Who’s Going to Be at This Year’s FWD Innovation Summit? One Former Judge’s Thoughts on this Year’s Contestant Line Up

Last year, when I was one of the judges on the FWD Innovation Summit, I wrote up a fairly rigorous analysis of the participants so that I could be prepared for their presentations.  This year, I won’t be judging, but I will be live-blogging the event on Tuesday here on this blog, so I did the same thing.

Basically, I looked at each app or website and wrote up a short description of what they are and how they would apply in real estate. And just out of habit, I came up with one question for each of them that I’d ask as a judge. I thought it might be helpful for those of you attending the conference, who want a thumbnail introduction to the companies and what they’re presenting.

I want to be clear that these are my own very unofficial impressions based on their site or their app. I may have some stuff wrong, because I’m not very bright.  If I’ve mis-described any business, I apologize and will update this post with any errors if you bring them to my attention.

I should also be clear that I don’t represent the FWD conference, Realogy, Better Homes and Gardens Real Estate, the Rand family, or really anyone else.  My observations are my own.

In the chart and the discussion below, I’ve organized the companies’ solutions according to three categories. I should note that this is my own organization, not something that came from Realogy or from the companies themselves, and that the one-line “descriptions” are just my own short-hand for what I see as the main driving purpose of the site or app:

  • Home Search (6): Sites and apps that assist buyers during the home search process, mostly portals.
  • Marketing (4): Sites and apps that help agents market homes.
  • Business (5): A bit of a catchall for sites and apps that helps real estate professionals manage their business (including apps designed for property managers and developers).

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Home Search:

Closing Time

Closing Time is a web-based service designed to help make the home buying transactional process easier.  You sign up, answer a bunch of questions about yourself and the home you’re buying, and you get a detailed checklist of steps you need to take, which are fully customized to your personal needs and the location of your home.  The site is designed for home buyers, but the company offers an integrated enterprise solution allowing brokers to create customized checklists for their clients that can, for example, promote affiliate partners throughout the transactional process. (Full disclosure: my company is talking with Closing Time about setting up the enterprise product).

Key Application: It’s a great way to manage the transactional process for your clients.  Set your buyer up with an account, and she’ll have a detailed checklist of steps she needs to take to buy her home that will prompt her with email alerts and reminders.

Key Question: How can Closing Time fully address transactional challenges in a document-intensive process without ever touching any of those documents?

 

Curb Call

Curb Call has one of those really simple elevator pitches: “Uber for real estate agents.”  Let’s say a buyer is standing out in front of a home for sale, and wants to see it right away.  She can use the Curb Call app to call up a list of available agents in the area, screen them based on their app profile (i.e., ratings, etc.), and “call” them to come by the home to show it.

Key Application: If you can get a big enough installed user base of users and agents, this provides a novel way for clients to find an agent who is available for immediate gratification: show me this house right now!

Key Question: The Uber connection is clever, but is that kind of immediate gratification possible when most home sellers require advance notice to show a home?

 

Househappy

Househappy is an image-based home search portal. When you log in, you don’t see a traditional home search screen with filtering options – instead, you see row upon row of home photos, which you can click on to get the full details and the rest of the images.  You can also use more traditional options if you want to narrow your search, but photos are front and center as the search idiom.  The listing feed comes through listhub, which provides the listing agent contact information, and agents can also set up a profile to “claim” their own listings.

Key Application. Househappy is a clever, fresh, very visual take on traditional home search, using images instead of filters or maps as the dominant criteria.

Key Question: You market the site as a free community platform for all users and agents, so where is your revenue going to come from?

 

Lasso

Lasso is a bookmarking service for real estate, an answer to the challenge posed when buyers use multiple sites to look for homes.  You install a bookmarklet on your browser toolbar, and whenever you see a property you want to save, you just click the tool and save it to Lasso. Then, when you log into Lasso, you’ll see all your saved properties in one place in a very Pinterest-type layout, where you can rate the property, take notes, and share it.

Key Application: Lasso seems to be creating a more social approach to home search, one that not only anticipates including a real estate agent, but also other people who might be interested (friends, family, spouse, etc.).  For a client who insists on using a national portal as well as the local company site, or multiple portals, agents might find it helpful to encourage the client to “corral” all those properties in one place to organize their search.

Key Question: This solves the problem of clients who use multiple home search sites, but can’t they also solve that problem by just using one site?

 

Retsly

Retsly is really something different from the other participants at FWD.  It’s not a consumer- or agent-based product.  Rather, it’s a real estate software API that was featured at Realogy’s “Hackathon” last fall at the NAR conference, giving contestants a cleaned-up database of listings upon which to build creative apps during the contest.  And now it’s available to other app and website developers as a platform upon which to build real estate related products (indeed, Curb Call, another FWD contestant, is featured on the Retsly site as a user).

Key Application: Not for agents, not for consumers.  But for web developers, the API provides a clean data feed of listings, which become their development platform.

Key Question: Who should be using this, and how much data do you actually have?

 

Zumper

Zumper is a national real estate portal site and app for home and apartment rentals.  Using traditional filter-based and map-based search, users can look for rentals submitted by landlords, brokers, and apparently through some third party sites (a number of the listings I looked at came from Hotpads).  For agents, you can set up a “Pro” account and post your listings, syndicate them to other portals, market the listings through email, and manage leads through the site.

Key Application: A dedicated rental site with good, reliable, up-to-date data would be really useful to consumers, giving them the same quality experience that home buyers currently get from any number of online portals. And agents might value a one-stop solution to marketing rentals to portals.

Key Question: What’s the value to a real estate agent with another portal dedicated narrowly to rentals when most real estate sites and portals already market rental properties?

 

Marketing:

 

Beamly

Beamly is a micro-location marketing app designed to enhance home showings, particularly for new construction, using the Apple iBeacon technology.  The app works with special Bluetooth-enable proximity “beacons” that look like hocky pucks, and which trigger informational displays when visitors come close enough to them. The app comes from BrightDoor, a specialist in home builder online marketing, and is expected to be launched this summer.

Key Application: You put the beacons in strategic spots around a home.  When visitors come to the front door, the app displays neighborhood amenities, the floor plans, or anything else you set up.  When they get to the kitchen, the app highlights special features or possible upgrade finishes.  You can even track where people are going, maybe even where they are lingering.

Key Question:  What does this app add for a typical home showing, when an agent is usually present to highlight features of the home?

 

Matterport

Matterport provides three-dimensional photography that could provide a really exciting way to market properties.  Here’s how it works.  You get a Matterport-branded 3D camera and set it up on a tripod in a room.  It spins around the room, capturing not just pictures but also dimensions and spatial relationships. You then upload the data to the Matterport site, which creates a 3D image model of the space using fancy technology that I quite frankly don’t understand.  But it looks very cool (and not dissimilar to last year’s FWD grand prize winner, Floored).

Key Application: If 3d imaging technology works the way that Matterport says, it could leapfrog video marketing as the best way to market properties online. More immersive than still photos or video, and actually easier to create than standard video.

Key Question: How feasible, in both time and money, is it for someone to buy your camera, set it up in the living room of their new listing, and build a 3d model of that home right now – today?

 

Slide Bureau

Slide Bureau is a presentation and slideshow iPad app that provides hundreds of design templates, including dozens built specifically for the real estate industry.  You download the app, choose a template, create your customized slides, and share your final presentation through the web.  Many of the templates are interactive, meaning they pull real-time data directly from services like Google Maps and Twitter – so you won’t have to copy and paste data or use screenshots.  Users can also suggest new templates if they can’t find what they need.

Key Application: Depending on the growth of the template library, agents could find some interesting ways of presenting information to clients or doing promotional presentations.

Key Question: What do you see as the advantage of creating presentations like this on an iPad, which is generally seen more as a content-delivery rather than –creation device?

 

SmartExpose

SmartExpose is an international digital real estate marketing development company that provides white label software for iphone and iPad apps, webpages, and project pages.  You can either create your own set of multi-device apps, or advertise properties in one of the established SmartExpose marketplaces.  You can also create an individualized iPad magazine, using a mix of standardized and customized content.

Key Application: Agents and brokers might like the turnkey aspect of creating an interactive iPad-based magazine that could be used to display properties or promote the company.

Key Question: The online versions of your materials look slick, but how customizable are they?

 

Business:

CO Everywhere

Co Everywhere is an app and web service that lets you pick a place that’s important to you, and then follow social media and news content generated from that location.  You just go on a map, circle the area of interest, and then you’ll get a rich, unfiltered stream of hyper-local content from Facebook, Twitter, Instagram, Yelp, and other news and social media sites.  For example, I circled my hometown and was immediately inundated with tweets and Facebook posts generated by people in the area.

Key Application: Real estate is hyper-local, so anything that helps an agent tune into what’s going on in her neighborhood or geographic farm can be a real asset. I could see agents picking 7 or 8 locations to follow and checking in a few times a day to see if anything interesting pops up.

Key Question: Co Everywhere seems to pride itself on an “unfiltered” feed, which might be good for 20-somethings who want to follow the club action, but are you building curating features for professionals who want to use it more selectively?

 

Deductr

Deductr provides a streamlined way for real estate agents to track and monitor their expenses to ensure that they maximize their small-business tax deductions.  Using the website or a mobile app, you can record transactions, document your income, account for your working hours, and track your mileage to build customized reports that can help ensure you claim the appropriate deductions and monitor your business performance.

Key Application: All financial services apps require a little discipline, because you have to remember to log your transactions and all that, but agents could find this very helpful not just for maximizing deductions but analyzing their business performance.

Key Question: Real estate agents are busy and often don’t have the time to process every transaction – how much of the tracking can be automated so that they don’t have to?

 

Go Connect

Go Connect is a task management checklist app for real estate agents, designed by a practicing real estate broker in North Carolina (full disclosure: the founder Zach Schabot is a friend).  The app allows an agent to track all her leads, clients, listings, and transactions, set up customizable checklists for particular processes, and then manage those tasks through an intuitive reminder and scheduling system.  The interface is very straightforward, the CRM integrates with your phone’s contact list, and the site provides a number of helpful instructional videos.

Key Application: I’m a big checklist guy, so I love this kind of stuff, even while I recognize that this is the kind of thing that you need to go “all in” on in order for it to work correctly.  But once they’ve done the initial customization and set up, agents might really find value in a single app that provides CRM, reminders, scheduling, and task management.

Key Question: Agents are not generally going to take the time to customize their checklist templates, so is there a broker enterprise solution that would allow for a broker to create templates customized to the company’s operations and apply them for all the agents in the company?

 

Kisi

Kisi allows you to use your smartphone to replace keycards for any keyless entry access control system. Let’s say, for example, that your apartment building uses keycard access for a parking lot, you can use Kisi to replace the keycards and allow people entry just with a swipe of the app.  Even better, the building manager can control access, giving out virtual “keycards” via email from the app, track all entries, and revoke access when the need is complete.

Key Application: I could see this being a huge advance for commercial buildings that use keyless access systems, or even real estate brokers who have keyless entries for their offices. Rather than tracking who has access cards, you could turn on an agent’s key when they join the company, track who is coming in and out of your office, monitor traffic patterns, and eliminate access for agents who are terminated.

