In the spirit of taking action to reverse the negative stigma around the industry, there has been a spike in conversation recently around the cause of ‘Raising The Bar’ (#RTB) by real estate professionals, including an REBarcamp session before Inman Connect NYC, Twitter-speak, blog posts, podcasts and blog talk radio shows.

With lots of conversation comes lots of ideas, including:

• Raise the barrier to entry (Keep out the stupid, poor agents)
• Kill the barrier to entry (Increase competition)
• Increase continuing education requirements and ethics standards (Create smarter, more ethical agents)
• Only hire honest, empathetic, generally good people who have a strong work ethic (Make the consumer LIKE me into doing business)
• Acquire pretty technologies and engage in Social Media best practices (Apply the Laws of Attraction)

All of these ideas focus on the top of the industry funnel – marketing, messaging, advertising, massaging, allure, the ‘easy to manipulate’ aspect of reputation management…they are too far removed from solving the real issues at hand.

The common thread I’ve heard is that the industry must increase its ‘Professionalism.”

My Notorious partner posed ‘The Single Question to Rule Them All‘, all Lord of The Rings style:

“Is professionalism a competitive advantage in real estate or not?”

In short, Rob says if this is the case, the riff-raff will eventually be driven out.  If it isn’t the whole RTB exercise is anti-competitive in nature and generally deceptive.

Robs logic is sound, but there is very little context to the question, so it’s just that…logically correct with alot of ambiguous conjecture and talking heads spewing esoteric, self-serving opinion around the definition of professionalism and how to raise That.

Rewind— REBarCamp San Francisco 2009.  Sitting in a group of well respected real estate ‘thinkers’, Rob Hahn asks:  ’What is the next big thing in real estate?’  With my head focused on the cornucopia of tech related products and services, I didn’t have an answer and admitted to such.

Today–- My answer is pulling the veil back around performance related metrics relative to market baselines for practicing real estate agents.  Establish a Bar, establish accountability, demand greater transparency and Raise The Bar along the way.

So, I propose ‘The Single Question To Rule Them All’ then becomes:

‘Is Performance a competitive advantage in real estate or not?’

Rob’s logic applies to this question and fits like a rubber glove.

If Performance is a competitive advantage, the riff-raff will eventually be driven out.  If its not, then the whole RTB exercise is anti-competitive in nature and generally deceptive.

Performance is a competitive advantage.  I trust I don’t have to write 400 words to explain why.

I’m not sure that the greater industry is ready to RTB…it can be done in pretty straight forward fashion but there are substantial ramifications.

Lets begin…

Social Media Can Help Raise The Bar.

Generally speaking, Social Media provides a two-way conversation medium that ideally compels some level of engagement between two parties.  There is an emotional connection that Social Media taps into for people and it works (very well) when implemented thoughtfully and engaged consistently…a good strategy here will drive potential clients.

Social Media should not be postured as a chronic popularity contest where thou with the most ‘friends’ wins.  The term friend has a diminished meaning in the world of  5000 Twitter and FaceBook ‘followers’. Being named to ‘influential’ lists and the such amounts to little more than superficial ‘pat on the back’ contests amongst inter-industry professionals and is of little value to a consumer…I digress.

Where Social Media really stands to help RTB is rooted in the caveat of the medium:   If you don’t follow up your dynamic online persona with performance driven results, consumers are likely to wield Social Media against you…As stated, its a two way street and bad news travels fast.

Set The Bar With Transparent Access to Relative Performance Metrics.

Open the MLS data vaults to establish a baseline (or bar) around local market performance metrics such as:

• What is the average Days on Market for a $Xk to $Xk house in my market?
• What is the average List to Sales Price difference for similar homes in my market?
• How many sides did an average agent close in the last 6 mos, 12 mos, 24 mos?
• What is the average # times a listing re-priced or re-listed in a given market?
• What is the average final Sales to List price ratio?
• What is the average commission charged on a property within my search criteria?
• How do REO’s and Foreclosures affect a property in a given area?

Once I have a flavor for how my market is performing on average and a Bar has been set, the second and more important question is:

Which Agents/Offices/Brokerages/Franchises Outperform These Averages and by How Much?

