In the ongoing listings wars, some of the nation’s most heavily funded brokerages have been blasting out press releases touting innovative new programs to sell homes quickly for the highest price.
You might expect that this steady stream of “news” is about some next-gen marketing software, iBuyer partnership, or something related to artificial intelligence.
But the latest seismic shift shaking up the residential real estate industry isn’t high-tech at all.
In fact, it’s about as low-tech and old-school as a doctor who makes house calls or a hotel clerk who reserves your theater tickets and calls you a cab.
The latest innovation and buzzword in residential real estate? Concierge.
It has smaller independent brokerages and agents feeling especially anxious.
Sotheby’s, Keller Williams, Coldwell Banker, Realogy and Redfin have all rolled out concierge programs.
Compass and other big names are pouring cash into so-called concierge programs that promise to walk time- and money-strapped sellers through the home prep process. Services include upfront, no-interest loans for staging and home improvements.
Compass, which launched Compass Concierge in October 2018, is the loudest name in the concierge game when it comes to trying to charm home sellers and aggressively recruit agents. Funding has been no problem: Compass raised $370 million in a Series G round that increased the startup’s valuation to $6.4 billion as of July 2019.
So the question is: How can indie agents and agencies compete against those big industry names and that kind of capital?
The big worry is that these high-profile loan programs for presale repairs and improvements will set a new homeseller expectation that every brokerage should organize and fund deep cleaning, painting, light renovations, landscaping, and more. You know, like how agent-paid staging became the expected norm in competitive markets, no matter the price point.
Is access to capital the only key to future success?
As real estate strategist Mike DelPrete noted in his talk at Inman Connect Las Vegas 2019 in July, “the new disruption in the real estate industry is financial disruption.” Mike was talking about iBuyers, but he easily could have been talking about the latest concierge trend.
Let’s pull back the curtain on what today’s “concierge” is and how other brokerages can compete.
In a nutshell, Compass Concierge and others are offering the same exact thing that indie brokerages have been providing to agents and clients for years. It’s pretty standard really.
Here’s how it works at Compass, according to the company website, for example:
- The seller’s agent presents a list of recommended property improvements that have terrific ROI potential.
- Covered services include: floor repair, deep-cleaning, de-cluttering, cosmetic renovations, painting, landscaping, staging, HVAC, roof repair, moving and storage, pest control, fencing, electrical work, kitchen and bathroom improvements, sewer lateral inspections and remediation, water heating and plumbing repair, and mortgage payments.
- Once the agent and seller agree to a budget, the seller is asked to sign a 12-month listing agreement (industry standard is 6 months).
- There’s no minimum listing price and no maximum loan amount, but Compass recommends spending no more than 3 percent of the listing price.
- The agent “will be by your side as you engage vendors and commission work.” The seller is responsible for making sure contractors are licensed and insured. The seller also is responsible for any needed work permits.
- Compass recoups its loan once the sale closes.
- Compass also recently sweetened its sales pitch by offering to connect home sellers with hard-to-get bridge loans. These are no out-of-pocket costs for the borrower for up to six months.
While Compass is the loudest company in this space, Redfin was possibly the first major brokerage to publicize a concierge program in 2017. Redfin Concierge provides home cleaning, painting, staging and landscaping for listings worth at least $500,000 for a 2 percent listing fee.
Sotheby’s Next Level Concierge, launched in the San Francisco Bay Area in September, provides cash-free property prep and boasts that it covers more expansive costs, including structural repairs, and takes responsibility for finding licensed and insured vendors (unlike Compass.) The program also covers a stay at a four-star hotel during the renovation.
Not to be left behind, Keller Williams rolled out KW Concierge for minor home improvements this fall in California, Georgia, and Texas.
Get the idea? They are spending huge amounts of money on loans and marketing.
And they are really good at spinning old ideas as new.
But smaller brokerages and indie agents without such deep pockets can fend off this competition. Here’s how:
1. Build your own concierge
Provide the upfront, no-interest loans yourself, or work with a team of agents interested in pooling resources to create a loan program.
Present yourself as an experienced agent who won’t spend unnecessary money.
Risk factor: You’ll need to comfortable with displacing cash and okay with possibly losing it.
Remember to protect yourself and your investment. Confirm there is sufficient equity and no liens on the property. The listing agreement should specify if the seller backs out for any reason, you expect full reimbursement or you can place a lien on the property at any time.
Let’s say you can’t or don’t want to loan money. You still can provide a concierge experience because you’re a good real estate agent/broker who knows which improvements will have the best ROI impact in your market and how to get them done.
Create a solid team of go-to handymen, inspectors, contractors, painters, stagers, landscapers, professional photographers, and videographers.
You’ll serve as project manager so the seller doesn’t have to be bothered with scheduling and other details.
Chances are you already offer this kind of hands-on service.
2. Change your marketing
The concierge trend is less of a revolution and more of a really good marketing campaign. So, emulate it.
Like we mentioned earlier, you probably already provide concierge-level services. Now, shout about it! Promote your hands-on approach in all your marketing materials and listing presentations.
And use the buzzword … a lot. Concierge, concierge, concierge.
3. Partner with a 3rd party
Don’t have time to project manage the home prep? Align with a company that will do it for you and accept payment at the close of escrow.
Curbio is a fairly new real estate technology company working with agents and sellers to provide turnkey renovations, using proprietary technology. Curbio’s project managers can order materials, schedule deliveries, hire subcontractors, pull permits and serve as a single point person for the home seller and agent.
Zoom Casa, headquartered in Southern California, is another regional company offering renovations and staging to home sellers with no cash out of pocket. Zoom Casa provides licensed contractors and professional stagers to make cosmetic repairs and get homes ready for sale. Payment for the work is deferred until the home sells.
Many regions also have small local companies working in the same space. Nurture Source Designs in Berkeley, CA, for example, identifies and manages select home improvements by linking their designers with the construction industry. The service also covers everything from staging to social media marketing.
The bottom line: Full-service real estate agents will not be lost in this market if they make smart positioning and marketing moves.
Troy Palmquist is the founder and broker of The Address in Southern California. Follow him on Facebook, or connect with him on LinkedIn.
Linnette Edwards is the co-owner and associate broker at Abio Properties in the San Francisco area. Connect with her on Instagram and Facebook.
Linnette and Troy connected when they shared the stage as featured panelists at Inman Connect Las Vegas 2019.
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