Key Question: Do you see this as having any kind of applicability to replace the lock box system that most agents use now for listed properties?

 

Remotely

Remotely is a home automation app-based service designed primarily for landlords and tenants, which allows you to control locks, lights, thermostats, home security, etc. remotely through the app.  You need to install all the home automation hardware from their vendor partners, including keyless lock systems, thermostats, sensors, and alarm equipment, but you can then monitor everything about the home remotely (I see what they did there!) through the app or the online software for a monthly fee.

Key Application: Home automation is really hot right now, and Remotely is going after a narrow segment of the market: renters, landlords, and possibly second-home markets.  I could see second-home owners loving the idea of remotely controlling their home security, lights, and keyless entry with the convenience of a smartphone app.

Key Question: The monitoring service is relatively cheap, but what is the average cost of the hardware that you need to make it run correctly?

Is the Real Problem With the Real Estate Industry the Clients? Maybe

I was asked again last week to contribute a response at Inman News to a provocative article from Brad Inman.  Last time, he wrote about the potential disruption of the broker-agent relationship from online portals, in the way that Uber has disrupted the traditional limousine industry’s relationship with drivers.  And in my response, I challenged the idea that technology might be as disruptive as people think it’s going to be, but then argued that if it does happen, it’s the brokerage industry’s fault for not creating a better experience for our clients.

This time, Brad suggests that the industry has been too focused on marketing and customer acquisition at the expense of a concentration on improving the customer service experience, and that technology startups might be a driver toward changing that experience:

But the current discussion should not be about revenue models, it is about who can fundamentally change the old ways of doing business. For now, everyone is focused on marketing and customer acquisition, including Zillow, Trulia, realtor.com, Homes.com, etc., not the overall consumer flow from home search to closing. Regrettably, the identity and the reality of the industry has always been about marketing, sales, recruiting and advertising. The old-school model continues to win, with the portals playing a role in the cabal.

***

But more change is needed, and opportunity and lighter technology will drive it. The company that offers a complete and superior consumer platform will have valuations more like Uber and Airbnb — $10 billion today and rising.

The winner will present an integrated combination of a stellar front end with a robust CRM and transaction management system on the back end, offering a connected, elegant and easy-to-use online place for buyers and sellers as they go through the rigorous 90-day workout.

The challenge in responding to this argument is that I essentially agree with it — I’ve been saying for years that the industry needs to be more client-oriented, that we need to change our focus from our own needs (lead acquisition) toward providing them with a better experience.  So I basically agree with him.

So my response took a bit of an angle on his argument, pointing out that the problem is not the technology — which I think already exists at some companies. Rather, the problem is that we don’t have enough good agents to implement that technology, and the reason for that is that the clients are just not choosy enough!  That is, clients are willing to work with lousy agents, and because of that they create all the wrong incentives — agents put money and time into marketing because they see clients respond to that, clients who would be better off doing a more rigorous vetting process to find a great agent, but who simply work with whoever answers their internet lead, the phone on their incoming inquiry, or sits the open house when they’re at the right point in their purchasing process.

Having read the piece now that it’s out, I’m a little concerned that people will  think I’m letting the brokerage industry off the hook. I’m not.  Basically, I think that we are the ones who have created the consumer perception that all agents are the same, that they’re all salespeople, and that they don’t need to be selective in choosing one. It’s really our fault.

It’s kind of a self-reinforcing loop: we do a bad job of differentiating our services, leading to commodification; clients see us as a commodity, so they believe all are the same and don’t feel they need to be selective; and agents see how clients respond to marketing and lead generation techniques, rather than performance and track record, and invest their time and energies accordingly.

Take a look, and if you have comments feel free to make them on the Inman piece.

Rules for CORE Agents #34: Only Embrace New Technologies That Replace Old Tools With Better Tools

Consider the plight of the poor “Realtogeek” – real estate agents who embrace new technology so tightly that they leap into every new trend and buy every shiny new gizmo that hits the market.  While the Realtosaurus reacts to the intimidation of new technologies by shutting down and ignoring them, Realtogeeks respond by elevating them as centerpiece of their business in the smug belief that all the “old school” ways of doing things are dead.

But Realtogeeks make the mistake of thinking that they’re in the technology business, not the real estate business, and so they spend too much of their time doing things that don’t actually help them acquire clients or sell homes. They don’t see the point of cultivating a sphere, or contacting FSBOs and expireds, because they’re going to generate all the leads they need from their blog, their Twitter feed, or that new online system they just bought.  They don’t pick up the phone, since, well, NO ONE talks on the phone anymore.  New technologies become important for their own sake, a security blanket that tricks the Realtogeek into thinking that he had a productive day if he spent three hours posting a great answer on Trulia Voices that is generating a lot of online buzz.

Now, I’m not saying that technology is a bad thing. You need to find a happy medium between the Realtosauruses who reject all new technologies and the Realtogeeks who embrace all of them for their own sake.  The key is to recognize that technology is just a tool, and differentiate between the tools that will help you and the tools that are a waste of your time.

Here’s the key: if a new technology allows you to do something you were already doing, but to do it faster, cheaper, or easier, then it’s a productive technology and you should learn how to use it in your business.  That is, good technologies are just tools that are better than the old tools you were already using:  smartphones are better than dumbphones, online MLS systems are better than shoeboxes full of index cards, emailing is better than mailing, scanning better than faxing, a GPS is better than a map, digital photography is better than film.  All these new technologies are great because they are just tools that give us a better way to do something we were already doing.

Conversely, non-productive technologies are tools that seduce you into spending a lot of time doing things that you never did before, like blogging and tweeting and answering online questions from people who are not, and will likely never be, your clients.  You have to avoid technologies that give you that false sense of productivity because you spent a lot of time in front of the computer without actually accomplishing anything that will generate business or service a client.

 

This post is part of a series of what I call the “36-1/2 Rules for Client-Oriented Real Estate Agents,” a collection of short takes on the CORE concept that I’ve developed over the years of discussing and teaching the system.  We’ll count up to the 36th rule over the next few months, and then the 1/2 rule.  You can get the full list of rules by clicking on the “36-1/2 Rules for CORE Agents” category on the blog – scroll from the bottom if you want to read them in order.

Rules for CORE Agents #33: You Wouldn’t Trust a Doctor Who Still Used Leaches

Consider the plight of the poor “Realtosaurus” – real estate agents who are increasingly falling behind because they stubbornly resist learning how to use modern technology.  They’re so afraid of these new technologies that they’ve overcompensated by making it an “old school” point of pride that they don’t know how to use a computer or a smartphone or the internet.  They do business the “old fashioned” way!

I think we all have to acknowledge that the time has passed when someone who doesn’t know how to use a computer is charming or colorful.  It’s just silly to stick your head in the sand and pretend that you can still be as effective and efficient without taking advantage of new technology that’s available to you.  Imagine an agent 30 years ago refusing how to use a copy machine, insisting that the “old school” way of mimeographing was good enough.

Moreover, it’s not fair to your clients. Why should clients trust an agent who can’t perform some of the basic requirements of the job – taking and enhancing digital photos, pulling comps online, creating and sending PDF documents, staying in touch through email and text?  Would you trust a doctor who trumpeted the virtues of his old school approach to using leeches and boring holes in your skull to release all the evil demons?

The reason so many of us are afraid of new technologies is that we give them too much credit.  We’re too intimidated by them, and many of us respond to that intimidation by just shutting down.  It doesn’t help that the real estate industry keeps treating “technology” as some awesome, unfathomable, omnipotent force that is segregated out as its own discrete category – we have whole conferences just devoted to “real estate technology” and whole training courses dedicated to teaching “technology” as a standalone subject.  Having a whole conference dedicated to social media is as ridiculous as a conference 25 years ago devoted to teaching people how to use answering machines, copiers, and the white pages.

Technology is not our job, it’s just a tool that we need to use in our job.  And like any tool that’s important for our business, you need to learn how to use it if you’re going to stay relevant.  Refusing to learn how to use a computer is like refusing to learn how to use a fax machine.

So stop being intimidated by new technologies. Learn how to use them, not for their own sake, but so that you can figure out how they can help you do your job.

 

This post is part of a series of what I call the “36-1/2 Rules for Client-Oriented Real Estate Agents,” a collection of short takes on the CORE concept that I’ve developed over the years of discussing and teaching the system.  We’ll count up to the 36th rule over the next few months, and then the 1/2 rule.  You can get the full list of rules by clicking on the “36-1/2 Rules for CORE Agents” category on the blog – scroll from the bottom if you want to read them in order.

Reviewing the iPad Apps from Realtor.com, Trulia, and Zillow: The New Home Search Paradigm

I love my iPad. Seriously. I find myself curling up in bed with it, with no particular idea of what I’m going to do with it other than that I want to play with it. I read my books on it, surf the web, read blogs, and I’ve even started reading comic books again because they look so cool on the display.

But what I’ve been doing recently is looking at real estate. Not just because I’m a broker, but because, like a lot of people, I just like looking at real estate.  When I started using the iPad2 for home search, I used the Zillow app because it was the only one available, then tried out to Trulia when that came out, and immediately test drove Realtor.com’s app when I saw Brian Boero’s post that it had finally been released.

Having used an iPad2 to look for a home, using all the major iPad apps, I can tell you that tablets are the future of real estate search. It’s really a new search paradigm, built from the Godlike perspective of looking down on an area and seeing what’s available on a big map, rather than setting up a set of criteria and reviewing a list of responsive properties.  Right now, most people start a home search online by building up — identifying what they want (location, price, bedrooms, bathrooms), generating a list, and then reviewing the list.  On a tablet, you don’t build up, you narrow down — you start by looking at a map and seeing every property for sale on that map screen, then you winnow it down by putting in restrictive criteria.  The tablet flip the search experience from a building to a narrowing process, and that is bound to change the kinds of homes that buyers end up becoming interested in.

Moreover, tablets provide a gamechanging experience for most consumers through GPS search, something that most consumers never had on their laptop.  My wife and I drove through the New Jersey shore with an iPad2 in her lap, using Realtor.com’s app to constantly refresh homes for sale that met our basic price and size criteria.  We did drive bys of about 25 properties, something that would have been impossible to set up using more traditional real estate sites.

Finally, the iPad experience is much more immersive than a laptop or computer.  It’s just seductive, almost addictive, to poke, prod, and swipe the screen looking at properties on the big map.

Having spent so much time playing on them, I thought I’d put together a review of the Realtor.com, Trulia, and Zillow apps (the only other major company with a search app is Coldwell Banker, but as of now it only has CB listings on it, which is pretty limited to most buyers who don’t say to themselves, “I really just want a Coldwell Banker listing”).

I broke down the reviews like so:

  • Overall Impressions
  • Main Display
  • Property Details
  • Search Experience
  • Other stuff I liked and didn’t like.

To test the apps, I not only had my experience searching for shore properties, but also looked at properties in my market area. I didn’t find a major difference in the inventory, although I didn’t really look that hard at the issue.

Overall

Overall, I will say that I liked all the apps.  They all provide truly immersive experiences, to the point that just looking at random real estate is one of my favorite things to do on the iPad.  The extent to which I’ve elaborated on differences is a little bit of hair splitting, because any one of them would be great for most home buyers looking for a home.

