Is Real Estate ripe for VRM?

Email written to Doc Searls, coauthor of ClueTrain Manifesto, originally posted a month ago as comment on ProjectVRM blog,

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 Working draft, originally written 2000-2002

Two major paradigm shifts predicted in the original business plan are emerging and could become cornerstones for an "app store" of new VRM tools for consumers:

1.  Sellers will be able to identify and contact potential buyers as easily as buyers currently find listings, and

2.  Housing searches will access ANY existing or permitted dwelling unit, approximately 100 million properties, rather than “active” listings--about 1.3 million at any time.

The proposed business venture, HomeSearchID will give buyers and sellers an opportunity to interact directly in this new environment without real estate agents thereby minimizing fees and maximizing consumer savings. 

UPDATE FROM NAR CONVENTION:  Sunday, November 15, 2009

While "do-it-yourself" homebuyers and sellers may cheer at the pull quote above, most real estate agents will be threatened.  However as the past decade has proven, real estate agents won't disappear but their role will change as they continue to evolve from sales people to consultants.  As proposed a month ago, I am visiting hundreds of exhibitors at the NAR convention identifying businesses which already have VRM-like characteristics.  Special thanks to Tara Hunt, one of the featured speakers, for cohosting the TweetUp last night to expand the conversation about VRM and real estate.  You can follow the ongoing discussion by searching for #VRM and #REVRM on Twitter.  To be added to the REVRM TwitList, send your Twitter address to http://Twitter.com/RealEstateCafe.  Watch for video (NOW LIVE ON YOUTUBE!), slides, and Google Wave soon!

Comeback of the Consumer Savings Value Proposition in Real Estate

Like fellow real estate consumer advocates and "change agents," my passion is helping real estate consumers save money—collectively, an estimated $30 billion annually through new technologies and new money-saving business models.  Over the past fifteen years, I've come to believe that a steady drumbeat of innovation is more likely to be transforming than a single “big bang” event that seeks to bring about "revolutionary" changes the real estate industry.

So, I was delighted to see the “Comeback of the Consumer Savings Value Proposition” at ConnectSF 2009, the leading real estate technology conference in August. There wasn't a panel by that name on the formal agenda, but the comeback was there in the “Start-up Alley,” “Launch Pad,” and “Connect Create.” Beyond FSBOs and alternative fees, I counted a half dozen ways new companies are helping real estate consumers save money:

1. SAVINGS AGGREGATORS
Examples:
http://www.CondoDealz.com
http://www.Closing.com
http://www.WorkforceResource.com

2. SOCIAL SAVINGS: A bold new frontier, consumers rewarded by sharing savings
Example:
http://www.MyFrontSteps.com

3. PARADIGM CHANGERS
Example:
http://www.NationalBLS.com (National Buyer Listing Service, need we say more?)

4. INFORMED DECISION-MAKING TOOLS
Examples:
http://www.AltosResearch.com
http://NeighborCity.com

5. FEE REDUCTIONS / SERVICE COMPANIES
Example:
http://www.Home-Account.com

6. FEE TRANSPARENCY
Examples:
http://www.Closing.com
Agent Scouting Report (if they ever publish commissions, could deliver billions in consumer savings!)

Whether those new entrants ever think of themselves as a group, “change agents” are transforming the industry, some though technology, others through the political process (go Bruce Hahn), others through new consumer groups (go Doug Miller), and still others by educating consumers directly about their rights (go Erle Rawlins).

I continue to believe we are more a loose affiliation of real estate consumer advocates with the ability to organize on an adhoc basis (see case study from 2001), than a single organization or an event waiting to happen. Whether we ever sing together as one chorus, individuals like Joel Stern have proven the power of one consistent, prophetic voice.

Would anyone else, regardless of whether they are passionate about a single issue or systemic change, be interested using a wiki to coauthor a reform agenda and / or catalogue consumer savings opportunities in real estate?  How about attending a monthly series of real estate round tables, or fireside chats, in Boston and online?  Here's an example of one hosted at the Berkman Center for Internet & Society at Harvard Law School in January 2009.  I am there again today, talking about using VRM (vendor relationship management) to deliver consumer savings through a national network of self-organizing local home buyer clubs.  You can follow VRoom Boston 2009 on Twitter using #VRM.

Should we organize a "FSBOTradeMart" so sellers can meet vendors & homebuyers?

