Tag Archives: Real Estate Industry

real estate industry

Will ‘smart contracts’ replace real estate closers?

This article was originally published on Inman News:
by Sam DeBord

Key Takeaways

  • Criminals are taking advantage of poor security in real estate transactions to defraud buyers.
  • Security holes in the real estate transaction could be fixed with verification software.
  • The role of a closing agent could be drastically altered with smart contracts taking over verification.

Most of a real estate closing revolves around trust and verification. Buyers and sellers use trusted intermediaries to verify that properties, funds, contractual obligations and insurance safety nets are all properly vetted before closing a sale.

That’s part of the reason a real estate transaction has so many participants. Agents, lenders, inspectors, title insurance providers, notaries and closers provide independent verifications of individual facets of a sale. An escrow company or an attorney is usually the organizing force that pulls these individual points of verification into one trusted transaction.

Security is lacking

The security of the current process is weak at best. Homebuyers are frequently being robbed of their purchase funds. By simply hacking an agent or closer’s email account, criminals have put themselves in control of the closing communication.

The hackers spoof the closer’s email, ask the buyer to change the wire instructions, and the funds roll into an unverified bank account. By the time the buyer realizes what has happened, the money has been laundered overseas through multiple wire transfers. It’s gone.

Software security to replace human fallibility?

This kind of real estate fraud is possible because of a reliance on unsecure, disjointed communication methods. The purchase process has no safety envelope. It lacks a seamless layer of overriding security that verifies each sale condition throughout the process.

What if software could replace the parts of the closing process that rely on human verification for security? Smart contracts aim to do just that.

Imagine a digital contract that independently verifies every step in a real estate sale including the identities of the buyer and seller, the funds sourcing, the lender sign-off, deposits, property title transfer and delivery of payoffs to sellers and lien holders.

Before getting into the technical details, let’s look at the roles of an escrow closer or an attorney in the closing process.

Closing functions that could potentially be replaced by secure software:

  • Administration of transaction as a neutral third-party
  • Control of earnest money funds
  • Verification that proper paperwork is in place
  • Examination of title for liens, judgments, mortgages, clouds
  • Ordering of title insurance policy
  • Pro-ration and transfer of property tax and utility bills
  • Preparation of closing documents
  • Administration of signing appointment
  • Transfer of purchase funds to sellers and lien holders
  • Recording of deeds with local government

Closing functions in which human input may trump intelligent software:

  • Live verification of personal identity
  • Explanation and recommendations for resolving title issues
  • Review and explanation of contract items
  • Guidance of clients during unexpected or unique circumstances

Clearly, there is a large portion of the closing process that could potentially be absorbed by secure software. This isn’t to say that the smart contract is ready to take over 90 percent of a closer’s role today.

The potential is real, though. Some of the world’s biggest banks are already developing software based on a technology concept called blockchain to create smart contracts for the financial world.

This is not bitcoin. Although many have only heard of blockchain technologyas the foundation for the digital currency, its use as a software model can be applied to any number of reputable business processes.

The real estate concept, in an oversimplified explanation, is a digital contract embedded with smart money. Buyers, sellers, lenders and all other parties are identified by their personal information.

This data comes from decentralized databases that add to the verified blocks in the data chain — banking, credit reporting, employment, government or other information gathered from trusted sources.

After verifying individuals, the blockchain assigns them an encrypted ID, which allows the smart contract to approve their actions going forward.

You’ve been verified; you no longer need to be trusted

From here, a homebuyer can create smart money by uploading funds and programming them. The buyer’s programmed money goes into the contract with stipulations attached to it.

The seller cannot touch the funds until the buyer’s programming instructions have been met: inspection approved, title clears, lender releases funds, county records the deed and so on.

The lenders, title companies, government agencies and others can all become verified participants in the blockchain smart contract. These identified users in the transaction can make the sale move forward when they verify that certain steps have been accomplished. Only the verified sellers and lien holders will be allowed to receive the closing funds.

What does the smart contract mean for escrow and attorney closers?

Smart contracts could drastically alter the way real estate transactions are closed. With much of the verification process now handled by a network of databases instead of human interaction, there’s the potential to remove much of the labor that’s currently necessary. This is the way most technologies disrupt industries — through efficiency improvements.

Timelines for closings could be reduced. Software doesn’t take holidays, evenings or weekends off.

It’s clear that a smart contract with enough access to the right data could administer a large portion of a real estate closing. Any item that pertains to verification is ripe for delegation to the smart contract. The complexity of the human interaction in the transaction isn’t something to underestimate, however.

Barriers and holes in the process

Smart contracts can’t review and explain contract documents to a nervous seller or buyer the way a human closer can. It’s a stretch to believe they’d replace the closer completely.

It would also be foolish to ignore the most glaring hurdle to the full-fledged adoption of smart contracts in real estate. That is the decentralized and unharmonious makeup of the industry itself.

A typical transaction might have a buyer’s broker using Instanet software while a seller’s broker is using dotloop. Meanwhile, the escrow company and lender are trying to shoehorn everyone into their own custom software product.

Each individual wants the process to work smoothly, but no one wants to use the other’s solution. A consensus blockchain-style foundation could allow many different software products to access the same smart contract, but the industry’s track record of coalescing around a single solution is less than stellar.

Moreover, the cross-industry participants necessary to close a financed sale make for an uphill battle. A single contract needs every member of the transaction to adopt its platform to be effective.

Brokers, lenders, title companies and even government agencies that record transactions would have to sign on for a truly seamless, secure transaction. That will take significant time and influence.

Digital disruption through leadership or pragmatic paper?

Smart contracts have significant potential for increasing the security of transactions, improving the speed of sales and making the closing process more efficient. They could effect profound changes on the role of the real estate closer, but they don’t eliminate the closer’s role entirely.

The smartest software in the world can die in unfulfilled anonymity in this industry. Adoption of smart contract technology won’t happen from the ground up. It will require the kinds of voices that can convince government agencies, banks and big brokerages to sign on.

Whether it’s blockchain or another solution, consumers deserve industry leaders’ full attention on providing a safer way to buy and sell homes. If it happens to make transactions faster and more efficient in the process, everyone benefits.