In my experience, though, I found myself liking and using Realtor.com the most. Realtor.com has the ugliest main display, and I don’t understand why they are still using those thumb-tacks on the map to display properties when a house icon indicating price is so much more effective. But the drawing tool in the search function is a game-changer, and so far only Realtor.com has it.  I thought Trulia provided a terrific experience, but the lack of saving features kept it from being a contended. And I was a little disappointed in Zillow, which had the best overall display but was too heavily about Zillowish stuff (i.e. Zestimates and agent advertising) and not enough about what the client actually wants in a search app.

 

Main Display

All three sites follow the same basic format, with the main display a map that shows properties for sale and a list along one side of the screen with more details about the the listings. All three allow you to view the map either as a street view (like a map) or a satellite-hybrid view (a Google Earth photo view with streets superimposed on it).

I thought that Zillow’s layout was terrific, very clean and easy to follow, with more space given over to the listing details rather than the map. That allowed for larger pictures and important information like property address to be included in the list of properties.

Trulia’s display was laid out the same way, but less space was given for the actual property details, including not providing the property address in the list unless you click on the property. That’s a pretty serious omission. The pictures were also significantly smaller, making the list view less helpful.

Realtor.com’s list view provided address information along with other pertinent sales information, but its pictures were even smaller than Trulia. I also didn’t like that Realtor.com’s default view of the map showed the listings as virtual “thumbtacks” without displaying prices. The other sites show the listings as tiny houses showing the price of the home, which is much more helpful. (You can see the tiny houses with prices on Realtor.com in the “scout” view, but I don’t know why that’s necessary). I did, though, like that Realtor.com allowed for a “gallery” view if you want to see the properties laid out for you rather than see them displayed on the map.

The Winner: Zillow

This was a close call.  All the displays are inviting and intuitive, but I thought Zillow found the best balance between space given over to the map and detailed information on the property displays.

Property Details

Although the main display of the apps are similar, the way they display actual property details is very different. In Trulia and Realtor.com, clicking on an individual property takes you to a new “property display” that shows the pictures of the property and all the details in a tabbed format. But Zillow works entirely through the list view along the right hand side of the screen, so if you click on a particular property the list view disappears, replaced by the property view. You then scroll through the details from top to bottom.

The Winner: Realtor.com

Realtor.com has the best property display, hands-down. When you click on a property, you default to an “overview” that has the property description, listing date, and the broker information along with a reasonably-sized picture. Realtor.com also gives you a large section (probably too large, frankly) to take notes, give a rating, or send the listing and a separate details tab to look at a bunch of jumbled details about the property (I wish it were organized better, and highlight the more important areas of taxes better). Most importantly, Realtor.com allows you to save the listing, which is crucial during a home search and is something that Trulia does not have yet (but promises at some point).

Trulia has the prettiest display, making the pictures more prominent than Realtor.com, and it has a great section on Tax and Price History that Realtor.com should add. But it is missing some really important property details that are included in Realtor.com. Most importantly, the inability to save a listing makes the app a nice way to surf around, but unusable for a prolonged property search. They indicate they’re working on that.

I really did not like Zillow’s property display. They limit you to looking at the property in the narrow bar that normally contains the property list view. That’s okay, since you can scroll down to get details rather than touch on different tabs. And you can save favorites, which is so important. But some property details were missing, and the setup was a little awkward when looking at individual properties. You use the same motion to swipe through photos as swipe through properties, and the display is narrow, so people like me with fat fingers are likely to accidentally swipe out a property when they’re just trying to swipe through pictures. Also, Zillow’s silly Zestimate functions are too prominent. Zillow’s “zestimates,” particularly the “Rent Zestimate,” might as well be a random number generator for all of their accuracy.  They’re a waste of valuable real estate (ummm, forgive the pun) on the app.

Search Experience

All three apps need some work refining the search experience, at least in my opinion. They all want you to search on the map, to the detriment of traditional searches based on parameters like town location that are often important to buyers. For example, a buyer wanting to stay in the town of New City (which is where our main headquarters is) in order to get the local school district will have difficulty limiting her search to just New City using all the apps, since the apps want you to use the map to define your search area.

My feeling is that map searching is an amazing thing, and one of the reasons to use these apps, but many buyers still define their searches primarily on town lines. I would suggest they make the location search easier and more prominent to accommodate those users.

The Winner: Realtor.com

Realtor.com wins for its overall more nuanced search capability, including being the one app that allows for restricting searches by area designations. Realtor.com not only has more detail based searching (such as restricting searches to homes with pools), but it was the only app that you could use to search for a particular town, and which would only show you homes in that town even if you moved off the map.

But it not only has the best area-based search, it also has the best map-based searching, simply because it has its “drawing” function that allows you to literally trace a circle on a map and search only for properties within that circle. I love that function. Although I think you need area-based searching, I think that if you’re going to have map based search, the best way to do that is to actually define your area by hand when looking at a map.  I think that it’s enormously helpful to buyers who are really just looking in a neighborhood.

For example, I was doing a search for near-beach properties at the New Jersey shore, and was able to use the drawing function to only show me properties that were near the beach, as opposed to using a town-based search that would show me everything in the town. This is the perfect application of map-based searching, and it seems to be a Realtor.com app exclusive.

My problems with Realtor.com? I found some oddities in the location-based searching, including properties from out of the area. It’s also unclear to me why Realtor.com won’t show you all the properties responsive to the search, instead giving you a prompt to “Show More Listings” without any indication of how many listings you’re not seeing.

Trulia

Trulia’s search function was great if you want to start with a map-based search. As you move on the map, the search refines itself to show you responsive properties to your search terms (price, size, etc.) within the map space. My problem is that if people want to limit a search to a town, they can’t move around on the map without refining the search to the map space. So I started a search in New City, got only New City properties, then moved south on the map only to find that the search terms automatically refined to include the map area, which included areas outside of New City.

Also, Trulia doesn’t allow you to save properties that you find in the search, or to save your searches. That’s a deal-breaker. You can’t do a rigorous home search without the ability to save properties or save your searches. Hopefully, they’ll fix that soon, because the map interface is great.

Zillow

Zillow search function is the weakest of all the apps, because it is entirely map based. You can’t search for particular towns, you can only set the map for an area and then “filter” the search for your basic parameters (price, type, size, etc.). This can be a little limiting. If you want to search for homes in Town A, you can put “Town A” in the search bar above the map and the map will go to Town A. But if the map also happens to include part of Town B, Town B listings will also show up on your search. That’s not as useful to most buyers, who often need to limit their searches to particular towns (to stay in a school district, for example).

The search (really, the “filter”) function is also littered with typical Zillow nonsense like viewing “Zestimate Homes” or “Make Me Move” homes. I’m surprised they ported those over to the app, since they’re deemphasizing them on the site.

Miscellaneous

Here are some other things I liked and didn’t like about the apps:

Realtor.com

  • I liked the prominent placement of the listing agent on the property detail page.  I just feel like these apps should reward the listing agents that provide them with the inventory that drives their sites. From the service perspective, it also makes sense to direct interested buyers to the person who knows the home best, rather than to someone whose primary qualification is the willingness to purchase advertising space.
  • I liked the ability to take notes on the listing, or assign ratings. Very prominent.  Maybe a little too prominent, because it takes up a lot of space on the property details display. But a serious buyer will like that feature, particularly to share notes with a co-purchaser (i.e., like a spouse sharing the account).
  • I liked the ability to go to a “gallery view” of properties, which the other apps did not have.
  • I liked the ease of saving and going back to saved searches.
  • I liked sharing shortcuts available on the settings section, which allowed me to set up my wife as my sharing “friend,” so I didn’t have to put her email address in every time I wanted to send her a property.
  • I didn’t like the necessity to go to “scout” view to see the home prices listed with the icons on the map, and didn’t understand what scout view even was.
  • I really didn’t like that the app would not show you all the properties on the map, but simply indicate that “more listings were available.”  That’s not helpful.  Put them all on the map, even if it creates a big mess, and I’ll zoom in to clear it up.

Trulia

  • I liked Trulia’s contact page, which provides a simple contact form that goes to the listing agent (at least on the properties I checked).
  • I liked Trulia’s property display, putting the pictures in a more prominent place and displaying them in a larger size. The other apps give you smaller pictures, but allow you to click on them to go into a slideshow mode.  Trulia starts in the slideshow mode.
  • I liked the tax and price history, although the data was often incomplete or wrong.  but when it was there, it was very insightful.
  • I liked the idea of Trulia’s research-y sections, involving cool shaded overlays on the maps to show you different average price ranges, and the ability to see neighborhood lines, restaurants and other amenities, and school locations.  Most of that stuff didn’t work for the areas in which I searched, but I figure they’ll build it out.
  • I didn’t like Trulia’s separation of core “property facts” from the agent-written “property description,” or the need to toggle tabs from one to the other.  They really should be combined in some way.

Zillow

  • I liked the prominent placement of “last sale” and tax info, which was tougher to find on the other apps.
  • I liked Zillow’s provision of comparable sales, which if available I could not find on the other apps.
  • I liked that Zillow allowed me to search by sold properties, which I could not find in the other apps.
  • I didn’t like Zillow putting “Zestimates” above the property description in the scroll list of information about the property was a ludicrous, self-serving choice. In particular, including a rental “Zestimate” on most properties is a waste of space, and probably should be an option for people who self-describe as investors.
  • I really didn’t like Zillow’s business model of putting competing broker advertising on a listing, directing consumers to approach buyer agents simply because those agents are paying for advertising on Zillow. Typically, Zillow suggested three “buyer agents” with contact information and a picture, then buried the actual listing agent’s name and contact information at the bottom without a picture. It’s simply wrong to take listing data from participating brokers, stock your website with that data for free, and then sell advertising space on that broker’s listing. It’s why many brokers will probably pull their listing data from Zillow, which will make Zillow a much less useful search tool in the future, although probably too late to impact their public offering.

Conclusion:

I should disclose that I have absolutely no idea what, if any, relationship my real estate company has with any of these organizations, although I am pretty sure that we give at least some of them a good deal of money to enhance our listings. I have no connection with anyone at the sites or the apps, and didn’t tell anyone I was writing this to get their insight into the app. I just used them the way consumers would use them.  So if you think I’m completely wrong, I came to my misjudgments honestly.

Also, if I have gotten something wrong factually, or if the apps are updated such that I can amend some of this, I hope someone will let me know. I’m happy to discuss this in comments.

UPDATE: this post has been modified slightly from the original.

“THIS IS THE JOB”: Seven Things That Real Estate Agents and Brokers Do that Are Not Good Enough

In a post last week, I argued that the enemy of the good is not the great, but the crappy. That is, the classic cliche that the “enemy of the good is the great” has some truth for perfectionist types that have difficulty finishing projects because they’re never quite “good enough,” but the bigger problems in the real estate industry are actually caused by agents and brokers who  do crappy work instead of good work.

The enemy of the good, I argued, is that so many people settle for doing things poorly in situations where doing them great does not take all that much more time, energy, or money.

Why? Because sometimes those things are boring, or difficult, or take a lot of time. But like I tell my agents: THAT’S THE JOB!  The job is doing those things.

