UD: Realtors Don't Like the Real Deal's Honesty

Sorry, bad link.

www.urbandigs.com/2009/04/the_real_deal_tossed_for_not_s.html

The RE brokerage industry is starting to remind me of the music industry, the way it ignored the consumer's desire for downloads and a better price point on media, tried ridiculous things like corrupting CDs (damaging people's computers in the process), filed lawsuits against college kids, and basically did everything to avoid adapting to a changing market. Now it's a shadow of it's former self, the highest-profile player being a computer manufacturer.

RE firms are going to wake up in a couple of years and realize it's over. These games didn't work - at all. They are done, except for the few (not necessarily current firms, but individuals) who can adapt to the actual wants and needs of customers and the market.

THat is a bit rich. When the real estate market gets hot again...and at some point it will - Realtors will be in demand. You can't illegally file share condos and half acre houses. The analogy is beyond flawed.

Oh my lord.... brokers, who have SOLD THEMSELVES as the folks with "insider info"... don't actually want the honest info?

I guess "insider" means lying.

Then again, didn't we already need this?

> You can't illegally file share condos and half acre houses. The analogy is beyond flawed.

Your analogy is even worse than that.

Brokers don't build condos or own half-acre houses. They just facilitate the transaction. Much of that can be easily replaced by computers.

Record companies didn't make music, they distributed it.
Real estate brokers used to be the the ones who helped you sort through what is available to find what you want... the internet can absolutely do most of that.

The point is, the RE industry seems hell bent on obfuscation of facts, and in the end it will do much more harm to them than good. The general opinion of brokers is low enough to begin with, now when they need to prove their value they do things like this?

Actually, the same internet technology that enables bands to market and distribute their work enables sellers and (especially) buyers to research the market, educate themselves and search for property (or buyers, in the case of sellers). I've learned a couple of things from brokers in person (not like this site, where the few who reveal themselves can be very valuable), and found a couple to be pleasant people, but the vast majority knew less about the property I was visiting and my market niche then I did, and seemed like nothing more than an unnecessary obstacle.

By the time RE is 'hot' again (a long ways away that will have seen the flushing out of the brokerage industry), even more people will be comfortable buying without them (seems to be the majority of potential buyers here already) and likely selling as well. They need to prove their worth right now, and instead they're gaming inventory numbers and hiding from the press.

its true the internet and services such as this one are making the broker nothing more than a showroom model. only the good ones will survive this downturn and god knows what kind of small percentage of brokers qualify as good.

Death and good riddens to their 6% extortion fees

I wonder how tanning salons and Lexus-leasing dealers are faring in this market.

I have never minded paying a professional for a service, and that includes RE professionals who are honest, know what they're doing and have my best interests front and center. When I contract with a broker, I do it because I assume they know more than I do. Good professional brokers sitll make it their business to know the market, the area, and see lots of apartments and houses for themselves. If it begins to appear that they care more about themselves than they do about me, we part company.

What's bothering some of these brokers is the transparency resulting from changes in technology that they can't reverse. In the old days, buyers had to be content with 6-line ads in the NYT real estate section that said "RSD, classic 8, riv vu" and not much more. One didn't know the building, much less the apartment. You couldn't see a floor plan. There was no organized public exchange of information, just what you might pick up from friends or neighbors.

I'm sure brokers would like to return to that market model, because they controlled all information (and information is power), but it's not going to happen. The internet has made it impossible for brokers to have a monopoly on information. These are desperation tactics to try to regain that monopoly. That's why I think the analogy with the music industry is apt.

When brokers omit information such as building addreses and square footage in their listings in the internet age, they only alienate their potential customers. I am a potential buyer and I don't bother to look at listings if there's no street address or floor plan included.

Generalogoun, you said it.

Re: one aspect, street address, I was just going through a stack of 1995-1996 ads/floorplans from Corcoran. Maybe half had an address, and a few more I could spot by floorplan. Now the address is pretty much a given. The business does evolve, as do they all, but slowly. Far as I know, the only building brokers *can't* give a name/address for is River House. That's pretty silly, as the pictures/plans make it instantly recognizable.

I am sorry to hear that Brokers would attempt to do away with The Real Deal, which is probably the only real news source for real estate in this country. I know they don't cover the national real estate market, but I've worked in three other major markets and nothing comes close to it. I would questions the intelligence of those managers and executives who thought it would be a good strategy to hide The Real Deal from them.

It's not just the information about the place - in this day and age, any educated buyer would demand increasingly more be at their finger tips. The less filtered through the brokers hands the better (they have a bias to get you to buy).

But just as important is the history of sales. Brokers used to go on about issues of sales and desirability of a place. In a matter of minutes, you can use the web to get a history of the place, prices, etc. In my experience, often this is far more than the broker dares reveal, and at times strongly at odds (always in the direction of LESS desirability!).

We are in the middle of the Information Revolution, and RE, like everything else in business, will come out the other end of it totally different.

