Archive for the 'Carnival of Real Estate' Category
If I was going to create a soundtrack for #rppsi, (and why wouldn’t I?), it would have to include the dark and disturbing world of Mack the Knife.
Nick Cave, Jimmie Dale Gilmore, and Lotte Lenya stick it to us. Enjoy the pain.
I’m sitting in the room @ NAR Mid-Year listening to the IDX Rules Committee trying to get its collective head around the use of IDX data on franchisor web sites, social media, and whether or not price change and days on market can be shown on IDX sites.
Its kinda like watching fleas on a dog debating whether not the dog should go swimming as if they had a say in the matter. Don’t these people ever learn? It was precisely by trying to control listings on the Web that they created an environment that was conducive to the growth of Trulia and Zillow and thus realized what they ostensibly fear — loss of control over the distribution of listings on Web sites and and the creation of an incentive for consumers to look for information they want on third party sites.
The Internet was designed to route around obstacles much bigger than a rules committee — like the nuclear obliteration of a network hub. Take away the ability to use IDX to sling listings to Facebook or the ability of brokers to say how long a listing has been on the market and what the price changes were and another channel will open up to provide that very information. It is the nature of the network.
For the record, the committee decided not to decide anything w/r/t social media, unanimously voted to keep a rule that prevents DOM and price changes from appearing on IDX sites, and — saving the most interesting for last — voted to suspend the rule they adopted last fall that enabled franchisors to use IDX on franchise domains.
Now these recommendations go before the Directors for a vote on Saturday which, as we learned in the “scraping” controversy, does not necessarily mean they will be followed. It will be interesting to see if the Directors decide to listen to their own subject matter “experts” (and I use that term very, very loosely) or choose to carry the franchisors water on their own.
On a side note, it was a lot of fun to sit here and re-read Greg’s recent posts about NAR while sitting in a NAR committee forum…6 comments
I’m so glad that the NAR leaders took the time to present the Town Hall meeting. It was both informative and educational and I learned quite a bit about the NAR, how they really function as an organization, and what they hope to accomplish with the Realtor Party. Ya know, the NAR leaders who took the time to prepare and present this Town Hall seem like really nice folks who truly believe in what they are saying, and I believe them when they say it really is about survival, but their solutions are based on what they’ve done in the past, and what they’ve done in the past is look at taxpayers, politicians, and members, as dinner.
Some of my favorite quotes:
“It’s the few of us who are pulling everybody else along. A few of us are making and allowing people to stay in business because of our RPAC donations. It’s time that everybody gives… We need to make this fair for everybody and everybody needs to share in what we do at NAR.”
In other words, “we need your blood in order to survive”. Something doesn’t quite follow, though. If I’m forced to join the NAR in order to be a member of the MLS, how am I being unfair to the NAR because I’m not a willing participant in their RPAC political blood-sucking initiatives?
Speaking of those political initiatives…
“(The NAR has) over a million members… about 900,000 of them don’t stand up and charge when we say charge.”
Oh. Well. I do beg your pardon. And yet, even with such a lamentably small number of foot soldiers willing to do their bidding, (Dear NAR- instead of looking at us as sheeple, perhaps you should consider upping your own UVP) the NAR proudly proclaims all the fine work it did in pushing for the cannibalizing Home Buyer Tax Credit. That was good for the temporary survival of Realtors, not so good for home buyers who may have paid more for their homes than they otherwise would have if the market had been allowed to work itself out and, especially not so good for taxpayers who have just flushed more than half a billion dollars down the commode on tax refunds to ineligible home buyers. Well done, RPAC. Well done.
So now the NAR is looking at its own members and licking its lips, and after the Town Hall meeting, I think I might understand the thought process at work here. After all, if all you have are fangs, everything looks like an artery.27 comments
From the Wall Street Journal, complete with video, is Brett Arends take on why now might be a great time to buy a home. This is the action item to follow Greg’s last post on Why Housing will come back. I’m in a very seasonal, resort type of market. A buyer’s negotiating position right now, when a seller who doesn’t have a deal is likely going to still own their home next spring, is amazing. Make that reason eleven.
Enough with the doom and gloom about homeownership.
Sure, maybe there’s more pain to come in the housing market. But when Time magazine starts running covers that declare “Owning a home may no longer make economic sense,” it’s time to say: Enough is enough. This is what “capitulation” looks like. Everyone has given up.The Sept. 6 cover of Time magazine: This is what capitulation looks like.