You can’t argue with real, empirical data.  You can’t fake the grades on your bell curved report card.

Allowing consumers to evaluate which real estate professionals outperform local averages (Baselines or Bars) that are important to the specific consumer would go a long way toward increasing the likelihood of a positive experience, as well as aid in improving consumer perceptions and expectations.

In addition, consumer access to performance based information (currently locked under MLS data use Rules and Regulations) would:

• Drive out the under-performers or force them to do what it takes to raise themselves above the Bar
• Spur innovation in the sector of commission reform <–A big deal to consumers
• Increase good competition

I can hear the arguments:

‘Just because Sally transacted more sides, doesn’t mean she’s a better agent.’    Very true.  Johnny could have sold 4 properties to Sally’s 20 over the past 12 months, but Johnny sold each one in far less time than the market average.

‘Billy took, on average, 30 more days to sell a property.’  Yes, but he did so at a List to Sales price that was well above market averages.

‘My consumer wouldn’t listen to me and insisted I list the price way above market value, thats why I had to reduce the price 3x and it sat on the market for 462 days.’   Well, you should have passed on taking that consumer as a client.

There are many such what if scenarios.  Performance based data isn’t of much value when analyzed in a vacuum.  It becomes very valuable when compared and contrasted against market averages and considered in conjunction with a unique consumers wants and needs.  Throw in consumer ratings, other forms of feedback on some level and now you’re serving steak instead of sizzle.

Evolve The Traditional Real Estate Commission Model

I know, its not supposed to exist, ‘there is no set commission model’- humor me.

The fundamental issue in the ongoing consumer vs. real estate professional beef is the gross misalignment of performance for consideration.  Consumers generally have a negative opinion of real estate professionals because they believe they overpaid for services compared to the value received.  This is likely because the agent they ended up retaining had poor performance metrics or their positive metrics didn’t align with the consumers wants/needs.

Access to such transparent performance metrics relative to a baseline would blow a hole in the bow of the traditional real estate commission model. Underperforming, inexperienced agents could no longer ride the coat tails of top performing seasoned agents.  Top performing agents could set new pricing models, justify a retainer for services, charge for services using a ‘cost plus’ model…they could make MORE money instead of subsidizing Ron the part time Realtor who botched his last three listings, yet scored a listing that would have otherwise been yours because his college friend Bill said something about needing a real estate professional on FaceBook.

I can’t think of another industry that pays entry level employees on the same scale as long standing executives.  Consumer confidence and perception could rise substantially if they knew who they were paying for up front rather than after the transaction closed, didn’t or worse.

If you’ve followed along to this point I’m sure many are screaming that something like this will never happen, because…:

MLS’s are funded by and thus beholden to the agents they serve.

If an MLS decided to adopt some crazy cavalier attitude and turn this performance based data consumer facing, many agents would likely get upset…read: violent rebellion amongst natives, loss of revenue, mass firings at Cowboy MLS.

Since MLS’s are generally for profit enterprises and the people that run them probably like the fact they have a job, this type of a mass public outing is a non-starter.

So, what about a version that displays all the pertinent individual performance metrics and how they rank against the given baseline/bar, but leaves the agents personal information anonymous?  The only time an agents personal information becomes available is when a consumer pays for the privilege.  Unlimited access to all agent profiles wouldn’t be prudent for obvious reasons…rather a set amount, say 5 profiles per subscription. Those below The Bar remain anonymous and left to think about how to raise their Bar.

In the alternative, Stan finds a real estate professional on Facebook, Blogsite, Zilow, Trulia, IDX, ActiveRain…pick your Social Media outlet.  They like the personality and now want to check how deep the beauty runs.  Dial up the agents performance related data and get a holistic view of who you might retain to handle the largest transaction of your life.  Think Carfax for real estate professionals.

