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:
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!