The document discusses how changes in the real estate industry, including the shift in leverage from brokers to agents resulting in declining broker profitability, have necessitated that brokers reevaluate and "remargin" their businesses. It describes current and emerging business models brokers can adopt, such as offering ancillary services or using different compensation structures for agents, to increase profit margins. The key is for brokers to change their business model in order to adapt to the new environment and remain profitable.
The document discusses the competitive environment and new business development strategies of several large banks in 2011. It notes that banks are focusing on growing lending while reducing commercial real estate exposure. Specific banks' plans mentioned include PNC growing lending and treasury management services, Flagstar emphasizing commercial, small business, and retail lending, and 5/3 expanding in small business, private banking, and treasury management. The document recommends that banks bundle solutions to meet operational needs of prospective business clients.
Sales aid leasing can transform businesses by making purchases easier for customers. Offering financing options reduces customers' upfront costs and allows them to spread payments over time. This helps drive sales and improves cash flow for suppliers. However, as businesses grow and change, their financing needs may also change. It's important to periodically review financing options to ensure they keep pace with the business and allow access to new markets and customer types. Conducting a gap analysis by comparing business goals to the capabilities of current financing partners can help identify any limitations and ensure financing continues fueling growth.
The federal government narrowly missed its small business contracting goal for the seventh year in a row. However, some argue the SBA inflates the numbers through exclusions and by allowing large companies to receive contracts counted as small business awards. An analysis found over $500 million in contracts awarded to Fortune 100 companies labeled as small business. Advocacy groups and experts say the procurement process is not working as intended and the goals are not being accurately measured and reported.
This document discusses disruption in the wealth management industry through three papers. The first paper discusses how major disruption is inevitable due to long periods of inertia in the industry and changing client needs. The second paper emphasizes the importance of institutionalizing data sharing across departments to improve client experiences and business strategy. The third paper discusses how technology can help facilitate more holistic advisory approaches to better meet client needs over time.
Everything you need to know about the top economic stories from September 2014, including the Bank of England base rate voting split, lower unemployment rate and the No vote for Scottish independence.
The document provides background information on factoring and how it works. It defines key terms like invoices, accounts receivable, clients, customers, and factors. It explains that factors generate revenue not through interest on loans, but by purchasing invoices from clients at a discount fee. Factors provide upfront advances to clients and release reserves once invoices are paid, helping clients improve their cash flow.
Destination 100%: the evolutionary journey to a total quality concept in the ...HML Ltd
HML is developing a "total quality concept" or "wheel" to holistically assess employee performance quality and prevent customer detriment. The wheel combines data from various quality frameworks to provide team leaders all the information needed to evaluate individuals. This preventative approach aims to place customers at the center of operations, in line with regulatory focus on appropriate consumer outcomes. If implemented, the wheel could help HML achieve its goal of a 0% risk appetite through ongoing feedback loops that improve employee performance over time.
Global private equity trends in the 1 st quarter of 2013Ramkumar ,PMP
The private equity deal volume declined in the first quarter of 2013 compared to the fourth quarter of 2012. The deal volume decreased as many sellers who had been anticipating higher tax rates completed deals by year-end 2012, but then withdrew from the market in 2013. Additionally, some deals fell apart after buyers' due diligence uncovered issues causing them to lower their valuation. However, the market for desirable companies remains strong, and sellers are now doing more due diligence upfront to better defend their valuations against potential downward adjustments later in the process.
The document discusses the competitive environment and new business development strategies of several large banks in 2011. It notes that banks are focusing on growing lending while reducing commercial real estate exposure. Specific banks' plans mentioned include PNC growing lending and treasury management services, Flagstar emphasizing commercial, small business, and retail lending, and 5/3 expanding in small business, private banking, and treasury management. The document recommends that banks bundle solutions to meet operational needs of prospective business clients.
Sales aid leasing can transform businesses by making purchases easier for customers. Offering financing options reduces customers' upfront costs and allows them to spread payments over time. This helps drive sales and improves cash flow for suppliers. However, as businesses grow and change, their financing needs may also change. It's important to periodically review financing options to ensure they keep pace with the business and allow access to new markets and customer types. Conducting a gap analysis by comparing business goals to the capabilities of current financing partners can help identify any limitations and ensure financing continues fueling growth.
The federal government narrowly missed its small business contracting goal for the seventh year in a row. However, some argue the SBA inflates the numbers through exclusions and by allowing large companies to receive contracts counted as small business awards. An analysis found over $500 million in contracts awarded to Fortune 100 companies labeled as small business. Advocacy groups and experts say the procurement process is not working as intended and the goals are not being accurately measured and reported.
This document discusses disruption in the wealth management industry through three papers. The first paper discusses how major disruption is inevitable due to long periods of inertia in the industry and changing client needs. The second paper emphasizes the importance of institutionalizing data sharing across departments to improve client experiences and business strategy. The third paper discusses how technology can help facilitate more holistic advisory approaches to better meet client needs over time.
Everything you need to know about the top economic stories from September 2014, including the Bank of England base rate voting split, lower unemployment rate and the No vote for Scottish independence.
The document provides background information on factoring and how it works. It defines key terms like invoices, accounts receivable, clients, customers, and factors. It explains that factors generate revenue not through interest on loans, but by purchasing invoices from clients at a discount fee. Factors provide upfront advances to clients and release reserves once invoices are paid, helping clients improve their cash flow.
Destination 100%: the evolutionary journey to a total quality concept in the ...HML Ltd
HML is developing a "total quality concept" or "wheel" to holistically assess employee performance quality and prevent customer detriment. The wheel combines data from various quality frameworks to provide team leaders all the information needed to evaluate individuals. This preventative approach aims to place customers at the center of operations, in line with regulatory focus on appropriate consumer outcomes. If implemented, the wheel could help HML achieve its goal of a 0% risk appetite through ongoing feedback loops that improve employee performance over time.
Global private equity trends in the 1 st quarter of 2013Ramkumar ,PMP
The private equity deal volume declined in the first quarter of 2013 compared to the fourth quarter of 2012. The deal volume decreased as many sellers who had been anticipating higher tax rates completed deals by year-end 2012, but then withdrew from the market in 2013. Additionally, some deals fell apart after buyers' due diligence uncovered issues causing them to lower their valuation. However, the market for desirable companies remains strong, and sellers are now doing more due diligence upfront to better defend their valuations against potential downward adjustments later in the process.
Digital transformation and sustained shareholder supportGerrard Schmid
I recently collaborated with Craig Hapelt and Kilian Berz at BCG on the link between digital transformation and sustained shareholder support. A key topic for public companies as they wrestle with the implications of transforming their business models.
Pleased that our transformation journey at D+H formed a backdrop for this work. Hats off to all my former colleagues that helped us on that journey.
As a member of the INC 5000 I was interviewed on the federal government's policy for SBA loans, my own firm and how it has been affected by the market freeze. Furthermore, I am asked what President Obama should add to aid small business owners in this economic downturn all in the December 2008 edition of Inc.com
Heartland Payment Systems is a payment processing company that has built a narrow economic moat through its merchant-focused and transparent business practices. It provides competitive advantages over larger processors through lower fees and a customer-first approach. While the company may see slower growth during an economic downturn due to its focus on small and medium businesses, the continued shift to debit and credit card usage provides long-term opportunities. The analyst maintains a fair value of $26 per share based on forecasts of continued revenue and margin growth.
The document provides an outline for Redington's quarterly publication called "Outline" which features thought pieces on key investment topics for institutional investors.
The March 2013 issue includes articles on:
1) Arguments against smoothing asset and liability valuations for pension schemes.
2) The importance of considering both risk and return, rather than an "either-or" approach, when developing investment strategies.
3) How carry, or the mark-to-market impact of the passage of time, is an important factor for liability driven investment strategies given current low interest rates.
4) Challenges with relying on historical estimates of the equity risk premium to inform investment decisions.
