You think the real estate revolution on the web has begun? Think again.
Sure we all have the lookie-lou time of our lives, perusing fresh digs online. Ipix early on took inside the homes of the never-rich, never-to-be-famous. Now multiple photos (minimize the concrete, please) and slide shows are getting to be the standard. But as would-be buyers and then as necessary sellers, we still go back to The System to transact. Brokerages still charge a national average of 5.1%, even as real estate prices have grown to medians beyond $700,000 in Silicon Valley and $374,000 in the Boston.
Home prices have skyrocketed across the board, witness a report from the Office of Federal Housing Enterprise Oversight. The median home price in the United States rose 12.5 percent last year. It is up 50.5 percent in five years and 249 percent since 1980.
Of course, commissions have skyrocketed right along with them, though arguably no more work is needed to sell a million-dollar house than a $100,000 one.
Why? Well it's not like buying a book on Amazon or a digital camera on eBay or even car via autobytel. It just seems....more complicated, and more potentially perilous. It must be complicated, we think, given the stack of papers we're supposed to sign without reading at closing. What if something goes wrong? Lawsuits? Piles of cash gone? Big headaches?
Well, having bought and sold three or four houses so far, I know that it is more complicated. It does seem though a process that can be broken down in parts. Apparently a number of other more experienced people think so as well.
Just last week, the Tribune company, which has taken in tens of millions of dollars from realtors over the years, stuck a finger in their face. It bought ForSaleByOwner.com. That's right, one of the FSBO companies that realtors love to disparage. ForSaleByOwner.com helps sellers list properties and offers a host of tools onsite to figure out the rest -- title, mortgage, insurance, inspection, etc. Tribune's purchase is a sign it is hedging its bets that web-based buying power will move closer to consumers in real estate as it has for other goods and services.
Or check out Dow Jones Start-Up Journal this week. It's one of the company's free sites. Featured is an absolutely non-remarkable interview with a Donna Chance, experienced Dallas realtor who is now a franchisee for....Assist-2-Sell. That's right, they assist buyers, and not at a commission rate, but at a flat price.
Says our Donna:
I like the concept of saving clients money on commissions. Assist-2-Sell Realtors charge a $2,995 flat fee for service, instead of a percentage of the sales price, typically 6%, like a traditional Realtor. We show the home, handle negotiations, purchase agreement, paper work, financing, and anything else to insure a smooth closing -- everything a traditional Realtor does.
Cautionary note for newspapers loving the realtor ads:
We don't spend a lot of time advertising and promoting agents, the Assist-2-Sell model is to focus on advertising the homes that are for sale. When I competed with other agents as Donna Chance Realtors, I always tried to sell myself as being better. Now when I go in to compete against other agents for a sale, I'm competing based on price. I am willing to offer all the same services at a fixed fee.
Competing on price. Sounds like the web.
And peruse a post by my friend Peter Krasilovsky on "Yo Chicago" on his Local Onliner blog. Yo Chicago is one of his clients (very well disclosed), and he describes its opportunity well. Get beyond listings and create community around real estate. It's bloggy, spirited, and you can smell its potential in giving you a sense of place.
After all, look at how much we all talk about our homes, our neighborhoods and our communities. Calling all newspaper editors: this should be done by newspaper companies.
Lastly, there are those pesky feds. When they're done plumbing through Barry Bonds' perjury and income tax evasion files, they'll go back to taking on the real estate industry's monopolistic hold on the Multiple Listing Service. Companies are finding holes in the monopoly, but the case now being worked out of the Justice Department could break the dam.