After all, at the peak of the bubble five years ago, Time had a different take. “Home Sweet Home,” declared its cover then, as it celebrated the boom and asked: “Will your house make your rich?”
But it’s not enough just to be contrarian. So here are 10 reasons why it’s good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What’s not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. “You can tell the ones that have been bought,” said my local guide. “They’ve painted the front door. It’s the first thing people do when they buy.” It was a small sign that said something big.
5. You’ll get a better home. In many parts of the country it can be really hard to find – read the rest, see the video at the WSJ
I’ve been a bit quiet on BHB due to some personal issues I’ve been working through. But, I was very happy to see Greg’s latest post on challenging everything! I had a little holiday brainstorm today and wrote a post on my local Lake Chelan blog on a Real Estate Declaration of Independence for the consumers of services from Real Estate Professionals.
I want to share it here on BHB and get your thoughts on what I missed, should add or could have said better! So, without further ado here is my Independence Week start to the Real Estate Declaration of Independence:
Real Estate Declaration of Independence
We, the people who buy and sell real estate, hold these truths to be obvious:
- We the people believe that information on real estate for sale should be readily accessible without surrendering our private information. We reject having to register on a web site in order to view listings in an area. We value our time and will contact a real estate professional when we are good and ready for their services.
- We the people reject all policies of the National Association of Realtors that are not in the best interest of the real estate buying and selling public. Limiting our access to information, restricting our ability to a free and open market through regulation and limiting our market choices are all examples of policies we reject that are designed to line Realtors pockets at the expense of the public.
- We the people reject “Dual Agency,” where a real estate agent has an inherent conflict of interest with his agency and fiduciary duties by attempting to represent both the buyer and seller in order to earn a larger commission on our transaction. If the agent is truly delivering value, both parties of a transaction have an equal right to that value without a conflict of interest and each party deserves their own agent in the transaction.
- We the people reject the practice of real estate agents trying to “Buy the Listing” by telling a potential seller an above market price in an attempt to secure a listing. This practice costs sellers time and money while their home sits on the market as the agent waits for the seller to cut the price to where it should have been to start.
- We the people reject the practice of real estate MLS systems that limit a home seller’s exposure to potential buyers in an attempt to control access to a market. A listing agent’s responsibility is to market a property to the best of their ability and limiting the exposure of our home costs us money.
We the people are independent in a country that still allows us to make market choices. We the people demand better service and will exercise our freedom of choice and only choose Real Estate Professionals who deliver better value.
You might want to have a look at the entire post and give me feedback on it as well. Feel free to use it as your own if you agree to it and I would truly love suggestions to improve it.7 comments
Have you heard of Private Transfer Fees? A private transfer fee is a fee that is required to be paid each time a property is sold at closing. The transfer fee is attached to the property as a covenant that can run for a period, often 20 or 100 years.
The fees are being used for a variety of purposes. In some cases, they have been used to satisfy demands from environmental groups. Developers have also used them, by securitizing them up front, to help pay mitigation costs and up-front infrastructure costs on new developments. Supposedly even private home owners might be able to add a 1% transfer fee to their homes with revenues serving as future household income.
The NAR, American Land Title Association and the NAHB are all looking at ways to prohibit or limit private transfer fees. While that tends to make me like the idea of transfer fees on its own, I really don’t see issues with them. Admittedly, I develop properties from time to time. Yes, I am frustrated with impact fees, mitigation and infrastructure fees that have climbed to the stratosphere in my little part of the world. This approach could really help to create some affordable homes that people might actually buy.
Freehold Capital Partners is active in the reconveyance fee financing arena working with developers to structure financing for infrastructure improvements.
Essentially, the concept is based on the premise that improvements which enhance real property are in the immediate and long-term public interest; and a system enabling present owners of private property to better and more fairly apportion present costs and profits amongst multiple future beneficial owners increases economic efficiency.
Traditionally, initial buyers shoulder 100% of the burden of amenities, infrastructure and other improvements, which creates a high barrier to entry into the development. By utilizing this funding tool, developers can now more fairly apportion expenses incurred for permanent improvements among successive owners of the property who will be enjoying the amenities and improvements for years to come. (A familiar example would be bonds issued to finance new schools, where the bonds are paid off over time by the same families whose properties continue to benefit from having a school in the community.) In fact, Transfer Fee financing has often been referred to as the creation of a “mini-bond”. However, unlike traditional bond financing, the transaction costs associated with creating Transfer Fees Rights are minimal.