5) Potential alternatives
200108 saa s industry overview - final (002)Sara Cody
This document provides an overview of key valuation metrics for software-as-a-service (SaaS) companies. It discusses how SaaS companies are typically valued based on revenue or EBITDA multiples depending on their pricing model. The document also examines trends in the SaaS industry and how they are changing investor perspectives on valuation. Several "key value drivers" that influence a SaaS company's market value are identified, including metrics related to capital efficiency, market demand, and certainty of continuity. Strategic and financial acquirers of SaaS companies are also analyzed.
The document discusses several challenges and opportunities facing global securities firms. It notes that while last year's results were good, the industry faces evolving businesses that require new strategies. Successful firms will serve both large companies seeking strategic advice and the growing middle market. They will also adapt to changing relationships with large clients, financial sponsors, and hedge funds as private and public boundaries blur. Firms will need new models to serve sponsors and uncover investment opportunities, while also advising companies on private vs. public financing options. Overall the industry faces pressure to develop innovative solutions across client segments.
Lending To Automobile Dealers Credit Risk Issueserikday
Lending to auto dealerships presents several credit risk management issues for lenders. Large dealer groups have greater dollar exposure and complexity due to operating multiple franchises across various regions. Small dealers may offer better returns but also have vulnerabilities due to sole ownership and reliance on local markets. When evaluating loans, lenders must consider factors like a dealer's financial controls, ownership structure, management experience, product mix, and regional economic exposure to understand the risks. Ongoing changes in the auto industry also impact dealers through issues such as high inventory, lower margins, and consolidation trends.
Expense Reduction Analysts guide to cost reduction in the area of Banking and Finance. Covers credit card transactions and fees; service charges and finance processes.
Get In The Drivers Seat Of Lending To Automobile Dealershipserikday
This article discusses key issues for lenders to consider when lending to automobile dealerships. It outlines the types of financing requests dealerships typically make, including floorplan financing, mortgages, and working capital loans. It also discusses important factors for lenders to evaluate such as the dealership ownership structure, franchise mix, processing days, advance rates and collateral requirements. The article emphasizes the importance of understanding the dealership's operations, financials, ownership, and managing credit risks when lending to automobile dealerships.
What Family Business Advisors Need to Know About ValuationMercer Capital
Family business advisors help companies and leaders navigate a wide range of business and family challenges, ranging from corporate governance to succession planning to family relationship dynamics and all points in between. This whitepaper helps fill in that gap.
The document discusses several challenges facing the insurance industry, including the shift to digital and multichannel operations, digital transformation, maintaining a client-centric approach, and preventing commoditization. It argues that marketing has a key role to play in addressing these challenges by focusing on the client experience across channels, linking digital transformation to business strategy and objectives, generating visible value for clients, and developing attribution models to measure marketing's contribution to profitability. The document outlines how marketing and sales goals should be set and measured based on positioning, education, interaction, costs, income, and return in order to optimize marketing's contribution to business results.
The document discusses the impact of new legislation that will lower debit card interchange fees for utilities. It explains that:
1) New rules from the Federal Reserve will result in lower interchange fees for debit card transactions, reducing costs for utilities and other businesses.
2) While some savings may be passed to consumers, cost reductions typically go to company profits rather than lower prices.
3) The growth of debit card use, especially online, means utilities need to accept card payments to serve customers, but lower fees will make this more affordable.
Nicholas Financial is rated a BUY with a price target of $16. Key points include:
1) NICK is underleveraged compared to peers and has achieved high returns on equity given its leverage.
2) NICK could be an attractive acquisition target due to its free cash flow, low price-earnings ratio, and Canadian headquarters.
3) The recent sell-off in price was unwarranted and due to risk-arbitrage fund selling, not a change in NICK's investment outlook. NICK remains undervalued relative to peers and warrants a higher price.
The Intersection of Construction & FinTech 10.06.20Erica Amatori
As a firm, we have been very outspoken regarding our bullishness on Construction & Development Tech. Over the past 2 years, we have been publishing research and stating our case for why Construction Tech will evolve into its own behemoth of a category.
A round-up of the latest UK economic news, including a reminder of the key announcements in George Osborne's Budget, inflation falling to 0%, the latest unemployment figures and David Cameron's comments about his re-election.
Ownership and control in multinational joint venturesanushreeg0
This document summarizes a paper that examines how capital restrictions can affect the ownership structure and control of international joint ventures between multinational enterprises and local firms. The paper reviews previous research on factors that influence joint venture ownership structures. It then discusses how capital restrictions imposed by host countries can limit foreign ownership and influence how ventures are structured to allocate control between partners. The paper aims to analyze how different levels of capital restrictions impact investment levels and the optimal design of joint venture contracts under asymmetric information conditions.
Business Leasing and Finance News (BLFN) 2012 Summer EditionPatton Boggs LLP
1. The document summarizes decisions made by the FASB and IASB regarding changes to lease accounting standards. Key decisions include adopting a two-lease approach for lessees and lessors.
2. For equipment leases, it will now be presumed that leases will be accounted for using the interest and amortization method, resulting in front-loaded expenses for lessees. Fewer equipment leases will qualify for straight-line rent recognition.
3. For real estate leases, it will still be presumed that leases will be accounted for using the single lease expense method, allowing for straight-line rent recognition. This is viewed as good news for real estate lessees
The Productivity Imperative: 2013 Corporate Real Estate Trends for Banking an...JLL
Perhaps more than any other industry, the financial services sector has been challenged by the simultaneous pressures of intense competition, increased regulation, and margin compression.Although profits are once again rising for some banks, it is clear that there are still many risks ahead. In this environment, an optimized corporate real estate platform is no longer an option, but a necessity.This report identifies the elements of our global report that are top of mind in the financial services industry, and it details the most pressing issues facing bank CRE executives.
1) GE Capital Retail Finance supports retailers' strategies of driving sales and managing credit costs through an integrated point-of-sale application offering private label and co-branded credit cards with instant credit. Discover understands and supports this flexible approach.
2) GE measures acquisition success through metrics like new accounts, approval rates, and same-day activation, but ultimately through helping retailers increase sales and credit penetration.
3) Maintaining customer acquisitions requires a compelling consumer value proposition and close alignment between GE and retail partners on mutual goals like in-store marketing and sales associate support.
This presentation outlines 3 methods for managing a buy-fix-sell real estate investing business. In it, we examine the pros/cons, how's/why's of either 1) Being Your Own General Contractor, 2) Hiring a Project Manager or 3) Hiring a Site Supervisor. We also take a look at why you shouldn't hire a General Contractor to rehab an investment property.
The document discusses the investment opportunity in Ashiana Housing, a real estate developer in India. It notes that Ashiana has a robust business model and strong financial management. The real estate industry in India is expected to see huge growth due to factors like urbanization and increasing affordability. There is significant pent-up demand for housing across income segments in India due to a large shortage. Ashiana is well positioned to benefit from this opportunity through its focus on mid-income housing projects.
THE BIG PICTURE: THE CASE FOR REAL ESTATE AS A WEALTH-BUILDING VEHICLEPGIMER
Book by: ALFRED LABEJA
Director/Property Expert.
Warib Capital Ltd
London.
Founder: http://www.propertyinvestmentgroups.com
THE BIG PICTURE: THE CASE FOR REAL ESTATE AS A WEALTH-BUILDING VEHICLE
Digital transformation and sustained shareholder supportGerrard Schmid
I recently collaborated with Craig Hapelt and Kilian Berz at BCG on the link between digital transformation and sustained shareholder support. A key topic for public companies as they wrestle with the implications of transforming their business models.
Pleased that our transformation journey at D+H formed a backdrop for this work. Hats off to all my former colleagues that helped us on that journey.
As a member of the INC 5000 I was interviewed on the federal government's policy for SBA loans, my own firm and how it has been affected by the market freeze. Furthermore, I am asked what President Obama should add to aid small business owners in this economic downturn all in the December 2008 edition of Inc.com
Heartland Payment Systems is a payment processing company that has built a narrow economic moat through its merchant-focused and transparent business practices. It provides competitive advantages over larger processors through lower fees and a customer-first approach. While the company may see slower growth during an economic downturn due to its focus on small and medium businesses, the continued shift to debit and credit card usage provides long-term opportunities. The analyst maintains a fair value of $26 per share based on forecasts of continued revenue and margin growth.