Every buyer and seller should be warned of the current danger of digital fraud at the outset of a transaction. Of course, there’s a simple way for many of them to avoid it.

Drive to the bank. Get a paper cashier’s check. Drive it to the closing office. Sign the paper. Thank your closing agent in person. As archaic as it sounds, until there is a solution, it couldn’t hurt.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth and President-Elect of Seattle King County Realtors. You can find his team at SeattleHomes.com and BellevueHomes.com.

Culling the lazy, bloodsucker real estate agents

This article was originally posted on The Real Daily:
by Sam DeBord

Liar. Cheater. Loser. Choker. Incendiary rhetoric seems to be in vogue this year.

“The consultants are like bloodsuckers. They’re ten times worse than a real estate salesman or broker, ten times, which is saying pretty bad stuff.” This was the biting yet confusing commentary from Donald Trump, a real estate salesman himself, at a recent political rally.

Inside the industry

The shots at real estate agents are coming from within the industry as well. Keller Williams’ Chairman Gary Keller recently said that agents who buy leads from Zillow “are lazy and don’t want to do the work.” Surely many of his top agents and teams who effectively use the leads would disagree.

Zillow’s CEO Spencer Rascoff recently told CNBC that the company no longer wanted to work with agents who weren’t “great” (they don’t spend a lot of money on advertising). So they’ll be “culling” those agents who aren’t up to snuff. While a practical business move, avoiding a term associated with slaughtering inferior or surplus animals might be item #1 for the PR team’s next executive media coaching session.

Real estate classism

Before we get self-righteous about these leaders’ word choices, though, it’s worth noting that this kind of language pervades much of the industry’s conversations on the quality of real estate agents.

There’s no shortage of snobbery and classist speech among agents and brokers.

Just ask a high volume agent how we should raise the bar of professionalism in the industry:
“Raise Realtor dues by 1000% and we’ll lose 90% of the deadbeats who bring us down.”

Talk to boutique brokers about their counterparts:
“That head shop will hire anyone who can fog a mirror. Their agents are bottom feeders who don’t sell anything and make us all look bad.”

You hear it from speakers at industry conferences:
“Let’s use the 80/20 rule. We need to get rid of the 80% of crappy agents who are making us look bad, so that the good agents who do 80% of the volume are the only ones left.”

There are some really important conversations to be had about the quality of real estate agents in our industry. We want clear answers as to how we fix them problem. We want the answers to be simple.

Unfortunately, big answers are often necessarily complex. When we group real estate agents into simplistic silos to try to fix our issues, we do a disservice to ourselves.

Volume does not equal quality

We can all agree that there are real estate licensees without the experience, ethics, education, or conscience necessary to serve their clients well. There are bad apples in our midst. They’re a poison on our reputation and should not be allowed to sell real estate.

Let’s not overreach with our reaction, though. This rhetorical journey usually ends with lower producing agents or those with non-traditional business models being given the scarlet letter and pronounced as a scourge on the industry.

Volume does not equal professionalism or quality. We’ve seen sweatshop practitioners become real estate celebrities, only to later lose their businesses and licenses when their practices came under scrutiny.

On the other hand, some of the lowest-volume agents often have the most experience to with which to guide their clients. Agents who are nearing retirement will often shrink their active client base significantly. The buyers and sellers who work with them are afforded all of the benefits of an agent with decades of experience and insight, as well as a greater share of that agent’s attention.

The client who works with an agent who has only one client at the moment may be the client who is receiving the most comprehensive personal service possible.

Then there are those “lazy” agents who buy leads, or pay fees/splits to others who prospect for them.  Since when was specialization of skill and division of labor a sign of laziness?

Selling vs. lead generation

Admittedly, this comes from my position of personal bias. We’ve brought agents on to our team who were low volume producers before they joined. Most had experience, but didn’t want to prospect anymore. They just wanted to work with clients and sell.

Meet “Jane”. She sold for 30 years before joining us. She is one of the smartest, most dependable, respectful, and effective agents we’ve worked with.

By many counts, she should have been tossed from the industry the year before because she only sold two homes. She sold 15 homes last year, a healthy business in a market like Seattle. It still probably wasn’t enough for the sales police to label her volume sufficient. She’s “lazy” because she’s relying on others to generate leads and focusing on her core skills of selling. She might just be “culled” with the other low-rung agents who provide outstanding service and consistently receive raving reviews from their clients.

It’s more complex than that

To be fair, we’re in an industry that has an unhealthy obsession with sales numbers. I’ve stopped counting the number of times someone asked me, “What kind of volume do you do?” within the first two minutes of a conversation (It almost sounds like “How much do you bench, bro?”). So it’s not surprising that an agent’s volume is often the first metric many look to for a frame of reference. Volume makes a big difference in finding out whether or not an agent is good for your team, your office, and your business model.

Let’s just not let it creep so far into the conversation about who deserves to belong within the greater industry. There are a lot of different business models, and different roles that fit within them. Not everyone needs to be a solo, door-knocking, cold-calling top producer to provide great service to clients.

“Jane” isn’t. Her clients will scoff if you tell them that her volume and prospecting system make her a bad agent. If we’re going to talk about improving the reputation of real estate agents, let’s stay away from oversimplifications.

The answer is more complex than volume or business model.

It’s about education, experience, dedication, and professionalism. Those are difficult things to measure, but improving an industry isn’t supposed to be easy.

Let’s skip the simple labels. They’re part of the problem.

Project Upstream: Tax Reform for Real Estate?

This article was originally published in Realtor Magazine:
by Sam DeBord

Business owners take risks to create valuable products and services. They drive the national economy and create jobs.

But no good deed goes unpunished. These entrepreneurs are rewarded with a slough of tax reporting requirements from a tangled web of government agencies. A single business might file fee or tax reports with its city, county, secretary of state, state department of revenue, licensing board, insurance commissioner, and the IRS.

Business owners often feel powerless, subject to countless mandates with no voice in the process. In an ideal world, the system would be reformed. A business would file a single revenue report that could be used by any agency, cut one check to the government, and get back to work. No one is holding their breath for that outcome.