BTW, yesterday's Corcoran listings do NOT have the apartment number. Time for the pitchforks and torches.

akallabeth, we tend to focus on 2003-and-later prices because those're all that're easily accessible. If you look at prices charted, 2003 is quite near the top of the curve, and that may be skewing our thinking.

True 10022, I think the web will disintermediate realtors to some degree; however, people still use stockbrokers despite etrade and schwab, and mortgage brokers despite lending tree, and lawyers for very routine things despite nolo press, etc. So my point stands.

Corcoran's "newest listings" link leads to an error page. I think withholding apt numbers and making people ask for open houses and work to find addresses is a brilliant strategy in this mkt!

"True 10022, I think the web will disintermediate realtors to some degree; however, people still use stockbrokers despite etrade and schwab, and mortgage brokers despite lending tree, and lawyers for very routine things despite nolo press, etc. So my point stands."

Bad analogy, you're sort of proving the point.

Stockbrokers COMPLETELY changed their model because of discount brokerage. First off, they stopped trying to make money on the trades (they lost that game)... spreads went away, and so did trading commissions. So they've gone to fee models / retirement planning / bla bla. The brokerage industry is nothing like it used to be.

The money has moved to asset management (though that will change, too).

And your point doesn't really stand...

"When the real estate market gets hot again...and at some point it will - Realtors will be in demand"

Stockbrokers never did quite get hot again. And they're certainly nothing like they used to be. Stockbrokers in name only. Hell, they don't even call themselves that anymore!

"mortgage brokers despite lending tree"

Uh, you haven't seen what happened to mortgage brokers?

Who says realtors won't change their model like stockbrokers? And their were more stockbrokers (and FPs) in 2007 than their were in 1997, by a lot. And average pay was higher. As for mortgage brokers - that is cyclical, obviously. I could add to the above list. Banks have MORE tellers and longer window hours now than ten years ago despite online banking and ATMs. And those transactions are FAR simpler than a real estate transaction. Of course technology has completely disindermediated many jobs, but I think real estate is far too hands on, and most people do not have the time or frankly education/intelligence, to do-it-themselves.

I guess you hate brokers a lot and can't see that. I clearly dislike them if you read the majority of my posts, but I can think of far too many jobs that have not gone away despite the web that I can easily see why people would still use a realtor to buy or sell or rent property.

www.pandora.com

Wish there was a site like this for RE.

ny10022...."Stockbrokers never did quite get hot again. And they're certainly nothing like they used to be."

You are clearly wrong....Retail brokerage is the most consistent low cost, high margin business on Wall Street. Both Citi Smith Barney's and Merrill's private client group were both profitable in 2008 when the rest of their businesses clearly were not. Somebody thinks brokers are worth something, see below...

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alWmE3Irti1A

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=av.LuBiBulnI

> Who says realtors won't change their model like stockbrokers?

That would disprove your point then... their original services would not be in demand, so they'd have to look for others to sell.

"And their were more stockbrokers (and FPs) in 2007 than their were in 1997, by a lot"

Your stats from where?

Fact is, there is BY FAR a bigger and growing percentage of stock buyers who do not use a live broker. Bigger than ever and not going down.

"Banks have MORE tellers and longer window hours now than ten years ago despite online banking and ATMs."

And significantly less so than 20 years ago... and, we were in a bubble there too.
Don't cherry pick your dates just because you are losing the argument!

There are fewer teller, and the number is falling dramatically today!

"Of course technology has completely disindermediated many jobs, but I think real estate is far too hands on, and most people do not have the time or frankly education/intelligence, to do-it-themselves."

Yeah, they said that about brokerage, too.

"Who says realtors won't change their model like stockbrokers?"

That's the whole point of this thread. They aren't changing their model. They're resorting to shady tricks to try and hold on to it as is. Most of us posting here expect that effort to fail, dismally.

But when did Iiiiii say that people would use realtors EXACTLy as they do now? I said people would still need realtors, and more so when the real estate market picks up again.

"I said people would still need realtors, and more so when the real estate market picks up again."

Again, you're missing the point. People already don't NEED realtors. Some prefer to use them, but many don't. As for some way that you're imagining they will one day reinvent themselves, at the moment all they seem to be doing is digging in their heels and proving that their lousy reputations are deserved.

Other than Noah, with his musings about a consultation-based model with an hourly rate (hell, I've informally counseled friends on NYC RE and they've suggested I charge people for the service), I haven't heard a single broker discuss a new direction for the industry to take. If you have examples of that, please share.

sadly, you need a realtor in order to get decent exposure when your selling. Selling FSBO is extremely difficult.

"But when did Iiiiii say that people would use realtors EXACTLy as they do now? I said people would still need realtors, and more so when the real estate market picks up again. "

Yes, and every piece of logic says otherwise.

You can keep repeating yourself, but it won't make it true.

Corcoran is still adding new listings without apartment numbers. What does this do to UrbanDigs widget accuracy? Are Corcoran's new listings not reflected? I have a new computer and haven't gotten a new copy of office yet, and e-mailing curbed requires outlook express, but I think someone should point them to this and the UD piece on the Real Deal. The more noise the better.