The document provides an outline for Redington's quarterly publication called "Outline" which features thought pieces on key investment topics for institutional investors.
The March 2013 issue includes articles on:
1) Arguments against smoothing asset and liability valuations for pension schemes.
2) The importance of considering both risk and return, rather than an "either-or" approach, when developing investment strategies.
3) How carry, or the mark-to-market impact of the passage of time, is an important factor for liability driven investment strategies given current low interest rates.
4) Challenges with relying on historical estimates of the equity risk premium to inform investment decisions.
5) Potential alternatives
200108 saa s industry overview - final (002)Sara Cody
This document provides an overview of key valuation metrics for software-as-a-service (SaaS) companies. It discusses how SaaS companies are typically valued based on revenue or EBITDA multiples depending on their pricing model. The document also examines trends in the SaaS industry and how they are changing investor perspectives on valuation. Several "key value drivers" that influence a SaaS company's market value are identified, including metrics related to capital efficiency, market demand, and certainty of continuity. Strategic and financial acquirers of SaaS companies are also analyzed.
The document discusses several challenges and opportunities facing global securities firms. It notes that while last year's results were good, the industry faces evolving businesses that require new strategies. Successful firms will serve both large companies seeking strategic advice and the growing middle market. They will also adapt to changing relationships with large clients, financial sponsors, and hedge funds as private and public boundaries blur. Firms will need new models to serve sponsors and uncover investment opportunities, while also advising companies on private vs. public financing options. Overall the industry faces pressure to develop innovative solutions across client segments.
Lending To Automobile Dealers Credit Risk Issueserikday
Lending to auto dealerships presents several credit risk management issues for lenders. Large dealer groups have greater dollar exposure and complexity due to operating multiple franchises across various regions. Small dealers may offer better returns but also have vulnerabilities due to sole ownership and reliance on local markets. When evaluating loans, lenders must consider factors like a dealer's financial controls, ownership structure, management experience, product mix, and regional economic exposure to understand the risks. Ongoing changes in the auto industry also impact dealers through issues such as high inventory, lower margins, and consolidation trends.
Expense Reduction Analysts guide to cost reduction in the area of Banking and Finance. Covers credit card transactions and fees; service charges and finance processes.
Get In The Drivers Seat Of Lending To Automobile Dealershipserikday
This article discusses key issues for lenders to consider when lending to automobile dealerships. It outlines the types of financing requests dealerships typically make, including floorplan financing, mortgages, and working capital loans. It also discusses important factors for lenders to evaluate such as the dealership ownership structure, franchise mix, processing days, advance rates and collateral requirements. The article emphasizes the importance of understanding the dealership's operations, financials, ownership, and managing credit risks when lending to automobile dealerships.
What Family Business Advisors Need to Know About ValuationMercer Capital
Family business advisors help companies and leaders navigate a wide range of business and family challenges, ranging from corporate governance to succession planning to family relationship dynamics and all points in between. This whitepaper helps fill in that gap.
The document discusses several challenges facing the insurance industry, including the shift to digital and multichannel operations, digital transformation, maintaining a client-centric approach, and preventing commoditization. It argues that marketing has a key role to play in addressing these challenges by focusing on the client experience across channels, linking digital transformation to business strategy and objectives, generating visible value for clients, and developing attribution models to measure marketing's contribution to profitability. The document outlines how marketing and sales goals should be set and measured based on positioning, education, interaction, costs, income, and return in order to optimize marketing's contribution to business results.
The document discusses the impact of new legislation that will lower debit card interchange fees for utilities. It explains that:
1) New rules from the Federal Reserve will result in lower interchange fees for debit card transactions, reducing costs for utilities and other businesses.
2) While some savings may be passed to consumers, cost reductions typically go to company profits rather than lower prices.
3) The growth of debit card use, especially online, means utilities need to accept card payments to serve customers, but lower fees will make this more affordable.
Nicholas Financial is rated a BUY with a price target of $16. Key points include:
1) NICK is underleveraged compared to peers and has achieved high returns on equity given its leverage.
2) NICK could be an attractive acquisition target due to its free cash flow, low price-earnings ratio, and Canadian headquarters.
3) The recent sell-off in price was unwarranted and due to risk-arbitrage fund selling, not a change in NICK's investment outlook. NICK remains undervalued relative to peers and warrants a higher price.
The Intersection of Construction & FinTech 10.06.20Erica Amatori
As a firm, we have been very outspoken regarding our bullishness on Construction & Development Tech. Over the past 2 years, we have been publishing research and stating our case for why Construction Tech will evolve into its own behemoth of a category.
A round-up of the latest UK economic news, including a reminder of the key announcements in George Osborne's Budget, inflation falling to 0%, the latest unemployment figures and David Cameron's comments about his re-election.
Ownership and control in multinational joint venturesanushreeg0
This document summarizes a paper that examines how capital restrictions can affect the ownership structure and control of international joint ventures between multinational enterprises and local firms. The paper reviews previous research on factors that influence joint venture ownership structures. It then discusses how capital restrictions imposed by host countries can limit foreign ownership and influence how ventures are structured to allocate control between partners. The paper aims to analyze how different levels of capital restrictions impact investment levels and the optimal design of joint venture contracts under asymmetric information conditions.
Business Leasing and Finance News (BLFN) 2012 Summer EditionPatton Boggs LLP
1. The document summarizes decisions made by the FASB and IASB regarding changes to lease accounting standards. Key decisions include adopting a two-lease approach for lessees and lessors.
2. For equipment leases, it will now be presumed that leases will be accounted for using the interest and amortization method, resulting in front-loaded expenses for lessees. Fewer equipment leases will qualify for straight-line rent recognition.
3. For real estate leases, it will still be presumed that leases will be accounted for using the single lease expense method, allowing for straight-line rent recognition. This is viewed as good news for real estate lessees
The Productivity Imperative: 2013 Corporate Real Estate Trends for Banking an...JLL
Perhaps more than any other industry, the financial services sector has been challenged by the simultaneous pressures of intense competition, increased regulation, and margin compression.Although profits are once again rising for some banks, it is clear that there are still many risks ahead. In this environment, an optimized corporate real estate platform is no longer an option, but a necessity.This report identifies the elements of our global report that are top of mind in the financial services industry, and it details the most pressing issues facing bank CRE executives.
1) GE Capital Retail Finance supports retailers' strategies of driving sales and managing credit costs through an integrated point-of-sale application offering private label and co-branded credit cards with instant credit. Discover understands and supports this flexible approach.
2) GE measures acquisition success through metrics like new accounts, approval rates, and same-day activation, but ultimately through helping retailers increase sales and credit penetration.
3) Maintaining customer acquisitions requires a compelling consumer value proposition and close alignment between GE and retail partners on mutual goals like in-store marketing and sales associate support.
This presentation outlines 3 methods for managing a buy-fix-sell real estate investing business. In it, we examine the pros/cons, how's/why's of either 1) Being Your Own General Contractor, 2) Hiring a Project Manager or 3) Hiring a Site Supervisor. We also take a look at why you shouldn't hire a General Contractor to rehab an investment property.
The document discusses the investment opportunity in Ashiana Housing, a real estate developer in India. It notes that Ashiana has a robust business model and strong financial management. The real estate industry in India is expected to see huge growth due to factors like urbanization and increasing affordability. There is significant pent-up demand for housing across income segments in India due to a large shortage. Ashiana is well positioned to benefit from this opportunity through its focus on mid-income housing projects.
THE BIG PICTURE: THE CASE FOR REAL ESTATE AS A WEALTH-BUILDING VEHICLEPGIMER
Book by: ALFRED LABEJA
Director/Property Expert.
Warib Capital Ltd
London.
Founder: http://www.propertyinvestmentgroups.com
THE BIG PICTURE: THE CASE FOR REAL ESTATE AS A WEALTH-BUILDING VEHICLE
Comparing RE/MAX Business Model with traditional Real Estate BrokerManaan Choksi
How does the real estate broker function usually? How does he work differently then the competition so that he earns more? Learn from the most successful real estate company to earn more, by adopting its model and changing your business.