Flowing from this premise, reconveyance fee financing enable institutional owners and developers to allocate costs amongst future willing buyers by requiring, in connection with each subsequent transfer of title, the payment of 1% of the gross sales price.. – Freehold Capital Partners
The NAR, ALTA and others cite concerns about disclosure. However, a properly recorded covenant should show up in a title search so I think that cannot be the real concern. They cite concerns that people never read covenants. That floors me! I can’t imaging buying a home without reading the covenants.
The National Association of Realtors and the American Land Title Association, for example, are asking their members to persuade legislators to prohibit or limit the use of investor-oriented private transfer-fee programs. Even the National Association of Home Builders, some of whose members reportedly have signed up to offer transfer fees, isn’t convinced the idea is sound.
“It’s a very creative concept,” said David Ledford, the builder association’s senior vice president for housing finance, “but it’s largely untested and controversial politically.” – Seattle Times
Homes that are subject to a reconveyance fee should sell at a lower price due to the reconveyance fee. That lower price should be reflected in assessments and lower property taxes. So, all those infrastructure improvements the developer had to put in wouldn’t show up completely in the taxed value of the property. I like that the property owner may not end up paying property tax on improvements which are typically deeded to the local government which was simply double taxation before.
California has laws that require upfront disclosure of reconveyance fees. Texas has some prohibitions on them. Kansas, Oregon, Florida and Missouri do not allow them.
So, here’s a method that helps developers fund projects, lowers the price of housing and lowers the ongoing cost of property taxes for a home. The instrument of this tool is recorded on the title of the property for all to see. Tell me. What’s not to like?11 comments
Mr. Obama’s latest program for the foreclosure crisis attempts to stabilize the market in a different way than his previous attempts. Before, the feds tried to keep people in their homes by negotiating reduced payments through loan modifications. Few people were able to use the programs and of those that did the rate of default recidivism was 50% within six months. The “new” approach is to help those in trouble get out of their homes by streamlining the short sale process and adding requirements that will force banks to accept many more short sales. Basically, the feds will pay owners to sell at a loss and give them a little cash in the process.
Starting April 5th, hundreds of thousands of delinquent borrowers will be encouraged to sell their homes through this process. Since the basic laws of economics still apply, that flood of inventory at fire sale prices will create heavy downward pressure on other homes in their markets. Prices should fall.
That’s just one problem with this approach. The Home Buyer’s Tax Credit was already a magnet for fraudulent filings. The government mandated short sale process could be even worse.
Short sales are “tailor-made for fraud,” said Mr. Lawler, a former executive at the mortgage finance company Fannie Mae.
Last year, short sales started to increase, although they remain relatively uncommon. Fannie Mae said preforeclosure deals on loans in its portfolio more than tripled in 2009, to 36,968. But real estate agents say many lenders still seem to disapprove of short sales.
Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it. – MSN
With the high regard that the public holds for real estate agents, they should be a pinnacle of integrity when it comes to setting values for lenders. Or, could that be a problem? I’ve found that real estate agents offer different values, at times in spite of the comparables, to suit their desired outcome to get a listing. Also, there is rarely enough information on comparable properties, particularly in a small market like Lake Chelan, to make a realtor’s Comparative Market Analysis statistically meaningful (for those the agents that understand statistics) making the estimate, at best, a hopefully educated guess. How much of your tax money do you want to see spent this way?
For responsible home owners who might be looking to sell if this new program actually attracts sellers, you could be facing sales competition from subsidized homeowners in as little time as one month.6 comments
Incredibly, the IRS cannot do a lot to stop you, or anybody, from cashing in on the stimulus tax credits.
According to the Treasury Inspector General for Tax Administration, the IRS is “unable to verify eligibility for the majority of Recovery Act benefits at the time a tax return is filed.” That doesn’t mean they can’t audit you, but only a small portion of filers are audited. If audited, you would have to correct any mistakes and you might face penalties.
Understand that the IRS prefers that you file electronically for efficiency reasons. They rely on taxpayers to provide accurate information.
For example, the inspector general recommended that the IRS require taxpayers to provide documentation to verify first-time homebuyer credit claims, but the IRS said no. Such a requirement, officials said, “would be burdensome and would potentially exclude as many as 2 million taxpayers from electronically filing.”
