Wed
Another new real estate business model launch
Posted by Marlow Harris under Real Estate
[6] Comments
Utah company BlueRoof launched this weekend, with much fanfare and celebration. In their blog, they state:
“It only makes sense that consumers are tired of the old guard of Realtor and want a fresh alternative. Enter Propsmart and Trulia and Redfin and Zillow and now BlueRoof to give the consumer better technology that can add more value to their experience.”
They continue, “The BlueRoof business model is to connect buyers and sellers together in one place with a Realtor coordinating the transaction so everything goes smoothly. Sellers can list their home and have full representation and a complete marketing plan for 1%. Buyers receive a rebate of any commission received, and when a buyer buys a home that is for sale by owner we’ll help them coordinate the transaction for $1000.” When I checked with the National Association of Realtors, however, there was no “Blue Roof” in Utah listed as a member.
Blue Roof, like Redfin and Zip Realty, misrepresents their status as “Realtor” and claims to be a member of the National Association of Realtors and adher to its strict Code of Ethics, while actually NOT being a Realtor subject to their rules, regulations and ethical code.
Are agents at these companies “Real Estate Professionals”? Not according to Dr. Kevin Boileau in a recent Inman article Real Estate Ethicist (registration required). He says, “there really is a technical, traditional definition of “professional” status, which includes three criteria: 1) specialized knowledge; 2) group identification and membership; and 3) agreed-upon education and training, including ethics training, certification by examination and continuing education.”
So, while these agents who work for these new breed of real estate companies may have learned some specialized knowledge, they must also be obligated to follow certain, written ethical standards of practice. “This allows individuals in a specific industry to maintain specific behavioral expectations amongst themselves as well as toward their target consumers. Without a written code of ethics, standards are nebulous and therefore cannot be formally learned or enforced. This breeds moral chaos.”
You have to wonder why so many real estate agents and companies want to claim association with an organization that they despise. They want all the benefits and good will that comes with this association, but refuse to pay their dues and continue to “Realtor bash” whenever they have the opportunity.
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Marlow,
Unfortunately you are very misinformed about BlueRoof. We are, in fact, Realtors. Every person working at BlueRoof, including the staff, are all Realtor members of the National Association of Realtors. We are not yet listed on the registry because we only filed this week (the site launched last weekend). For the last number of years I have been working with Coldwell Banker and most recently I have been a broker with Coldwell Banker, managing an office of over 100 Realtors here in the Salt Lake area. The President of our company, Mike Shehan, is an associate broker (Realtor) and has been working as Prudential Utah’s director of marketing for the last few years. I have over 13 years experience as a Realtor and MIke has over ten years as a Realtor, the whole time paying association dues and adhering to the code of ethics.
Our business model is about empowering the consumer with choice. Our model is to to give buyers an option of finding a home themselves and making an offer online and receive 50% of the buyer side commission, or have an agent (a licensed Realtor) help them right from the start in the traditional way and still receive a rebate of up to $3000. Our team of agents has helped over 60 people buy a home in the last 12 months, from start to finish, in the traditional sense. We do not refer the buyers to an agent of another company or collect referal fees. Our licensed Realtor associates take the buyers out and work with them.
We also have For Sale By Owner homes on our website. I believe this is a good thing for Realtors and, most importantly, to the consumer. On the website when you search for homes you can search for homes that are For Sale By Owner and you can also search for homes that are AGENT FRIENDLY For Sale By Owner, meaning they have agreed up front to pay a buyers agent a commission. In our market homes are selling very quickly and many agents are showing for sale by owner homes if they can not find a suitable listed property for their buyers. The dillema for the agent is that they do not know which of these fsbo owners are willing to pay them a commission and it is uncomfortable asking with a client there. We hope to have a resource for agents to be able to search for FSBO homes where they know the owners are willing to pay their commission. Another advantage to having these homes on our website is that we have their data to use for comparables when an agent or appraiser cannot find sufficient homes to justify a selling price. Having an additional source of comps should be of benefit to the agents, the appraisers, and most importantly, the consumer trying to purchase a home.
Most FSBO sellers would like the help of a Realtor to coordinate the transaction and make sure everything goes smoothly, they just do not want to pay the traditional fees for that service. We give them the option of having a licensed Realtor help them and the buyer and coordiante the entire transaction for them, making sure that everyone is taken care of for $1000.
