I wrote this this morning, and it’s been bugging me all day:
Here’s a thought: The $99 divorce. It only works where the split is unclouded by children or property. But imagine a $999 FSBO package: The usual MLS-only marketing package with a buy-back guarantee for the buyer. Quoting me:
“From the buyer’s point of view, the buyer’s agent’s compensation can be thought of as a risk premium. An important benefit the agent brings to the transaction is a reduction in the risks the buyer takes on in purchasing a home. There is certainly a value to this, but that value cannot possibly be infinite — nor even terribly elastic.”
If, by using something akin to insurance, a Realty.bot can drive the risk of limited service buyer’s agency to something approaching zero — then what?
This is a business model. I’m not saying anyone will — or should — do it, but it is a workable answer to marketing objections.
Consider: Nu-Way Realty is a low-ball lister in the Phoenix market. They’re very big on promoting their listings — big newspaper ads and flyers distributed door-to-door. Taking account that MLS search is ubiquitous by now, they have that as promotion of their listings, too.
Do you see why this matters? Buyer’s agents don’t control what houses their buyers know about. As long as buyers can log onto an IDX system, they can say, “What about this one?”
A brokerage like Nu-Way could leverage all of this.
First, let’s do a limited-service listing — but with stipulations. Part of the listing contract is a full inspection of the property, with the seller agreeing to correct any identified defects prior to the MLS listing.
The listing brokerage now has a listed home in which it has a high degree of confidence. This is why it can offer a Money Back Guarantee — because it will never be in a position where it will have to honor it.
The MLS listing carries a $1 co-broke, which is the ultimate joke on all the NAR posturing about price-fixing. Probably, most buyer’s agents won’t show these homes voluntarily, but there is nothing to prevent buyers from discovering them on their own.
And: The Money Back Guarantee eliminates much of the value of paying a buyer’s agent a risk premium.
If buyers want an agent, they can write the compensation into the contract — subject to the seller’s and the lender’s approval.
What we’ve really done is turn real estate into a sort of car dealership. We’re fond of thinking of opening things up so that all homes — listed, FSBO and newly built — are available to all buyers in a one-size-fits-all search engine. So far, at least, there is relatively little we buy that way. Instead, we buy from the inherently limited available inventory of the vendor we choose to do business with.
That would probably end up being the case in a brokerage like this: Buyers would “search the lot,” as it were, but would select from among that brokerage’s listed homes. Roll in a sub-prime lender — just like a car dealer — and it’s a slam dunk.
Another way of thinking of this: A resale brokerage that operates like a new-home builder.
I’m not arguing for this — and I’m certainly not interested in doing it. But this seems to me to be a workable business model that would completely disintermediate buyer’s agents — all without any gee-whiz technology…
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