Brian R Kelly

Tag: Trulia

  • Real Estate Brokerage Model Will Change To Accommodate Trust and Service

    Real Estate Brokerage Model Will Change To Accommodate Trust and Service
    Real Estate Brokerage Must Deliver Service and Trust
    Real estate brokerage model will change to accommodate trust and service. Serving home buyers and sellers with trustworthy service will be a generous business for years to come. How Realtors and brokerage firms get paid will most likely change. Change is being driven by the human need for honest communication and is being facilitated by technology. Here are four observations to make the point.

    One: Ebay and AirBnB. Models that are built on trust. They work because of stamps or stars of trust conveyed by stories of other people.

    Two: Google took inventory of all real property and Zillow Make Me Move is a system that is begging for trust. Ebay and AirBnB proved their models. I hear grown Realtors calling Zillow and Trulia the porn sites of real estate. What? Give me a break – what that tells me is that they are gaining traction and weak agents are becoming fearful. Do not even come back with poor data integrity, etc. (Granted…buyers miss some deals because Zillow updates run slower than MLS) The services still provide value.

    Three: Real estate brokerages can charge much less money if everything they did was compensated. 40-50% of all listings, energy , advertising is wasted on properties where the seller does not have sufficient motivation or ability to sell for the market demand. Sellers would sell “if” they get their price (to buy the next place or simply pay off the lender) Home shoppers not buyers: real estate agents may spend lots of time and gas showing houses to someone that does not “have to” buy a home. There is room for creative agreements with sellers and buyers and their brokerage firms if motivation and non-payment risks are reduced.

    Four: Social Media will push Brokerages to adapt “systems” because buyers and sellers will “connect” more frequently. (Pushing on the door of reducing the costs of finding the “Willing” party) Which will demand a service of transaction liability coordinator. Some title companies may niche and grow what some will see as a growing FSBO (For Sale By Owners) market. On the brokerage side, I can see a DIY brick and mortar model where the seller and buyer pay for a menu of services complementing Zillow. (Similar to local Ebay stores that handle the sale of an item for you for a fee). Agency law, fiduciary responsibility, and liability insurance will need to cover the scope of services rendered.

    [** Learning moment for agent compensation: The local Chattanooga MLS reports that there has been 5,144 homes sold year to date with total volume of $872,600,261. Multiply that number by 5% or 6% and you get roughly $34-$53 Million dollars of commissions. Divide that by 1,500 real estate agents and they average $35,000 each. Multiply $35,000 by 70% split that is nearly $25,000 a piece gross before gas, taxes, advertising , healthcare, etc. Agents are paid 1099 not W-2. You can see the model is pretty efficient, especially when a high percentage of activity is NEVER compensated. Imagine your boss walking in on payroll day and saying let’s roll the dice to see if you are worthy of being paid today!]

    The bottom line is that technology is changing how we serve people in real estate. I used my smart phone to check the level of a door jam, shine a light into a crawl space, check a HUD for closing, and text a message to another customer (All during one home showing). My buyers are calling me with information from Zillow, and Trulia on their phones. They are demanding a response. Please understand, that I am NOT predicting that smart phones will replace real estate agents. Nor, I am predicting a sharp reduction in the “cost” of sale of your home. Ebay does not seem to be making large dents in retail malls, and AirBnb has not toppled Marriott.

    Home buyers and sellers will pay for great service and trust. People will demand it. They may actually pay more than a “typical” commission to sort out all the “noise”. Tech is changing real estate; therefore, the real estate brokerage model will change to accommodate trust and service.

  • Who will bust the fat greedy real estate brokers 6% Commission

    Real Estate Agent Worth 6%?
    Real Estate Agent Worth 6%?
    Who will bust the fat greedy real estate brokers 6% commission? The commission is not set by law. All commission is negotiable. Individual real estate firms set their rate and establish the rate they will share with a co-operating brokerage. Real estate agents compete daily with DIY or For-Sale-By-Owners (FSBOs). So, it does amuse me to read articles from people outside the “industry” who see unfairness in the charges. Tech savvy authors like Frederic Lardinois, who wrote a thoughtful article pondering who will “disrupt” the real estate industry? He points to the travel industry, and taxi cabs as changed models. Cindy Zetts, wrote an article in 2008 titled: The 6% commission: Is it the best way to pay agents? Both articles make great points and ask good questions. Here are a few observations from a second generation middle America Realtor.