It might just be part of Realogy's new business plan to save the failing empire. They might be rebranding Corcoran and getting it ready for a merger with their other brokerage Citi-Habitats. It seems like Corcoran is adopting most of CH's strategies.

patient, that may be true, but it f's up the inventory numbers AND makes it much more difficult to track pricing history. i know i'm going on a bit, but i think there's a story here. this doesn't seem to be such a wise move, trending back toward obfuscation.

People who don't have time or the knowledge to buy or sell will always need realtors. People like YOU might not, but people like the rest of my family? No way.

For exaample, I don't ever use travel agents because I am whiz online. But co-workers of mine who know ALL the same travel sites but who just don't feel like spending there time looking for deals on Kayak use our in-house travel agent all the time. My sister is the same way - i tell her a million times what travel sites to go to, but she just thinks its easier to pay a few bucks and use a travel agent. So while technically the Internet might mean people don't need travel agents, people who chose NOT to spend hours on this site, trulia, etc, and who would rather do other things than advertise and show their own home when for sale will use an agent.

Hell, we have an iron and w/d in my apt and I STILL take clothes to the dry cleaner that could be laundered.

I have plenty of time to clean my own apt, but I chose to use a maid. Many people COULD wash thir own car but go to a carwash. I COULD walk to and from the grocery store but have them delivered. I could go on, but the idea is the same. There are countless services I have listted which can easily be do-it-yourself, but which peole CHOSE not to do themselves.

jason10006, you're actually making my point. Do you think travel agencies haven't been negatively impacted by Priceline, Expedia, etc.? Do you think that industry is as strong as it was before those sites existed? I agree that some people will still want to use brokers (more so on the sell side), but I compared RE brokerage to the music industry, which I said is a shadow of it's former self. I predict the same for RE.

Things can change and people do want to utilize brokerage services. I am approaching one year in business and it's been very successful. Yes mostly on the rental side, but with a few buy/sell side consults as well. The demand is there.

I am slowly getting ready to roll out more services and begin hiring brokers that are ready to work on this new model.
The first key is letting brokers work on a 90% split. following the fee schedule that we have outlined.

I challenge one person to give me one iota of information as to why anyone needs a big shop to buy or sell property. 98% of the time a broker is involved on the buy and sell side of a deal. We know where to look for apartments that are for sale, they are all in the same place!

Take away the pork of running a major retail brokerage operation, utilize technology that is in use everyday and you can drastically reduce the cost of doing business. You either get it or you don't. Most people in the RE biz are thick headed, uncreative types. Run a virtual office, let brokers do their thing. These are indeed exciting times, and like the music industry(which I was a part of), travel and stock brokerage industry, they will change...it's just a matter of time.

I am not looking to overtake Elliman, but in my own small way I have been highly successful. Web 2.0.

This is just a start:

http://www.theburkhardtgroup.com/about.php

The real estate broker model has to adapt like everything else has with the introduction of the internet. With so much information available online and given that a house is your most important investment, many people even if they hire brokers are doing a lot of their own homework so perhaps next time they buy/sell, they might consider to do it themselves. The straightline 5-6% commission structure must change. Everyone knows that this model does not facilitate brokers to sell your house at the best price since the difference to them for selling your house at let's say 500k vs 450k is only 3k difference in commission which of course only about $500 goes directly to the selling agent. This gives them no incentive. The only incentive is to sell it fast to go on to the next client. A new model must be put into place that will realign their interests with the homeowners. Until that happens, more and more sellers will start selling on their own. It does take effort to sell a home and I would gladly pay someone else to do it just like I pay for a maid but when I feel I am getting ripped off and when they don't have my best interest in mind then the relationship doesn't work well.

"jason10006, you're actually making my point. "

Well, actually if you scroll all the way up you will see that we were never THAT far apart.

"You can't illegally file share condos and half acre houses. The analogy is beyond flawed."

No, it's actually a great anology: Realtors aren't selling title to condos or half acre houses; they don't own 'em, the sellers do. All realtors are selling is INFORMATION as to which houses/condos are for sale, from whom, at which price points. The whole business plan is nothing more than a name give-up business. And that information can, easily, be shared over the internet.

The music companies wanted to protect their $24.99 CD's. Realtors DESPERATELY want to protect their precious 6% commission. The genie is out of the bottle; with today's technology their services are worth $5-10K a transaction, at most -- not 6% of todays high housing prices.

"For exaample, I don't ever use travel agents because I am whiz online. But co-workers of mine who know ALL the same travel sites but who just don't feel like spending there time looking for deals on Kayak use our in-house travel agent all the time. My sister is the same way - i tell her a million times what travel sites to go to, but she just thinks its easier to pay a few bucks and use a travel agent. So while technically the Internet might mean people don't need travel agents, people who chose NOT to spend hours on this site, trulia, etc, and who would rather do other things than advertise and show their own home when for sale will use an agent."

Yes, and travel agents are continuing to die off...

Some folks might prefer the "old way", but those people will die eventually.

Some folks don't use the internet, and never will. They'll die, too.