Of Steve Jobs, the Music Business and Real Estate

Jose Perez of PCMS Consulting is on RISMedia today talking about Steve Jobs and the music industry.  What’s that got to do with us? you ask . . . quite a bit, I’d say.

Before we go there, however, let’s drop into Wall Street.  We often look at the history of the securities business in the last 15 years and draw parallels to real estate.  Remember?  Used to be, we had to contact a broker to trade a stock and we paid a percentage based commission for the privilege.  Stock trading was mysterious, complicated, beyond the grasp of most people and the commissions were, well, just the reasonable cost of entry.  Then along came Charles Schwab with $15 flat fee trades.  Consumers loved it and the industry took note.  The forward thinkers not only shifted to the new model, they enhanced it by putting powerful analytic information in the consumer’s hands on the Internet.

Sound like the real estate business?  You bet.

Perez is saying the same kind of change happened in the Music business.  Remember when we used to go to the music store to buy vinyl LP records, and then CDs?  That’s how music was distributed.  The whole industry was built around the idea of making and marketing these plastic objects called ‘records.’  But then, technology made it possible for people to take the records, digitize them and then share them (often illegally) over the Internet.  The industry reacted not by looking forward at how they might capitalize on this,  but by looking to the courts, suing the most prolific pirates.  Meanwhile, Steve Jobs – a music industry outsider – quietly invented the Ipod – nothing more than a solid state drive with a simple user interface – and the ITunes store for making digital music accessible to consumers.  For 99 cents you could buy a song . . . and, today, that’s what we do.

Just as in real estate, we had a music industry fighting to preserve the status quo . . . and losing; because you can never preserve the status quo.  It is impossible. In both cases we have industries struggling to keep information out of the consumer’s hands . . . and losing.

Want another example?  How about the Travel industry.  Not too many years  ago we used to call a travel agent to book a plane trip or a vacation.  They had all the information:  schedules and fares and so on; and they earned a nice commission for helping us navigate this mysterious process.  How many travel agents do you know today?  Really:  they have become largely extinct!  And how do we book travel today?  We go to the Internet where all the information is housed and make our decisions for ourselves.  Unfortunately, the pricing model for travel has not changed significantly . . . which makes me wonder:  whose getting that commission today?

And here we have real estate:  an industry that justified its percentage based commissions for decades largely by hoarding information.  Then along came Don Taylor (and by the way, he came along a good ten years before Charles Schwab had his epiphany).  He saw a way to do the real estate business not for a nonsensical percentage based commission, but for a Low Set Fee.  He saw all of this hoarding going on and decided that Information Without Obligation would be one of his new company’s core values.  The maturation of the Internet twenty years later put that value on steroids . . .

And how did the Industry react?  It ran in terror for the hills, dug foxholes, locked up the valuables (the information), put its fingers in its ears and refused to hear what consumers were saying.  Even today, with a real estate market undergoing complete upheaval, with change swooping down around us like a Tsunami, how many of the big national brands are talking about their pricing model?  Um . . . none.  Even today, when consumers can (with the click of a mouse) get all the information REALTORS used to hoard, how many are talking about how we can use that fact to streamline the process and make the experience better for the home buyers and sellers?  Um . . . none.

All I can say is:  get ready.  We’re about to witness a magnificent collision.  The vision of Don Taylor is about to come to full fruition as it collides with the reality of today’s consumer, the Internet and the upheaval in the marketplace.  Five years from now as brokers collect their Set Fee at closing, they’ll scratch their heads, look back and wonder:  ‘Did we ever really do business that old fashioned way?’

 

The ABC Tool

There is a new piece of agent tech out that intrigues me.  It’s call the ABC Tool and it is an online client and transaction management tool.  It puts the agent at the center of the myriad of details that must be coordinated and provides an efficient platform for agents and their clients to communicate and move together toward a successful closing.

The tool is in BETA testing right now and pricing has not been established.  However, you can go to the website and sign up for a 30 day free account.  I’ve asked a couple of Help-U-Sell brokers to take a look and tell me what they think and will report back, but if you’re curious, take a look:

www.TheAbcTool.com

I stumbled on this in an Inman News article and was struck by the comments by ABC’s founder, Michele Serro.  Here’s how she describes the homebuying experience:

  • Homebuyers range from wanting low- to high-touch experiences with their agents. Some homebuyers want complete autonomy, choosing to look at listings and homes by themselves; others want an agent to merely function as a sounding board; while yet others expect high-touch service from their agent, seeking accompaniment to showings and someone to run the deal.
  • The real estate agent is the sun around which all other planets, and parties, revolve. As a central figure in the homebuying scenario, the agent needs are currently underserved by the market as well — from generating leads, prequalifying homebuyers, managing documents, and managing the expectations of clients.
  • The process feels opaque, decentralized and out of control to most homebuyers. Homebuyers are seeking a single, centralized resource and repository to increase transparency around the process and communications between all stakeholders involved.
  • Homebuyers seek validation and support throughout the process. Many homebuyers turn to friends and family members to provide both administrative and emotional support throughout the process, or are advised by other trusted service providers in the process.
  • Document collection, management and sharing is a serious bottleneck. For all service providers involved in the buying or selling experience, document management is a critical, and often painful, part of the process. Missed milestones (often due to missed deadlines in document filing) can have lasting domino effects, ultimately impacting a homebuyer’s closing date.
  • The complexity of buying a home today is exponentially greater than it was a few years ago. The housing market crash has resulted in fewer leads for agents, increased rigor, due diligence and regulation around financials, and extended timelines for those looking to buy.