Shame on the agent or broker that would threaten to pull out of an MLS for offering this anonymous data for public consumption, that would be like saying you want the industry to remain in the gallows of consumer perception, deceptive beasts of no prestige.  And if shame isn’t enough, I’m sure there are other incentives to keep everyone submitting their data…

In the ugly and very likely circumstance that agents and/or brokers still balk at the idea, make it opt-in only.  No personal information available unless you as an agent give the MLS the express right to do so.  Pay agents to opt-in, every time their personal profile is requested.  Share the wealth a little.

The big question is always:  Where is the money?  I’d be willing to bet that (ALOT of) consumers would pay for access to such information presented in an intuitive UI-sortable and searchable by what metrics are important to their situation (much like Diverse Solutions did).

This isn’t some pipe dream that would take millions of dollars in development or years to implement.  It could be done quickly and at relatively little expense.  In fact, the primary reason this data isn’t already available is due to simple economics and complex politics…there is alot of money in keeping the data under lock and key…economics rules politics, so where there’s a bigger dollar there is a way.

There are Agent ranking systems out there.  Most allow the agent control over what information is displayed and/or claimed…rendering the system and information skewed at best.  This type of agent rating system must have a very complete set of market data and be maintained by 3rd party providers that simply maintain its purity and integrity.

Diverse Solutions has created the closest product I’ve seen to a tangible, working model using MLS direct data.  Agent Scouting Report was the result of a 48-hour developer competition at the Inman Connect conference in San Francisco last summer.  In its current edition Agent Scouting Report doesn’t work because it shows every agents stats…effectively ostracizing those that happen to fall below the Bar.  I don’t think they’re far off, their product was well thought out given the limited time they had to develop it..a few turns of the dial and some thoughtful considerations in how the data is displayed (see above), and..?

As an agent or broker would you be adverse to this?  Why?  :)

The Broker/Franchise Perspective.

I own a brokerage or franchise and want to fill my office with agents who exceed certain performance metrics for certain property types in certain areas of town.  My brokerage is conducive for these types of agents to excel.  As a broker/owner, I would pay to know who these agents are.  This would be an immensely valuable tool in analyzing my own brokerage as well as my competition on key performance indicators.  I could derive all sorts of actionable data to use as a recruitment and retention tool.

So is everyone ready to Raise The Bar?

It depends on if those who talk the talk about Raising The Bar are indeed serious about doing so and walk the talk.  It will take open minded professionals from MLS directors, their boards as well as the brokers and agents they serve.  I’ve laid out some top level ideas on how economics could cut through the politics, there are more.

The upside for the industry is huge from customer service, commission model and perception standpoints.  It risks shaking the long standing economic model right down to its core, which is a good thing.  In the right hands this very well could and should be the next big thing in real estate.

Comments, opinions, thoughts, flames?

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Is The Real Estate Industry Really Ready To Raise The Bar?

Uh-oh.  This is kind of a big deal.

Lets reflect back for a minute…

Back in September 2008 the bottom fell out of the mortgage and housing industry, the pillar of our economy at the time, as the MBS market was more or less exposed as a fraud and subsequently deemed toxic rather than the AAA rated investments they were being pimped out as.   Former Wall Street stalwarts like Bear Stearns and Lehman Brothers were heavily invested in such securities and subsequently imploded almost overnight.  Banks, lenders and the credit (mortgages) they offered disappeared like a David Blaine magic trick- *poof*

Crisis ensues and the government steps in to cauterize the gaping wound, funding the market to the tune of some trillion or so dollars in lieu of risking a catastrophic ceasing of our (and the worlds) economic engines.

Fast forward to January 2010.

The trillion dollar capital infusion coupled with keeping the overnight funds rate at or near zero has kept interest rates low and market volatility in relative check.  Well this is about to change.

First, you can’t print a trillion new dollars and not expect inflation at some point on a relative level.  Apart from the inflation dynamic, the Fed has decided that its time to cease backstopping the MBS market, and as a direct result, the housing market…preferring to hand things back off to the private sector.

Wait a minute…What private sector??  Who has an appetite for MBS’s and more importantly at what yields?

You can bet as sure as the sun will rise in the east tomorrow that the private funds, banks, lenders and their managers who do play in this sandbox will buffer margins to mitigate perceived risk in such securities, which all but guarantees higher interest rates.

