discount basic service. With more competition and choice the consumer wins in the end.
Cave Spot
http://www.cavespot.com
Toronto Real Estate Forum
Alby the Utopian: You forgot to mention Amazon with the "Others also bought..." You will be able to by multiple homes of your choosing. Oh, and you also forgot about repealing all the rules and regulations protecting buyers so no one ever gets sued when we find out the purchased home was a lemon...and on and on.
I'm not feeling threatened yet in the "not so perfect world."
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made the following comment on May 15, 2007 1:58 PM
What would the real estate market be like, if every seller with a property to sell, could fill out a few blanks in one central real estate transaction system, and place their home on the market, for sale, with a point and click? Then every buyer out there would know, through whatever advertising means, that all property for sale was listed at this central real estate market place?
The need for agents and commissions would be "nil". A day in the life of a buyer might be, them searching online for a property that catches their eye. They would email the owners for a private showing or come to a posted open house. If the buyer is satisfied, both buyer and seller agree to use a closing firm who processes all the paperwork. A date and time is set for closing, both parties sign, and the deal is done. Or maybe the whole deal is done online, the papers are sent via pdf to both parties. Each sign and email them back. Deal done.
Who needs a yard sign, home pictures in the local paper, and a commission breathing agent to point out the nice fireplace you installed? With the rise of instant communications and inter-networked communication tools, everything an agent does can be done online. You can see more pictures on a website of a property, than an agent could ever list in a local paper. Buyers can get direct access to Sellers regarding questions about the property, whereas using an agent as a middleman is time consuming an innefficient. This really is a time of transition.
In the perfect world of tomorrow, there are no agents. Property is bought and sold online including all paperwork transactions directly between the buyer and seller with minor fees being collected (ie: eBay). And like I mentioned before, if buyers want to visit and touch the property, they would just make arrangements with the seller.
Honestly, its not a question of "If", but "When". The means exist to make this happen tomorrow. Its just a question of how long of a transition will it take to go from Traditional to Modern was of selling real estate.
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