Put it this way. You know what job I don’t want? Being a mover. I really wouldn’t like being a mover. I hated having to move myself, and that was my own stuff. I’d really hate schlepping around with YOUR stuff.  When I lived in Manhattan, I had a four-story walkup, and every time I got something delivered, the guys (not being sexist, it was always guys) would huff and puff while they climbed the stairs, complaining about the walkup.

My reaction was always the same: “THIS IS THE JOB!”.  If I lived on the ground floor, I could carry my own stuff in.  The only reason I AM PAYING YOU is that it requires carrying heavy stuff up stairs, and I am a soft, pasty man who doesn’t like carrying heavy stuff up stairs.  So stop complaining about the job.

It’s like if you went to the dentist, and the dentist looked at you and said, “Oh, God, more teeth. I hate teeth.”  THIS IS THE JOB!

So let’s stop complaining about things that we have to do for our jobs. If we can do things the right way, and the right way requires just a little more work than the crappy way, then do it the right way.

I got some emails from people who asked for specific examples to demonstrate the point, and I came up with exactly seven. Not nine, not six, but seven.  Amazing how that always happens.

So here are seven things that most agents and brokers could do that would be great, but most do crappily:

1.  Crappy Pictures of Listings

This is one of my pet peeves about the real estate industry.  Even thought great pictures of listings are the single best way to market a home, most agents take too few pictures, and take them poorly. It’s like the old joke: the food is bad, and the portions are too small.

There’s no excuse for this. Good digital cameras are cheap, and if you learn how to use them they can take really great pictures. You just need a decent-sized sensor, a wide angle lens, and a basic understanding of lighting.  And then you just need to keep snapping. Most MLS systems allow for a lot more pictures than most agents submit, and some allow for high-resolution photos. Instead, though, you’ll see a listing for a high-end property that has 4,000 square feet, a pool, and two acres, and you’ll get eight pictures with none of the pool, or the grounds, or half the rooms.

That’s unacceptable, and it’s not because the agent was trying to be great and thus couldn’t be good.  The agent was willing to settle for crappy.

2.  Crappy Property Descriptions

The same goes for property descriptions. It takes a little time to sit down and write a good property description, one that engages the reader, describes the entire property, and inspires buyers to want to see it. Probably not a lot of time. Not as much time, for example, as it took me to write this post, but a little time.

But most agents under self-imposed pressure to get a description done in the inadequate 24 hours that most MLS’s require to get listings uploaded will just dash off a couple of cliches, use abbreviations as if they’re under a strict word count, and just leave it there like a festering pile of crapulence for the entire listing term without every revising it.  Not good enough.

3.  Crappy Listing Information

What are the taxes? What is the square footage? Does the property have an updated certificate of occupancy for the new porch or downstairs bathroom?  That’s something that buyers need to know, and listing agents need to provide. But most agents never confirm the taxes, never go to the municipality to get the property card to confirm the C/O, and are often afraid to provide estimations of square footage for fear of being sued if they get it wrong.

But that’s the job. You’re brokering a piece of property. How can you do that properly if you haven’t confirmed that the property is legal.  All that’s going to happen is that the lack of the C/O is going to show up on a municipal search and delay the closing. Or you’ll get the taxes wrong and the buyer will demand some sort of concession. And even if you get the square footage wrong, just make clear in listing that it’s estimated and you’ll be pretty much safe from lawsuits.

Getting that information, and getting it right, is not a lot of work, and it’s the job.

4.  Crappy Broker web sites.

Okay, we’ve hammered the agents enough, what about the brokers? Most broker websites are abominable.  Indeed, most brokers don’t even have a website, and it’s 2011.  I can set up a reasonably professional website with a dedicated domain in bout two hours for less than $100 to write Star Trek fan fiction, and brokers who are selling millions of dollars in real estate every year do not have a website.

And even if they have a website, most of them are pretty crappy.  I’m not talking about “crappy” in the way that the smart guys at 1000WattBlog talk about real estate websites that are not intuitive or up-to-date or client friendly, and have the challenge of competing with well-funded national sites like Trulia or Zillow. I’m talking about stuff like this (no names or links, because I’m not trying to disparage anyone personally):

  • A local competitor of mine in Orange County, New York, one of the top 3 brokers by marketshare in the area, whose front page of the website has two paragraphs of text with three grammatical errors and discusses all of its 2009 accomplishments.  2009!!!!  Obviously, one of the 2010 accomplishments did not involve updating the website…
  • A local competitor of mine in Rockland County, New York, one of the top 5 by marketshare, whose website has scrolling text, flashing links (smiley faces), about 50 link icons and over 80 links on the sidebar.  80 links!  Lots of stuff I don’t even know what it is, but I did find the “Contact Us” link there, coming in at number 75, right above the “Find Your Agent”.  Can you imagine sifting through 75 links to find a “contact us” page?
I could do this all day, but the fact is that at least those companies have websites. By my calculation, about 35% of the business in our market is done by companies that don’t even have one.  That’s seems odd, given that the internet has kind of become a big thing.

5.  Crappy Agent web page pictures.

Earlier this year, my company had an “Extreme Makeover” training class for about 300 agents.  During the full-day class, we provided every agent who attended with new head shots.  The photographer was actually in the back of the room, and people signed up for times and would get up from the class to take their picture when it was their time.  Why? Because I was tired of low-resolution, lousy headshots on marketing materials and the website.

You can go get a good headshot for $40, and put it on every piece of marketing that you do. Or you can continue to have that cropped, low resolution photo that a friend took with a camera phone four years ago, and use that as the way you present yourself to the world.  Get a new picture.

6.  Crappy Disclosure Documentation

Disclosure documentation is a fact of life in the real estate business.  Every agent meeting with every client is supposed to provide a set of documents for disclosure and acknowledgment. If that’s the case, though, why are most disclosures so crappy? Why are brokers still requiring agents to provide clients, at the first meeting, when first impressions are formed, with documents that are fourth-generation copies of copies, on different-sized paper, all bundled haphazardly in a cheap folder.

It’s such a terrible system.  The first impression you make on your clients is that you’re too cheap to get professional forms copied. Brokers — find out what forms you definitely need for a new listing, and a new buyer, and get them bound together and copied professionally so that they look good, don’t get lost, and make a good impression. It costs a little more, and it takes a little more work, and you get killed on printing costs when the stupid department of state makes a technical change on the New York State Agency Disclosure form and leaves you with 5,000 extra copies of your bound disclosure packets that you now are going to use for mulch (okay, that’s pretty much just me, this year).

But on the whole, you make a better impression than when your agent has to root around in a folder looking for some grainy copy of a form that might have fallen out in the car.

7.  Crappy Industry Knowledge

Why do so few brokers and agents stay on top of what’s happening in the industry? Every year, I attend about four or five industry conferences. I see the same people there. We all know each other. But I’m shocked at how few agents and brokers actually attend these gatherings.

And for the most part, agents and brokers don’t even follow industry news.  Each week, I send out an email with industry and real estate news.  The biggest response I get is that the email is too long.  Too long!  It’s news about the industry we work in, with information that keeps us up to date about how we can best service our clients!

Imagine going to the doctor and he looks over at a pile of medical journals on this desk and says, “Oii, I hate reading all that stuff.”  Would you feel good about your upcoming surgery?

Yes, going to industry conferences can be expensive and a drain on your time. And, yes, trying to follow the unending stream of news about the industry and the market can seem like a full time job. But that is, after all, the job.

So do the job well.

The Guide to the Best Smartphone Apps

A good smartphone is really a mini-computer in your pocket, capable of doings things that computers even five years ago could not do.  But you’re not getting the most out of your smartphone if you’re just using it for making calls, checking email, and surfing the web.  Those are all good things to do, but if you really want to take advantage of your smartphone you need to learn how to use your apps.

What is an app?  Simply put, it’s a mini-application.  You use applications all the time: Microsoft Word is an application, so is Powerpoint, so is your mail program.  Traditionally, applications are big complicated pieces of software that can cost hundreds of dollars. But Apple pioneered the idea of an application as an “app,” a high-powered but simple application that you can get for free or purchase for a relatively small amount.   Some apps are simply smartphone versions of websites or programs that you can use on your computer, while others were created simply to use the power of your smartphone in interesting ways.

What follows is a very unofficial, incomplete, and totally personal Guide to some of the best apps out there for the iPhone and Droid smartphones.  There are hundreds of thousands of them out there, and lots of places where you can get advice about what to buy, but these are the apps I use all the time.  Amazingly, the Android operating system for Droid phones has caught up with the iOS operating system for iPhone, and almost all major apps are available on both platforms.  I also included iPad apps that are specifically designed for the iPad.  I did not include Blackberry apps, because I have not used them and the Blackberry is still very far behind in establishing its app sales.

You can find iPhone and iPad apps at the  App Store, and Droid apps at the Android Market. Just search for the name and you’ll find them.  This is a work in progress, so if you have suggestions of new apps to add to the list, just email me.

Here is an outline of the organization for the apps that follow

  • Business and Productivity Apps
  • Communication Apps
  • Information and Reference Apps
  • Leisure Apps
  • Entertainment Apps
BUSINESS APPS: Productivity, Social Media

Google (iPhone, iPad, Droid) (free)
The Google app is a must, if only because it gives you quick access to the Google sites you might be using, like Docs, Calendar, etc. Unfortunately, Google does not have dedicated apps for most of its services, so this is the collective “hub” for getting to them without going through Safari.
You can also do a search through the app. Just convenient to have it directly.

Google Voice (iPhone, GV Connect for iPad, Droid) (free or $1)
If you don’t use Google Voice at all, you should check it out.  You can set up a universal phone number that will ring all your phones (i.e., mobile, work, home office) at once, so people can call you at one number and get you wherever you are.  And then Voice can also transcribe your voicemail (although the transcriptions are not great) and save it as an audio file link that you can access with a click.  If you use Visual Voicemail that comes with the iPhone, this is a slight upgrade.  Also great because your text messages are all available on Google Voice wherever you are (any internet computer, and your phone), which can be helpful. For the iPad, Google doesn’t have a dedicated iPad app for Google Voice, but you can buy GV Connect that provides a good app experience to review your messages and texts.

Evernote (iPhone, iPad, Droid) (free)
A terrific notetaking app that can sync your notes between your mobile device, computer, and any other device, accessible anywhere you can get on the internet.

Social Media Apps (iPhone, some on iPad, Droid) (mostly free)
All the big social media sites have apps for your smartphone that are very useful and often better than the computer experience: Facebook, Twitter, Linkedin Foursquare. They’re all free, and what’s great about them is your ability to check out social media updates in your downtime, without interrupting productive work. For example, surfing social media is a fun and easy thing to do when you’re waiting on line, which turns out to be a lot of my day. Not all of the sites are on the iPad with apps (no Facebook app?), but they all have third-party services that let you check out your social media fees (fyi, the best Facebook iPad app is Facely HD).

Dragon Dictation (iPhone, iPad) (free)
People that don’t type well will love Dragon Dictation, a free app that will transcribe what you say into it, turn it into text, and allow you to save it as a note or send by email.  Very effective, and pretty good with transcription.

WordPress (iPhone, iPad, Droid) (free)
Wordpress has a dedicated app for reviewing your WordPress blogs.  You won’t want to write a blog post, but you can review comments, approve them, do some little things.

