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Sign into your accountAllre Causes Brokers To ReThink Strategy
September 19 2014
The FSBO dam just sprouted another leak, and brokers better pay attention. If you have not heard about Allre, you better watch the video below right now. It is collaboration between banks like Prime Lending, Home Insurance providers, home warranty companies, and even a lock box vendor to facilitate FSBO sales. The fee to the consumer is ZERO – nothing.
There are no brokerage services at all, so they completely surpass all RESPA regulations. It is 100% FSBO. The only thing that will sit between Allre and success is venture capital. If they attract enough venture capital to attract the consumer, traditional brokerage is going to hit a wall.
WAV Group is a strategy company. To remain competitive, businesses need to act in ways that allow them to survive in a fast changing market place. In the case of Allre, they are only launching in San Diego. Perhaps the industry at large does not need to hit the panic button yet. However, you probably need to pay close attention. I know that we will.
San Diego is a high value market place. According to Zillow, the average home price in San Diego is $492,000. As a side bar, I did a Google search for "the average home price in San Diego and the only broker who had the information was ZipRealty – an article from 2012; Trulia Voices had a question about home building; and the best first search result was Zillow. Where are all of the Brokers, Associations, and MLS answers?
Why The Business Will Work
Everyone talks about the 6% commission rate – but my research shows that the number is closer to 5% split two ways in San Diego – about $24,000 – exactly the number that Allre CEO talks about in her pitch. It makes San Diego a ripe candidate for this style of opportunity pursuit. That is enough incentive for FSBO buyers and seller to take a risk and sample the service. I would not be surprised to see a similar service pop up in San Jose, Santa Barbara, Ventura, San Francisco, and other high-end real estate markets in California. If you average sales price is below $200,000, the incentive for FSBOs to save money is less attractive.