Egoism
Individualism
Sovereignty
Splendor

(These ideas are explicated in this sloppy manifesto)

 
One more bit about real estate...

...and then I'll stop, I promise. I've been reflecting on an idea I had last week, a phrase that may turn out to be the title of my marketing bible, when I write one: "Everything sells something." Like this:

I just grabbed the mail and had a direct-mail piece from my life insurance company. "Now is the time to reconsider USAA," says the outside of the self-mailer. Why? And for whose benefit? The heading on the inside is better, not by much, but that's two tears and two page turns away. I may be the only person who opened the damned package. The ultimate purpose of the mailing is to get me to log onto their website, the purpose of which seems to be to offload routine calls from their call center. In any case, there is no offer, nor any hint of a clear benefit to me, not for reading the junk-mail piece and not for logging onto the website. It's really all about USAA: How can I save them money? The good news for them is that they mostly sold nothing, since that piece is going to hit the trash unopened almost everywhere it goes. The bad news is that it's probably going to cost them more money than it could save them, since no one is going to be motivated to go to their website based on this inept mailing. Everything sells something. At a minimum, USAA sold some of their store of good will at a loss. Very dumb.

(For what it's worth, the Truth In Marketing approach would have been a headline like this: "Waiting on hold really stinks. But with our new website, now you don't have to!" This is bad because it admits to an unaddressed management failure, which is being whitewashed by a capital investment. But this is the true message of the mailing, to anyone who can read. There is nothing that marketing and advertising can do to make up for bad service. Everything sells something, and bad service sells the competitor's product.)

While I was looking at Realty Times, I came across this: The Agent Marketing Package. All-in-one, cut-and-paste, plug-and-play, rape-and-run, blah-blah-blah. But there, in the middle of the page, was this perfect gem of marketing wisdom:

Please review each of the following sections before purchasing the Agent Marketing Package.

Yes! Don't you dare buy now! We want to bore you lifeless for eight more web pages! Everything sells something, and these people, in one short sentence, sold me the unvarnished truth: They know nothing about marketing.
posted by Greg Swann at 12:48 PM

 
Taking another VOW

From Realty Times, a different outlook on VOWs:

Too many brokers are offering VOWs, and they aren't working them or policing them.

That's the view of Broker Al Napier. His comments are interesting, because he makes it plain that he sees VOWs not as disintermediaries, but simply as a bait-and-switch path to an ordinary Buyer-Broker Agreement. In other words, the promised savings-from-internet-efficiency really don't exist. How could they? A VOW is simply a new way of offering a discount in a way that seems plausible to the customer. The irony is that Napier and the VOWs he's visited can't work the leads they're getting, so they're just giving away the store for nothing. This is not a threat to anyone...
posted by Greg Swann at 11:41 AM

 
"There's no evidence that the magazine would have made any money at all"...

A simply, utterly brilliant ruling in the Rosie O'Donnell suit. Solomon lives!
posted by Greg Swann at 10:47 AM

 
Swearing an oath against VOWs?

John Venlet from Improved Clinch fingered this unsigned op-ed (go figure) from USA Today:

For more than a century, America's real estate agents have pooled the homes for sale in a specific area into a Multiple Listing Service (MLS). The listings, jointly owned by local realty firms, link buyers and sellers in a large, common marketplace.

But now these same brokers have concluded that cooperation has its limits. Starting Jan. 1, a new rule by the National Association of Realtors will allow agents at traditional firms to deny listings to an innovative breed of discount Internet brokers who are slashing the average 5% to 7% commissions Realtors long have charged.

I think the National Association of Realtors is a cartel, but this is a very defective take on the issue. The important word in the first paragraph is "local". The missing word from the second paragraph is "remote". The NAR policy that is being badly summarized is called the VOW Policy. A 'VOW' is a Virtual Office Website, a regional or national clearinghouse of listings that connects buyers to listed homes and does little else, because it can do little else from a distance.

Why would local brokers object to this? Because the offer of compensation in the MLS listing presumes that the cooperating agent is going to do half the (substantial, painstaking and tedious) work of effecting a real estate transaction. Out-of-town VOWs can't do the real work of transferring title to a home. The Listing Broker ends up feeling like Henny Penny, and who can blame him?

What the VOW Policy says is that local brokers can exclude some or all VOWs from access to their listings. The op-ed says that listings are "jointly owned by local realty firms", but this is false. A real-estate listing is a contract between a home seller and a particular real estate broker (not the agent, the broker). The broker can keep that listing exclusive to his brokerage, or he can choose to share information about it with his local MLS. When he does, he is doing the same thing you do when you show me your vacation snapshots: Sharing information about something that is undeniably yours to share--or withhold. Regardless of what the anti-trust people say, forcing brokers to share their proprietary information is forced speech.

That's a tempest in a teapot, and it doesn't really matter. The fable that best explains the NAR is not Henny Penny but Chicken Little--the disintermediation sky is always falling. The USA Today article mentions stock brokerage and travel agency as two business models that have been rendered middlemanless by the internet, but omits two important facts: First, a discount middleman is still a middleman, and second, stocks and travel are off-the-rack transactions, while selling or buying a home always requires custom tailoring. A VOW-initiated transactions does not require less work from the brokers, it just pushes the Buyer's broker's work onto the shoulders of the Seller's broker. What's more, internet buyers are more likely to use a full-service broker than their unwired cousins.

The real issue is not internet listings. That Djinn is out of the bottle. The real issue is compensation. A sine qua non feature of an MLS listing is an offer of compensation: The Seller's broker must tell the Buyer's broker how much he will be paid, if he produces a ready, willing and able buyer. Amazingly, all of the discounting in discount commissions happens on the listing side. The Buyer's broker will get 3% of the deal no matter how badly the Seller's broker is screwing himself. And his client, I should add: Nothing is sold at a discount that can actually command a higher price; if your real estate agent is cutting his commission for you, he is probably also cutting his outlays and exertions for you, too.

In any case, the VOW-killer is pretty simply. In the offer of compensation, instead of putting "3%", Seller's brokers should put "negotiable" or "3% for full cooperation". MLS rules are observed--some compensation is offered--but the Seller's broker has the opportunity to put the question to any inquiring Buyer's broker: How much of your weight are you expecting me to carry? Since their legal liability as fiduciaries will be the same, the VOWs will either skip over these listings (a violation of Agency law and the NAR Code of Ethics) or lose the risk of fiduciary status by taking a referral fee instead.

And the real solution, in the long run, is for Realtors--at least those who hope to survive--to learn how to provide and promote the kind of bend-over-backwards service that not only justifies the commission but makes it seem like an incredible bargain.
posted by Greg Swann at 7:20 AM

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