1. The document discusses the basics of real estate development modeling including goals of building confidence, enabling better analysis of investments, and increasing credibility. 2. It defines financial modeling as forecasting future financial outcomes based on current assumptions and provides "cardinal rules" for effective modeling like ensuring assumptions are reliable and annotating models. 3. It outlines key components of a development pro forma model including sources and uses, hard costs modeled as a bell curve, soft costs, furniture/fixtures/equipment, and financing costs.
The document outlines the company's 2008-2009 development business plan, including goals to implement a development pipeline and modeling project, improve development processes, open several new projects on time and on budget, and establish strategic development plans and market research strategies to drive growth. Key metrics include delivering over 2 million square feet of space annually and contributing over $100 million to net operating income by 2009 through new development projects and initiatives.
Real Estate Development Case PresentationDaniel Mandel
In one week, my group (Nurulauni Saniman, Maike Zhang, Yuhua Zhou) and I analyzed a development case with an existing office building and adjacent vacant land for development. Group created a 20-minute investor presentation analyzing the macro economy, purchase price of entire site and adjacent vacant land, and optimization of the capital structure to reduce the weighted average cost of capital for the project.
This document provides an overview on real estate development and financial feasibility.
Topics Covered:
Development - Process, Ecosystem, Model, Flowchart, Risk vs Value, Development Risk, Development Cycle, Key Categories of Tasks
Economic Feasibility - Financial, Development Budget, Static Analysis, Loan-to-Cost, Debt Cover & Default Ratio Approaches, Detailed Proforma & Analysis
Real Estate Development - Financial ModelImran Almaleh
This document provides an overview and financial model for a proposed real estate development project in Dubai. The project involves constructing a mixed-use retail/residential building. Key assumptions in the analysis include net operating income projections and capitalization rates. Special attention should be given to these assumptions as they are important factors in determining the financial feasibility of the project over a 10-year holding period. The model outlines sources and uses of funds, cash flow projections, returns for investors, and other development costs and metrics.
Estate Master is property development software that has been used since 1991 by over 10,000 users in various industries. It offers development feasibility analysis, development management, and corporate consolidation functions. It provides a familiar spreadsheet interface and professional standard reports for budgeting, cash flow forecasting, and performance analysis.
Legal & General Surveying Services have published an interview with Robert Sinclair, Chief Executive at AMI and AFB, in their magazine Perspective.
Robert Sinclair, Chief Executive at AMI and AFB, helped establish the Association of Mortgage Intermediaries (AMI) as an independent entity in 2012. He joined the former parent trade body, AIFA, in October 2006, initially looking after the Association of Finance Brokers. He looks after the day-to-day running of AMI and AFB delivering member information and services, lobbying regulators and policy-makers and developing press relations.
View from the top: Jeremy Duncombe, Director of Intermediaries at Accord Mort...legalandgeneral
Legal & General Surveying Services recently interviewed Jeremy Duncombe, Director of Intermediaries at Accord Mortgages, in the recent instalment of Perspective Online: View from the top
When it comes to scrutinizing costs, most insurance companies can say “Been there, done that. Got the t-shirt.” Managers are familiar with the refrain from above to trim here and cut there. The typical result is flirtation with the latest management trends like lean, outsourcing and offshoring, and others. However, the results tend to be the same. Budgets reflect last year’s spend plus or minus a couple of percent in the same places.
Our global capabilities: financial servicesGrant Thornton
Grant Thornton provides audit, tax, and advisory services to financial institutions globally. It has over $300 million in combined global revenues from financial services. The document discusses challenges facing the financial services industry such as increased regulation, competition, and need for transparency. It also outlines Grant Thornton's solutions to help clients address issues like regulatory compliance, risk management, growth strategies, and data management.
This white paper summarizes current trends in mergers and acquisitions (M&As) within the residential real estate brokerage industry. It notes that M&A activity declined significantly from 2006-2010 due to the housing market downturn. The paper predicts a slow recovery in both housing and M&As from 2010-2012. Key factors that will impact M&As include available capital for deals, management talent needed to integrate acquisitions, and personal/emotional issues for sellers considering a sale. Buyer valuations of firms are affected by competition, sales professional retention, and deal structure/terms will be less favorable if the price is higher.
What Title Companies Can Do Now to Prepare for the Future of Mortgage LendingKhurram Mukhtar
Uncertainties in the home industry are inevitable. Managing various parties like sellers, agents, and appraisal companies can be complicated. We understand the challenges that home finance professionals face in mortgage loan origination. However, these complexities raise the question of how title companies can prepare for the future of mortgage lending. In search of a better solution, AtClose sheds light on the minimum requirements with the lenders and title agents. Attempting to meet those underlying needs while catering to industry challenges, AtClose designed a complete title industry solution. Read the whitepaper to learn how AtClose's leading order processing technology removed the friction that has been denying the title industry efficiency for so long.
Find out more about AtClose: https://www.atclose.com/
Business Quarterly - Making The Most Out Of Your BusinessEvalsam O
BQ - Issue 2 gives insight on how to use your business loss effectively and how to start a business quickly post covid-19 pandemic. There is a feature to inform you on how your mental health can affect the bottom line in your business.
BQ provides important business and industry specific news and snippets, with many engaging features, as well as marketing tips to help position your business as we emerge from
this pandemic.
Reduce Unfair Swipe Fees; a Hotel white paper on interchange cost reduction j...jdhgroup
This document discusses how managing credit card processing costs for multiple hotel brands and property management systems is complex and difficult without expert resources. It introduces KV Management, which provides consulting services as an extension of a company's finance staff. They analyze credit card statements to identify 8-20% in cost savings through optimizing interchange fees, payments, and contracts. Their services require no upfront fees or changes to existing providers, and only charge contingency fees based on realized savings.
The document discusses how paradigms in the real estate industry have shifted over time from a "we" model to an "I" model. It outlines the evolution of the industry from small brokerages in the 1960s to franchising models to 100% commission structures. Experts argue that current brokerage models are broken and do not work for brokers or agents. The document promotes a new "WE" model called Nextage Realty that is designed to address challenges, thrive in today's market, and lead the industry into the future through team support, training, recruiting, retention programs, and residual income opportunities.
The document discusses how paradigms in the real estate industry have shifted over time, from the traditional brokerage model to franchising to 100% commission structures. It argues that current models are broken and do not address the challenges of today's market conditions. The document promotes Nextage Realty as ushering in a new "WE" model that is structured to thrive in the current economy by focusing on teamwork, strong support systems, training, and residual income potential through recruiting and retention.
BlackRock Mortgage Modifications works with attorneys to process and support loan modifications by handling paperwork, faxes, and calls to lenders. This allows law firms to focus on legal work and increases their revenue. BlackRock examines clients' overall financial health, not just their mortgages, to develop a modification plan and educate clients to prevent re-default. Hiring BlackRock can help law firms streamline workflows, manage high case volumes, and increase their bottom lines during challenging economic times when clients have more purchasing power.
Enhancement in NDT inspection for operational effectiveness, efficiency and e...Innerspec Technologies
We intend to show that any change shall be linked, not only to improvement, but also to immediate cost reduction so that all management structure can conceive quick implementation as
part of its department strategy & enhancement in their budget cost.
For that, concepts such as effectiveness, efficiency and excellence must be approached. We will give clear saving cost ways which will follow the terminology.
In Financial terms and without a deep analysis, we can conrm cost savings above 30% from current prices are achieved.
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Selasturkiye Real Estate Business Model By Fnis
1. Real Estate confronts Profitability
Preface
The revolution in the accumulation, interpretation and transmission of information has
dramatically changed the nature of the real estate business. It has changed from a business where
people skills were paramount and information was the sole property of the Realtor® to a
business in which information is democratized and knowledge creation, as a service to the
consumer, drives success. This change has caused turmoil and general uncertainty about how to
conduct business in this new environment.
However, a far more important change was occurring in the industry even before the information
revolution. That change was the shift in leverage from brokers to agents, resulting in a steady
decline in broker profitability. In this new environment the pure practice of brokerage is
insufficient to sustain a business unless the broker can marshal a large volume of transactions.