    1. Sellers who are successful at selling pay for the other half of sellers who abuse the “industry”. Roughly half of all listings ever sell. The sellers who never sell costs agents and brokers time and money. Cindy Zetts correctly identifies the seller as a greedy culprit. Of course the culprit could also be a mis-informed victim of a green and unknowledgeable agent. Bottom line: … The “industry” does not require an upfront contribution from a seller who is only “testing” the market.

    2. Current tax law allows real estate brokers to pay licensees via contract or 1099. Essentially, it costs brokers very little to “hire” real estate agents because they guarantee them no pay until closing. (cue: coffee is for closers , Glengarry Glen Ross movie scene). Companies like Redfin and Zip are challenging this model.

    3. Regardless of how you get paid, being successful in real estate is demanding because “time is of the essence”, and you are serving people evenings and weekends and then working during the day to get ready to work in the evenings and weekends. Even if the model is W2, this is called overtime or time and a half.

    4. Large cities, coastal areas with higher dollar housing do attract franchises (buying brokerage firms), and agents seeking greater commission dollars because of the percentage of sales price brings more dollars.

    5. Buyers and sellers will always be at a disadvantage because they have limited transaction experience. Agents simply “see” more homes, and negotiate many “deals” over time.

    6. Real estate is a personal referral, relationship business. We are in the business of trust. That is why eBay, and Airbnb are successful. They have established a model with “acceptable risks exposure” (Airbnb has insurance in case rock band goes ape on your home bedroom).

    7. Deferred maintenance, subjective cosmetic features, fixture updates (lighting, plumbing, trim), functional floor plan differences, landscaping…. the lists goes on and on of variables that affect value. Your latest guess of value from an app will never be able to monitor the “feeling” you get when you smell your mom’s apple pie in the kitchen of your dreams. Perhaps a mood ring app will be able to transfer feelings to an emotional response database. (hey,,,not a bad idea!)

    8. Making the real estate industry a more efficient lean machine is a wonderful challenge. Finding ways to serve people’s real estate problems has provided well for my family for the last 23 years.

    9. My observation is that landlords, and lenders have more power to “abuse” the consumer (buyer, seller, renter) than the broker in a real estate transaction. Banks own larger buildings, and have more attorneys. Real estate agents drive Lincoln Town Cars, bankers drive armored trucks!

  • How to Do an Open House as a Realtor or Seller

    Open House SignHow do you hold an Open House? If you are the owner or if you are a Realtor, some similar steps apply.

    1. Marketing and advertising: Gone are the days of calling the newspaper and placing one ad. The newspaper directory of Open Houses is still a decent value in Chattanooga, TN. If you are an owner then use Craigslist, Zillow and Trulia to your list. Realtor’s add http://www.Realtor.com to your list. All the online venues are no charge and can be very effective.

    2. Directional signs and balloons: Get people off the main roads to your open house. You may think that home purchasing is not an impulse buy, but it is emotional and I have had folks trade homes over open house visits. Make sure you are not blocking the view of traffic getting out on main roads. You do not want to be the sign that causes people to curse while turning into traffic.

    3. Preparing the property: Don’t forget to spruce up the place and make the walk from the drive to the front door as welcoming as possible.

    4. Involve the senses: This is retail. So best you can, involve good smells (cinnamon sticks in water on stove), or take a sheet of cookies to bake in the oven. Music, appropriate to the space and target audience. Make sure all the lights and accent lamps are on.

    5. Register: Tell your guests that the owner prefers that visitors sign in. You want to follow up with these folks in an appropriate way. Paper registers work fine and there are some iPad apps (one is Open Home Pro $14.99) out for real estate agents that even engage shoppers after the fact. A key question should be “how did you find out about the Open House event?”

