Comments on: Sad Day in Seattle (Again) http://www.futureofrealestatemarketing.com/sad-day-in-seattle-again Internet, Web 2.0 and Real Estate Marketing Wed, 17 Mar 2010 03:29:40 -0700 http://wordpress.org/?v=2.8.4 hourly 1 By: Thomas Johnson http://www.futureofrealestatemarketing.com/sad-day-in-seattle-again/comment-page-1/#comment-24797 Thomas Johnson Sat, 18 Oct 2008 17:33:03 +0000 http://www.futureofrealestatemarketing.com/sad-day-in-seattle-again#comment-24797 This is the free market and unintended consequences at work. There is a reason that the commission rates have been stuck for years where they are. The contingency nature of the listing relationship drives the business the consumer is unwilling to pay for service that doe not result in a sale. Pouring VC cash into the real estate space has improved technology. The RE.net came on the scene with plans to disintermediate the real estate brokers by tapping into the commission honey pot. This put pressure on commissions forcing brokers to cut costs, so the RE.net responded by giving the services away for free. Free outbound doesn't earn a return inbound. The cash burn continues, brokers continue to cut costs by not buying RE.net products causing more cash burn and layoffs. As transactions slow, the commission honeypot shrinks. Brokers will cut cost and redouble efforts to get saleable listings, by using the free tools that are provided by RE.net. It seems to me that the RE.net did indeed disintermediate, but it was not the RE brokers that were disintermediated, but the print media. So here we are, marketing listings for free on the web. Because of the fractured nature of the RE space, it takes unimaginable amounts of time to manage all that free stuff, so we are where we were. The consumer is still unwilling to pay cash for RE services on a non-contingency basis. So, we tweet and blog and facespace our listings, to get a transaction started, and then the real work begins-getting the contract to the closing table. That is the part of this industry that the RE.net sort of forgot about and the cash burn continues... This is the free market and unintended consequences at work. There is a reason that the commission rates have been stuck for years where they are. The contingency nature of the listing relationship drives the business the consumer is unwilling to pay for service that doe not result in a sale.

Pouring VC cash into the real estate space has improved technology. The RE.net came on the scene with plans to disintermediate the real estate brokers by tapping into the commission honey pot. This put pressure on commissions forcing brokers to cut costs, so the RE.net responded by giving the services away for free. Free outbound doesn’t earn a return inbound. The cash burn continues, brokers continue to cut costs by not buying RE.net products causing more cash burn and layoffs.

As transactions slow, the commission honeypot shrinks. Brokers will cut cost and redouble efforts to get saleable listings, by using the free tools that are provided by RE.net.

It seems to me that the RE.net did indeed disintermediate, but it was not the RE brokers that were disintermediated, but the print media. So here we are, marketing listings for free on the web. Because of the fractured nature of the RE space, it takes unimaginable amounts of time to manage all that free stuff, so we are where we were. The consumer is still unwilling to pay cash for RE services on a non-contingency basis. So, we tweet and blog and facespace our listings, to get a transaction started, and then the real work begins-getting the contract to the closing table. That is the part of this industry that the RE.net sort of forgot about and the cash burn continues…

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