Disjointed Real Estate Listing Distribution

Real estate’s convoluted listing system creates a similar feeling. Property listings, and the services that support them, are the revenue drivers of the industry. Making listing delivery efficient should be a priority. Yet a single listing might have to be input in a dozen different locations before it has been comprehensively distributed. The process doesn’t improve much after distribution. The listing creators often have little control or feedback regarding how their information is treated.

Brokers, agents, staff, and others waste valuable time entering the same listing data into multiple MLSs, vendor websites, franchisor platforms, and advertising portals. The data is the same, but each listing outlet requires a different process of delivery. It’s the definition of inefficiency.

Loss of Control, Uncaptured Value

Once delivered, the listings can take on lives of their own. Brokers and agents often sign on to agreements with little protection for their data rights. Advertising portals rework and manipulate the data and media as they see fit. Some go so far as to republish listing photos in unrelated advertising campaigns without credit or compensation given to the creators.

The single brokerage, on its own, has little ability to reform the process or negotiate a better contract. The inertia of the current system is too great. As a nationwide collection of brokers, though, a single voice like the Upstream coalition would have that power. It has the assets necessary to create a new process and the clout to motivate listing data recipients to operate on a more level playing field.

This, of course, is where fears of power consolidation reside. Tax reformers promote a streamlined system but are wary of granting a federal government agency greater powers to make it possible. Project Upstream’s goal is to streamline business and benefit the entire broker sphere. It will also be a place for brokers to manage a broad range of other kinds of information beyond listing data, including customer databases, vendor contacts, and agent rosters.

Its motivation, though, is the subject of conspiracy theories regarding elimination of small brokers and takeover of MLSs.

Us vs. Them, or All for One?

Luckily for real estate, the body with the power to streamline its processes isn’t the IRS. It’s a collection of “us.” The forces combining to support Project Upstream are the brokers who deal with the value-sapping quagmire of the current listing system every day.

These are business owners who represent over 70 percent of brokers nationwide (and growing). When we get past fear, the benefits of Upstream are fairly straightforward for brokers:

  • Eliminate redundant labor in listing input
  • Improve accuracy and timeliness of listing data output
  • Ensure broker control and choice regarding which outlets receive data
  • Establish broker rights and display rules over the data and media

Upstream’s challenge will be conveying this message to the individual. The project’s developers clearly understand the mission. Can that message be delivered in a way that motivates a broker or agent to change course in their everyday duties in support of a greater movement? Much like each individual voter must understand and believe in a cause to take the time to cast a ballot, adoption by the masses, one by one, will determine the viability of this venture.

Tax reform may be wishful thinking. Listing data reform, on the other hand, is right under our noses. There’s no czar or military coup attempting to seize power and take our autonomy from us. Brokers are merely creating better tools and more control for themselves.

Real estate brokers nationwide haven’t collaborated this closely toward a clear goal in quite some time. Let’s not allow conspiracy theories to cloud the way forward.

Sam DeBord

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth, and 2016 president-elect of Seattle King Country REALTORS®. You can find his team at SeattleHome.com and SeattleCondo.com.

Don’t Go Solo, Tech Bro: Do Your Homework

This article was originally published on Inman News:
by Sam DeBord

  • Someone else already failed at it. Why will you succeed?
  • Real estate is a collaborative business.
  • Look to profitable precedents for true tech investment opportunities.

Picture the scene: “Tech bros” with money to burn surround the table. The disruptor-in-chief is rallying the troops to the tune of nine figures. The pitch is some variation of a model that has failed repeatedly and without exception for decades. “Today,” he states, “we will finally change real estate because we have — technology!”

SoloPro’s enticement of a $1.6 million investment from Lowe’s is just another data point in a long line of over-funded, soon-to-be-failed commission-busters.

That’s not broker-centric hubris speaking. It’s history.

The company’s “nod to the traditional real estate model” by bundling services this week wasn’t just a slide toward traditional commissions. It was the first step in admitting its model doesn’t work. The bluster of “blowing up” agent commissions is a tiresome, thin smokescreen to the seasoned observer.

Tech money is pouring into real estate, but some techpreneurs seem more interested in spending than doing their homework. Many of them need a Real Estate 101 course, with a significant portion dedicated to the history of failed ventures.

Don’t be offended, tech bros — I used to be one of you

I was a techie know-it-all who was appalled by the broker-agent model that dominates the industry. Agents were overpaid and commissions were overblown. We knew tech disruption would rid us of real estate’s high costs and inefficient labor. Then I spent 10 years in the trenches with real brokers and agents, and I saw how wrong we were.

If you’ve ever been lucky enough to hear Sean Carpenter speak, you’ve heard that in real estate, “Everything you need to know, you learned in kindergarten.” Having taught a significant number of kindergarten classes myself, I’d like to deliver a few of those lessons.

Let’s sit on the reading rug, clear our minds and start with the basics:

1. Read — read a lot

Find out if your business plan is just a carbon copy of something that’s already been done. Don’t let your ego get in the way. Many smart people have probably already tried it.

You’re saving consumers money by cutting commission costs? See Help-U-Sell since 1976. See the litany of competitors already entrenched in the marketplace and the graveyard of imitators in their wake.

You’re adding technology to increase the commission discount value proposition? See Redfin. Is $200 million in funding enough to reach 3 percent coverage in your primary market? That’s what it took them, along with continually shrinking the discount model.

The vast majority of that money came after the company changed its tone from adversarial to cooperative. So….

2. Play nice in our sandbox

Real estate is a relationship business. Abrasive characters usually find themselves a new attitude or find themselves out of the industry.

You’re not Steve Jobs. You don’t get to be a sociopath in this industry and get away with it. Real estate’s leaders are intelligent, savvy and financially motivated. They also make a lot of decisions based on long-term relationships. That’s not just the old boys’ club. It’s an acknowledgement that being amicable is profitable.

Many of our leaders were once real estate agents and brokers themselves — the smiling, anything-for-my-clients kind of folks. You’re going to have to shake a lot of hands, listen to a lot of different viewpoints and make a lot of friends to survive long term.

3. Build things. Don’t break things.

Disruption conjures images of broken models. Changing the way real estate works doesn’t have to mean tearing things down, though. It’s usually not the best path to profitability.