Real Estate Search Apps (iPhone, some iPad) (free)
The real estate search apps are all pretty good and free.  The best smartphone  are Realtor.com’s and Trulia.  Great for searching on maps, so you can see where the properties are. The best iPad app available right now is Zillow, which I don’t love (seems like the inventory is incomplete) but does provide a big screen experience for home browsing on the iPad.

DropBox (iPhone, iPad, Droid) (free for 2GB storage)
DropBox is an amazing app that allows you to store your big files so you can share them between computers, and now between your mobile devices.  Great way to move big files from one computer to another (like, from work to home), or to keep them available wherever you are.  You can also share files by putting them into a public folder, and sending people the link, which is better than emailing them that 10MB PDF.  It’s a great service, and the apps are terrific. Perfect for moving movie and picture files from computer to computer, and then having access from your smartphone.

COMMUNICATION APPS: Messaging, Calling

FaceTime (on iPhone, $1 app for iPad)
Facetime is not strictly an “app,” because it comes on the iPhone 4 standard and can be found when you pull up a contact, but you should make sure you know how to find it. When you pull up a contact in your phone, you can  click on the number to call the number, the email to email the contact, but at the bottom of the contact are buttons for text message and facetime.  For iPad, you can get an app for about a dollar that works great.  Remember Facetime only works when you’re on a wireless network.  (I don’t know that Droid has anything similar.)

Speed Dial (iPhone) ($1)
A must for the iPhone, which does not have dedicated buttons for speed dials.  There are lots of variations on this.  You can get a free app called “Speed Dial #1,” “Speed Dial #2”, and so on, which gives you a dedicated button for a one-touch dial, but you’ll have to memorize the order.  A better choice is “Speed Dial,” which provides a yellowish version if iPhone’s “Phone” app and leads you to up to 24 programmable buttons that you can label for your speed dials.  Takes about 10 minutes to set up, and then you have two-touch speed dialing: hit Speed Dial, then hit the name you want. Very quick.

Meebo (iPhone, Droid) or Imo.Im (iPad, Droid) (free)
If you use computer-based instant messaging (as opposed to text messaging on your phone number) on services like MSN, Yahoo Messenger, Facebook messenger, Google Chat, or lots of others, you can consolidate all of them on Meebo on the iPhone/Droid or Imo on the iPad and have one site to check for your text messages.  Set up all your accounts, and lot onto all or some of them at any time.

INFORMATION APPS: News, Sports, Reference

Pulse News (iPhone, iPad, Droid) (free)
Zine (iPad only) (free)
Pulse is a great app that aggregates news based on the preferences you put in, and then gives you news feeds that fit your preferences. If you use Google Reader, for example, it pulls in all your RSS feeds. If you don’t understand that last sentence, don’t worry – the basic idea is that it customizes a news feed. If you do nothing else other than set up a real estate news feed on Pulse to keep up with the news, it’s a great use of the app. And looks amazing on iPad.

NYTimes (iPhone, iPad, Droid) (free for now)
A great app for checking out top stories, even if you’re not a subscriber.  You get it free if you’re a subscriber, but soon they’ll be charging heavier users. It’s not clear what the apps will cost, but it will probably allow for some access to top news with payment if you want deeper coverage.

Sportacular (iPhone, iPad, Droid) (free)
For sports updates, Sportacular is quicker than any of the ESPN apps, which are slow and laden with a difficult interface.  Sportacular just gives you the scores by sport, easy to look up.

Wikipanion (iPhone, iPad) (free)
Wikidroid (Droid) (free)
A great app for looking stuff up without having to go to Google.  Wikipedia is a user-generated encyclopedia that is surprisingly effective, and I find myself looking something up on it once or twice a week and always being entertained and informed. Wikipanion and Wikidroid are great apps for getting into Wikipedia in a customized setting without going through the browser.

The Weather Channel (iPhone, iPad, Droid) (free)
The iPhone and iPad come with a very cute weather app, but it doesn’t give you a lot of information.  The Weather Channel app isn’t ideal, but it provides a lot of information for your area with cool graphics.

Google Earth (iPhone, iPad, Droid) (free)
I already mentioned the Google app, but the Google Earth app is so good that I want to highlight it separately.  Google Earth on the computer has been around a while, but the experience on the mobile device is just great because of the location search and just the visual of watching the globe zero down on where you.  A must for real estate people that need to know their terrain and maps.

Maps (iPhone, iPad) (installed)
All smartphones come with the Maps app, but it’s worth pointing out just how great it is and how you need to become familiar with how to set your location and get driving (or walking!) directions.  The idea that years ago you bought a specialized device for this service, and now the your phone has it, is just amazing.

LEISURE APPS: Books, Movies, Food

Yelp (iPhone, iPad, Droid) (free)
Yelp is a great business directory website with user-generated reviews, mostly of restaurants but growing.  This is the kind of website that is geared for mobile device, because you can literally be standing on a corner, go on Yelp to look for nearby restaurants, and choose them based on cuisine and user reviews.  Vastly superior to the Zagat app. I use it all the time, and constantly when traveling.

OpenTable (iPhone, iPad, Droid) (free)
My wife swears by this app, which allows you to find restaurants and then make restaurant reservations right from the app.  No phone calls, no waiting on hold, and you can find the right time by yourself.  Has location-based searching, so you can look for restaurants near where you are.

Kindle App (iPhone, iPad, Droid) (free)
If you have a Kindle, this is a must – all your Kindle books can be loaded onto your Smartphone.  You’d think it would be difficult to read on the phone, but once you get used to reading your email, news, and other items on it, books are not much of a reach. And with the iPhone 4, the resolution is so clear that you don’t get eyestrain. The books also look amazing on an iPad.  Tip: you can store your Kindle books on up to six devices (your Kindle, your iPhone, iPad, etc.), which means that you can get just one Kindle account and share your books on multiple devices with other members of your family (i.e., you get a Kindle and an iPhone, your spouse has an iPhone and an iPad, and your kid has a Droid, all sharing the same book account).

Epicurious (iPhone, iPad, Droid) (free)
The best recipe app, with tons of recipes searchable in a lot of ways.  It also lets you create a shopping list, a great use for your mobile device.

Movie Apps: Fandango and “Movies by Flixster” (iPhone, iPad, Droid) (free)
If you like movies, you need these two apps.  Fandango is the app for the website that allows you to buy tickets online for movies, and Flixster has content from the Rotten Tomatoes movie-reviewing site.

ENTERTAINMENT APPS: Music, Video, TV, Radio
Pocket Tunes (iPhone, iPad) ($6.99)
A great app for people that like to listen to the radio.  Virtually every radio station you can think of in very good audio.  Great for getting local news and sports stations on your iPhone, superior to traditional radios because you don’t get static.

SiriusXM Premium (iPhone, iPad, Droid) (free app with subscription)
If you have either Sirius or XM in your car, you can get access to the satellite radio service on your iPhone or iPad and listen anywhere.  Audio is slow, though, if you’re not connected to a wireless network.

MLB.com At Bat 11 (iPhone, iPad, Droid) ($14.99, lite version for free)
If you are a baseball fan, this app is amazing. You can get updates on any game, with highlight videos that look great, and in many cases can actually watch an out-of-market game right on your device.  Fantastic if you’re a fan of a non-New York team and want to watch the games, and better than getting the cable service that provides access to games because it’s more portable on your device and less annoying to the non-baseball fans around you. If the $15 is too pricey, the free version has some great features also.

Slingplayer Mobile (iPhone, iPad, Droid) ($29 plus Slingplayer)
Slingplayer is a device that costs about $200 which connects to your television and lets you watch THAT television from any internet-connected computer.  This app lets you do it from your Smartphone or iPad, great for traveling if you want to watch something on your DVR. A little pricey, but it allows you, as I have discovered, to watch TV in bed with the headphones on and your spouse happily sleeping.

Shazam (iPhone, iPad, Droid) (free, or $5)
Soundhound (iPhone, iPad, Droid) (free, or $5)
The classic apps for people that like music.  Hear a song you like, just hold your device up and it will identify the song for you so you can buy it. Both are free for a limited number of songs per month, and a few bucks to get unlimited use. They also have other features I haven’t tried (like lyrics)

Pandora (iPhone, iPad, Droid) (free)
Last.FM (iPhone, Droid ) (free)
Slacker Radio (iPhone, Droid) (free)
Pandora was the first breakthrough app on the iPhone, the idea that you could create your own personalized radio station based on very specific music or artists you like, and have the station play similar music.  For example, you can tell the app what artists you like (e.g. “Jack Johnson”), and it will create a virtual radio station for you – not just of that artist, but artists with similar styles.  And if you don’t like a song, you can “skip” it or give it a “thumbs down” and the system will learn your taste. Great for finding new artists that fit your taste.  Pandora has started running commercials, so a number of competitors have gained popularity.  They all have positives and negatives, but having one of them is a must (or all of them, then decide if you want to upgrade one of them).

 

Again, if you have additions or corrections, or if you would like to contribute a list of Blackberry apps, I would welcome that. Just feel free to contact me here.

Are Real Estate Agents Worth It? Yes!

NOTE: This is a reprint of a post I made in early February on the Market Intelligence blog that I write for my company in New York.  Since it has some universal application to the industry, I thought I would share it here.  The bottom line: good real estate agents are, and always have been, worth the money they’re paid.

 

The New York Times ran an article on the front page of its real estate section last week describing how some home sellers are starting to consider whether it makes sense to sell a home on their own, or otherwise try to sell without paying a full brokerage commission.  For example, the Times pointed out:

  • · For sellers who have watched the prices on their houses slide in recent months, the idea of eliminating the middleman — a real estate agent and his or her 6 percent commission — can be alluring.

Oh, wait! Sorry, that was actually a quote from an article in the Times from June 2008, which made basically the same point.  Actually, what the Times said was:

  • · This is subversive stuff. Homeowners across the United States are figuring out that they do not need to pay what agents demand and they may not need an agent at all. At the same time, technology is giving consumers tools to nearly circumvent the agent.

Oops.  Sorry, my mistake again!  That was actually from an article in the Times in September 2005, which again made basically the same point.  Let me try again.  Here’s what the Times said:

  • · Highly competitive marketplace conditions coupled with concerns about inflation are encouraging a number of sellers and brokers to look for alternative ways to market homes without paying a full brokerage fee.

Darn it, I keep quoting from the wrong Times article!  That was actually from the Times from 1981 (!) the first of what turns out to be many, many articles from the Times over the past 30 years that keeps forecasting the end of the real estate brokerage industry as we know it.

Indeed, in just fifteen minutes or so of searching, I found that the Times basically has written the same article over and over again for the last 30 years, making the same points that sellers are just about to turn their backs on the industry and turn to the internet, or discount brokers, or selling homes on their own:

And yet, year after year, about 95% of home sales are conducted through brokers.  I daresay that the real estate industry model seems to be in better shape, even after a bunch of down economic years, than the newspaper industry model. (Not to mention the deep irony of the Times writing year after year about how the real estate industry is essentially doomed in a section of the newspaper that would not exist if not for real estate broker advertising….)