Homeowners:  If you're already selling your home "for sale by owner" or hope to do some sometime this Fall, would it be helpful to meet (1) other sellers, (2) "best of breed" money-saving vendors who can turbocharge your FSBO, and (3) potential homebuyers?

See comments on our blog post earlier this year, "Should we organize a "FSBO Camp," a real estate unconference for homebuyers & sellers?" and follow Twitter.com/RealEstateCafe for updates and brainstorming TweetUps.

If you'd like to help plan the event, demonstrate your produce or service, or simply drop in, please email realestatecafe (at) gmail.com or call us:  617-661-4046.

RECafe's new Boston.com ad to feature "Best of Breed" money-saving demos

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The Real Estate Cafe is working on new artwork to replace our existing banner ad on Boston.com's open house search page.  Do-it-yourself homebuyers and sellers, what kind of educational seminars would you like us to host this month, and which "best of breed" money-saving web sites would you like us to demo?  Real estate professionals, particularly buyer brokers and FSBO / discount listing services, we're also open to your suggestions for consumer seminars, "best of breed" demos (both online and hands-on), and potential real estate round tables.  Feel free to propose them below, or on the Real Estate Cafe's wiki.

Computer programmers, reformers, dreamers, and frustrated consumers:  Got an idea you'd like to develop into an application to help "do-it-yourself" home buyers and sellers save money?  We'd be glad to brainstorm / collaborate with you, and invite you to our next monthly meeting of other "change agents" and real estate innovators.  Here's an example of a technology debriefing we hosted in January 2009 at the Berkman Center for Internet & Society, at Harvard Law School. 

Proposal to turn ice cream truck into "Bailout Mobile" submitted to Awesome Awards

Background:  When The Real Estate Cafe bought an ice cream truck in January 2007, our hope was to repair the vehicle and create a mobile podcasting studio that could turn any open house into a BlockpARTy.  In addition to free ice cream (paid by sponsors), the truck would be filled with art supplies so prospective homebuyers (our clients) could meet neighbors as their children created art on the street.  

Two years later, that dream is dying a slow death.  Unless the truck is rescued by an Awesome Award or the Harvard Lampoon Society (they’ve expressed preliminary interest), the truck will be crushed into scrap metal by the end of the week. Before that happens, we beg the awesome judges to consider this 3 act play or write their own ending:

Act 1:  While Wall Street celebrates the 1st anniversary of their $700 Billion dollar bailout, an estimated nine million households are at risk of foreclosure across America.  To protest that injustice, the ice cream truck could be turned into a whimsical “Bailout Mobile” in Act 1.  Anyone who is “underwater” on their mortgage could help turn the vehicle into a giant collage, chronicling the rise and collapse of the real estate bubble.  (see concept proposal from last year).

Act 2:  One Awesome judge astutely observed that a “Bailout Boat” would be a more effective way to rescue someone who is underwater on their mortgage, hence that bold suggestion stretched our original vision.  We invite more brainstorming in Act 2, and one BETA House member already suggested creating an amphibious vehicle.  It’s not hard to imagine creating a virtual version of the truck that can fly anywhere and host BlockpARTies in Second Life!

Act 3:  If the proposals above are too ambitious, one side of the ice cream truck could be cut from the body to become a modular, mobile facade or “stage” which could be reassembled at remote locations.  This would enable the truck to achieve it's original mission -- to turn any open house into BlockpARTy.  Ideally, the modular truck could be attached temporarily to a garage or be free standing -- think of a giant lemon aide stand!  

Metal Artist and “Soul Mechanic” Mahmood Rezaei-Kamalabad as agreed to act as consultant to the project.  Like his artwork, our ice cream truck seeks to build unity, both by inviting neighbors to meet each other, and by inviting Real Estate Cafe clients to donate a portion to their rebates to provide housing or shelter subsidies for AIDS orphans.  

You can learn more about The Real Estate Cafe and ASAP: AIDS Shelter Alliance Partners at:
http://realestatecafe.pbworks.com/timeline
http://realestatecafe.pbworks.com/SaveASAP

Our clients have saved over $1 million in two of the past three years and the Wall Street Journal likes us, too!

PS.  Readers are invited to submit proposals for the ice cream truck, too.  We are particularly interested in hearing ideas from the Art Car community -- have you seen the movie "Wild Wheels"?