Our disruptive friends who are hell-bent on breaking everything in sight are often the fastest ones to the exit when it comes to earnings time. We love innovation in our industry, but don’t walk in, kick down the sand castle and tell us how smart you are.

Rather, build innovative tools that help us do business. Look at who’s actually generating revenue in this industry — listing advertising portals, productivity app developers, transaction management platforms, e-signature providers and so on.

Although some of these companies are still operating in the red, they’re at least hanging around with revenue long enough to establish themselves.

Brokers and agents have money, and they’ll spend it. Innovate and bring us a product we want to buy.

4. Follow the rules (as much as possible)

You’re entrepreneurs, so you’re naturally inclined to break the rules. Feel free to bend the rules of formality, tradition and stagnant thought. Just don’t ask to join the group and then pretend that you didn’t read the rules.

You can be a unique snowflake, but if you stand on your desk and throw rocks, you’re probably going to fail.

You could prove me wrong.

One of you will break all of the rules and be successful. I’ll let you buy me a drink and tell me all about it when you get there. But for most of you, building cooperatively is an easier path to profits in this industry. It has lower hurdles and more successful precedents to follow.

Innovate, but research first. Ask a broker why it won’t work. Take the advice seriously.

Then get busy building something that will loosen up our pocketbooks. History, and your investors, will look favorably upon you.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth and President-Elect of Seattle King County Realtors. You can find his team at SeattleHomes.com and BellevueHomes.com.

Broker Public Portal: Angling for a new face

This article was originally published on Inman News:
by Sam DeBord

  • Accuracy isn’t enough. BPP needs attractive tools and media content.
  • BPP has valuable exclusive data that could be leveraged for exposure.
  • Public relations will generate earned media on a tight budget.
  • The name has got to go.

Organized real estate has undertaken some potentially transformative ventures in the past couple of years. Project UpstreamRPR-AMP and theBroker Public Portal have aligned the vision of brokers in numbers that would have been unthinkable in the recent past.

What these projects seem to have in common is that their progress since initiation has been difficult to follow. Although they have secured initial funding, the strategic direction of each feels like it’s taking shape in the dark.

It would be satisfying for industry constituents to have more insight into the mindsets of the leaders of these programs. In particular, the Broker Public Portal seems to be as much of an enigma today as it was when it was first proposed.

We know the leadership and the stated mission: to provide a simple, direct home search experience that connects consumers directly with brokers.

What we don’t know is how it intends to produce a distinguishable value proposition for consumer viability. Its success is reliant upon its ability to create a unique consumer benefit. That benefit then has to reach the general public’s consciousness — possibly an even greater task.

Doomed to fail

Some critics have already called BPP a failed concept — an exhibition built without an audience in an arena where the titans already own the stage. They’re correct to point out the challenges, but probably overstepping in the sweeping conclusion.

Detractors will point to NRT’s short-lived portal, homesforsale.com, as a cautionary tale. It was released and then mothballed in 2015 because it didn’t garner any consumer traffic. That venture’s difficulties should be poignant for BPP’s leaders. Homesforsale.com didn’t seem to have a particularly unique sales pitch to consumers.

BPP is a different animal, though. NRT’s site was intended as a lead-generation and referral-fee platform within a branded silo. BPP’s mission sounds more like a grassroots, brand-agnostic platform. It seems to want to be the Wikipedia of real estate listings, the Switzerland of the portal world.

Too small, too late

Many have pointed to Zillow Group portals and realtor.com and asked how BPP could possibly compete.

BPP has $500,000 in funding so far. Portals are billion-dollar operations.

BPP’s people have said repeatedly that they don’t intend to compete with the top portals. They’re just creating a different option, a product offering that might be preferable to some portion of the consuming public.

Let’s be honest: “We don’t want to compete with the big portals,” sounds a bit like a coach saying, “We’re only thinking about today’s game.”

BPP’s leaders must have large-scale aspirations. They want to be a champion as much as their portal competitors do. They’re just wise enough to avoid inciting rivalry right away.

Why BPP?

The most important question being asked is: “Why would a consumer use the Broker Public Portal?”

What angle will BPP leverage to make it successful?

Make no mistake, it’s an angle. Its success will require sharp differentiation. Simply creating a neutral platform with direct broker data won’t cut it. The big three already have unbelievable amounts of data, user interfaces that provide superior experience and enough capital backing them to buy consumer traffic for the foreseeable future.

Can BPP be the neutral source for listing data — the Wikipedia for real estate consumers — if consumers can’t hear the message?

Realtor.com has blanketed consumers with its marketing pitch of being the most accurate and up-to-date site. Its 800-plus feeds from MLSs make this claim difficult to dispute.

It’s true that BPP could eventually have a broader set of listing feeds, but could it outspend Rupert Murdoch and actually get that message to the general public? There’s a natural conflict of messaging between the two portals if this is BPP’s elevator pitch.

If practitioners prefer BPP’s model and display rules to those of the other portals, it could become the preferred platform for agents and brokers. That might have little effect on consumer traffic, though.

Realtor.com is coming back today from its recent slide, but not because Realtors prefer it. It’s gaining steam because its operator and owners, Move Inc. and News Corp, are hustling and spending to get in front of consumers.

Building the shiny proprietary tools

Consumers don’t choose a portal based on a lofty mission statement. They use a website with attractive tools. So the portal’s strategy shouldn’t be overwhelmingly focused on how to build the framework that combines nationwide listings (though that’s a necessary foundation). It should be initially focused on what kinds of consumer-centric tools will attract organic consumer traffic.

What could those shiny new tools be that generate traffic? They could come from access to exclusive data that the member MLSs allow BPP to display.

Imagine the clickbait that BPP could generate by creating visualizations of electronic keybox histories. Home showing velocity and volume could be displayed as heat maps, time lapses and neighborhood trending reports.

That’s just one set of data out of many that BPP might be able to leverage in its quest for unique exposure. Access to immediate updates from MLSs’ raw data would allow BPP to inform its consumer base through news, social media and messaging in ways not possible for other consumer portal sites.