So it occurred to me that it might be helpful to set out why I think that the brokerage compensation model has survived relatively unchanged after all these years, even with all the challenges of media hostility, technological change, and alternative business models.  I started putting it together, and it took longer than I thought, so here’s a basic outline of what’s coming:

  • · First, some stipulations to guide the discussion.
  • · Second, a fundamental guide to how the real estate industry works.
  • · Third, an explanation as to why most sellers still choose full-service brokers.
  • · Fourth, a review of what you need to know if you’re going to sell on your own.
  • · Fifth, some conclusions.

If you have any comments you’d like to make directly to me, you can email me. I look forward to substantive comments below, but would ask people to avoid incivility.

I.  STIPULATIONS

Now, it’s always a little dangerous for a real estate broker, which is what I am, to defend the brokerage industry online, because all it does is invite message board “trolls” to swam the post with various diatribes about the industry, their brokerage experience, the massive success they had selling their home on their own, etc.  I fully expect to hear from all of them, which is a wearying prospect.

So let me stipulate to a few points:

First, not all brokers are worth the money.

I agree that many of the players in the industry don’t deserve the commission they charge.  Let’s stipulate that any argument I make below is really only in defense of brokers and agents that actually provide top-notch marketing services, great communication and information services to their clients, and professional assistance in marketing, staging, negotiating, and facilitating a sale.  (But can we also stipulate that if most brokers didn’t do that, at some point the buyer and seller community would have vindicated the Times’s 30 years of doomsday forecasts?)

Second, all commissions are indeed negotiable.

Before I get in trouble with the Justice Department, let me also stipulate that all commissions are indeed negotiable, and sellers are free to try to negotiate the commission on the sale of their home.  It’s just that an individual broker can set his or her fees for the services provided, just like doctors, lawyers, plumbers, hair stylists, or anyone else that provides a service.  The cost of coffee at Starbucks is technically negotiable, and may not be worth what they ask you to pay it, but Starbucks also has the right to set the fee on the services it provides.

Third, sellers can indeed sell their homes on their own.

People often think that real estate brokers are insulted by people who try to sell on their own.  That’s not really the case.  I don’t see FSBO’s as invalidating the industry and what it provides. I understand what they’re doing.  If you really think that you can sell your home and net more in your pocket than you could by hiring a broker, then I certainly don’t begrudge you that choice.  (More on that below).

II.  UNDERSTANDING HOW THE INDUSTRY WORKS

Getting past those stipulations, I wanted to make sure that we understand the basic structure of the real estate brokerage. When I read those articles in the Times, the main thing that strikes me is how little these journalists, one after another, actually understand the industry. They don’t seem to understand how brokerage commissions are split between two sides (the list side and the buy side), they don’t appreciate how much work agents do in a real estate transaction, and they never consider how agents do all that work without a guarantee of getting paid.

First, commissions don’t just go to the listing broker.

The first thing you need to know is that the legendary “6% commission” (and let me stipulate again for the good folks at the Justice Department that I am simply using the figure from the Times) does not mean that your individual real estate agent collects 6% of the sale of the home.

Rather, that 6% commission is usually split between a listing broker and a buyer broker,the brokerage and agent who represent the buyer in the transaction. Hiring a listing broker who is part of a multiple listing system means that the listing broker will make an offer of cooperation to all the other members of the MLS, which usually includes all the other brokers in the county.  You don’t hire a listing broker and only get the services of that broker to sell your home.  Instead, listing with that broker gives you access to all the other brokers and agents working in the county. But those other brokers and agents aren’t going to work for free, which is why the listing broker splits that commission with the successful buyer broker.  You need to incentivize buyer agents to want to show your home.

Second, agents need to get paid for the work that they do.

We can argue all day long as to what the appropriate compensation should be overall, but I don’t think that anyone disputes the basic idea that real estate professionals need to be properly compensated for the work that they do:

The listing side needs to be compensated for the time, energy, and money required to help the seller analyze prevailing market conditions, consult with the seller on setting a sales price given the market, identify priority selling points, prepare the home for sale, ensure compliance with legal requirements for selling your home, document the relevant property data, take pictures of the home, write up descriptions, upload the property to MLS and various internet sites, prepare flyers, put up a sign, prepare a lockbox, coordinate showings, answer questions from potential buyers and other agents, hold public open houses, obtain feedback after showings, communicate with the seller, monitor online traffic for the home, field offers, negotiate offers, schedule inspections, handle remediation requests following inspections, prepare documents for attorneys, coordinate a walkthrough, and help facilitate the closing.

The buyer side needs to be compensated for the time, energy, and money required to consult with the buyer about their needs, help them ascertain their price range, get them pre-qualified by a mortgage lender, do comprehensive searches to determine what properties to see, track down answers to questions that buyers might have about properties, stay on top of the market as new properties come up, schedule showings, preview properties to be showing, prepare show sheets and buyer tours, attend showings, provide feedback to listing agents, prepare, present, and negotiate offers, schedule and attend inspections, handle inspection issues, coordinate with the mortgage lender, provide documentation to attorneys, schedule and attend the walkthrough, and facilitate the closing.

Moreover, all that is just what brokers do in a “clean deal,” not factoring all the work that goes into more difficult situations.   Some listing agents will end up doing a lot more when the home needs significant remediation work, when the home takes longer to sell and requires multiple open houses, or when offers and deals require significant handholding and care. Just think of the time spent doing four or five open houses on a home (not unusual if a home is for sale for six months or more, which is the average time in this market), at four hours per open house.

And we’re glossing over the amount of work buyer agents do in preparing showings, particularly for buyers who often see dozens of properties before they settle on something. The rule of thumb is that the showing of a single home takes about an hour, factoring in the previewing, preparation, travel time, showing time, etc., so a buyer seeing dozens of homes racks up significant agent time.
Third, don’t forget that brokers only get paid a commission on an actual sale.

On top of that, remember the fundamental trade-off in a commission environment – after all that work, a real estate broker doesn’t get paid if the deal doesn’t go through. The listing broker gets nothing if that home does not successfully sell, and the buyer agent gets nothing if the buyer never finds the right place to purchase.  In other words, you get the benefit of the services provided by a real estate broker, and you get that benefit for free if you ultimately do not sell or buy a home.

Now, of course, none of that matters to a seller who actually sells and pays a commission – the successful seller shouldn’t have to think of herself as subsidizing all the work that the agent did for the seller who never actually sold.  And I don’t think that she does. I think that the agent gets fairly compensated for the work done on the deal that actually happened.  But it’s worth remembering that anyone who hires a broker gets those services regardless of whether the home actually sells.

III.  WHY MOST SELLERS AND BUYERS USE AGENTS

With all that in mind, I just want to explain why I think most homeowners make a fully rational choice when they use a broker to sell their home.  Indeed, I think that the industry itself generally does a poor job of explaining its value to clients, which is why the industry is not generally held in high regard and is prone to unremitting attacks on its value.

Here’s why I think most home sellers use a broker to sell their home.

1.  The real estate brokerage industry creates a great market for homes.

The most misunderstood part of the industry is how the brokerage industry cooperates to create a very fluid market for the sale of homes.  Because listing brokers split their commission with buyer brokers, the industry creates an open market in which you can go to any broker in an area to get help to buy virtually any home for sale in the area.

Think of it this way: it’s actually easier to buy a home than it is to buy a car.  When you want to buy a car, you have to go visit dozens of dealerships to find the right car. Yes, you can do some searching online, but if you actually want to go see cars you have to go to individual dealerships, because the dealer can only show you the cars that particular dealer is selling.  So let’s say you’re looking to buy a $30,000 sedan – you have to visit the Chrysler dealer, the Chevy dealer, the Ford dealer, the Hyundai dealer, the Honda dealer, the Nissan dealer, the Toyota dealer, the Acura dealer, the Lexus dealer, the Infiniti dealer, the Mercedes dealer, the Audi dealer, the BMW dealer, and all the rest (I’m sure I’m missing some).  Also, you have to visit multiple dealers for the same brand, since one particular Chrysler dealership won’t sell you a car offered by a different Chrysler dealer.

And you have to do all that without any representation. No one is setting up tours for you, or giving you advice on recent sales, or counseling you on your offer. There’s no “car representation agent” service available to help you choose among the various options, help you weigh those options, or help you negotiate your deal. (If any burgeoning entrepreneurs out there want to start a company like that, I’d like to be your first client, and I’d probably invest!).

Buying a home is different. You go to any broker in the area, and that broker can show you virtually any property for sale by any other broker. You don’t have to go from broker to broker to find out what that particular broker has listed, because brokers cooperate.  But cooperation requires incentives to both sides, which you won’t get if both sides are not cooperated.  If you think that brokers are overpaid, that’s fine, but then you’re really arguing that the real estate industry should behave more like the auto industry, which I don’t think anyone wants.

So that’s one reason why most sellers use a broker, and why virtually all buyers use a broker.  Because the industry creates a fluid open market in which every seller has access to all buyers in the area, and all buyers have access to all properties for sale (including information on other sales for comparison).

2.  Good real estate brokers provide a comparatively good value for their fee.

So now let’s look at the fee itself, and whether it is disproportionate for the services provided.  Let’s say that a broker charges 6% (just an example, for all your fine people at the Justice Department!), and offers out 3% to cooperating brokers.  That means that the listing broker collects 3% for the listing side work, and the buyer broker collects 3% for the buyer side work.

Is that really disproportionate?  Let’s compare that commission to what some other service-providers who are paid by percentages charge:

  • · Attorneys on contingency: Attorneys charge about a 35% contingency fee, not including their expenses, for most personal liability claims.  That’s essentially a 35% fee, but only if they are successful, much like brokers charge their fee only if they are successful.  Unlike brokers, though, attorneys also take their expenses off the top.

  • · Asset Managers: If you hire someone to manage your assets, either in high net worth situation (i.e., a hedge fund) or even in a simple mutual fund, the normal charge is a small percentage (say 1%) of the amount of the assets, but it’s charged every year.

  • · Interior designers: interior designers usually get paid in two ways: a basic fee per hour, and then a percentage of everything they help you buy (which is essentially offset by discounts that designers get you).  So that might be, say, $100/hour plus 30% of the furniture you buy.

You may object that real estate agents do not have the training or expertise of attorneys or asset managers, which is a fair point (although my experience with the performance of most asset managers does not inspire me with faith in their abilities).  But I’m not comparing what brokers do to what these professionals do.

My point is more that a 6% (just an example for all the fine people at the Department of Justice) as a commission, split between the listing side and the buyer side, is not an outsize compensation structure given some of these other services.  Attorneys take 35% of your recovery if they represent you in personal liability issue, or probably $200-500-1,000/hour for their services.  Asset managers keep roughly 1% of everything you invest with them, regardless of whether their investments go up or down, just for the service they provide in managing your account.  And they collect it every year you’re invested in them.  And interior designers routinely get 30% when they advise you about furnishings to buy.

I’m not complaining about any of that. I am an attorney myself, but I hire attorneys all the time to represent me (I don’t trust myself…). I have someone managing my assets.  I have a great interior designer who did a wonderful job when I bought a new place last year.  They all do wonderful work (not so much the asset manager, but at least I have something left), and they’re all entitled to be paid.

