|
|
|
Box Out For The Win
There's nothing more fun than being with your friends on hot
afternoon. You can chill out, hang loose, and just relax. And if
the odds are good, all of you should have enough cash to go on a
quick ride down to town and have yourselves a ball at...
Digital Color Printing for Professionals
It has been 10 years now since digital color printing was introduced in the market that aims to make the lives of people specially the professionals who are working very hard at their respective companies to gain more access with their printing...
Harness Your Entrepreneurial Spirit
You have permission to publish this article electronically or in print as long as the resource box is included. Please notify me of publication by sending a website link or copy of your publication to claudette@metavoice.org. Word Count: 485 words,...
How To Make a Fortune in Investments?
People work and save a part of their salaries. They try to make
more money out of their savings. Some of them try to achieve
more: They want make a fortune and change their life. How can
you make a fortune out of your money?
With a...
Six Key Principles of Corporate Accountability
The foundation of any business transaction is the promise of fair deal. In complex organizational relationships, it is all too easy to lose sight of the existence and terms of this deal. On the surface, that employer/employee relationship, called a...
|
|
| |
|
|
|
|
|
|
Reinventing real estate, Part 2
Reinventing real estate (Part 2:
How online and empowered consumers
are taking charge and paying less.
Demanding consumers
“Internet buyers tend to be better informed on market conditions and better prepared to act on the home they want when they start working with a realtor. Luckily for realtors, these changes don’t necessarily hurt, as long as they are able to adjust to the new relationship and realize that the new-style buyers value speed and efficiency over guidance when finding a home.”
– E-marketer, Internet Home Buyers Changing the House Rules
Thanks to the Internet and other technological innovations, more real estate information is freely available than ever before. As a result, consumers are demanding new choices, improved services, faster transactions and lower prices. According to a recent NAR survey, the number of sellers stating that they didn’t want to pay a sales commission fee rose from 46 percent in 2003 to 61 percent in 2004. In 2004, 23 percent of Florida home sellers opted to sell independently without an agent, up from 14 percent in 2003 and nearly double the 14 percent national average, according to Planet Realtor.
And Web-enabled consumers are demanding a high digital IQ when working with real estate professionals. In addition to being well-versed on their own industry-specific technology, real estate professionals now are expected to utilize laptops, mobile phones, digital cameras, personal digital assistants and global positioning systems to keep pace with Internet buyers and sellers.
Downward pressure
“If consumers are going to do their own home-shopping online, they expect to save some money, just as they would for using the self-service lane. That's why they are susceptible to online discount brokers and the new affinity companies that are promoting lower commissions if only the consumers will use their agents. These business models promote the idea to consumers that they ought to be paying less money in commissions.”
Realty Times Columnist Blanche Evans
Traditional real estate commissions, typically around six percent of a home’s selling price, are facing downward pressure from consumers and competition. Some consumers claim traditional real estate commissions don’t reflect:
Today’s home prices. Years ago, when median-priced homes sold for $25,000, real estate commissions were typically five percent, or $1,250. Today, with South Florida median home prices around $300,000, the cost of a six percent full-service real estate commission becomes $18,000. Some brokers even charge additional fees to cover administrative costs. When you consider that today’s average homeowner sells a home every five to seven years, real estate commissions can dramatically impact your personal savings and net worth.
Owner equity. When selling properties, most homeowners calculate the cost of selling as a portion of sales price, though the commissions are paid out of owner equity. (Equity is the difference between the value of your property and amount of mortgages owed.) Consider this example: You decide to sell a property for $250,000 in which you hold 10 percent equity, or $25,000. After paying a six percent commission of $15,000, you are left with $10,000 before any applicable closing costs. In this example, the $15,000 commission is six percent of the selling price, but 60 percent of the $25,000 equity.
Services performed. Under today’s commission structure, selling a $100,000 house at six percent typically costs $6,000, while selling a $500,000 house costs $30,000. Does selling the more expensive home really require five times more effort? Your cost is the same whether the agent spends one hour or 100 hours marketing your home. This is one reason many real estate consumers find fee-for-service real estate so appealing.