That positions BPP less as Wikipedia and more as Wikileaks. The portal could expose information to consumers that they can’t get — or aren’t allowed to see — anywhere else. There’s nothing more viral than exclusive content.

Perception: Marketing and public relations

BPP’s obstacle and opportunity is perception. The portal needs to first be perceptible to consumers. Without generating initial awareness, the rest of the package is irrelevant. That was NRT’s portal’s downfall. The second portion is the perception that consumers will have of the brand’s personality — how will the public perceive its image?

The kind of proprietary data BPP has access to could allow it to establish itself as a unique information source to the news media. Traditional brokers and Realtor organizations often complain that media outlets seek out sources such as Redfin and Zillow for news stories.

What they don’t often admit is that those companies are proactively driving the publicity. They employ researchers to build attractive consumer stories and public relations teams to push them to reporters. The media coverage they receive is not accidental.

Public relations is a gaping hole in the broker world. BPP could become the go-to source for inimitable media insights on the real estate industry.

Creating this content would, of course, be constrained by formidable broker and MLS restrictions on how broadly their data is used. The opportunities, though, are great:

  • Immediate market reports, leveraging daily market statistics while other outlets are working with weeks-old or months-old data
  • Keybox showing analytics tied to effects on sales results: Sale-to-list price, DOM, regional and seasonal variations
  • The best times and days to show a home to buyers, based on their likelihood of writing an offer
  • How likely a new agent is to sell your home in 30 days vs. an agent with 10 years’ experience
  • How long a property stays on the market when listed by a Realtor versus a non-Realtor licensee
  • Whether homes listed by single agents or teams sell faster
  • Whether agents with larger listing inventory have a higher percentage of overpriced listings that don’t sell

These kinds of stories are irresistible to consumers and to the news media. To be able to publish this kind of content, BPP’s members will have to fully buy in to the concept and allow for a deeper exposure of their data.

Angling for success

BPP has some significant strategic disadvantages when going up against the biggest national portals. It doesn’t have to compete with them initially, though. It just needs to create a ripple to demonstrate its potential.

Some strategy to make waves on a tight budget:

  • Start by imagining attractive tools and content for consumers that sit on top of an adequate listing database — not an overbuilt database followed by an interface. Consumers rarely know what’s under the surface. Give them what they want upfront.
  • Leverage proprietary data and pitch it incessantly to the media. Public relations generates inexpensive “earned media” when the content is truly unique. BPP could be the easiest pitch in the industry if it curates its assets correctly.
  • Don’t lean too heavily on pitching the data as accurate. Realtor.com is already buying that space. Reporters don’t bite on accuracy stories as much as they go for “new,” “cutting-edge” or “exclusive.” Build the perception that consumers, and news media, must come to you first for the biggest scoop.

Drive at an angle. Say it out loud.

  • “Trulia’s data: weeks old. Case-Shiller’s data: months old. Our data: updated this morning. Know first.”
  • “Find out where your city’s buyers are moving with data no one else can see.”
  • “Real estate tell-all: Choose the right kind of agent with exclusive data direct from the source — their broker/owners!”

That name, that name — Broker Public Portal

We don’t know if Broker Public Portal is intended to be the name of this effort long-term. Let’s hope it’s not.

“Broker” is a term that is known in the industry but foreign to most consumers. It sounds like a middleman who carries jewels wrapped in velvet in his breast pocket. Consumers can’t even distinguish a Realtor from an agent. This isn’t a good start.

“Public” is important for industry distinction. It is redundant to the consumer. Telling them that a consumer website is public conjures images of Austin Powers: “Allow myself to introduce — myself.”

“Portal” sounds like a mystical doorway or a stark public restroom. Neither conjures the friendly, useful image that BPP should be portraying to consumers.

I’m sure the good people at BPP and their consultants are aware of this issue and are working on it. The brand needs a lot of makeup.

All bets down for BPP

A betting person would put a strong dollar on BPP never competing with the top-ranked portals. Based on the current landscape, that would probably be a winning bet.

We’ve seen so many gamblers squander their capital on ill-fated, poorly vetted real estate ventures, though. In this industry, what you don’t know can really hurt you.

And BPP’s media arm, if it plays its cards right, will know a whole lot more than its competitors. If it can leverage that proprietary knowledge into earned media, it could find an angle to unchecked publicity.

I’d put a buck on that dark horse.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth and 2016 president-elect of Seattle King County Realtors. You can find his team at SeattleHome.com and SeattleCondo.com.

Lenders: How To Meet More Realtors (Without Making Us Cringe)

This article was originally published on The National Real Estate Post:

Lenders and Realtors are salespeople. Most of us are paid on commission. We need to do two things to be successful:

  • Meet new clients to broaden our customer base
  • Provide superior service to retain those clients and their referrals

Lenders need to meet Realtors and attract the business of their clients. The methods most use to do so are antiquated:

“Check out my rates and programs!” “Can I buy you a cup of coffee?” “Let’s grab lunch and talk about your goals.”

Talk to any Realtor who has been in the business for a few years and they’ll cringe when they hear these pitches. It’s not that we don’t like lenders. It’s just that we don’t have time to waste on repetitive requests for business with no reciprocal payoff. We get them almost daily and they rarely have any differentiation or offer of new value.

Do you want Realtors to see you as a partner and a respected expert? Join your local Realtor board.

You want Realtors to see you as a peer, a knowledgeable professional in the industry. By joining the Realtor board, supporting its committees, and showing your dedication to the profession, you’ll gain acceptance with your local Realtors.

Teach classes through your Realtor association’s offices. Write articles for their websites, newsletters, or magazines. We need to know what’s happening in the lending world, and you need to be connected to the issues we’re facing every day.

Realtor boards are looking for unified support from the real estate industry. Realtors themselves are looking for serious, professional lenders who will educate their clients and be trustworthy partners in their businesses.

So stop trying to get Realtors in their cars, one at a time, to meet you at a coffee shop or café. Go meet them en masse, on their turf, at their request.

The relationship you make will be based on respect. We’re salespeople, too. We know a pitch when we hear it, and we’ll choose a valuable partnership proposition over an “ask” for business every time.