But given those structures, I’m not so sure what’s so bad about a real estate industry commission structure that charges 6% (or whatever the number is) for services provided, especially given that:

  • · The commission doesn’t even get collected if the deal doesn’t go though.
  • · The commission is paid one time, regardless of how long you own the home.
  • · The commission is split between a listing broker and a buyer broker, to create incentives for both sides.

If you don’t like those comparisons, let’s then just compare what real estate agents make versus the other professionals involved in a real estate transaction.  Essentially, if you compare the revenue generated by full-time professionals involved in a real estate transaction, the revenue earned by agents participating in the real estate industry is not out of line.

  • · Real estate attorneys.  In real estate situations, attorneys usually charge a set fee for handling everything involved in the transaction.  The fee varies, but generally runs in this area between $500 and $2,000.  How much work is involved? It depends. It could be just a few hours for a simple deal to prepare a contract, review title, and set up and conduct a closing.  But let’s say that an attorney charges $1,000 for a closing and spends five hours on the transaction (an hour on the contract, an hour on negotiation, three hours on the closing).  That’s $200 per hour of work.

  • · Engineering Inspection. Companies that do physical inspections of homes generally get paid about $400-$500 for a service that takes two or three hours, including the physical inspection itself and the report that gets completed.

  • · Lenders. Regardless of whether you use a mortgage broker or a banker, you generally pay about 1.5% to 3% of the mortgage amount for the bank’s services (and of course, for the bank’s money).  The amount of time the lender’s employees have to spend on the file varies widely, but at minimum it takes 20-30 hours to properly process a loan, including consultation, documentation generation and review, underwriting, and clearance.

Although comparisons are difficult if we don’t actually know what the particular charge is or how much time it takes, we can make some assumptions that will help us.  An attorney who does mostly real estate transactions will generally close about 200 transactions a year, and could do quite a few more (or less in a difficult market).  That sounds like a lot, but it means about four closings a week, which is not a ridiculous schedule for a real estate attorney.  An engineer probably does about 300 or 400 inspections a year. And a really good individual mortgage loan originator might close 50-75 loans in year (most close a lot less, that would be a pretty good year for most).

So how does that work out:

  • · An attorney charging, say, $750 for a closing and doing 200 closings a year would generate $150,000 in closing revenue in a year.
  • · An engineer charging $450 for an inspection and doing 250 inspections in a year would generate $112,500 in revenue per year.
  • · A mortgage originator making 1.5% on an average loan of $300,000, and 75 loans for the year would generate $225,000 in revenue per year.

Let me again stipulate that I don’t have a problem with any of that.  Attorneys, engineers, and mortgage professionals provide a great service to clients, and they deserve to get paid.  Indeed, I think that attorneys, for example, are underpaid for the work they often have to do on a real estate closing.

But I also think it’s instructive to compare the revenue generated by the participants in that industry compared to real estate agents.  So let’s compare the revenue generation at the current compensation models.

What do agents get paid?  Really good real estate agent will close about 12 transaction sides a year.  Some agents close a lot more, most close significantly less. Indeed, the average agent in the local MLS participated in about 3.5 sales last year (but that includes a lot of non-full time agents).  As a comparison point, I can tell you that most real estate systems have award programs that start to kick in when an agent closes about 7 or 8 transactions. So 12 transactions is a very good year for a real estate agent, akin to a full-time real estate attorney, experienced engineer, or good loan officer.

So what is that agent making?  Well, if the agent closes 12 transaction sides in a year, with an average sales price of, say, $300,000, and an average commission side of (for example) 3%, that agent would generate revenue of $108,000.  (Note that this revenue gets split between the agent and the broker, much like the revenue earned by a mortgage broker.)

So if we compare what a good real estate agent generates for yearly revenue against an attorney, engineer, or mortgage originator, it doesn’t seem out of line.  Note that we’re just talking revenue, without considering expenses or anything like that.  We’re just comparing the revenue streams generated by the various industries involved in a real estate transaction.  And if you look at it that way, even a 6% commission does not seem out of line with the compensation structures set up for attorneys, inspection engineers, or mortgage professionals, particularly when you consider that the commission is again only collected on a successful transaction.

3.  It takes a lot of work to sell a home.

People who complain about broker’s fees often underestimate the work that goes into selling a home. They take a superficial view that all they have to do is put up a sign, write up an ad for the paper, and handle the transaction yourself.

I’ve already articulated the various services that both a listing agent and a buyer agent provide for the commission paid by a seller. I think that most sellers appreciate the time and energy those services require, which is why most sellers hire a broker.  But if you are considering selling your home without a broker, I can just itemize some of the things that you need to do on your own:

  • · You need to properly price your home. Properly pricing a home requires access not just to properties that are on the market – in fact, pricing your home to the unsold properties on the market is a good way to ensure that your house joins them.  What you need is access to what has actually SOLD on the market, which is not as easy to find.  You also need to know how to read the market.  You could, of course, ask agents to come in and help you, but it requires a certain intestinal fortitude to bring in agents to help you price your home with the intent of using their advice and then selling on your own.

  • · You need to be able to watch the market. Even if you get an agent’s unpaid advice on the initial price of your home, you have to be able to watch the market so you can adjust your price. Again, this requires you to have access to information on homes that have sold, which is not easy to access.

  • · You need to do the fundamental marketing: sign, pictures, descriptions. Assuming you’re going to get your home online, either on your own website or through some FSBO-oriented website, you’ll have to take your own pictures and write descriptions.  That’s not impossible, and some agents do a relatively poor job of it, but really good agents get that way because they know how to write engaging descriptions and take evocative pictures.  Also, if you’re going to put up a sign, put some money into it and get it done professionally. Nothing looks worse than getting one of those hardware store “for sale” signs and stapling it to a stick in your hard.  That’s not going to impress a buyer with the care and dedication with which you’ve maintained your home.

  • · You need to market your home online. When you list with most brokers, you’ll not only be on their website, but all cooperating broker websites, major real estate websites like Realtor.com, Trulia, Zillow, and others, and also media sites like NYTimes.com, lohud.com, and recordonline. Not all brokers are on all the sites like we are, but most brokers provide some online marketing. You can get access to some of those sites as a FSBO, and there are dedicated FSBO sites, but it takes some work and money to upload everything.  But if you’re going to sell your home, you need to be online.

  • · You need to be able to negotiate your own deal. Most people think they are good negotiators, and a lot of them are. Maybe you’ve done negotiating as part of your own job, so you’re confident that you can negotiate a good deal.  That’s very possible, although don’t discount the difficulty of negotiating directly with a counterparty, rather than through an intermediary. It’s sometimes tough to negotiate something on your own without having someone to act as a buffer, if only because having someone negotiate for you can remove some of the “personal” aspects of the transaction.  It’s also tough, by the way, to get good feedback from buyers directly, who might be uncomfortable talking directly to you the way they would to an agent.

  • · You need to have some free time available. Selling a home requires a lot of availability for showings and open houses.  Realize that an open house generally requires four hours of time, and you might need to do multiple open houses.  That kills a bunch of Sundays.  And you need to be available to show the home, something that brokers do for you either personally or with a lockbox that makes the home available to other brokers. In a market like this, the home needs to be available to show as much as possible.

All that said, it is indeed possible to replicate the work that a good listing agent does on your own.  It takes a bit of research, a little money, and quite a bit of time, but it’s possible.

IV.  SELLING YOUR HOME ON YOUR OWN – THE MARKET CHALLENGES

Even if you have the time, energy, and money to do all the listing work yourself, though, you still are going to have some challenges in selling your home on your own.  Remember that even doing all these things yourself, and doing them well, you’re only replacing the services of a listing agent.  You’re not doing anything that replaces the work of the buyer agent.

Which brings us to the fundamental problem sellers have if they try to sell on their own, above and beyond the work that they have to do if they are acting as their own listing agent — the size and nature of the buyer market that you reach.  Here are the problems:

1.  You’ve got a much smaller buyer base.

If you list with an MLS broker, you get access to all the buyer agents in your market, and all the buyers they represent. If you’re not listed, those brokers might not know you’re even on the market, and the buyers working with them won’t be aware that your home is for sale.

The problem is basic economics.  If you want to sell your home for the highest price possible, you need the biggest buyer market possible.  That means making your home available to every potential buyer in the marketplace.  But you don’t get that if you sell on your own.  You’re limiting yourself just to the group of buyers who are looking for homes on their own, which is a very small group. You don’t incentivize buyer agents and all the buyers they represent, you don’t reach buyers unless they’re looking specifically for FSBOs, and you thereby don’t reach the largest number of brokers possible.

2.  You’ve got a skewed buyer base

Not only is your buyer base smaller, but it skews to precisely the kind of buyers you don’t want.  Most legitimate buyers are working with agents.  Why wouldn’t they, when buyer agents will do all the work for them and get paid by the seller?  The buyers who are not working with agents are doing so for a reason – they’re bargain hunters looking for a deal, and they believe that if they find a FSBO they can save money.

How?  Because they know you’re not paying a commission, so you’ll take less.  Indeed, the buyer will use your FSBO status in negotiation: “well, you’re listed for $400,000, but if you had a broker you’d only net $374,000 after a broker’s fee, so I’ll offer you $350,000.” Show me a buyer who is trolling the classified ads or the FSBO sites for homes, and I’ll show you someone who is looking to get a house on the cheap.  Think of it this way: you’re working without a broker to save money, but so is he!  You think that you’re saving on the commission, except the buyer is going to try to save that money, too, by taking it out of the purchase price.

All that said, you don’t have to accept any offer you don’t want, so you don’t have to let the buyer use your FSBO status against you. But the bottom line is that if you sell your home yourself, you’re attracting the wrong kind of buyers: bargain-hunting buyers who are willing, like you, to do the work themselves to save some money.

3.  Even if you are willing to pay buyer agents to enlarge your buyer base, you cut into your commission savings.

Some sellers who are going FSBO recognize that they still need the services of buyer agents, so they either indicate their willingness to compensate buyer agents or find a low-cost entry into MLS.  Those are viable options, but in both cases it does require giving up some of the savings you were trying to make on the commission, and still doesn’t create quite the same market as listing the property with a broker.

Some FSBO sellers advertise they’ll pay a fee to a buyer agent if the agent finds them a buyer.  That’s fine if that buyer agent finds out your home is for sale, becomes aware of your offer, is willing to work for that fee, has the perfect buyer for your home, and is willing to do the extra work required when a seller doesn’t have an agent (more difficulty setting up showings, handling all transactional details alone).  But you’re not really generating a market for your home, since you’re not attracting the attention of the full buyer brokerage community.  And remember that you’ve now cut your savings quite a bit: you’re only now saving the, say, 3% that the listing agent was going to charge you, since you’re paying the buyer agent (and a fee to the service getting you on MLS).  Maybe you’re still saving money, but not as much, and you’re spending quite a bit of time to do all the listing agent work.

Alternatively, some people selling their own home list their home with an MLS through a discount broker that does not provide seller service but can get you on MLS.  In those cases, at least you do have access to buyer agents, and if you are listed with MLS your home will be available to the brokerage community on some online sites.  But now you’re again cutting your savings, since you’re now paying a fee to the buyer agent, a fee to the discount service, and you’re still doing all the work of the listing agent. And although you will be in MLS, you don’t necessarily get all the internet distribution that most brokers provide.