Fortunately, the same information revolution that has shaken the industry also provides the
solution to the profit problem facing broker-owners. Technology has blurred the lines between
brokerage and real estate related services which allows for the extensions of real estate
businesses. Thus, the decline in brokerage revenue can be offset by the generation of revenue
from ancillary businesses. In other words, share of market is replaced by share of customer.
The time has come to re-evaluate your business and your position in this industry. Are you just
another real estate professional, or are you more? Are you happy being a ³Mom and Pop´ real
estate company selling a few houses, or can you become a full service, home and lifestyle
advisor.
To make the transition you have to think strategically, which requires discipline and focus. To
think strategically, you must first create a vision of the future. To create a vision of the future,
you must believe in, and accept change. Change is natural. Change is good. Change can create
opportunity. Change can create more profit, and profit makes the journey worthwhile.
We hope that this whitepaper will contribute towards your finding an improved path to
profitability. If you have any suggestions, ideas or questions, feel free to contact either one of us.
2. Contents
SECTION 1 REVISITING YOUR BUSINESS PLAN
1.1 State of the Real Estate Brokerage Industry
1.2 Compensation Packages
1.3 Increasing Margins Through Ancillary Services
1.4 Increasing Margins Through Growth
1.5 Revisiting Your Business Plan
SECTION 2 NEW REAL ESTATE BUSINESS MODELS
2.1 Overview
2.2 Buyer Brokerage
2.3 One-Stop Shops
2.4 New Paradigm Companies
2.5 Annuity Agencies
2.6 Fee-Based Services
2.7 Employee Estate Agents
2.8 Superstores
SECTION 3 TOOLS TO REMARGIN YOUR BUSINESS
3.1 Overview
3.2 Providing Better Information
3.3 Expanding Your Core Business
3.4 Improving Lead Management
3.5 Providing Ongoing Customer Contact
SECTION 4 STRATEGIES TO REMARGIN YOUR BUSINESS
4.1 Overview
4.2 New Economy Brokers
4.3 Giving the Consumer What They Want
4.4 The Decisions: A Guide to Remargining
4.5 The Implementation
Conclusion
About the Authors
Companies Profiled
3. Section 1
1.1 State of the Real Estate Brokerage Industry
Historically the fundamental driver of the real estate industry was the control of information. The
real estate agent and the real estate office were the only sources of comprehensive information
on which properties were for sale and those who might be interested in buying them. With this
control revenues were practically guaranteed. Moreover, because this exclusive control was akin
to a monopoly by virtue of the multiple listing service (MLS) any firm of any size could serve
the customer equally well. As a result, the number of real estate companies grew without regard
to market efficiencies.
In recent years increased market leverage by the consumer has begun to transform the real estate
industry. None of these transformations are as profound as the restructuring of agent fees which,
in turn, has undermined the profitability of brokers. Agents are claiming an increasing share of
commission revenue, thus further diminishing the broker¶s profit. When 50-50 splits were
standard, most real estate businesses were highly profitable. Today however, profit margins are
so thin that most real estate brokers have been forced to reevaluate and remargin their businesses.
Many industry leaders have acknowledged that the next three to five years will witness the
demise of the ³stand-alone´ residential real estate company as we know it today. There is,
however, considerable debate as to the details of how and when this transition will occur. There
is however, consensus that new models will emerge, resulting in real estate brokerages offering a
much broader base of services.
Compensation Master, a leading financial consulting company, has researched hundreds of real
estate brokerages in an effort to determine the optimum cost structures and profit levels.
According to CEO David Cocks, the average net profit margin for today¶s real estate brokerage
is between 1-3%. This equates to a per transaction profit ranging between $44 and $132 based on
the average sales price for single-family homes. (According to National Association of
Realtors® the average sales price in 2001 was $151,800). This portrays an industry teetering on
bankruptcy.
The key to remargin your business is changing your business model. NAR describes the current
and emerging business models as follows:
Current and Emerging Business Models
Residential real estate brokerages have developed three primary models to meet changing
customer demands.
4. Traditional Brokerage
In the traditional brokerage model all sales associates are independent contractors and 55%
indicate they belong to a national, local or regional franchise. Typically, they offer few, if any,
ancillary services such as title insurance. They generally serve one geographic center and focus
on smaller and niche markets.
Vertically Expanded Brokerage
In the vertically expanded brokerage, real estate brokerage remains the core but new revenue
streams have been created through ancillary services. In a recent survey, 91.7% offered mortgage
lending services and 58.2% offered title and other insurance services. Some firms using this
model are offering homeownership/concierge services including landscaping, security, appliance
and home repair. They seek new business through membership in relocation/referral networks.
Cutting edge firms are completing the entire real estate transaction on the Internet.
Agent Service Bureau
The third dominant model is the agent service bureau providing office and marketing support to
independent sales agents who retain the full commission and pay a fee to the firm. This approach
transfers the generation of income from transactions to agents.
Three other models are also emerging.
Unbundled Services
One is unbundled services. In this model, the consumer is offered a menu of services and can
tailor their selection. For example, the seller may choose to market and negotiate the deal but
want the firm to prepare the contract. This model targets the FSBO market, which is
approximately 13% of the total residential market that comprises about $110 billion in
transactions.
Market-Makers
Another emerging model is market-makers, in which an auction format is used to determine fair
market value and speed the sales cycle while the real estate professional guides their client
through the process and interprets information.
Corporate Model
The third emerging model is the corporate model. With today¶s low cost of capital and
heightened competition, non-brokerage firms such as title companies and financial services
businesses are seeking to leverage their geographic dispersion and strong capital base by
acquiring a real estate brokerage and using it to generate clients for their other business lines
(possibly as a loss leader).
5. Within any of these models, there are numerous possibilities to increase profits.
1.2 Agent Compensation
Compensation is the largest cost component for any real estate firm, often accounting for 80% of
expenses. Therefore, the best way to reach a higher level of profitability is to design commission
structures to ensure that fixed expenses are covered and profitability is built in. Large companies,
for example, can offer commission splits up to the point at which the company achieves a
revenue goal equal to the costs of maintaining the agent. At that point, the split becomes steadily
less favorable to the broker.
Certain of the real estate business models described above are associated with particular types of
compensation. For example, unbundled services are frequently associated with salaried agents.
But the reality of the industry is that (aside from the traditional brokerage model) most firms will
use a variety of business models. So, it makes sense to offer a choice of compensation plans as
Compensation Master says that past experiences has shown that giving your agents a choice of
commission structures almost invariably lowers the company's breakeven point.
1.3 Increasing Margins Through Ancillary Services
Companies having profitability problems are increasingly finding an additional source of
revenue in ancillary services. These services can provide a significant additional revenue stream
that compensates for lack of profitability in the core business. David Cocks states that real estate
brokerages that provide ancillary services, without changing any other aspects in their companies
such as compensation plans, have considerably higher net profits of between 4% - 7%, or $132 to
$309 per transaction.
1.4 Increasing Margins Through Growth
One of the solutions to a declining company dollar is to grow the business and thus increase
volume. Obviously, growth requires expenditure, so not all of the increased revenue generated by
expansion will become profit. But if you can hire more agents without expanding your physical
space, more revenue goes directly to your bottom line, reducing your breakeven point and
improving profitability.
1.5 Revisiting your Business Plan
In the past the value proposition for real estate has been the control of information. The real
estate professional possessed it and the consumer needed it. But this is no longer the case. As
technology allows the consumer to control information the traditional role of the real estate
professional has begun to change. A new consumer-centric value proposition based on reducing
time and stress and increasing convenience and service will be necessary for success.
In his book, The Eight New Rules of Real Estate, John Tuccillo outlined the seven new
competencies that allow you to create this value proposition:
6. y Counseling the consumer;
y Negotiating the contract;
y Managing the transaction;
y Marketing;
y Building and maintaining a brand;
y Acquiring, managing and using information;
y Thinking strategically.
Mastery of each of these is necessary to provide an attractive value proposition to the
empowered consumer in a world where information is available to all.
Conclusion
Simply stated ± it is the brokerage industry¶s responsibility to figure out how to meet the
changing demands of sophisticated consumers that are demanding a more comprehensive and
superior service at a lower cost. At the same time we still must provide a practical, real world,
profitable business model in which all components prosper; it is a prudent and wise business
decision.
