Bill Wendel of Real Estate Cafe is one of the first people I met after becoming a fellow at the Berkman Center three years ago. What he’s been doing for a long time is right up the VRM alley: equipping users (whether buyers or sellers) with the means to become independent of controlling institutions and ways of doing business — and improving the marketplace while saving themselves money and hassle.
Bill will be at VRooM Boston 2009 and has told me he would like to bring up real estate as a session topic. I encouraged Bill to do that, and I encourage others to jump in and talk about it (and move some balls down the field too). Looking forward to it.
Doc,
Thanks for launching real estate as a session topic at VRoom Boston 2009. I’d like to use this comment to get some ideas started in response to your question, sent to me privately, about consumer-centric real estate business models.
Based on my limited understanding of fourth party vs user-driven services, my response is that the “ideal real estate business, at least for buyers,” is not a business but a network of “fourth party” organizations, or home buyer clubs both public / non-profit and private / for profit. Think of an AARP or AAA model but with LOCAL home buyer clubs that aggregate “user-driven” services and savings opportunities by local housing market, from both local and national vendors.
After the meltdown of the housing market, mortgage requirements have tightened and home buyers once again have to save real money, up to 20% down for their first home or condo. That has contributed to the slowdown in the housing market. Home buyer clubs could expedite that time frame by reducing transaction costs and delivering savings from four or five segments of the marketplace:
1. Lenders,
2. Developers / sellers,
3. Brokers, and
4. Product and service vendors.
5. Optional: Government subsidies and incentives, local and national
Trends at a recent real estate technology conference in San Francisco lead me to believe that home buyer clubs and an MLS of buyers could emerge as new players in the housing marketplace. Some of us have talked about those ideas for years, drafted business plans, even experimented with local organizations, like the Mass. Homebuyers Club (1990-1995).
If you google “home buyers club,” you will see that there are already a variety of initiatives across the country. My goal would be to create a digital tool chest so that local organizations, public and private, can assemble their own home buyer clubs to enable real estate consumers to save billions of dollars annually. (In 1998, McKinsey & Co. first estimated that home buyers and sellers could save $30 billion annually by harnessing the money-saving power of the internet.)
Where should we start? Can we inventory best of breed new consumer centric businesses and VRM tools, and update this old business plan to co-author a real estate and VRM manifesto (or something else)?
HomeSearchID: Executive Summary (2000-2002ish)
https://realestatecafe.pbworks.com/HomeSearchID
Key VRM-like pull quote from link above:
How can HomeSearchID make money doing this? HomeSearchID has two major revenue streams:
1. A ladder of referrals, beginning with a $50 match fee from buyers and sellers to a 20 percent referral fee to traditional listing agents and buyer brokers (see Exhibit X); and
2. Micro-payments or affiliate marketing payments from product and service vendors using a distributed transaction manager …
Substitute “VRM platform” in sentence above for “transaction manager,” and continue to conversation online before we get to the VRooM Session Monday?
—–
“The next major revolution in real estate will be fee based services replacing the blanket commission pricing that has dominated the industry for so long.”
Former Chief Economist, National Association of Realtors
Bill Wendel
The Real Estate Cafe
Serving a menu of money-saving services since 1995
97a Garden St.
Cambridge, MA 02138
617-661-4046 office / cell
realestatecafe@gmail.com
http://twitter.com/realestatecafe
http://www.realestatecafe.squarespace.com
—
“The next major revolution in real estate will be fee based services replacing the blanket commission pricing that has dominated the industry for so long.”
Former Chief Economist, National Association of Realtors
Bill Wendel
The Real Estate Cafe
Serving a menu of money-saving services since 1995
97a Garden St.
Cambridge, MA 02138
617-661-4046 office / cell
realestatecafe@gmail.com
http://www.realestatecafe.squarespace.com
http://twitter.com/realestatecafe