Open Door PartnersInvite Us Into Your Offices For A Safety Check-in

Getting us into your office might be difficult. We do everything virtually these days. There is a way to get agents to stop by your office, though, without even having to ask.

Sign up your office with Open Door Partners. You’ve probably heard a handful of stories in the past year about agents being assaulted, kidnapped, and murdered on the job. That’s because they go meet unidentified prospects at vacant property locations.

They need convenient offices near properties to meet these unknown clients. If their broker’s office isn’t nearby, maybe your office is.

Agents are using our nationwide online map of lenders, title companies, and broker offices as locations for quick safety check-ins. Sign your office up at Open Door Partners, and if an agent in your area needs to meet a new client in your area, they can stop in at your front desk for the meeting.

It provides you an opportunity to give something of value to a real estate agent, and meet them face-to-face while they’re working in the field. It costs you nothing, but creates and opportunity for business—and improves the safety of your industry partners.


Sam DeBord

Sam DeBord is a managing broker with Seattle Homes Group and Coldwell Banker Danforth. He is 2016 President-Elect of Seattle King County REALTORS® and has been featured in Inman News’s Top 101 In Real Estate and the T3 Swanepoel Group’s Top 20 Social Influencers. His team sells homes and condos in Seattle and Bellevue.

Raising the NAR: Sink ships or float boats?

Lack of real estate agent professional competence: it’s a perpetual topic of industry conversation. Marginal agents have been called the #1 threat to the agent sphere in the recently-released D.A.N.G.E.R. Report. “Raising the bar” in real estate is the prime focus of one of the largest agent-led groups online.

bar

Missing the mark on raising the bar

While the industry professes to want improvements in agent competency, tangible progress is inconsistent. Franchisers, brokers, associations, MLS’s, and licensing boards control the barriers to entry and sustaining licensure in real estate. These organizations are primarily driven by the inertia of their need to sustain revenue.

Raising the bar for the industry is widely accepted as a necessary goal, but few have the motivation to fund it.

This paradox was particularly evident at NAR Annual this year, with the debate over making ZipLogix a nationwide member benefit. NAR would spend $12 million per year to provide the transaction management platform to all of its members. The funds would come from NAR reserves.

ZipLogix for all agents?

Proponents of the deal spoke of the long-term benefits to Realtors:

  • Keeping the real estate agent at the center of the transaction
  • Protecting the data of Realtors from outside vendors
  • Recruiting the almost 1 million non-Realtor licensees into NAR

These were all important points in guiding the financial and technological strategy for the organization. There was also a significant undercurrent in the discussion, though, about raising the level of membership professionalism. Financial and competitive issues aside, it was implied that this service could improve the competence of the members who currently don’t use transaction management software.


 

Efficiency and professionalism increase

There’s an argument in favor of the deal, simply for this cause. By getting the vast majority of real estate agents on board with a platform that will increase their efficiency, it could improve the professionalism of their interactions with clients. Theoretically, better tools could boost the image of a Realtor in the eyes of consumers, one transaction at a time. Each time a client closed an efficiently-managed transaction with a tech-savvy agent, NAR’s broader image would be enhanced to the buying and selling public.

That’s a lofty goal, but one that shouldn’t be dismissed simply because of its difficulty.

Spending money on the lower rung

The flipside is that most successful agents are already using software that improves their transaction management, document management, and e-signature processing. There are a plethora of tools that competent agents already pay for on a monthly basis and use consistently in their businesses.

This is a clear duplication of costs for this group. The implication for them, and their brokers, is that money is being spent on those members who aren’t willing to step up and commit themselves to better tools and service. They see NAR spending money to raise the level of competence of its lowest-performing members. The top performers will continue to use the tools they currently have, while carrying the water for the rest of membership.

We often hear in these circles that this strategy doesn’t actually improve the image of the organization, but preserves its lowest rungs. It focuses on those who can’t, instead of embracing those who can and do, to the tune of tens of millions of dollars.

There are strong arguments for both sides. Does a rising tide really lift all ships? Can we raise the bar in real estate by bringing up the baseline of all agents?

Taking out the weakest links

Or, should NAR be torpedoing everything that’s a drag on the top line of our industry? Does the industry, and NAR, ultimately only improve when focusing resources on those who can lead a smaller successful core of agents toward a higher level? There is plenty of rhetoric about significantly increasing the costs associated with membership and shrinking the population to put more business in the hands of the purportedly more capable bigger producers.

A board divided

With the stated goal of recruiting many of the 1 million non-Realtor licensees into the fold with the ZipLogix deal, it seems that the current leadership is leaning toward the rising tide. NAR’s directors voted two-to-one for the proposal. But that is a highly divided board, compared to the nearly unanimous approval that most proposals receive by the time they get to the directors.

This is a discussion that has to be central in the search for NAR’s ideological future. Is it in our best interests to focus our resources on increasing the population of members from its current slate of 1.2 million? Will that increased membership have the resources to improve the level of real estate agency services nationwide, or will it dilute the organization’s focus and lend less resources to its best and brightest?

Getting off the fence

We certainly have the ability to provide different services to distinct groups within our membership. But choosing to bifurcate our mission to both a bottom-up and top-down approach means we’ll be less successful at both.

Float more boats or sink more ships? Let’s decide, let’s say it out loud, and let’s put it on our flag, so everyone on board knows where we’re headed.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth, and 2016 president-elect of Seattle King Country REALTORS®. You can find his team at SeattleHome.com and BellevueHomes.com.

Could the Supreme Court put an end to open house signs?

This article was originally published on Inman News:

Key Takeaways
  • A recent Supreme Court ruling threatens agents’ ability to display open house signs.
  • Municipalities will be reviewing sign codes and may remove real estate exemptions for expediency.
  • The ruling allows exemptions for compelling state interests, and real estate signage has been cited as supporting Fair Housing laws.

Open house signs dot the sidewalks on a weekend morning — it’s a sight of familiarity for our clients and our businesses.

Based on a recent legal ruling, those signs might disappear in short order.

That’s unless Realtor associations nationwide step up quickly to help their local governments identify the language in the ruling that supports open house sign exemptions in sign codes.