Section 2
2.1 Overview
Over the last five decades the real estate industry has been in a constant state of evolution.
Looking back one can today clearly identify business models and trends that have noticeably
changed the way we manage a real estate brokerage company. Quite simply, a business model
refers to a firm¶s core architecture, specifically how it deploys all relevant resources (not just
those within its corporate boundaries) to create differentiated value for customers.
The 60¶s automated the MLS. Franchising and the emergence of new brands such as Century 21
and ERA became the legacy of the 1970¶s. The 100% concept and RE/MAX punctuated the 80¶s
as the industry changed from a broker-centric to an agent -centric model. During the early 90¶s
technology gained universal real estate acceptance while the latter part of the 90¶s saw the
emergence of the Internet.
And so here we are, at the beginning of the 21st century. Although the dominant trend for the
current decade has not yet been established, various trends are already flexing their muscle. We
will most likely look back at the early years of this decade and refer to this period as the decade
of the dominant consumer and the disgrace of corporate America. When we look at the degree
with which the new economy has evolved and affected the real estate industry, it becomes
evident that technology and the Internet have taken away the control previously enjoyed by the
industry and triggered a process that is fundamentally changing its entire core structure.
The last few years have also introduced us to a deluge of new business models. We are clearly at
the early stages of development and success is still, as yet, undetermined. There are however
numerous models that are very appealing to the consumer and starting to show creditable
7. success. It is hard to foresee winners or to construct exact definitions around new emerging
concepts, yet when sifting through the smorgasbord of service and products, similarities in
strategy and offerings begin to emerge.
In RealeConnections (2002), an audiotape set by Stefan Swanepoel, he outlined the following
categories of new business models:
y Buyer Brokerage
y One-Stop-Shopping
y New Paradigm Companies
y Annuity Agencies
y Fee-Based Services
y Employee Agents
y Superstores
2.2 Buyer Brokerage
Dooley and Charlie Dahlheimer of the North American Consulting Group, in the late 80¶s and
early 90¶s that the original fledging group of about 250 proponents grew to 6,000. This had taken
place by the time the NAR acquired the Real Estate BUYER¶S AGENT Council (REBAC) from
Dooley and Dahlheimer. Since then, with NAR¶s intense involvement, the organization has
grown to over 40,000 members, making it the world's largest association of real estate
professionals focusing on representing real estate buyers.
Ongoing consumer pressure to separate the simultaneous representation of both the buyer and the
seller has already caused major changes to the structure of the industry, and fostered courses,
designations, books and legal proceedings frequently dealing with the issue. Its ongoing impact
will most likely further sensitize the value of each side of the transaction (listing/sale), which
were previously perceived as equal contributors. In the long term it will contribute to the overall
restructuring of standard real estate commissions.
2.3 One-Stop-Shops
This business model is by no means new. It was introduced a few decades ago by some of the
largest real estate brokerages in the country. However, this logical extension of services was only
popularized in the mid 1990¶s by the new wave of Internet real estate companies. It became the
flavor of the day when new start-ups promoted this ³new cool concept´ as the key driver to
achieve the ultimate goal of quicker, cheaper and simpler real estate transactions. This
³Integrated Model,´ as it also became known, has as its core the goal of providing consumers
with a single source or place to have all their real estate needs met.
Although this vision was pure and admirable, the implementation curve was far more complex
than anticipated. Very few ³dotcom´ companies survived to deliver on the promise, yet they left
behind a legacy of consumer perception that has required many large real estate companies to
realign their existing business models.
8. Today, five years later, most large traditional real estate brokerages consider one-stop-shopping
an integral strategy against the onslaught from outsiders (non-traditional brokerages) and
dwindling commissions. By adding and incorporating mortgage, insurance and escrow services,
many have seen their business become much more financially stable.
However, as much as this strategy has significantly contributed to the profitability of many real
estate companies it has also encouraged financial institutions to refocus on their opportunities to
enter the real estate brokerage arena.
2.4 New Paradigm Companies
Largely associated with the ³dotcom´ era, this business model has also been referred to as
³Online Offices,´ ³Internet Brokerages,´ or ³Virtual Real Estate Companies.´ Their purpose was
to leverage technology to provide consumers with a faster, cheaper and better real estate
transaction experience. A great many of these companies understood the technology very well,
but did not understand the real estate business at all. So, as the market quickly became saturated
with new players during the period 1996 ± 1999, these players just as quickly disappeared in the
aftermath of the tech sector collapse in the Spring of 2000.
As a result many traditionalists have written off companies that were born during that era.
It is true that many former Internet brokerages did not live up to expectations, but a select
handful did survive the crash and are working hard to validate their belief in a more streamlined,
cost effective, and quicker real estate transaction. Good examples are companies such as eRealty,
yhd Foxtons and ZipRealty.
It is naïve thinking to believe that they have disappeared, or that the concepts they subscribe to
will not leave us an inheritance. Together with the concept of one-stop-shopping, they empower
a consumer who is constantly placing downward pressure on the overall cost of the home buying
transaction.
2.5 Annuity Agencies
In a period when top-producing agents wanted more, slicing and repackaging real estate
commissions in a different way helped launch a new business model. That model catapulted
RE/MAX, in the 70¶s and 80¶s, into one of the worlds largest and most respected real estate
companies in the world.
Today, in a period where many top producing agents are approaching retirement, slicing and
repackaging real estate commissions in a different way is contributing to the growth of another
new business model. This time companies such as Keller Williams and EXIT Realty are rapidly
expanding and changing from ³multi-level marketers´ to large, national real estate companies.
9. The core of this new business annuity agency model revolves around a ³Profit Sharing´ or
³Residual´ system. Through a residual income stream, agents can now earn dollars even after
they stop listing and selling real estate. Although not appealing to everyone it is very attractive to
the many baby boomer real estate professionals who are contemplating slowing down, if not
retiring. Therefore, it would be unwise to turn a blind eye to this new model as it, like the 100%
concept, will most likely require you to re-evaluate the compensation structure within your
company in the not too distant future.
2.6 Fee-Based Services
Fee-based services date as far back as the 1970¶s and are frequently incorrectly associated with
the concept of For-Sale-By-Owners (FSBOs). Today, fueled by the growing inclination of many
homeowners to use the Internet to try and sell their own homes, this concept, also referred to as
the Consumer Assisted model, dissects the traditional real estate brokerage service into a more
menu-driven type system. It affords consumers the opportunity to select those services for which
they would like to be responsible for and those for which they are willing to pay.
Back in 1976, Don Taylor started a company based on this premise, called Help-U-Sell. The
company stalled in the late 1980¶s under its then owner, Mutual Benefit Life Insurance, and was
ultimately repurchased in 1996 by Roger Steiner, a longtime franchise. Since then the company
and concept seems to have gained renewed momentum.
Although the Consumer Assisted model is still at an early stage of development, it has however
gained sufficient momentum to experience the birth of its own association, the National
Association of Real Estate Consultants (NAREC). Julie Garton-Good started NAREC in 1999,
and today with a 1,000 members, it would appear to be at about the same stage of development
as was REBAC a decade ago.
2.7 Employee Estate Agents
The concept that real estate agents might one day work as salaried agents remains as
controversial as ever. During the last three decades various companies have considered changing
from the existing independent contractor structure to some form of salaried compensation
structure. A few companies even tested this model but there were no meaningful results.
However, today¶s real estate environment is considerably different from just five years ago.
Many real estate companies have reached critical mass, access to listings are now no longer
under MLS lock and key, the unbundling and rebundling of real estate related services is
common place and most large companies are fairly advanced with automation. These changes
create a significantly different platform from which to launch a new compensation structure.
It¶s true that most successful real estate agents operating under the traditional model will resist
working for a fixed income. However, there are literally tens of thousands of experienced and
new young professionals that may welcome a regular paycheck with perks.
10. Currently there are a few new companies testing this model, and although still in stealth mode,
unofficial results are promising. Looking at this model from the point of view of a large bank, an
insurance company or corporate America in general, the numerous management benefits are
obvious and to ignore this alternative business model would be unwise.