To me, agency is all about the client and what is best for the client. And I believe that offering full representation is good for the client. I also believe that giving the client the choice to pay less for that service is good for the client.
I was at a Board of Realtor luncheon today explaining our business model to many of my friends in the industry and we have a lot of support from the local Realtors. And I think we might gain support from out of town Realtors, such as yourself, once you understand what we are actually doing and why.
I hope this helps you understand our business model. If you have any questions about it, please let me know.
Sincerely,
Greg Tracy
Principle Broker, BlueRoof
Dear Greg,
Thanks for your clarification. I checked the NAR website and also followed up with a phone call earlier today, and they still do not have a record of your company joining the National Association of Realtors.
When I can get confirmation of Blue Roof’s membership, I’ll be happy to post that here.
Good luck!
— Marlow
Dear Ms. Harris and Mr. Tracy,
There is no doubt in my mind that you are in fact both Realtors. In reading the comments written by Mr. Tracy it became clear to me that there were some inconsistencies in his assertions.
In fact any licensed Real Estate agent can become a Realtor. There is no special committment associated with the designation other than paying dues and attending classes. There is something to be said about a Real Estate agent that has the clout to have the principle broker in a Real Estate business defending his business model.
Those of us who have been in the Real Estate business a little more than twelve years have seen thousands of business models exactly like the one being defended here today. In the wake of those discount fees I will have buyers and sellers in my office telling me how they didn’t get a good deal and can I fix it.
I can’t fix it. In time, if they wait, or find a bigger sucker than themselves, they may be able to extricate themselves from a bad business decision.
Zip, BlueRoof, Redfin, and Zillow, are all hoping they are the next Google. These are internet based businesses that will be bought sold and traded. In that regard, because they are businesses to be bought sold and traded, they are a part of the Real Estate business; other than that these are get rich quick kind of guys.
Good Luck and thanks for the customers.
David,
You mention that I have “inconsistencies in my assertions” but you don’t mention what they are. You are a great example of someone who expects the consumer to pay your commission simply because you claim to be superior. I believe that you have been in the business for “a little more than twelve years” because you sound like the old guard.
I happen to disagree that “There is no special committment associated with the designation other than paying dues and attending classes”
I think there is a lot of difference between being a sales agent and being a Realtor. I am very proud to be a Realtor and the effort I have put into my profession.
Ironically, it’s actually because of you that my business model is ding so well.
The consumer wants the service without the high commission and while I realize that is difficult for you to understand, it is actually possible that a great agent, with good negotiating skills and a good marketing plan would actually charge less commission than you do.
You and your business model have a place and my business model does a s well. And I am sure we will both be successful- only difference is that my clients will keep more of the money than yours…
Oh, and Marlow- we should be registered on NAR now- we are registered at UAR (Utah Association of Realtors).
Goodness!
People pay me to generate profit. They don’t pay me to buy or sell a house for them. I generate profit. What I get paid is negotiable. Business is predicated on profit and profit potential. You are now a business person with a business model that needs to be profitable.
If your business model is predicated on a reduced income, based on commision, then you have a duty to your investors to make up the difference. My work is very resonably priced compared to my clients return. All of the people who I do business with make money; in good markets or bad.
My comment about longevity in the business relates to the fact that there are cycles. Your business model seems to me to be coming into the top of the Real Estate cycle. You might be squeezed by that discounted commission if the Real Estate market should slow.
What I have seen in the past is that many people get hurt when a company begins doing deals to generate more income based on reduced pricing. The second half of that equation is that there are so many discount brokerage firms competing with each other today.
Greg Tracy claims to have all this experience selling when in fact he is a fraud. He has jumped from company to company and in fact has rarely been a selling agent since the late 90′s when he got out for not paying his taxes and the irs caught up with him. He has only been back in Utah working for Coldwell for 2 years. Before then he was a marketing rep for a Superior Title. He comes with a great reputation from his counterparts as being irresponsible. I agree with the others in that he is only in it for a quick buck. Anyone who has worked with him knows he was singing a different tune at Coldwell Banker and then turned around and has made a mockery of himself stealing employees. You would be an idiot to ever do business with him and to work for him….I can speak from experience is a joke. They will be under in no time the man has made a life off of riding coat tails and when the money runs out he will be out of town and out of business.