Developing alternatives
“Consumers want what they want, when they want it and will gravitate to the most cost-effective source to obtain it. Why? Because our "one-size-fits-all" approach to working with sellers and buyers is archaic and won't allow consumers to access various segments of help they need in a timely fashion. That's why .com Web start-ups are finding a receptive audience in real estate consumers and why for-sale-by-owners are burgeoning.”
Julie Garton-Good, Author of “Real Estate a la Carte: Selecting the Services You Need, Paying What They’re Worth”
Until recently, you have had few practical alternatives to the traditional full-service, full-commission real estate transaction with a broker. Most sellers paid a single commission fee for a full range of real estate services, whether they needed them or not. Now traditional real estate agencies face the challenge of identifying new
services that have value to today’s sophisticated online and empowered consumers.
One result is an “unbundling” of traditional one-size-fits-all real estate services for consumers who want more control over real estate transactions and their associated costs. If you’re willing to take on some tasks traditionally performed by agents and brokers, you could receive lower transaction costs. You might benefit from the following emerging alternatives:
Fee-for-services
“Consumers want assistance from real estate professionals, but don’t want to pay for it in the form of traditional commissions,” says a la Carte real estate Pioneer Julie Garton-Good. Garton-Good has been preaching the fee-for-services gospel for more than 20 years. As the name implies, you can choose which tasks you feel comfortable performing and hire qualified real estate professionals to do the rest. Many traditional real estate brokerages are beginning to offer a more menu-based service plan. For example, you may not mind listing your home and holding open houses, but you may want assistance with contracts and closings.
One-stop shopping
In response to dwindling margins and the rising costs of technology and lead generation, some real estate companies are attempting to combine traditional and Web-based services to provide consumers a single source for all their real estate needs. One-stop shopping sites generally provide or partner with lenders, insurers, title companies, real estate attorneys and others to facilitate all aspects of buying and selling. In addition, some sites are adding home-improvement and related services to stay in touch with consumers between buying and selling transactions.
Web-based discounters
Although many Web-based real estate companies flamed out in the dotcom era, scores of new companies have emerged to take their place. By offering targeted services such as flat-fee MLS listings, buyer rebates and AVM tools, these sites are appealing to independent buyers and sellers who prefer to take a more active role in transactions. In addition to listings, some sites also offer how-to articles and advice for those who choose to go it alone.
Tradition + technology + turbulence = opportunities
So, given the trends, changes and ongoing industry evolution, what can independent buyers, sellers and investors expect in this new era of real estate?
• The Web and other technologies will continue to evolve and transform the $1.3 trillion real-estate industry. Technology will continue to reduce the time, expense and complexity of manual processes, and increasingly sophisticated search and valuation tools will play a more strategic role.
• Free and low-cost real estate resources will continue to be available and even multiply on the Web. In real estate, knowledge truly is power. Consumers will try to use their power to gain more control of the real estate process and subsequently expect to be compensated in the form of reduced and fee-for-service commissions.
• The role of traditional real estate brokerages will evolve as Web-enabled consumers become more knowledgeable. This likely will trigger some restructuring and consolidation of traditional brokerages, but will also drive the development of innovative new practices targeting online and empowered consumers. Real estate professionals will focus more on promoting their local knowledge and industry expertise, while consumers will perform some buying and selling tasks on their own.
• Traditional real estate commissions and profitability levels will continue to face downward pressure from various sources. The future will be profitable for brokerages that are able to extend their core expertise of neighborhood and industry knowledge into flexible new consumer-centric offerings.
• The traditional high-touch, full-service real estate agency is evolving, not disappearing. Real estate professionals who provide exceptional service and value to their customers will always be in demand.
You now can find more real estate knowledge, tools and resources on the Web than ever before, enabling you to buy and sell with increased confidence. For real estate professionals, reinventing the industry means making hard decisions, changing processes and managing new opportunities. But for consumers, reinvention in real estate is a winner, hands-down.