It wasn’t until the Worker, Homeownership and Business Assistance Act of 2009 was signed into law on Nov. 6 that additional documentation was required for the credit and the IRS was given additional authority with respect to returns that did not include that documentation.
Moreover, the IRS did not have math error authority – meaning that officials are not authorized to check calculations – to stop payment of erroneous credit claims. In essence, the IRS relied on taxpayers to be honest, didn’t require hard documentation and could not check the math on certain credits.
That same article quoted above has a sidebar titled “Getting money you don’t deserve.” It goes through a hypothetical scenario of how the First Time Homebuyer Tax Credit can be scammed for extra benefits. The limitations of e-filing do not allow the IRS to transfer paper documentation to electronic format. So, there is a level of trust in the system. There is a level of trust in the system that the 73,799 taxpayers who are suspected of not correctly claiming the tax credit as of last July do not justify. Those suspected incorrect claims may total $504 million.
Expect more news of fraud as this version of the Homebuyer Tax Credit, and other stimulus credits, wind down if they ever do. Thank the NAR and NAHB, and your support as Realtors, for another program we can be proud of.1 comment
I don’t know if you’re familiar with Randall O’Toole from the Cato Institute, but he’s much better reading than Lawrence Yun. I was just acquainted with one of his latest works entitled How Urban Planners Caused the Housing Bubble.
If you’re in real estate, it is a must read. I live in a strict Growth Management state from a public planning perspective. As a freedom loving individual, it is frustrating. But this analysis not only talks about the costs of planning, but the volatility it introduces into the market and why. It compares different policies of various states.
The correlation between planning practices and pricing volatility is uncanny! Fed policy, the Community Reinvestment Act and other hair brained political practices can’t explain the phenomenon without the inclusion of growth managment into the equation. The costs for growth managment are also staggering! For real estate nerds, it is required reading!1 comment
Sometimes, out here in more rural America, we have properties to sell that you can’t just drive up to in the Lexus and click off the security system to show. I usually have a property or two a year that are a bit more challenging and immensely more fun to work with and show.
Saturday, I took a several hours to view a new listing. In that time, I only saw bits of it. This particular property is pretty big, 1 mile by ½ mile for 346 acres. It has 16 individual tax parcels and is mostly undeveloped. It is surrounded by forest and has over 2000 feet of elevation change across it. It does have power, a well and amenities. Access to part of it is via a dirt road. Other parts also have dirt roads that go near or into the property. While this property is spectacular wilderness, it only takes 20 minutes to get to the edge of it from town or my own home. This is a fun property!
I was reminded of a conversation at Unchained one evening about good real estate agent cars. While I can often use a sedan, maneuvering around boulders on a narrow road cut into the side of a cliff just isn’t what a Lexus is made for! Things are a bit less civilized on a listing like this! I’ve used SUVs, pickups, jeeps, ORVs and even snowmobiles to show my most fun listings. No worries though, I’ve never seen nor heard dueling banjos at any of these remote properties.
Part of the fun in selling one of these ranch or acreage types of properties is to figure out the best way to show it to clients and explain how to show it to other agents. I also like to be able to talk to clients before a showing and make sure they have an expectation on what we’ll be doing. If they have height concerns, I might avoid a narrow path cut into a cliff and just show that part from the bottom of the hill. If we’re hiking, I try to make sure that they are capable of the walk, we have water, supplies, a GPS to show where we are on the property and whatever we need so that clients don’t feel like they might be lunch for a bear or cougar. This type of real estate attracts some real interesting characters.
Like other parts of marketing real estate, the agent who can market properties to prospective clients to their best advantage wins. Yes, we have beautiful homes that I can drive a comfortable sedan or sports car to. But, sometimes it is just a blast to have a property to show that really gets me out in nature! Some days are just about the smiles since I can’t put their names into the CRM system until I have cell coverage anyway!3 comments
Wow, crazy spending in our government should cause rising interest rates in the future. Government incentives, mandates, moratoriums and Fed manipulation of the housing market, which got us here in the first place, are running amok right now. The unintended consequences of all these actions are yet to be seen. The NAR is advertising NOW as a great time to buy, just like they did in 2006 and 2007.
I get buyers and sellers asking me what I think will happen, as I had this weekend. I can tell them with certainty that I expect that things will change from where we are today. Do I tell them the NAR line that it’s a great time to buy a house? No.
