"Discount" Brokers

Written by Posted On Wednesday, 29 July 2020 22:33

They have come and gone for decades…but has the day of consumer choice in real estate fees and services arrived, or are consumers satisfied with the age old pricing of real estate services, structured for an infrequent event in the lives of most people?

Real Estate is a “Me Too” business. Ninety-five percent of what brokers do for their clients is the same thing every other broker does for their clients. Think about the listing side for a moment:

• Lockbox
• Sign
• Portal Display
• Open House

Seth Godin said, and he is right on: “Be different, or charge less.”

Many have tried the lower fee route. "Discount" brokerages have been around since I was first licensed to sell real estate in 1975. The most memorable from that era was Help You Sell. But price competition is not new and has always been one way to compete (but it is not the only way).

In the late 1990s, there were a number of new "discount" brokerage models that sprang up with the emerging World Wide Web, or what are now referred to as Web 1.0 (the "read only" Web, which evolved into "Web 2.0" with the ability of anyone to engage on a web site without being a programmer, which led to what we today refer to as "Social Media").

Even Coldwell Banker, a "traditional real estate broker" tried a 2% model referred to as Blue Edge in the late 1990s.

In 2001, eRealty sued and then settled with the Austin Board of REALTORS for antitrust violations which led to the national conversation around Virtual Office Websites (VOWs) and a 2008 Antitrust Consent Decree between the Department of Justice and the National Association of REALTORS.

Zip Realty was not only known for its discounts, but also for its Volkswagens.

Other discount brokers of the era included List Low Dot Com, Home Broker Auction Dot Com, HomeSaleRealty dot com. and others.

Most of the early web models are gone or transformed, having been either absorbed or abandoned.

But what does it even mean to offer a "discount" in a business where we are constantly reminded that "all commissions are negotiable," where we cannot even speak in public about commissions, and where we repeatedly state that there is "no Standard rate of commission?"

Some real estate educators I have known over the years even discourage the use of the word "discount" as its usage indicates that there is a "Standard Rate" and that some brokers offer a "discount" from that "standard rate."

Of course, if there really was a "Standard" rate of commission, it would be a violation of the Sherman Anti-Trust Act.

Over the years, 6% has been the default (and there is more to this part of the story than just the rate), and there has been much litigation and many have and still do accuse the Industry of price fixing, but that is another issue for another day.

Consumers love discounts, but that is only part of the story. Consumers also desire:
Speed, convenience, choice, value added, quality, service, and information (preferably in context).

Text without context is pretext 

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Saul Klein

In 1948, doctors told my father that his life aboard submarines on war patrol in the South Pacific and the depth charging he experienced had rendered him sterile. Although controversial and not widely applied, he was treated with an Ayurvedic therapy called “shivambu.” If you are unfamiliar with this term, I recommend you Google it because against all odds, I came to exist.

That was a loony segue into my life but is a fitting precursor to a career that would be just as incredible.

Like my father, I joined the Navy. However, due to a medical inconvenience, I was honorably discharged after 6 years of commissioned service, all on Sea Duty. This was an opportune misfortune that led me down the path to a successful career in real estate. Both my father and grandfather flirted in real estate brokering and flipping part-time, and I followed suit but making a lifelong career out of it.

With over 40 years in real estate, it is impossible to talk about my experiences in this small window. But I can proudly say that I am well-recognized as an industry pioneer, especially in real estate syndication and education, and one of the few luminaries that paved the way for real estate’s transition to the online world.

Some highlights of my life’s work:
● Co-created ePRO, technology certification course that certified 70,000 students
● Created the first online communities for real estate professionals to network, learn, and sell
● Created "Opt Out" Listing Syndication, aggregating over 1.4 Million Listings in 18 months
● Built the #2 National Listing Syndication Service, Point2 Technologies, sold to Yardi in 2010
● Founder of the California Association of Buyer’s Agents
● Member of the first REALTOR.com Team, pre-IPO, responsible for obtaining first 500,000 listings
● Helped Zillow and Trulia build up their MLS data inventory

Today I continue to lead efforts that bring new technologies to the real estate industry. Feel free to reach out and learn more.

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