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| June 15, 1999 |
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Peter G. Miller
For awhile it seemed as though no traditional business was safe. Stockbrokers,
booksellers, and travel agents all battled with the Internet -- and all lost
marketshare and profit margins to Web upstarts. But that hasn't happened with
real estate, and the reasons why are more than interesting.
All businesses have a certain economic basis, at least until someone finds a
quicker, better, or cheaper way to satisfy consumer wants. And the most
vulnerable businesses, the ones which ultimately have the greatest risk, are
those which offer similar or identical products and services.
Think about it this way: When you go to buy a van you really don't care if you
buy from dealer Jones or dealer Smith. The van comes from the same factory. The
only issue is which dealer will give the best price and terms.
Then consider this: The catalog business has shown that you do not need a
physical store setting to sell an array of retail goods, a useful example for
the Internet.
Combine fungible (like) products and services with an absence of traditional
costs such as stores and local employees, and substantial economies are
instantly available. Thus we see shifting markets for books, CDs, and stock
purchases to online venues.
But being online does not guarantee profits.
While online sites may not pay rent for mall locations, they have high
marketing costs because people need to find Web venues.
And a related problem works like this: A business which starts out in the
"virtual" mode may soon grow into something which looks suspiciously
traditional.
Barron's magazine, as an
example, points out that Amazon.com now has
2.7 million square feet of warehouse space -- hardly a Web-only operation (See:
"Amazon.Bomb," May 31, 1999).
Surely the Web has brought changes to real estate. Thousands of brokers have
their own Web sites. Listings have migrated from closely-held MLS systems to
online sites operated by state and local broker organizations, franchises, and
online firms. Indeed, Realtor.com, a site with 1.25 million listings, is vastly
larger than any local MLS.
But strip away the electronic gloss, remove the high-tech gadgetry, and the
finished picture looks like this:
The result is that while there is much talk of "reducing paperwork," "filling
the Internet with information," and "speeding the transaction," the basic
elements required to make real estate deals are largely unchanged. You still
need properties, buyers, and sellers -- and none can be popped out of a modem
on command.
Thus the Internet has become still another marketing and communication tool for
brokers. At the same time, just as doctors, lawyers, CPAs, and architects have
found -- and as brokers and consumers are also finding -- information on the
Internet is not a substitute for professional services.
The great irony is that while brokers have been quick to take advantage of the
efficiencies offered by the Internet, Web industry economics are themselves now
in question.
After all, what is more fungible than Internet access or computer chips? We
have free e-mail and free faxing, so why not free services from Internet
Service Providers (ISPs)? The largest ISP in Britain doesn't charge a monthly
fee -- a concept which is beginning to emerge in the U.S.
Q We bought a home several years
ago with a parent as a co-owner. The parent has become ill and may shortly die.
What happens to her ownership in the property?
A The first questions to ask are
how title in the property is held and whether there is an automatic right of
survivorship. If there is no automatic right of survivorship, then you will
need to see what the individual's will stipulates. Please consult with an
attorney for specifics.
If you find both that there is no right of survivorship and no will, then
matters can become difficult. If the parent dies without a will, then state
rules for disbursing estate property can come into play.
Does the parent want to create a will? Does she have the mental capacity
required to do so? These and like questions should also be discussed with the
parent and an attorney.
Credit cards tend to have unique and interesting terms which typically add up
to higher costs than most consumers expect. The Federal Reserve provides a
useful guide
to credit cards, including a national rates survey. |
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