I don’t think it is necessarily a bad time to buy a house, and may even be a pretty good time to buy a house, depending on somebody’s particular situation. On the other hand, if the person who is thinking of buying isn’t sure they’re going to stay put, with the cash flow to pay for their home for a pretty good while, it may be a really poor time to buy a house for that person.
How about selling? I’ve sold two homes that I personally owned in the last six months. Is it a great time to sell? It was for me. And sell them I did, in about 1/5 the typical time on market in the area. Could I get more for them in the future? Maybe but I can’t tell you how far into the future that might be. I tell clients that this may, or may not, be a good time for them to sell depending on their situation.
So, the NAR advertising line irritates me. I don’t find it helpful at all. It undermines the credibility of real estate professionals to simple mind numbing “it’s time to buy” repeated over and over. That’s the kind of help I can do without. While my crystal ball on the future is no better than anyone else’s, I just want to be there help my clients and friends through actions that best serve their specific circumstance and prepare for what they believe may be coming down the pike. Is it too much to ask that the NAR not make that more challenging?7 comments
I’m basing this on a flurry of tweets out of NAR Mid Year, but it looks like the NAR rules committee came to its senses.
I await the actual verbiage. It will be interesting to see what twisted hedge they come up with to distinguish an “indexer” from a “scraper”.
Still, the question remains: Was the original decision to back MIBOR a deliberate attempt to see if they could rally the Luddites to hobble IDX?
Or was it just plain vanilla cluelessness?
Either way, it begs the even bigger question that was asked hundreds of times on blog posts over the last week: What are NAR members paying for?
UPDATE: Not so fast. See Malok’s comment below. It’s not a done deal, apparently, and the twits are silent.18 comments
Google News plopped a link to a Blog post on SFGate.com (The San Francisco Chronicle’s Web site) about dual agency in front of me today.
It’s always interesting to see a discussion about what Greg calls “…the insane way we compensate buyer’s agents in the residential real estate market” in the MSM, even if the arc of the dialog is predictable (“Agents are whores and criminals!”, “No we’re not”, “The traditional Real Estate model is dead!”, “No it isn’t!”, ad nauseum)
Discussions in the Real Estate blogosphere on this topic have a certain navel-gazing quality to them. That is not the case when regular people, many of whom have been involved in a recent transaction have their say. My favorite comment from the thread:
No conflict here. Just get the highest price for a seller and the lowest for the buyer at the same time. This is great!
The way the Realtors, some of whom identify themselves and some of whom just embarrass themselves by shilling for the status quo in such an obvious manner that their identity is transparent, jump all over these discussions just adds fuel to the fire.
The Realtors doth protest too much, methinks.23 comments
This started as a comment on Jessica’s earlier post about content. Welcome aboard, Jessica, and thanks for the grist.
Jessica points out that the average agent is no better than the average owner at generating content. I disagree with that a little: FSBO listings with owner-generated content are often better than agent-generated content (which isn’t saying much).
Owners just know more about their property and its surroundings, have more at stake, and have just one listing to worry about. Not to mention that, if they are even going the Web-based FSBO route, they know their way around a computer and the Web and are more likely to be an educated professional in their own right. All they really need to do is develop the content they know they would like to see themselves.
eCommerce professionals know that content sells. Period. Just compare the quality and depth of content Amazon has around a $10 copy of Home Buying for Dummies to the average listing for a $500k ranch on Realtor.com. The only thing I’ve seen that plays in that ballpark are Greg’s single property Web sites.
The current model (agent responsible for everything, gets paid nothing unless they sell), has Zero capacity for generating consistent, quality content that consumers are accustomed to when they buy anything else on line, and that violates the most basic principle of merchandising: Use the consumer’s learned behaviors to encourage them to do what you want them to do (like contact you).
So how do you change that when the entrenched interests have a dis-incentive to do the right thing? To wit:
- Agents don’t want to dip into their split to pay professionals.
- Brokers take advantage of the indie contractor tax loophole to make sure they don’t have to pay agents in the first place, and even the very best admins (the people who really keep the wheels on in every RE office I’ve visited) make, what? $30/hr.? That is not a mindset that is conducive to paying specialists.
- The NAR and the MLSs have a stake in keeping the agent population over-stuffed with dues-paying half-wits.
- The franchises consider consumers secondary customers: Their majority of their dollars are spent on attracting and retaining brokers, not training agents to serve consumers.
Developing the content that modern, Web-based Real Estate marketing requires has been a missing piece of the new model/new franchise discussion that is going on here, so I’m glad Jessica brought it up. Where do we go from here?