The town of Gilbert, Arizona, recently took a sign code case all the way to the Supreme Court. The town’s ability to regulate the content and manner in which temporary directional signs are displayed is at issue.

The Supreme Court ruling

In short, the court ruled that any sign regulation must be content-neutral so as not to deny free speech. A city can impose restrictions on size, type and placement of a sign — but not the message.

If a city employee has to read the sign to determine whether it complies with municipal regulations, then the regulations are not content-neutral. Therefore, the regulations are unconstitutional.

What does this mean for municipalities?

For decades, Realtor organizations have worked with local communities to craft reasonable sign codes. These regulations allow for responsible placement of open house signs that support consumers, real estate practitioners and their communities.

The Supreme Court ruling will force every municipality with a sign code to re-evaluate their regulations and decide whether they’ve granted exemptions that don’t pass the content-neutral sniff test.

If they currently grant content-based exemptions, they’ll likely see two basic choices:

  • Grant the right to place directional signs to everyone, regardless of content. This means the hardware store, the adult novelty shop and the liquor store can all place A-boards wherever an open house sign can be displayed.
  • Throw out all of the sign exemptions. Don’t allow any businesses to display any directional signs, including open house signs.

The second choice will likely be viewed as the easier, cleaner solution. Legal advice is currently going out to towns across the country asking them to review their policies, and many will lean toward the fastest solution.

There’s one caveat in the ruling, though, and it applies directly to real estate signs. If the content regulation is being applied in pursuit of a compelling governmental interest — and narrowly tailored to that end — some content exemptions are allowed.

The Supreme Court and Federal Trade Commission have, in the past, cited real estate signage as an asset to federal fair housing. These signs create non-discriminating access to housing and are supportive of the Fair Housing Amendments to the federal Civil Rights Act.

Why sign codes for real estate?

Cities create sign codes to limit sign sprawl. If every shop on every street is allowed to drop A-board signs around the block, a city’s rights-of-way quickly become cluttered and unmanageable.

Sensible sign regulations allow for business advertising while still keeping to the community’s desire for an attractive image.

Most businesses don’t require directional signs. They’re in a static physical location, with a permanent address, and they can be found fairly easily by consumers searching them out.

Real estate open houses, on the other hand, are dynamic in location. Each weekend they change, and consumers are led by temporary directional signs to properties that might otherwise not be located on residential streets.

One could say that Internet advertising and GPS-enabled apps have all but removed the need for open house signs, and most consumers find the homes they’re searching for on their computer or phone.

That’s a bit of a myopic big-city view, however. There are still many people who find homes through traditional means, and there are also those who don’t have regular access to online resources.

What would real estate look like without open house signs?

Would the lack of these signs significantly affect the industry? The first and most obvious change would be the reduction of the marketing opportunity to agents.

Agents often base their businesses on the ability to meet new buyers at their listings as well as neighbors who will be future sellers. Without signs on the street, the casual open house visitor might never stop in.

Serious homebuyers will usually find a way to view the properties they are most interested in — open house or not.

But agents who’ve used open houses as a significant source of new clients via the lookie-loos who happen across a sign in the neighborhood would see a drop in business.

And there are still plenty of home sales that happen when buyers walk into a home that they had no idea they’d love until they stepped inside at an open house.

FSBOs vs. sign codes

There would also be a potential benefit to organized real estate. Licensed real estate agents who belong to an MLS might take a firmer grasp on the volume of listing inventory. The open house sign is currently a neutral marketing platform, open to homesellers — licensed or not.

With FSBOs unable to advertise their own open houses through neighborhood open house signs, market exposure of properties on the MLS might become a much bigger value proposition. The FSBO seller would have fewer ways to garner consumer attention and likely be more inclined to list property with a licensed real estate broker.

Safety and fair housing

Realtor safety and homeowner safety might increase with fewer unknown open house visitors. The idea of the open house itself is bizarre to most outside of the industry.

Professionals invite complete strangers into the home of a client who isn’t present. There is a multitude of opportunities in these situations for bad things to happen to the agents or their clients’ property. Fewer open houses might result in better security in general.

On the other hand, fair housing efforts are supported by open house signs. Protected classes and groups who might not have access to certain real estate marketing information cannot be discriminated against when a physical sign invites all comers in a geographic location into a home for sale.

There is still a sizable portion of the population that does not regularly engage in online activities or does not have regular access to the Internet. Physical signs can engage these consumers no matter their social and economic status.

Saving the signs

The fix for the real estate industry is straightforward, though it will require much legwork and expediency. Municipalities don’t like to open up their sign codes. It’s a tedious process.

Their inclination when faced with the SCOTUS ruling will be to throw their hands up and throw all of the signs out. Rather than let their communities be cluttered, they’ll toss out the exemptions.

Education now, before the decision-making processes come about, is necessary to let these municipalities understand their options. The key is to engage local officials before the fear of lawsuits arises.

City councils and their counsel need to know that there is a compelling interest in allowing exemptions for real estate signage:

  • Open house signs increase local home sales, the rate of sales and revenue collection for municipalities.
  • Open house signs improve access for all citizens to housing and support fair housing and non-discrimination efforts.
  • Municipalities can continue their narrowly tailored exemptions based on this content.

City and county governments don’t want to be tied up in lawsuits, which is why their first inclination might be to take all exemptions away. Unfortunately, that will likely create more litigation from real estate organizations that rightfully wish to keep their current signage rights.

By pre-emptively engaging and educating local leaders with this information early, we can preserve the ability to advertise open houses without opening the floodgates of rampant right-of-way signage.

Many thanks to our Realtor staff, volunteer leaders and housing specialists in providing the background for this post.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth and 2016 president-elect of Seattle King County Realtors. You can find his team at SeattleHome.com and SeattleCondo.com.

Will RPR fears hold back industry vision for Upstream?

This article was originally published on Inman News:

  • Upstream provides the model for broker-led data management, but the expense of RPR worries brokers.
  • Data management isn’t free. Brokers need to spend to keep up with portals.
  • Inaction based on past failures will only deepen brokers’ loss of control.

Broker conversations about data today usually take on a grim tone. That was the case when I recently moderated an industry panel of MLS and broker executives. The topic was the future of organized real estate, and the conversation was filled with worry that we (the broker-centric world) had lost the ability to manage and profit from our data.

