I watched Sunday night's 60 Minutes segment on the real estate industry and blanched when I heard reporter Leslie Stahl guarantee that Realtors get "six percent on every house they sell...it is sacrosanct."
Leslie Stahl dared to tread where no Realtor would ever step, because commissions are negotiable and anything to the contrary would amount to price fixing. If I go through the San Diego MLS, I will see commissions ranging from $250.00 to $10,000.00, and from 2 percent to 8 percent of the sales price. It is as far from being "fixed" or sacrosanct as home pricing itself.
60 Minutes allowed Redfin CEO Glenn Kelman to control the show, with back-up chorus from the former CEO of the now-defunct e-Realty. Their premise? Real estate transactions can be handled online, just like a hotel or airline reservation, and a desk-bound agent should be able to handle 8 transactions a week. In fact, Kelman confessed that he had hired an agent who only put five hours into a home transaction she had completed as a full service agent. He further stated that real estate "usually (has a) 3 percent sales commission.
Uh oh.
Response from the real estate industry has only begun to emerge. This letter to hundreds of Windermere agents and staff from Geoff Wood, CEO of the West Coast's upscale Windermere Real Estate (with 70 percent market share in Seattle), represents the feelings of many and reveals much:
Windermere Agents, Managers, Owners, Staff, Services
From: Geoff Wood, CEO, Windermere Services Company
Date: May 15, 2007
On Sunday May 13th, many of you may have seen that 60 Minutes aired a segment about the impact of online discount brokerages on the traditional real estate industry entitled "Chipping Away at 6%". The focus was on Redfin, a Seattle-based online real estate broker. An agent from Re/Max represented the full service side of the equation.
When planning for this segment began last December, CBS asked Windermere to participate. We diligently sought out a handful of seasoned and articulate Windermere professionals and presented one agent to Leslie Stahl's team. That representative was rejected and our feeling was that the agent did not provide the desired spin for their story. As it became clear the story's direction was very one-sided and becoming a promotional piece for Redfin, we declined to participate. Other major Seattle real estate companies declined participation for similar reasons.
As the 60 Minutes segment attempted to predict the demise of the traditional real estate agent, I've never felt more strongly in our position as a full service company. Comparing the discount broker's use of the internet in a real estate transaction to changes in the book, travel, stock and diamond industries cements our ardent belief in Windermere's approach to the full service solution. Windermere competes on extraordinary service, fees are secondary. Discount brokers compete on price and services are secondary. The battle for discount mediocrity has been waged in our industry for many years while at Windermere we've always strived to take the transaction to another level. Windermere will continue to be an industry leader in new technologies and new processes to streamline the real estate transaction. Our success is predicated on the incredible knowledge and experience our agents provide for their clients. That success is built upon the notion that our agents are counselors, hand-holders, coaches and educators for the vast majority of people who realize that a home transaction is an expensive and complicated financial proposition.
Attached (below) is an article that will appear in the Puget Sound Business Journal that has some excellent talking points in support of our full service value proposition. Even more important is our current branding approach. Our view remains that we are simply in a different business than the online discount brokers. We are in the experience business.
(Not sure if the link will work or not)
http://mail.google.com/mail/?attid=0.1&disp=vah&view=att&th=112921c39f8e26dd
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