2.8 Superstores
Mergers and acquisitions, consolidation and roll-ups have been around for decades and are not
foreign to the real estate industry. Historically the acquisition of one real estate company by
another has been the industry norm. But the industry has also seen a number of new players enter
the industry, such as Metropolitan which acquired Century 21, Sears which acquired Coldwell
Banker and Prudential which acquired Merrill Lynch.
In the aforesaid two examples (Century 21 and Prudential), the parent company changed, and
although management changed as well, their overall involvement did not fundamentally change
the business itself. In the case of Coldwell Banker, Sears actually did endeavor to re-engineer the
home buying process and introduced the concept of one-stop shopping with very limited success.
However, the entrance of Cendant (formerly HFS) in August 1995 (refer to Real Estate
Confronts Reality by Swanepoel, Dooley and Abelson) introduced a previously unknown
consolidation strategy to the industry. Not only did parent company Cendant become the first
ever holding company to simultaneously own more than one major national real estate brand
(currently owning Coldwell Banker, Century 21 and ERA), but its subsequent creation of NRT
created the largest and most successful real estate consolidator of all time.
Furthermore, in selecting Coldwell Banker as their brand of choice, NRT propelled what was
already a premier brand and arguably the third largest real estate company in the nation, to super
stardom and the number one brand in the country.
The 1980¶s introduced us to the concept of superstores and since then consumers have become
enamored with giants such as Staples, Home Depot and Walmart. It was therefore just a matter
of time before it would happen to the real estate industry. Even though the industry is very
fragmented and often resistant to new trends, we have sufficient proof that it can be done.
Whether its by introducing an outside industry brand and creating a new giant real estate brand
(Prudential) or acquiring existing companies in multi states and weaving them effectively into
one unit (NRT).
The big question is of course: Is there room for another and, if so, who will be next?
11. Conclusion
Remember that none of these new business models are perfect and neither should you expect any
one of them to dominate the industry. Neither franchising, the 100% concept nor technology has
achieved that honor.
However, the aforesaid concepts have all contributed significantly to the evolution of the
traditional real estate model and so will the above new business models. Ignoring them is unwise
and may well leave you standing on the outside looking in.
By staying current with the latest changes and trends, evaluating the value proposition of each
new model, and then adding certain new business tools as they become available, brokers and
agents can prepare themselves and strengthen their business to adapt to the changing market.
Section 3
3.1 Overview
We have been bedazzled with e-commerce, palm pilots, blackberries, m-life, t-mobile, bluetooth,
and more. But however overwhelming, real estate professionals must remember that e-business
is nothing more than traditional business being done online. M-business in turn is little more than
wireless e-business, and v-business is basically voice-enabled m-business. So in the end, the new
alphabet soup is nothing more than traditional business restructured. Therefore you must also re-
invent yourself to adapt to using these new repackaged tools.
The first technology wave brought us personal computers (PCs), Local Area Networks (LANs) ,
and advanced applications such as word processing, contact managers and network
communication. The first wave of communications did away with much of the paper and made it
easier to save, file, retrieve and share information.
The second wave was the Internet, which expanded the LAN to the public domain. Indeed, this
development is still a work in progress ± with the Internet increasing in size, speed and
efficiency almost daily.
The third wave is the current deployment of cheaper and faster bandwidth (DSL, cable and T1),
which enables the convergence of pre-existing technologies into integrated desktop and software
applications.
The fourth wave, just now beginning, is the deployment of wireless high-speed bandwidth that
makes the desktop mobile. The primary drivers making this possible are low cost bandwidth to
the home and office in the form of cable, T1 and DSL and near DSL performance on wireless
laptop and palmtop devices.
Thanks to the Internet, the confines of time and space have disappeared. Thanks to the NRT,
bigger does actually mean bigger profits. Thanks to the new business models we are
12. experiencing a RE/MAX-type revolution once again. Thanks to the ³dotcommers´ we now
understand that real estate professionals in the future will have to offer more for less. But that¶s
OK. Realtors® are not going away. They will not be dis-intermediated. Home buying
transactions will always require the ³high-touch´ component of an effective, well-educated and
well-equipped facilitator and negotiator.
The change in information processing may seem overwhelming and confusing. But real estate
brokers need not be technologists. In fact, they shouldn¶t be. Rather, technology is a tool and,
like any tool, can be used efficiently only if you know when to use it to accomplish your
business goals.
Your first job is to determine what you want to accomplish. That means developing a business
plan. Second, you need to choose the right tools to implement that plan. Fortunately there are
vendors who are putting together the tools you might need for success. These tools can roughly
be divided into three categories:
y Communications
y Information management
y Personal (or business) management
The following sections describe representative companies delivering technologically innovative
tools to the real estate industry.
3.2 Providing Brokers and Agents with Better Information
Company Overview
Fidelity National Information Solutions (FNIS) was created in August 2001 when Fidelity
National Financial merged its existing data and information services with Vista Info, a company
that was listed on NASDAQ. Since then, FNIS has assembled an impressive array of software
solutions and data companies to become the world¶s largest data and technology company
specifically serving the real estate marketplace. Acquisitions have included Micro General,
ComStock, Vista Info (Moore and Boris), iProperty (RISCO), HomeSeekers (MLS division),
Reez, and Eastern Financial Services to name but a few. Today FNIS has over $400 million in
annual revenues and provides data and technology services to more than 400,000 real estate
professionals.
Products and Services
FNIS offers three types of services:
1. Provisioning of data about real estate and consumers (both in an aggregated and
customizable format).
2. Business solutions that improve customer efficiency and lower costs.
3. Services that eliminate paperwork and processes. The core products of these services are: a
lead and listing management solution (Paragon BrokerOffice or AgentOffice); a MLS platform
13. interface (IDX, VOWs, etc.); a transaction processing service (TransactionPoint); and an e-
commerce and transaction processing service (RealEC).
FNIS Customers
FNIS is not a competitor to real estate brokers or agents but rather a facilitator enhancing their
services. FNIS operates as a B2B (business to business) service provider and serves four
industries: 1) Real estate brokerage; 2) Mortgage lending; 3) Settlements services; and 4)
Homeownership services.
Value Proposition to Brokers
FNIS has come a long way in enabling cross-platform functionality, thereby adding to potential
broker profitability. By offering these services to your customers, brokers and agents can now
create additional revenue sharing opportunities as well as use a larger array of tools to help
identify and acquire new on and offline customers.
One of these tools is the listing aggregation tool developed by FNIS that solves the problem for
brokers and agents working with more than one MLS. The system not only aggregates the
listings from the MLS providers operated by FNIS (Moore, Boris, RISCO, and HomeSeekers)
but will also work with other systems such as Interealty, Realtron, GTE, MarketLinx, and
Rappatoni.
Conclusion
Although FNIS is still a year or two away from standardizing and integrating all of their product
offerings into one seamless solution, no other company comes close to the extent of what they
offer: real property information for some 1,250 counties across the nation, arguably the most
dynamic MLS system in the nation, a great Realtor® desktop, a good broker back office product
and a transaction coordination system. Realtors® no longer need to go far to find a total one-
shop data solution.
3.3 Expanding Your Core Business
Company Overview
L&G Mortgagebanc (L&G) was established 18 years ago and is headquartered in Scottsdale,
Arizona. In the last few years L&G recognized the emerging trend in homebuyers¶ demanding
one-stop shopping for the home buying process. It was one of the first mortgage companies to
offer a unique program of lending-related products and services to real estate agents, enabling
them keep up with these industry trends.
The L&G system is unique because the borrower receives instant loan approval (within an hour)
from a live underwriter rather than an automated underwriting program. This assures the real
estate professional and the borrower of the highest level of service and eliminates inaccurate
information being input into a loan application. In addition, the L&G 4-Way Warranty ensures
14. that its service and rates will be comparable to the best in the industry. Mortgagegenie.net and
Alff.net are divisions of L&G.
Loan Finding and Funding
Automated Loan Finding and Funding (ALFF) provides an opportunity for real estate agents to
earn additional income through a origination-type fee, while offering their buyers a quality third
party service.