The remaining banks are well capitalized for the most part (compared to late 2008, early ‘09), though they are still very gun-shy to lend except under the most pristine personal credit and financial conditions.  Ask any mortgage originator about perpetually moving underwriting guidelines.

Pundits have warned of a ‘false bottom’ when it comes to the housing market for some time.   Feel the floor shaking yet?  As interest rates rise, housing affordability decreases subsequently exerting downward pressure on housing values…again.

What happens if the bottom does fall out?

I’m sure President Obama and his staff aren’t keen on sending the economy back into a tailspin.  Surely the Fed has thought through the potential ramifications of their pending actions.  They could simply step back in at anytime to shore up the market if things got too volatile, using Fannie Mae and Freddie Mac as the primary vehicles to do so…alas there are calls to abolish these GSE’s all together.

As stated, inflation has to be a big concern here too.  How does the Fed pull all the ‘new capital’ out of the market to avoid hyper-inflation in a way that doesn’t send the economy back towards a protracted recession?  One way is something called a ‘reverse REPO‘, where they sell their stockpile of MBS’s with a guarantee to buy them back in the future at a profit for the purchaser.  Seems that this obscure company called ‘Google’ (among others) may be interested in this play…

Interesting times to say the least…the stakes are HUGE and not for the faint of heart.

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Mortgage and Housing Volatility Far From Over

First things first…Why is this a big deal to begin with?  IDX solutions are typically framed in to web/blogsites and offer little to no SEO value.  An indexable IDX effectively creates separate posts for every listing, thus creating GOBS of real estate and general property related content that the Search Engines can’t help but crawl all over and index.

In theory, indexable IDX’s should subsequently send copious relevant organic traffic to a site that has implemented such a plug-in.

As far as I can tell Jason Benesch from The Real Estate Tomato pioneered an open source WordPress plug-in (ListingPress) that spurred further development by a handful of other tech vendors that I also highly respect, like Diverse Solutions dsIDXpress (Press Release).

The idea seems great in theory…as said, plug it in and instantly create a ton of crawlable property data for your real estate web/blogsite.  If you are first in your market with one of these churning inside your site, there would appear to be a distinct SEM advantage.

So, I was having a conversation with some Housechick and this subject of Indexable IDX’s came up.  Being she knows a thing or three about IDX’s and SEM, the obvious question was thrown out:

‘What happens when multiple people/sites in the same market implement such a tool?’

• Does the SEO value evaporate, since everyone will effectively have the same content?
• Do the mysterious Duplicate Content theories come into play, and as a result does Google and the other Search portals penalize sites for such?
• Which site running the same Indexable IDX ranks better? Is this where a higher PageRank becomes more than a bragging right and effectuates results for higher ranking on SERP’s?
• Is there a way to differentiate the content via novel implementation methods, result formats, or other such tweakery?
• Is one Indexable IDX different from another (not from a functionality standpoint, rather strictly from an SEO perspective)?

Kelley and I speculated for a bit with no real conclusions, just educated guesses…so I called Google and am still on hold.

While I’m waiting, I ask the rest of the community: As adoption of indexable IDX’s reaches a certain saturation point by market, does the current innate SEO value diminish, evaporate, or worse?  Thoughts?

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Indexable IDX Questions

Today Matt Carter at Inman News expounds on Googles ‘AdveRateQuote’ platform for the mortgage industry.  Apparently they’ve partnered with pricing engines and lead generation providers to provide a better overall Search experience for the mortgage shopping consumer as well as a potentially better ROI (via higher conversion ratios) for the paying advertiser compared to a traditional AdWord campaign.

Google stomps into Zillow Mortgage Marketplace’s sandbox by offering an anonymous contact system between the mortgage professional and the consumer until the consumer is ready to formally engage.  ZMM is far more information intensive and polished but this is definitely a shot into their bow.

Who does this potentially pinch the most?  The maligned and molested Mortgage Broker…their main value proposition was offering consumers access to choice, this same access is becoming more and more available by the day.   Mortgage Brokers have been on the unprotected endangered species list for about 6 months now, and hunting season has only just begun.