Homekeys is coming soon. Be sure to look for us on the Web at http://www.homekeys.net
Feedback, ideas or input? We would like to hear from you! E-mail us at: info@homekeys.net
About the Author
Charles Warnock is Marketing Communications Manager at South-Florida based Homekeys. He writes frequently on real estate, finance, interactive marketing and business development.
|
|
|
|
|
| DTI - Welcome to the DTI's Innovation Home Page |
| The DTI is working to stimulate a significant increase in innovation throughout ... It covers Living Innovation, web streaming of a series of high profile ... |
| www.dti.gov.uk |
|
| Innovation - Wikipedia, the free encyclopedia |
| An innovation in this light occurs whether or not the act of innovating ... A convenient definition of innovation from an organizational perspective is ... |
| en.wikipedia.org |
|
| National Innovation Website |
| The Department of Industry, Tourism and Resources has developed this website to raise awareness of the importance and benefits of innovation and ... |
| www.innovation.gov.au |
|
| Innovation, creativity and brainstorming resources from ... |
| A comprehensive site designed to provide busy entrepreneurs with a focused collection of the best resources on innovation, creativity, and brainstorming. |
| www.innovationtools.com |
|
| Innovation Weblog - Trends, resources, viewpoints from Chuck Frey ... |
| The Innovation Weblog - Valuable trends, resources and viewpoints in innovation, creativity and brainstorming from Chuck Frey at InnovationTools. |
| www.innovationtools.com |
|
| CORDIS: Innovation Portal: Home |
| This Innovation Portal is supported by DG ENTR of the European Commission, ... European Commission adopts new Communication on Innovation: on 13 September ... |
| cordis.europa.eu |
|
| CORDIS: Promotion of Innovation: Home |
| This programme stands at the cross-roads of the Community's policies on Research, Innovation and SMEs. |
| cordis.europa.eu |
|
| Innovation Network... leveraging innovation, creativity and ... |
| The Innovation Network is an association of companies and employees committed to innovation. The site features some interesting articles as well as some fun ... |
| www.thinksmart.com |
|
| Business Innovation : Car Reviews, Online Gaming, and Product Branding |
| If your in need of great Online Gaming material, we carry up to the minute news and reviews for all of your favorite games and gaming systems. |
| www.businessweek.com |
|
| Innovation - Life, Inspired | PBS |
| Learn about fascinating innovations, explore interactive features, submit questions to our experts, investigate resources and lesson plans, and more. |
| www.pbs.org |
|
| Innovation.org - Welcome |
| Impact of Innovation Saving & Improving Lives Controlling Healthcare Costs Strengthening ... Future of Innovation New Medicines in Development Next Wave of ... |
| www.innovation.org |
|
| Innovation: See what people are saying right now on Technorati |
| See all blog posts tagged with innovation on Technorati. |
| www.technorati.com |
|
| Innovation Relay Centres - The World Largest Network for ... |
| Innovation Relay Centres giving advice on Innovation, Technology Transfer and Exploitation. Major European source for innovative technologies or new ... |
| irc.cordis.lu |
|
| The Tech Museum of Innovation | Welcome |
| The Tech Museum of Innovation - Welcome! The Tech Museum inspires and educates the innovators of the future. |
| www.thetech.org |
|
| Pages tagged with "innovation" on del.icio.us |
| CoDev 2007 - Co-Development for Business Growth: Open Innovation and Alternatives ... PDMA & IIR's 5th Annual Front End of Innovation ... |
| del.icio.us |
|
| innovation |
| Publication highlighting the research activities of NUS. The site provides snippets of selected articles online, and provides a subscription form online. |
| www.innovationmagazine.com |
|
| Canadian Innovation Centre |
| Services includes invention evaluation, technology due diligence, market research, and education programs. |
| www.innovationcentre.ca |
|
| London INNOVATION :: Home |
| Maximise your business potential through innovation. Learn the secrets of successful business innovation in London. |
| www.london-innovation.org.uk |
|
| Eric Von Hippel's Homepage |
| Downloadable Books. Democratizing Innovation (2005) ... The Sources of Innovation (1988). Free download of the complete book. Permission granted by Oxford ... |
| web.mit.edu |
|
| Intel Innovation in Education |
| www.intel.com/education/ - 3k - Cached - Similar pages |
|
|
|