How do we bring in people with the skills to produce consistent, quality content when they are too smart to work for the promise of easy money as they pay dues off their credit cards waiting for lightening to strike?
I don’t know, either, but I will keep thinking about it. Maybe this will be a two-parter…
In the meantime, I will continue to develop Web Merchandising tools and training for the 5% of agents who are capable enough to learn how to use them and smart enough to understand why they should.
No, its not as satisfying as marrying the perfect technology to the perfect business model, but I figure they will be the ones who will survive whatever changes the market and/or the Bloodhounds eventually bring to the industry, because status quo can’t lumber on forever.
Unless it can. And if that happens, I’m going to go Full Metal Luddite: Get my license, work for a franchise, spend all my money on print, coaches, and conventions, and live happily ever after in my mansion with matching his and her Lexī in the garage…15 comments
Consumer Reports has released a survey that shows that the national RE companies have successfully wrung every drop of meaning out of their so-called brands.
I haven’t had a chance to read the report, but there is enough on Inman today to get the gist:
- Even though Indie agents were said to offer fewer services, “…sellers who used them were just as satisfied” as the sellers who used name-brand agents.
- Customer satisfaction scores for Real Estate companies ranged from 79 to 81. A 3 point spread. Homogenization complete.
Translation: Sellers don’t mind when an indie agent fails to show up with a folder full of Home Warranties, and they don’t care which logo adorns the business cards of the brand-name agents who do.
I am looking out my window at a Hostess delivery truck with a picture of a split-open chocolate cup cake next to the Hostess logo. I want one. I want to peel the frosting off, set it aside, eat the decapitated cupcake and chase it with the frosting just like I did when I was 10. I have an emotional attachment to Hostess Cupcakes that started the day my Mom brought home a box from the supermarket, and its been reinforced every time I have had two (you have to have two) ever since.
Every time I open that cupcake wrapper, I know what I am going to get: The plastic peels off of the frosting even (usually) if the package is warm and they taste *exactly* the same every time, even if they have been sitting on a shelf for six years. Mom brought home cheap, store brand chocolate cupcakes once….Once.
That’s how branding is supposed to work. The ad man Jerry Bulmore said that “Consumers build an image [of a brand] as birds build nests. From the scraps and straws they chance upon.” Bulmore’s sticks and straws are interactions, and what he left out is that the strongest nests are built when the building materials are consistent.
Branding a service is inherently difficult. Unlike cupcakes, its a lot harder to control the quality of the end product, and something as fragile as the emotional connection a consumer feels towards a brand is no match for a bad personal interaction with a representative of said brand. Considering the current industry “standards” for agents, that fact alone makes Real Estate branding on a national level all but futile. Maybe that’s why the Real Estate brands long ago decided that recognition=branding, because, really, what else can they do?
They certainly aren’t interested in creating any real differences between the services they offer consumers. Look at Realogy: What’s the difference between a 5% commission contract from ERA, Century 21, Coldwell Banker, Sotheby’s or the new Better Homes and Gardens except for the logo in the corner? Even when they use the name of a brand that has a firmly established reputation for high-end quality, there is no logical attempt to capitalize on it. How often does a Sotheby’s sign go up in front of a shit box?
And while I’m on Realogy, let’s look at the concept of a branded franchise. There is no difference between the brands as far as consumers are concerned, but consumers aren’t really the national brand’s customer. Brokers are the customer, so they must be the real target of the brand managers. Surely the national brands take care to preseve the value of brand recognition for their brokers, since that’s all they’ve got, right?
As it turns out, not so much.
I used to wash down my Hostess cupcakes with a glass of milk, but now that I am all grown up I prefer Dunkin Donuts ice coffee. D&D is omnipresent in my hometown as they are all over New England, and I frequent at least 5 of them, but not even D&D would allow me to purchase a franchise, open a store across the street from another franchisee, and then offer the same ice coffee and donuts for half price.
Enter Century 21 Clickit, Inc, “Your Flat Fee MLS and Sale by Owner Partner”. They are based in Atlanta, but they are taking listings in four other states, including CT where I have a competing Century 21 franchise as a client. Friendly competition between Century 21 franchises is nothing new, but competing against an out-of-state broker who is plunking down signs with the C21 logo on them in my client’s backyard to advertise flat-fee and FSBO listings sure as hell is. So what did Realogy do about it?
Reward them. Repeatedly. Along with Inman.13 comments