Brokers and agents create the bulk of real estate’s valuable data sources, and then promptly give them away. Technology companies use the data, with few rules attached, and drive the majority of their revenue with it. They charge brokers to advertise adjacent to it.

This sentiment isn’t new, nor is it unique. It’s been around since the first portal website started charging for advertising. The message’s volume has been steadily growing, though. Its simple truths haven’t become any less true.

So when our panel’s conversation moved to the potential of Upstream to right the power structure in the world of real estate data, one would imagine the tone would turn aspirational, hopeful, or determined. It did not. While the concept clearly addressed our biggest concerns and drew significant approval in theory, the outlook was met with skepticism and distrust.

Skepticism’s roots

Unfortunately, this wasn’t a rare instance. Many of the industry folks whom I speak with about Project Upstream begin their conversations with wariness. There are well-founded concerns about the ability to bring such a diverse group of real estate companies together to make the project work.

By and large, though, the fears keep coming back to RPR.

Let’s get the bogeyman out of the way: RPR has cost the National Association of Realtors more than $120 million since its inception. That’s about $120 per member over its lifetime.

New annual expenses for RPR are around $22 million. They’re included in members’ dues (the Second Century Initiatives include RPR, HouseLogic, Real Estate Today Radio, .realtor domain, and eProperty data, at a cost of about $25 per member annually).

Maintaining RPR is a significant expense, one which many brokers feel is too large. It was built to be a revenue-producing tool, and it hasn’t become that. Although many Realtors across the country love and use the tool, adoption rates are still far too low.

Lack of access to MLS data in certain markets hamstrings its ability to provide profitable analytics products (its initial revenue model). Border wars between MLSs, brokers and vendors have created a maze of roadblocks to its adoption.

Moving forward

That $120 million is a sunk cost. It’s gone. RPR has been a failure so far as a revenue producer.

But it’s pivoting. We built a powerful tool, not realizing at the time what its most useful application would be: It’s ready to plug in to the data dashboard that brokers have been clamoring for.

The hottest topic at industry conferences is the desire to take back the management of our data. Unfortunately, many of the speakers get gun-shy when the tools are laid out on the table.

Ignoring how conspicuously RPR fits in to the model of broker-led real estate data management is playing the small game. Brokers are emotionally scarred by past ventures that didn’t go as expected, but we can’t let that drive us into a perpetual state of stagnation. If there’s one thing we can guarantee, it’s that marketing portals won’t be sitting still.

We must demand that RPR is run efficiently in the future as a facet of Upstream. The $20 million a year price tag is a big ticket, though it pales in comparison to the $50 million quarterly losses that advertising portals are taking on to secure a larger portion of the digital real estate pie.

The opportunity to shift the landscape of the industry’s data management isn’t free. Our leaders have to be aware of past mistakes, but not let them paralyze our will to take strategic risks.

After venting fears about RPR, our industry panel had one final related question:

“Considering that data management is the primary concern we’re voicing at the moment, is downplaying Upstream because of questions about RPR a signal that we’re OK doing nothing? Will we be sitting here next year with the same issues, or worse, if we don’t at least attempt to support Upstream?”

There was no answer. That’s because, frankly, we all knew it was the case. Our industry has many intelligent leaders with legitimate concerns about the path going forward. But the inertia of inaction in real estate is often scarier than the uncertainty of change.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth and 2016 president-elect of Seattle King County Realtors. You can find his team at SeattleHome.com and SeattleCondo.com.

Make Connections, Reduce Risk

This article was originally published in REALTOR Magazine:

Our guest editor Sam DeBord looks at how today’s hyperconnectivity has widened business opportunities and created networks of spaces to keep agents safe on the job.
SEPTEMBER 2015 | BY SAM DEBORD

Connections are the currency of our industry. Our professional development and financial success depend on our ability to connect with customers and industry friends. I had the honor of serving as guest editor for this issue of REALTOR® Magazine and learning how the staff links so many of us with the information we need to stay relevant. For years, I’ve contributed online pieces to the magazine working remotely (I’m a managing broker with Seattle Homes Group-Coldwell Banker Danforth in Seattle). Spending time with the team helped me develop a deeper understanding of the publication and a more solid camaraderie with the people behind it.

Technology has allowed us to develop global online connections at breakneck speed. We discuss, argue about, and laugh at our industry with peers we may never have met in person. By the time we share a beverage at a convention together, we’re old friends. I’m excited to build on those connections when I attend my first NAR conference in November. In the convention preview, you’ll find compelling ideas from several conference speakers about how to always be innovating in our business—a kind of sneak preview of the San Diego meeting’s educational highlights.

While today’s hyperconnectivity has vastly broadened our business opportunities, the exposure may also be making our work more dangerous. Our characteristics, habits, and daily routines are available online to anyone who would profile and target us.

This reality hit home when Arkansas agent Beverly Carter was murdered a year ago. In recent years, real estate practitioners have also been murdered in Washington, California, Michigan, Texas, and Ohio. Assaults on our colleagues are being reported regularly. These events snap us collectively back to the reality of our occupational risks, but the concern doesn’t last long enough to instigate broad action.

But some initiatives are underway to change the mindset. The REALTOR® Safe Harbor program is growing in Arkansas, with members sharing their office spaces so people can meet safely. Iowa REALTORS® are taking a safety pledge committing to checking IDs before every showing. At Open Door Partners, we’re compiling a nationwide map of broker, lender, and title offices to make safe agent check-ins easy. Learn more at MeetMeHereFirst.com. These are in addition to NAR’s expanded safety resources available at realtor.org/safety. But all these efforts will be merely lip service if we don’t commit to them.

Let’s go to this year’s conference ready to learn, to be challenged, and to be inspired. Let’s focus on making connections and sharing, not on brand rivalries and office politics. Let’s keep the well-being of our friends and colleagues top of mind. Then, of course, let’s have fun. The REALTOR® Magazine team and I will see you in San Diego.

Sam DeBord

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth, and 2016 president-elect of Seattle King Country REALTORS®. You can find his team at SeattleHome.com and SeattleCondo.com.