There is still alot to be desired when it comes to accurate mortgage qualification under this ad based system.  Its a sheer numbers play, doing little to improve the accuracy and efficacy of the mortgage qualification process.  The results are gross estimates based on generalized information, which often leads to confusion on the consumers behalf.  Mortgage professionals can still manipulate the data being displayed to their liking…but cleaning up the quagmire of mortgage qualification isn’t Googles mission.  Perpetuating greater ad spending is.  To this point they’re likely to create enough in new revenues to buy another small island, complete with private jet service for Sergey and Larry.

At the end of the day Google is building a bigger, badder, better funnel for comparison based products and services…like mortgages.  Its a win for Google if advertisers increase their current spend and/or more playas come to the ball.  Its a win because they don’t have to deviate from their business model and risk alienating current users.

Reading between the lines a bit: I wonder what Google will do with the valuable mortgage data they stand to collect from the participating lenders?  What happens when you cross pollinate hyper local mortgage data (yes mortgage rates and programs are very local in nature) with its real estate counterparts?  Hmmmm…

Also read:

Lead Confidential

Google Comparison Ads

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Worlds Biggest Baddest Mortgage Lead Funnel, by Google

LendingTree filed a lawsuit yesterday against Mortech, Inc., a technology provider, for violating its contract with LendingTree. According to the lawsuit, Mortech, whose technology helps automate lender offer pricing, violated its contractual covenants by partnering with Google to launch an online mortgage loan aggregator service similar to LendingTree.

So, apparently Google is going to enter the public mortgage quote comparison arena and soon, some sources indicate as early as next week.

Google Merchant Search (old news) looks to be the initial model.  Screen shot of UK Google Merchant Search provided by rustybrick on Flickr h/t to Search Engine Land

The screen shot shows some very basic mortgage search and comparison factors, using very limited data sets and range values.  Nothing all that sexy, mainly an advertising play for participating lenders not unlike the Bankrate’s of the world. Google has stated in response to the lawsuit (From the NYT):

We’re constantly looking for new ways to help people find what they are looking for on the Internet. As part of that effort, we are currently working on a small ad unit test that will run against a limited number of mortgage-related search queries in the U.S.

Meh.  Actions speak louder than spin.  As Lending Tree and Mortech go through their legal gymnastics, lets ponder the ramifications of the 1000 pound gorilla entering the room…

Google tends to enter sectors of business on the light side (see Google Base for real estate), choosing to keep things very simple (at first).  Nonetheless Google has the power to alter the way industries function, especially when it comes to information exchange and spook the hell out of the targeted sector along the way.  Real estate as a business and listing syndication propose far more complex issues and requires a relatively high level of human interaction (physical inspection of properties, local area knowledge, property is not a commodity etc) compared to mortgage rate quoting and pricing.  Mortgage rates are commodities whose price can be accurately be delivered to a consumer entering accurate information using some relatively simple algorithms and a database…something Google is pretty good at.

So, Google is looking to license some pretty robust rate pricing software, the type which mortgage brokers and bankers use and depend on in their day to day business.  Does Google offer indigenous rate pricing software to loan originators using their service?  It makes a ton of sense as it would increase the accuracy and thus the validity of the service.  How much control they allow loan originators over the mortgage pricing data being displayed to consumers is the big question in my mind.  I have my opinions…can you hear me in Mountain View?  Give me a call, I’d love to chat

It would seem that  Zillow Mortgage Marketplace (ZMM) would have the most heartburn over this news since the similarities are obvious.   ZMM is primarily a niche advertising/publishing/search platform that allows consumers to anonymously get mortgage quotes based on financial and credit risk factors from participating loan officers.  Approved pricing engines tie into ZMM’s API to generate automated quotes on behalf of the mortgage professional using one of these systems to automatically respond to consumers.  ZMM’s auto-quoting platform is mostly a convenience/efficiency perk for participating loan officers trying to deal with thousands of voyeuristic consumer rate quote requests.