    6. Security: Real estate agents must be aware of risks both personally and for the seller. Owners of property, please know that some predators and thieves are looking for jewelry, and medications in bathroom cabinets. A ploy may have you distracted with one member of the party while another goes to another un-watched room. Real estate agents may want to partner up for safety, and remember your local mortgage originator may want to help for their business as well. Your cell phone can be your friend. Apps such as Real Alert and Moby offer 911, recording features, alarm, location notification, and creeper recording info to help you.

    7. Brochures: Buyers like to have something in hand to help them remember what they have seen. Having a page with pictures help them to remember the property as well as you.

    8. Attitude: Open house events are for the convenience of home shoppers, not yours. So I prepare to work and bring my laptop and notecards prepared to get things done between visitors. When a guest comes in, time to bring your smile and charm. Think about your favorite restaurants and hotels and the greeting you receive. Time to dish out copious measures of warmth to these folks that have taken time out of their busy lives to see this home.

    9. Time: Open houses are for the seller and convenience of home buyers. Many open house shoppers will buy a house within 6 months of their visit. Follow up is a key. Jim Weichert has built a large real estate company in the New England area on measured activity. One huge activity is 4 hour open houses on Saturday and Sunday. One and two hour open houses allow some marketing punch, but to me are more for the real estate agent or seller who is interested more in their own free time. Why not schedule open houses during the week or evening?

    Open houses are a great way to engage with people and help to create an environment promoting “fear of loss” and activity, and helps the seller keep a spirit of welcome hospitality. A genuine welcoming spirit doing the discussed above activities is how to do an open house as a Realtor or a seller/owner.

  • Foosball, Zillow and Trulia are not of the devil

    Foosball, Trulia and  Zillow are not of the devil.  The post title is a play on the quote from Mama in the 1998 movie “The Waterboy”.  (Don’t worry if you did not catch the quote, it is one of Adam Sandler’s intellectual type flicks)  {Telling on my movie taste here:  if Adam Sandler or Jackie Chan are not in the film, it could be suspect}  Some real estate professionals may think organizations such as Trulia and Zillow are “bad for business.”  The real estate business as we know it is live and well and God bless Zillow and Trulia for joining the fray.   Here are five observations from this grizzled real estate broker.Zillow App

    1.  Home buyers and sellers love Zillow and Trulia:   Regardless of your opinion of data integrity, value accuracy, etc., there is no disputing that millions of buyers and sellers are using the apps.  They must have some type of value, otherwise people would not download them.  Judging from my experience it is not entertainment value.

    2.  Robots are robots:  Regardless of the power of third parties to influence our customers, they do not have the relationship with local people.  Licensed real estate agents do.  Hint to agents: focus on relationships.

    3.  Zillow and Trulia provide value:  Recent friend of mine used “Make Me Move” application with Zillow.  The buyer that responded had agent representation, so he called wanting me to represent him.  Zillow is not representing anyone regarding their “guess” to square footage, or their “Zestimate” of value.  My license is still on the line with my measuring tape in hand and on the “ground”.

    4.  Agents provide value:  We are paid well for our knowledge,  skill, and trust in relationship in context of fair dealing.  My most recent listing is 12 years old.  The owners purchased a new 2,400 square foot home for $300,000 in 2000.  Over the last decade the owners finished the entire second floor, which added space to a new total of 3,800 square feet.  There is no data that Zillow can pick up that “justifies” a price of $465,000 for the original 2,400 sqft home.  That is local product knowledge delivered by a licensed pro.

    5. Whip’em fair and square:  Groaning agents over competition bore me!  Trulia is a huge wordpress blog that strategically uses agents across the country to add value to it.  Stop!  Build your own blog and put a hurtin on Trulia and Zillow.  Reclaim your territory and bring the fight to your neighborhood.  One million Realtors or two million licensed real estate agents far out number the assets of Trulia and Zillow.

    Zillow and Trulia are not of the devil.  They are products of what current consumers are demanding in knowledge about real estate.  Start a blog, get a Twitter account and let’s serve our customers well!