Sign up Lori Alden to help you purchase or sell a home, and as a bonus, maybe she’ll also help you get a grip on those supply-and-demand concepts that receded from your memory after you waded through "Econ 101" in your college days.
That’s because Alden, who has run her own real estate brokerage for more than four years, also holds a doctorate in economics and lectured on various areas within the discipline at the college level for more than 20 years.
She’s aware that, even though real estate professionals tend to come from a broad array of backgrounds, they’re seldom — if ever — economists.
"I know a lot of lawyers have become brokers, but I wouldn’t know of any other economists, no," said Alden, whose firm, Chalkboard Realty, is located in Petaluma, Calif.
The company name is a nod to her teaching background, plus her conviction that her role includes teaching consumers about economic trade-offs in the buying and selling of houses.
Based on a business model that uses fee-for-service and commission-rebate compensation plans, she acknowledges that her brokerage is off the traditional grid. She took that route because her economics-oriented study of compensation convinced her that it’s in everybody’s interest — consumer and agent alike — to devise an alternate way to pay agents.
She also maintains a consumer-oriented website, KeepAgentsHonest.com, that takes the industry to task for questionable practices that she said boost commissions, push deals through more quickly, or use existing clients to attract new ones.
Among those practices, she said, are steering clients toward properties that offer higher commissions; accepting referral fees or gifts from the service providers they recommend; underpricing homes for quick sales, and numerous others.
It’s an approach, she acknowledged, that hasn’t exactly endeared her to more mainstream practitioners, and she’s found herself sometimes swimming upstream against a real estate establishment that she believes should be radically transformed, she said.
She also entered her previous field, economics, in a slightly untraditional way: Armed with a bachelor’s degree in political science from the University of California, Berkeley, Alden joined the Peace Corps and found herself in West Africa, in the Republic of Upper Volta, known today as Burkina Faso.
Along with the primitive conditions usually associated with Peace Corps service, she was able to find very little in the way of English-language reading material, she recalled.
But she did come across one book — Paul Samuelson’s "Economics: An Introductory Analysis," a hefty staple of economics education and the best-selling economics textbook of all time.
"There was this big textbook, and I read it cover to cover and I really liked it," she recalled. "When I came out of the Peace Corps, I quickly took enough courses to apply to a graduate program."
She obtained her doctorate from the University of California, Davis, and spent the next two decades as a lecturer in micro- and macroeconomics and related topics at various state universities, she said. She also has worked with high school teachers to integrate economics into their curricula.
During those years, she moved several times, buying and selling her homes both through brokerages and via for-sale-by-owner sales. The experience whetted her interest in the business.
"My daughter graduated from college and I was kicking around … something we could get into together," she said. "I was interested in real estate because, like many economists who looked into real estate, I was a bit disturbed by the way real estate agency was conducted in the United States."
The industry, as a whole, was — and is — out of step with the times, she said.
"I believed that real estate should be changing," Alden said. "It used to be that real estate agents were able to trade on their access to special information that wasn’t available to buyers and sellers — what’s on the multiple listing service, which contractors are good, which schools are good, etc.
"(Agents) were very valued sources of information, but that information is now available freely online," she said. "I think real estate agents need to find a different role for themselves."
So she and her daughter got their licenses and embarked on what she looks back on now as a frustrating learning curve for anyone operating outside traditional brokerage.
"Brokerages are almost guild-like in that they hold onto information and they don’t share it as willingly as I was used to in academia," she said.
"It’s almost like going back to the Middle Ages," she said. "If you were a shoemaker, you didn’t teach outsiders how to be shoemakers because you were part of the guild. If there were more shoemakers, the price of a shoe could drop and you’d be sunk."
Seminars she attended seemed laughably superficial and focused more on recruiting clients than on serving them, she said.
"I went to one that explained how to leave thank-you gifts so that clients will give us referrals," she said. "They suggested giving mustard, mayonnaise and ketchup bottles with notes saying, ‘I hope you found I cut the mustard and I hope I’ll relish your referrals.’
"It’s a little embarrassing," she said.
Mother and daughter got their feet wet with the aid of a mentor, a local real estate lawyer named Joe DiPaola, in Davis, she said.
"He was generous with information," she said. "He taught us the ins and outs, how things are really done. It’s difficult for somebody breaking into the business unless they join a traditional firm — (it’s) difficult to get this special information about how real estate is practiced. He shared that with us."
Chalkboard Realty operates as a discount broker. Alden keeps one portion of the commission and rebates the balance to her buyers, she said. On the listing side, she offers an a la carte menu of services, and puts the seller’s home in the local MLS.
"I allow the sellers to do some of the work themselves — maybe they elect to do their own photographs or host open houses," she said.
"My typical buyer is well-educated and many have purchased homes in the past, and (they) don’t see any mystique about what a real estate agent can do for them," she said.
She operates several local FSBO and flat-fee sites, including FSBOSonoma.com, FSBONapa.com, FSBOAlameda.com, and others, where she offers sellers free Web pages, signs, fliers, $250 MLS listing packages, and other services.
Convinced that being a "keeper of the information" is passé in real estate, she said agents should focus on skills that would most aid consumers, such as negotiation, a process she has studied as an economist.
"Skillful negotiators must be willing to put deals at risk in order to get better prices," she said. "Agents, though, are only paid when offers lead to contracts. As a result, most agents are not impressive negotiators, and I rarely see classes offered to them on how to negotiate.
"Instead, brokers offer new agents self-serving advice, like ‘Make sure an offer isn’t so low it insults the seller,’ " Alden said.
Agents, she said, need to align their interests better with their clients’ — partly in an effort to ensure that agents get paid fairly in deals that are unusually labor-intensive: Charge buyers additional fees over and above the commission if the buyer requires an excessive number of showings, for example.
"I do this, and my buyers usually research properties online and drive by them before asking for a showing," she said. "Since I charge my buyers $200 per offer, if I write offers on more than two properties I’m not penalized as much for helping buyers drive hard bargains."
Offering a menu of services for sellers encourages similar efficiencies, she said.
"Since services are offered a la carte, I’m forced to do a good job on all of them," Alden said. "By charging upfront, I’m able to introduce a cancellation clause in my listing contract.
"Knowing that a dissatisfied client can cancel at any time gives me a strong incentive to perform well. If my FSBO sellers get offers, they can elect to pay a flat fee to use my closing services."
Alden said she averages 15 to 20 transactions a year. It’s a part-time business, by design, that allows her to follow other pursuits, such as cooking and travel.
(She also operates Foodsubs.com, a site devoted to cooking; Econoclass.com, an online resource for high school economics teachers; and EqualShares.com, which suggests ways for heirs and divorced people to divide personal property fairly.)
"I’m able to earn a good living as a discount broker because I devote almost all of my working time to serving my clients rather than recruiting them," she said. "My clients are very respectful of my time."
Still, she’s well aware that she’s hardly the only brokerage operating with a nontraditional business model, and others she hears from on a real estate discounters’ online discussion group frequently express frustration and even anger that the industry seems closed-minded toward other ways of facilitating the process.
"It’s a bit of a silent brotherhood," she said. "A lot of those emails are frustrated rantings because all of us at this point feel powerless to change things."