Is there a benefit in hosting your own pricing engine over tying in APIs from third party services?  I think so.  Rather than being beholden to third party data aggregators and maintaining these multiple information pipes pulling from the essentially the same resources for hundreds of loan officers, why not streamline things even further and eliminate what is an unnecessary information middle man?  I’m marginally surprised ZMM hasn’t done this yet…who knows, maybe they will. Maybe they should. Yes, they should…like right now.

Lending Tree’s primary revenue stream comes from the origination of mortgages, something that wouldn’t appear to be in Google’s wheelhouse, yet as stated, Lending Tree is maintaining via the lawsuit against Mortech that Google will directly compete with them.

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Google Mortgage

We need to blame someone, so I ask the echo chamber: Who were the architects and engineers that created and enabled all of ‘this’? Before I answer, lets use the drug trade for my first analogy.

First loan is for free...

Who are the real criminals in the illicit drug trade? The users, the street level pushers, or the cartels who manufacture and make the drugs available aka The Enablers? One could make legitimate arguments that all are to fault for varying degrees. If users didn’t use, pushers couldn’t push and manufacturers would be out of business cause there is no demand for the product…yet that’s more tail wagging the dog. IMHO thou who enables is at the root of fault.

In theory, if the enablers didn’t produce the illicit product in the first place, there would be no pusher or user. The banks and other institutions who engineered the easy to acquire, downright addictive financial products framed an environment where unchecked growth dominated, deceit was rewarded and ethical business practitioners were punished.

Unchecked Growth is Bad, mmkay?

Follow me into more analogymnastics…What is uncontrolled growth called in the human body? Cancer. Without an internal system of checks and balances and proper detection techniques cancer manifests silently, usually until its too late when the organism has been consumed, ravaged to (near) death. You picking up what I’m putting down? Mortgage industry hell bent on growth until it consumed itself and imploded *pffft*

How is cancer treated? Traditionally with chemotherapy- an indiscriminate, very thoughtless killer of all things living. Wipe everything out and hopefully the body regenerates enough good cells to recuperate. This is effectively what’s happening to the mortgage industry- important aspects have been or are being primed for indiscriminate eradication. As nonsensical as mortgage qualification standards were just over a year ago, so are the proposed ‘fixes’ being introduced via legislation.

Self-medication is a bad idea, thus charging the same people who architected the demise of entire institutions with implementing a cure is a bad idea, mmmkay?  Medicine has evolved by studying and understanding what makes organisms tick on very (very) micro levels- further, how small thoughtful changes in the right places can cause substantial improvements. Business, industry as a whole, needs to adopt similar methodologies of implementing micro-evolutionary change rather than blow it all away, Bruce Willis-Die Hard style.

We will protect you, promise.

What is currently being proposed by law makers as solutions to the mortgage mess is incestuous at best. These changes are couched as ‘protective measures for the consumer’, which is a bunch of bullshit, seeing that the new Home Value Code of Conduct (HVCC) and H.R. 1728’s proposal to ban Yield Spread Premiums serve to do nothing of the sort. Instead they will (try to) eliminate the mortgage broker, compromise the real estate professional and ultimately harm the consumer…all for the banks gain.

Think that our policy makers in Washington wouldn’t let such things happen?  Think again…after all, they’ve invested heavily in these institutions that are ‘too big to fail’.

Next:  Review of the Home Value Code of Conduct (HVCC), H.R. 1728 and why they’re bullets designed to kill off the mortgage broker.

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Drug Cartels, Cancerous Growth and The F*cked Mortgage Industry

Reporting a $45.18 profit after only 60 days from its inception and subsequently securing $1500 in Series A funding, I have decided to join 7DS Associates and relieve Rob Hahn of the burden of changing the corporate name to 7DS Associate.  With the coffers full my required contribution was a link from this PR 5 blog, which according to the weight of 75 emails/day is one of my greatest assets.

The decision to leave ActiveRain in a full time capacity was not easy, yet I’m happy to remain with the company as a direct consultant furthering current and managing future business development initiatives.

On the other side, I look forward to working with Rob and building 7DS into the premiere strategy, consulting, branding and marketing firm in and around real estate.  Good thing Rob has an abundance of intelligence to sell…

In unrelated news, I recently grounded myself in Charlotte, NC after spending nine continuous months on the road (yes, I said nine months).  Hit me up if you’re in the area

::Scratches Entrepreneurial Itch::

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I’m Selling Intelligence?

