Entry by Lester Langdon

Why We Are Reinventing Business at PCMS...Again

  7 Comments

Here below is from the PCMS blog which I subscribe to.

ACREs should take special note.

In 2012 why don’t you try reinventing business using innovative real estate tools and strategic real estate planning? Here at PCMS, we push our clients to be proactive. We help by reinventing business operations that are outmoded and ineffective. This is how we make our living, so it is critical that we take our own advice.

http://realtyconsults.wordpress.com/2011/12/20/why-we-are-reinventing-business-at-pcmsagain/

7 Comments

Lester, it comes as no surprise that you would find such a great article about change in the real estate industry.  The example of Eastman Kodak is a great illustration of what will happen to many brokers and agents if they are not willing to change.  I am surprised at the number of brokers and agents out there that don't see that the way real estate is practiced is changing and that the consulting business model and pay for service fee structure is the future of real estate.  Agents who don't embrace this and begin getting a grasp of the change that is underway are going to be left in the dust, wondering what happend?  Great article, you always provide the best information.  Thanks!

I recently changed brokerages because of this very issue.  I cahnged from Keller Williams, which was considered progressive in the 90's - to Andrew Mitchell & Co - a startup in Massachusetts - 100% commission model with a SMALL monthly fee.  They provide services to agents - not the other way around! - Their business model is entirely consistent with the changing real estate industry, I believe.  For now, they are only in Massachusetts, but I read of a few brokerages in other parts of the country doing the same thing.  With no brick and mortar location, and taking themselves out of the commission picture, they can provide cutting edge systems and tools at a low cost, while focusing on brand - letting their agents deal with the business of transacting real estate.  

I believe it is the future....

Okay, now that I have a framework to start from (the article from Lester and John's comments) I will take this opportunity to share with the members here a program that I have worked on for more than 7 years. 

But before I go into full details here, I want to be clear that what I am sharing with you here is propietary. That said, I have no expectations of confidentiality. The only thing that I ask from you is to take the time to really understand what is happening in the industry and how this system would benefit all parties involved. 

One other point I like to make--this is a program that I believe would greatly enhance consulting in real estate.  

Actually what I will do here is, instead of going into great detail about the program, I will sum it up and mention a few industries where this model is working. Now remember, that it is not necessary to convince everyone that an idea will work. You only have to convince enough people in order to carve out a niche. 

Okay let us start with the Funeral industry. I know that this may sound morbid, but it offers the best example of how my program works. In the Funeral industry they offer what is known in the industry as Preneed Funeral Services--In short you pay up front for services to be rendered at a later date. 

Well my program uses the same concept of Preneed in the Funeral industry and apply it to the Real Estate industry. This is a program that capitalizes on time. In particular, for consulting in real estate time play such a crucial role.

Think about it, do we not fund in advance for most of the things we plan for? I just mentioned the Funeral industry, but what about the Prepaid Legal. Harland Stonecipher is a millionaire because he convince enough people that there is a benefit to prepaying for legal services. Or take uPromise and 529 plans. If you have soon to be college age kids, you know that this is prepaying for college. The list could go on, but I think you get my point.

So, the program is an Advance Marketing Prepaid Real Estate Commission Program. And this is my call to action! I'm looking for a group of people like the members here, to step out of their comfort zone and join me in pushing this concept. I'm would prefer to have just the Brokers in ACRE to respond to this call, but everyone is welcome.

Just to let you know, this is not in the idea stage. This is a fully developed program. I have a training manual, a full blown website with the ability to market properties in advance. 

To close I want to give you one more website to visit. www.goswap.org. I'm telling you, that everything that we are seeing when it come to innovation, most of it is coming from outside of our industry. And finally, if we don't do it someone will. Someone will take what I have here and capitalize on it. 

Let me know what you think. 

 

Thank you for your time.

 

William Watkins

I like you're plan, William - I don't think its for me,  but I think you have a good business model here and you can be very successful. 

 

Not sure about the soswap website - I'd have to do a great deal of research before I believed such a thing wasn't a scam - I've heard of this before - comes up during slow times, but I'm afraid that buying and selling property has so many legal and regulatory issues that "swapping" may not appeal to a large number of consumers ( I'm assuming you can still use an attonrey and/or real estate consultant in swapping). 

 

all the best, 

Linda 

If Prepaid Real Estate Program is used by a buyer of a residencial property, would the money be paid to the buyer broker?

The broker is already being paid 3% by the Seller's broker. This would necessitate a rebate to the buyer of the 3% paid to the buyer's broker or an agreement from the seller to reduce the price by the amount of the rebate which is unused to pay for allowed prepaid loan items.

The challenge with rebates to buyers on residential purchases is the regulations and restrictions imposed by government agencies.

We might want to investigate the extent of those restrictions. Glen Freezman has better investigated those restrictions. I believe that the buyer rebate is restricted to pay for those expenses related to the loan (govt guaranteed).

This would mean that the rebate could be used to pay for prepaid interest points and to pay down loan amount. But could NOT be used to pay for inspections, appraisals, surveys, closing costs, etc, etc.

We may wish to investigate the implications of this issue

In some states, Rebates are not legal, therefore the Buyer Broker would be paid by the seller broker and also by the Prepaid Real Estate Program.

All great questions and I am glad to see the responses. The thing we have to do here is think beyond the constraints of what is traditional real estate.

I will address a few of Lester's question, because these are the common questions that are asked when I expose the program to people. First I set the program up to where the buyer's broker would receive the commission. Now this is something that could be modified by any Brokerage if state laws have certain restrictions. 

Just to let you know, I have legal contracts for the program drawn up by a real estate attorney. But what I normally get after telling someone that the buyer's broker would get the commission without splitting with the listing broker (unless they agree to split) is, "How does the listing broker benefit? Well this is where I think the program will really resonates with the professionals in the industry. The program charges a nominal processing fee that is payable up front to the listing broker and is non-refundable. 

Before you say to yourself that a processing fee isn't enough (the processing fee is calculated on square footage) you first have to think about how your market has just shifted from an at-need market to a pre-need market. In theory every property owner that doesn't have a need to sell is now your market. So if I gave you an opportunity to collect say $200 potentially from every property owner, would you take that opportunity?  

Lester with this type of program, the dynamics are truly different than they are for traditional real estate. To me this is not discounting. We hear it time and time again that with innovation and more efficient processes, cost are forced down. So for the industry, what we lose in commission is made up for by expanding the market exponentially. The savings are past on to our clients, allowing them to take more funds with them to there next transaction.

As Brokers we have more control on how we run our business then most of us believe. 

Oh Linda, 

You are right, a swap will not work for everyone. But remember that it not necessary for it to work for everyone to fill a niche. And all niche are not necessarily small. I apologize if I put the wrong web address. It was www.goswap.org not www.soswap.org.

I'm told there are 70 million single family homes in the U.S.. What if we were able to convince just 5% of them that a program like this would save them money? That a niche I would love to fill!

This page contains a single entry by Lester Langdon published on December 21, 2011 1:09 AM.

Already Low, Housing Inventory Drops More was the previous entry in this blog.

Would You Like to Be a Part of Creating the "New" ACRE in 2012? is the next entry in this blog.

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