V.  CONCLUSIONS

This post obviously grew to be a lot longer than a simple response to yet another Times article about the coming demise of the real estate brokerage industry and its compensation model.  My point was to try to explain how the industry works, and in particular how the smooth functioning of the industry and the housing market depends on the compensation model inherent in the industry.

I realize that no one likes to pay fees, and that the brokers and agents in the industry don’t always provide the quality of service that justifies those fees.  The quality of the services brokers and agents provide their clients is something that I’ve written, talked, and worked on a great deal in the last few years, and we’re constantly trying to improve it for the agents in our company.

If you’re currently working with someone at Better Homes and Gardens Rand Realty, and you’re not happy with the level of service you’re receiving, just email me and let me know and I’ll look into what we can do for you.  And if you’re not working with a Rand agent, and would like help in finding someone who does justify that fee, just email me and I’ll set you up with someone who will earn any money he or she is paid.

 

Book Review: Atul Gawande’s The Checklist Manifesto: How to Get Things Right — Achieving Operational Excellence in the Real Estate Industry

Atul Gawande’s The Checklist Manifesto is a  powerful book, one of the best and simplest articulations of how to achieve operational excellence that I have ever read.  Gawande’s message is simple: the world has become increasingly complex, and we need to actively create systems and processes that will simplify the tasks that we have to complete in our everyday lives.  His deceptively modest proposal: use a checklist.

Now, I know that seems almost stupid and simplistic at first glance.  We’re all familiar with checklists, and generally associate them with rote tasks, not with complicated procedures.  And we resist the idea that our professional performance could be improved by something so jejune as a checklist, almost as if a checklist would trivialize the important work we do.

As Gawande points out, though, that’s exactly the way a bunch of doctors felt the first time that a hospital administration tried to incorporate a checklist into one of the most common of medical functions — putting in a central line.  He recounts how a critical care specialist at Johns Hopkins Hospital devised a checklist to try to avoid incidences of infenctions in the placing of a central line.  Doctors all knew the basic steps for central lines: (1) wash hands with soap; (2) clean the patient’s skin for the placement; (3) put sterile drapes over the patient, (4) put on a mask, hat, sterile gown, and gloves; and (5) put a sterile line over the insertion site after placing the line.  Gawande called these steps “no-brainers,” the type of things that doctors know they are supposed to.  But the hospital found that in one third of cases, doctors were skipping at least one of the steps.

So the hospital initiated a simple checklist procedure to ensure that all the steps were taken.   Since the doctors were resistant to the intrusion, nurses were enlisted to ensure compliance with the checklist.  What were the results?  According to Gawande, they “were so dramatic that [the administrators] weren’t sure whether to believe them.”  The ten-day line infenction rate went from 11% to 0%.  Over a fifteen month period, the administrators projected that the checklist had prevented 43 infections and 8 deaths, saving over $2 million in hospital costs.

This was not an isolated result.  After the success at Johns Hopkins, Gawande recounts how hospitals in Michigan initiated a project to use a central-line checklist in intensive care units (ICUs) in hospitals throughout the state.  Here are the results:

Within the first three months of the project, the central line infection rate in Michigan’s ICUs decreased by 66%.  Most ICUs . . . cut their quarterly infection rate to zero.  Michigan’s infenction rates fell so low that its average ICU outperformed 90% of ICUs nationwide.  In the …. first eighteen months, the hospitals saved an estimated $175 million in costs and more than fifteen hundred lives.  The successes have been sustained for several years now — all because of a stupid little checklist.

These are among the powerful illustrations of the effect of checklists on operational performance included in The Checklist Manifesto.  In addition to the medical field, Gawande shows how pilots use checklists to ensure safe operation of aircraft (including an engaging description of how checklists impacted the famous “Sully Sullenberger” flight that landed in the Hudson River in 2009).  And he demonstrates how hedge fund investors use versions of the checklists to protect against making poor investments, including one vivid illustration of an investor turning down an opportunity when a checklist item turned up that the company’s owners had been divesting their personal holdings.

So how does this impact the real estate industry?  I think that our industry could learn a lot from The Checklist Manifesto about operational excellence.  The role of the real estate agent is significantly task driven, but those tasks can sometimes be overwhelming.  Just getting a listing on the market can require dozens of discrete operations: taking pictures, uploading pictures, writing descriptions, checking paperwork, ordering signs, inputting property data, double-checking taxes, etc.  We need to do these things every single time, but rarely do we see a company articulate a simple checklist to ensure that every listing gets that quality service.  The same holds for the far more complicated but necessary task of maintaining ongoing listings, when agents tend to get lost in the frenzy of daily activity and neglect the day-to-day communication and updating responsibilities they have to existing clients, leading to poor client experiences.

For the last year, my company has been working on identifying the “best practices” in the industry — the practices that ensure a quality client experience for both buyers and sellers,  with the idea of coordinating those practices into a series of checklists and a comprehensive  “Project Plans” that cover particular aspects of the real estate transaction.  The goals is to provide with a set of plans that can guide them through the transaction.  The point is not to limit them — people can always do more than is on the plan.  Neither is the point to demean their professionalism– it’s not that we think they’re NOT doing some of these things, but we believe that in a given case they might not be doing ALL of these things because of the overwhelming complexity of the entire task.

Most importantly, we think that these kinds of checklists make a job easier, by simplifying our lives.  Just like computers, we have only a certain amount of “RAM” in our heads.  Computers gain efficiency if they can move information from “RAM” to hard drive memory.  Similarly, most of us become more efficient if we don’t have to store tasks in our memory, but can reduce them to a hard copy that we can refer to anytime we need them.  An agent with a 30-item checklist for getting a listing on the market is going to be more efficient than an agent who has to remember all 30 tasks and whether she’s already done them.  (And it’s definitely more efficient for the agent sitting at the desk next door, who keeps getting a tap on the shoulder asking, “hey, what am I supposed to do next?”)

Finally, real estate professionals should recognize that if checklists can improve execution and performance in life-and-death situations involving surgery and airline flight, and in million or billion-dollar financial investing decisions, then they certainly can be used in the much less urgent field of real estate.  A real estate agent who feels that checklists are “beneath” her should be at least a little chagrined that pilots and doctors are using them to great effect.

Essentially, I think that The Checklist Manifesto should be required reading for real estate professionals; indeed, I would recommend the book for anyone who cares about achieving operational excellence in his or her field.  If you need proof, I’ve already purchased 50 copies of the book at my company’s expense for distribution to our management team, and have saved others as gifts for colleagues in the industry.  It’s a great book.  You should read it.

If you’re interested in some other information about the book, here are some links:

Atul Gawande’s home page for The Checklist Manifesto

144 Reviews (average 4.5 stars out of 5) on Amazon.

Steven Levitt, the author of Freakonomics

Malcolm Gladwell, author of The Tipping Point, Blink and Outlier.

New York Times review

Washington Post review.

Interview in Time Magazine.

Gawande interviewed on the Daily Show with Jon Stewart.

The Safe Surgery Checklist illustrated in a terrific clip from NBC’s ER.

The Real Estate Broker of the Future?

I was at a conference this week and one of the issues we discussed was the “Real Estate Brokerage of the Future,” a topic that has come up a lot in discussions at industry conferences in the past year. Unfortunately, much of the discussion drifted, as it tends to do, to a simple application of technology, particularly the effect of technology on facilities. The idea is that the brokerage of the future tends to be perceived as a less office-intensive enterprise, leveraging technology to free agents from an office, or at least from a specific desk in the office.

I have no particular problem with this thought. My company has 23 offices, with 23 leases, and hundreds if not thousands of desks, phones, copiers, etc. Any sort of evolution in the industry that allows us to reduce our cost footprint without impacting the services we give to agents or clients would be a good thing.

But I do think that I’ve been part of that “broker of the future” discussion a half-dozen times now, and it seems we always end up talking about facilities. Every single time. It’s sort of like a framing limitation to the discussion, that all anyone can think about is how brokers of the future will be freed from their obligations to pay for office space.

It seems to me that the “broker of the future” issue is larger than that, that facilities are but a small part of it. Indeed, I think technology is a relatively small part of it, and that people tend to overestimate the effect of technology on the industry. Of course, the internet and mobile technology has had a significant impact on the real estate industry, just like all other industries. Consumers are more empowered with information, and do most of their shopping online rather than in person. And agents have myriad more tools to market properties and attract clients than they did ten years ago. But all that technology hasn’t really changed the dynamic of the industry. People still list with brokers, they still go out with agents to look at properties. Agents now market properties on the internet, rather than the newspaper, but the basic methodology is just an improvement on the old process, not a whole new process.

Will that change? Maybe. Certainly, lots of people are spending lots of money and going to lots of conferences to talk about how the industry is doomed (i.e., the travel agent example), but those people have been saying that for a long time. I’d be curious to pull out an Inman conference agenda from, say, 2002, and look at the list of presenters who predicted the death of the traditional brokerage industry back then, and how many of those presenters are still working for that same company and whether that company still exists. They were wrong then, but it may just be a matter of time before these predictions of inevitable decline play out. Maybe.

That said, I do in fact believe that the industry will change, and that technology will have its impact. But if I were to guess what the “Real Estate Broker of the Future” would look like, I am less interested in talking about the superficialities of facilities, website display, commission models, or agent compensation models. If there is going to be a transformative moment, I think it is going to be something more foundational and simple:

Essentially, I think that the real estate broker of the future is going to be the brokerage that finds a way to deliver a better experience for the client, and a way to add value to the transaction.

It’s that simple, and that hard. I have no idea what the broker of the future will look like, whether it will be a virtual office or a single big office with 200 desks and no private offices or a broker that essentially acts as a landlord for agents rather than a partner. All those things are possible. But what I think it inevitable is that the only real estate brokers who will thrive in the next ten years are those that find ways to go beyond the traditional service offerings of the industry.

There’s not a company in the country that doesn’t pay lip service to service through various platitudes and slogans, but there’s also not a company in the country that I’ve seen successfully implement a service ethic that creates a different experience for the client. Better information. Better care. Better communication. Right now, brokers do not differentiate themselves on the actual service experience they give.

Why? Because they haven’t had to. Clients are just not that choosy. They pick the agent they meet at an open house, or answers their call on a sign, or responds to their internet inquiry. Some choose an agent by referral, or work with the agent who helped them last time, but even to this day a plurality, if not majority, of agents are not particularly choosy in selecting an agent. And because of that, they end up with the experience they bargained for: sometimes good, sometimes not so good.

That’s going to change. One thing that’s going to happen in the next few years is that clients are going to be more selective about their agents, and one of the selection methods they’re going to use is the experience of past clients, and the statistical performance of the agents. Agents who burn their clients, who are good at prospecting but not at delivering service, are going to find that a difficult transition. Agents who take a lot of listings, and never sell them, are going to find this a challenge.

So the brokerage of the future, to me, is the one that actually finds ways to improve the qualify of the service experience delivered by its agents. I don’t care how that happens, whether its technology or compensation or commission or whatever, but the companies that create better client experiences are going to thrive as brokerages of the future. And the companies who ignore the client experience are going to become brokerages of the past.