And here is how she describes the ABC Tool:

Our tools and features coordinate agents and homebuyers seamlessly together, recasting the agents as the indispensable experts they are and supporting them in operating efficiently in an increasingly inefficient business environment and broken system.

(ABC Tool) takes care of much of the administration, so agents can focus on sharing their expertise of a certain area and putting best practices to good use — rather than filling out paperwork.

We also coordinate all the other players, like attorneys, inspectors and even lenders, and clearly spell out their roles and responsibilities along the way.

At first glance, I think this might be something that will improve efficiency, minimize errors and missed items, and above all, build agent value in the transaction process.  Check it out and please, report back!

 

 

Six Reasons Why A Housing Shortage Could Be In Our Future or . . .

WHY I THINK THINGS ARE LOOKING UP!

1.  We’ve really built nothing new (or nothing much) for five years.  Inventories of new houses are way down and little is planned for the near future.

2.  Millions who navigated a short sale and went into rental housing will be re-entering the market.

3.  Many millions of  ‘fence-sitters’ will flood the market when a tipping point of confidence and activity occurs.

4.  Lenders are becoming increasingly rational, more predictable, more systematic.  They are slowly becoming workable again.

5.  Prices have stabilized in most markets and actually risen in some.  Cue the trumpets!  Buyers tend not to buy when prices are falling.  They tend to return to the market when prices begin to rise.

6.  Investor activity in the lower price ranges is fairly frantic, and has been for some time.  Multiple offers and bidding wars are common.  Investor’s always signal the bottom of the trough.  They come out first – consumers follow.

I think 2012 is going to be a whole lot better than 2011, and I believe 2013 could be a break-out year.

Get Certified!

At Help-U-Sell, we love Patricia Boyd.  Her consumer advocate approach to real estate finance is a perfect match for our own consumer oriented program and she’s already brought great value to our new relationship.  Patricia is the founder of Real Finance Solutions and has spent almost 30 years working with Realtors to increase their understanding of mortgage financing so that they can help consumers make good decisions.  Recently, the National Association of Realtors brought her ‘Certified Real Finance Advocate’ training program into Realtor University.

The training program consists of two video lessons delivered online and upon successful completion of an exam, results in a certification of the participant a cRFA.  What’s important though is the quality of information that is delivered in the program and the ongoing support and education cRFA designees receive.  They have their own website that keeps them updated about new programs and changes, regular coaching sessions and networking opportunities.

In this business, we are all about VALUE.  Value is what bring to real estate transactions.  It is our commodity.  The only reason any consumer would ever choose to do business with you (over someone else) is that they perceive the value you bring to their situation.  Knowledge of finance and the ability to use it to make transactions happen is an essential part of our value package.

Help-U-Sell folks:  you know what I’m talking about.  You’ve heard Jack Bailey work with buyers to create a Real Estate Plan and you have swelled with pride and admiration at how he brings his vast knowledge to the task of solving real problems. With the cRFA program, you can begin to develop that same kind of expertise, that same depth of value.

Patricia recently teamed up with TurnScor, a credit repair company that approaches the process a little differently.  They provide software to participating real estate brokers who then offer it to consumers for free.  Consumers work through the software on their own, repairing or improving their own credit scores.  This is a superior solution for real estate professionals because they’re saving their customers the often substantial fees most credit repair companies charge and they are not handing their customers off to an outsider who may or may not support the original relationship.

As a broker I think I’d make TurnScor a part of every initial buyer consultation.  Credit score will absolutely impact the quality of financing the buyer will be able to achieve, and even the buyer with a 700 FICO could benefit from raising it to, say, 740.   I think I’d also use it with sellers who will likely be buying something else.

Here’s a novel idea:  why not give TurnScor to everyone on your CI list for the Holidays?  It will certainly be perceived as valuable.

NOW, HERE’S THE COOL PART:

TurnScor usually costs $199 a month (with no contract) and a $99 setup fee.  For the month of December ONLY, new signups are at $149 a month and the $99 fee is waived.  PLUS!! Patricia will throw in her full two course cRFA certification program – which usually sells for $199 – FOR FREE.   If that’s not a bargain, I don’t know what is.  Here’s a link to Patricia’s flyer with all the details (be sure to go to the TurnScor link and watch the Demo):  Real Finance Solutions System

Here is a short video with Patricia talking about the power of the cRFA program:

How does the Prudential sale stack up?

The Canadian franchisor who operates the Real Living network is buying Prudential Real Estate and Relocation Services for $110 million.

When I read that the first thing that struck me was the price.  $110 million?  Really?  For 1,700 offices?  That’s less that $1,000 per franchise!

HFS bought Century 21 in ’96 for $200 million.

They bought Coldwel Banker the same year for $710 million.

Heck, in 2004, they bought Southebys’ 1oo offices for $110 million!

Everybody knows Pru never made a dime on the real estate side of their business and after 20+ years of operation, they have a brand that the consuming public still does not equate with real estate.  But $110 million?  Really?  What am I missing?

Accessibility Toolbar