When comparing mortgage quotes, most borrowers focus on two factors: interest rate and upfront fees. But it’s difficult to determine whether it makes more sense to choose a loan with a lower rate and higher fees, or a loan with higher fees and a lower rate.  The best combination depends on how long borrowers will have the loan.

….Once they narrow down to a few quotes, they can check out the lender profiles, reviews, and ratings, and then select a couple of lenders to contact.

Consumers have a hard time understanding the real financial ramifications of a mortgage and most loan officers fail to get into the breadth and depth of the potential true cost of a given loan scenario based on the unknown variable of how long the loan may actually be held.  Annual Percentage Rate, the antiquated, often manipulated, more often misunderstood measure of how much a loan will cost a borrower has been prime for replacement.

Zillow has effectively provided a cleaner method for consumers to determine real loan cost by quickly crunching the long math after the variable of  ‘loan term’ is figured into the equation, allowing consumers the ability to evaluate a loan in hard dollars rather than ambiguous percentages.  This tightens a major loophole in regards to the consumer experience on ZMM and should lead to higher conversions for the most competitive participating loan officers.

Well thought by the big Z…

Also See:

Morning Mortgage Notes

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Zillow Mortgage Marketplace Petitions To Eliminate Annual Percentage Rate

The industry of real estate doesn’t quite lend itself to those conditions.  Its generally a loose, revolving door, part-time hobbyist infected environment that yields a highly uncontrollable and thus poor product.  As a result the biggest Brand in the space, ‘Realtor’, is currently in epic fail mode.  Corporate Brands like Coldwell Banker, Re/Max, Keller Williams etc. mean far more to agents (favorable commission schedules, franchise fees, tools provided) than they do consumers.

A Brands persona will not change (or continue to mean anything) in the consumers eyes until the underlying business model, day to day practices and purveyors of such are commanded/committed to such.  For too many traditional Brands, this is just not possible without the risk of alienating a majority of their contingency.  To which I’d say:  Good riddance.

With this in mind, a more relative comparison between Brands in the real estate space would be between the traditional names and Redfin, the Great Satan of real estate Brands. Redfin does what few others in this space do, they define their Brand through Business Strategy:

• Focus (and follow up) on exemplary customer service.  Hold agents accountable for their actions, or lack thereof.
• Provide rich, relative, intuitive data. Consumers fundamentally are searching for listings first, all of them.  Redfin provides many types:  Traditional, For Sale By Owner, MLS and Bank listed foreclosures as well as Sold data.
• Employ consumer centric business and revenue models based in logic rather than antiquity.
• Remain unusually nimble and open to change, as opposed to standing still and posturing into irrelevancy.

Any agent that flies under their flag is bound by these principles…The Fin tightly controls this environment, developing  an overwhelming positive experience for professionals and consumers along the way.

Can any other traditional Brand represent a 97% consumer satisfaction level?  Do they even know how to measure such?  Are they willing to try?  Me thinks no.  Is there great opportunity for those that dare?  Absolutely.

While there are individual agents and brokers that practice and achieve success employing similar business ideals, they are far more the exception than the rule and are often lost amongst the ‘rest of the crowd’ in such a way that Corporate Brand actually diminishes their efforts, having to instead build and rely on Personal Brand.

When Redfin launched, many industry folk quickly dismissed the company as ‘another discount brokerage’ doomed to failure.  Others have made it their personal vendetta to see that they stumble and fall…spooking, steering and slandering the Company as an impostor, a heretic…which must cause Mr. Kelman to smile more than just a little bit.  Despite all the mud-slinging Redfin apparently is turning a profit (in a ‘down market’ nonetheless), coupled with their high consumer satisfaction ratings, they’ve become a testament to building a Brand via business strategy and the greater industry can’t stand it.

The real estate industry would be well served to study and implement the major aspects of what Redfin is proving out, as opposed to perpetually denying their validity.  I’m not suggesting everyone breakout the Redfin blueprint and copy it verbatim, rather study their successes in comparison to the consumer voice which generally says that Realtors Suck.  Too idealistic?  Probably.  Why?  As suggested above, it would banish ~80% of actively licensed ‘real estate professionals’ to another industry because the bar would be raised off the floor.  Not to mention that too much coin would be left on the table in the near term for many short sighted C-Suite traditionalists to stomach, though continuing down the current road is a proven path to irrelevancy and ultimately insolvency.  Alas, suggesting that a business be run like a business is apparently crazy-talk…

While all the current rage resides with selling strategies that permeate the landscape with noisy propositions using ‘Social Media’ as some magic bullet to more business, what’s really broke and needs to be fixed first is The Business.  Dumping time and dollars into Social Media, SEO, a new website or the next cool shiny thing to (re)define Brand in hopes of more business without refining the core to become more in-line with the changing, demanding, educated marketplace is just plain ignorant.  They are utilities in the marketing tool belt, not long term solutions.

My 13 year old cousin could be a Social Media pundit.  Wordpress (many a blogsite platform actually) provides 85% of the SEO, design elements and disparate data portability one will ever need…the rest is pimping out your ride…accessorizing, if you will (which is fine).  Consistently refining fundamental business strategies, setting the bar higher with regards to agent acumen level, transparency and accountability will positively define a business, a Brand and an industry with an identity crisis.

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Defining a Brand Through Business Strategy

Jay Thompson wrote about the NAR’s foray into the world of controlled finances over a year ago…Eric Stegemann brought the topic up while at RE BarCamp-Phoenix, indicating it was his understanding that after a few delays, its a go. Fascinating implications.

The largest trade organization in the United States, with all its lobbyist power, is for all practical purposes a lender.  Yes, yes, NAR and the Realtors (INSERT COPYRIGHT SYMBOL HERE) Federal Credit Union (RFCU) are separate and apart in all the right places but I love the messaging coming off the article on realtor.org:

Because operations will be on the Internet, REALTORS^® FCU will be sensitive to the work habits and lifestyles of REALTORS^®, most of whom are independent contractors who are compensated by commissions.”

All REALTORS^® and their families are eligible to become REALTORS^® FCU  members. REALTORS^® employees and staff, including NAR, state and local boards and associations, and NAR’s institutes, societies and councils are also eligible. REALTOR^® clients and customers, such and home buyers and home sellers, are not eligible.

Whats clear:

A year ago, pre-credit crisis, this was a borderline *yawn*, today its stands to be a pretty big deal.  Access to a credit union is a real benefit, yielding –>credit<– to its members using  their own underwriting guidelines, separate and apart from Big Bank or gov’t regulated programs.

Mortgages for those of self-employed and commission based income ilk don’t (really) exist in the mainstream anymore.  My opinion, which isn’t usually positive when it comes to NAR’s moves is just that, positive.  RFCU stands to provide real benefits to the member contingency, substantiating the dues to be a Realtor (INSERT COPYRIGHT SYMBOL HERE).

Whats speculation:

Right now, clients and consumers are not eligible as the RFCU is careful to not trip the line hypocritic with their hard stance against banks getting into the real estate sales industry.  But I can only wonder how ‘Americas Largest Trade Orgaization’ might choose to flex their lobbyist muscles in the future? NAR can actually compete with Big Bank lobbyists on Capitol Hill.

If the banks won’t lend in a common sensical fashion (a common theory), then consumers can’t buy…if consumers cant buy, then Realtors can’t pay NARs dues…NAR loses income and voices…

Does this ‘force’ NAR’s hands to get in the mortgage game?  The argument is compelling and someone needs to check the Big Banks actions.  The irony of NAR, recently accused of anti-competitive practices by the Dept of Justice, chipping away at The Banks increasing monopolistic nature would be great theater.

Do they push to allow clients access to RFCU mortgages?  Now that’s a neatly marketable reason of solid tangible value to use a Realtor (INSERT COPYRIGHT SYMBOL HERE).

(I know health benefits are important too…thats another subject for another day…)

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NAR Dipping Into The Mortgage Pool?