The key components of ALFF are:
y A simple and efficient loan origination program designed for real estate agents, which
ensures that agents do not compromise their existing core business of selling real estate.
y A live underwriter available 7 days a week to counsel with your borrowers and assist
them in completing their loan application as well as counsel with your borrowers. This
ensures that your loans will be correctly structured upfront and close seamlessly.
y Instant loan approval (not a pre-qualification) within one hour of receipt of the
application, from a live underwriter.
y Twenty years of mortgage banking experience with a full variety of mortgage products.
y A fully RESPA compliant system.
Value Proposition for Brokers
y Creates an additional profit center for real estate brokers by providing mortgage services
without the risks involved in owning a mortgage company.
y Enables brokers to provide a quality service to their agents, thus enabling them to recruit
and retain more agents.
y Enables brokers to offer a superior service to homebuyers thereby improving customer
retention.
Value Proposition for Agents
y Offers your buyers a one-stop service, saving time and money.
y Provides additional income from mortgage origination fee.
y Eliminate third party communication problems.
y Loan approval received directly from the underwriter.
y Enables agents to offer a superior service to homebuyers thereby improving customer
retention.
Marketing and Training Support:
y The 4-Way Warranty guarantees competitive pricing, excellent service and on time
closings in writing.
y The Customer for Life Program assures agents of ongoing business from existing and
past borrowers.
15. y Free customized web page designed for a more convenient loan process and a
professional image to your borrowers.
y Training and marketing support provided on an ongoing basis.
Conclusion
There are many ways to add mortgage services to a company¶s portfolio. The L&G system is
however specially designed for real estate professionals and is an ideal way of getting into the
business without going through the risks and effort involved with starting and operating a
mortgage company. With the hot refinancing market, this also seems to be a great tool for real
estate professionals to increase their profitability.
3.4 Improving Lead Management for Brokers and Agents
Company Overview
LeadMAXX and 360house.com are wholly owned subsidiaries of the X-variant Corporation, a
NASDAQ listed company. Together these companies service the real estate industry with lead
generation, lead qualification, and digital imaging tools.
Products and Services
Their suite of products include:
y A lead qualification service through both e-mail contact and ³call center´ personal
contact to ensure the highest percentage of lead scrubbing and conversion.
y A multi media 360° tour of homes, including virtual tours, still shots, interactive floor
plans, printable property brochures, and detailed statistical reports (called TourMAXX
and PlanMAXX).
y For new home sales, a buyer web page that displays job progress, photos of new home
and model, community, and builder/agent information (called MailMAXX).
y A means of communicating with buyers, using automated surveys, to improve customer
satisfaction (called SurveyMAXX).
y A customizable experience to the broker¶s site by providing a personalized web page to
store favorite properties.
y A ³Plug in´ IDX/VOW search engine.
y A comprehensive, integrated backend that helps manage Internet leads.
Value Proposition for Brokers and Agents
Websites are no longer just brochureware. It has become important for brokers and agents to
realize that they can obtain measurable returns from the Internet. LeadMAXX has created a way
to provide for the capture and qualification of meaningful numbers of web users early enough in
the home purchase process to make ³one stop shopping´ a possibility. They allow for real estate
sales at potentially higher company retained commission levels along with the ability to garner
increased mortgage, title and post-closing service conversion and revenue. Additionally, as a
16. result of the LeadMAXX program, agents secure better-qualified Internet leads and avoid
dealing with early users who are not ready to buy thereby increasing agent income, morale and
productivity.
Conclusion
Internet leads are considerably different and in most cases less time sensitive compared to a lead
generated by a walk-in, however the Internet lead still has significant value. Although we do not
yet completely understand the buying patterns and habits of the e-buyer, LeadMAXX has one a
long way in facilitating real estate professionals to more effectively obtain and market listings
and attract and retain more potential web home shoppers with better web site content.
3.5 Providing Ongoing Customer Contact
Company Overview
Adigida Solutions, headquartered in Minneapolis, Minnesota, was founded by a former real
estate company executive. His mission was to create the first Internet-based customer
relationship, business retention and sales management service. It is the company¶s integrated,
web-based application called RealFuture that we have included in this whitepaper.
Maximizing past clients
Repeat sales and referrals from past customers is well recognized across industries as the lowest-
cost method for generating revenue. Yet in the real estate industry, repeat sales account for only
about 10% of revenue. An obvious roadblock to marketing to this clientele is the average seven-
year sales cycle. The passage of time coupled with a typical agent¶s failure to stay in contact
tends to sever the bond between agent and customer. However, with a database of customers,
well-devised information and communication programs and the use of technology to automate
most of the tasks, the after-sale bond between agent and customer does not need to be severed.
Rather it can be nurtured with resulting referrals and repeat business.
Product Summary
RealFuture provides a structured series of automated customer ³touch points´, that allow the
sales professional the ability to effectively -- and non-obtrusively -- nurture their customer
relationships through the seven-year home-buying cycle.
The key components of RealFuture are:
y A private web site ³branded´ by the sales agent and automatically created for each
customer (called HomeHub).
y A Client Relationship Management system that works in concert with HomeHub Connect
to feed real-time data to the customer's site, while promoting the client relationship
through other traditional touch points (called Client Connect).
17. y A service that allows all the members of a team to work in unison, with real-time data
and from multiple locations, while giving the team leader an overall view of the business
(called Team Connect).
y An ability for brokers to easily work with their sales trainees, to better monitor and coach
them during the critical early months of their career (called Management Connect).
Conclusion
Stand-alone and shrink-wrap CRM and Sales Management software invariably do not work very
well in the real estate industry. Adigida's web-based services are a welcome improvement and
offer many advantages. Perhaps the greatest advantage lies in the increased profitability the sales
agent and/or broker can generate with a returning customer. Studies have shown that if the
customer retention rate can be increased from 12% to 40-50%, then the overall profitability for
the real estate sales professional will increase with about 50%.
Section 4
4.1 Overview
The past quarter century has seen the gradual erosion of the broker¶s profits, and as stated in
Section 1, the average profit per transaction today ranges between $44 and $132. Unless the
company does a large volume of business, this is insufficient to produce the revenues needed to
stay in business.
Even larger firms have taken notice of the shrinking return to brokerage and have commenced an
attempt to control other parts of the transaction. They have purchased other companies, created
companies or partnered with existing companies to offer mortgage, title, home inspection and
escrow services to the home buying public. Since margins in these businesses are greater than
that of brokerage, it makes sense to generate more business in these areas to enhance
profitability. On another level, brokers have instituted transaction fees, usually (and ultimately)
paid by the consumer, to cover their overhead expenses and technology fees to help offset the
cost of providing agents with modern transaction systems.
All these measures represent broker reaction to the reality of the market as seen through the filter
of conventional wisdom. These are the only ways in which most brokers are able to make up for
the decline in profits occasioned by the increasing commission share claimed by agents. There is
another way to look at this, however.
In today¶s environment the real estate agent engages a consumer (buyer or seller) when that
consumer enters the real estate market and accompanies the consumer through to the closing of
the transaction. This involves helping the consumer sort through available properties (an
increasingly less important function), helping the seller prepare the property for the market,
preparing and negotiating a contract, and managing the transactions (arranging for financing,
inspection, title clearance, settlement and so forth).
18. At this point, the agent leaves the consumer with a parting gift and turns their attention to the
next most pressing transaction. And while the best agents maintain a cadre of customers who
might return, the average agent moves from customer to customer, rather than building a
³customer for life.´ If there is any long-term relationship, it consists of referrals from past
customers to new customers.
4.2 New Economy Brokers
But if you widen the definition of the real estate transaction, the term ³customer for life´ could
have real bottom line implications. The degree to which the household uses property-related
services after the closing of the sale is actually greater than before the sale. Thus, the potential
revenue from the customer relationship expands dramatically after the sale.
This ³move and improve´ stage encompasses all the changes a household wishes to make to the
property in order to make a house a home. Almost more importantly, the consumer will reenter
the housing market as both buyer and seller, and will likely refinance the mortgage on the house
several times while still living in it. All of these activities represent opportunities for ancillary
income that a broker or agent might wish to seize upon. Creating the customer for life is thus a
key strategy for brokers in the new economy in order to both preserve and enhance profitability.
The challenge to the broker-owner is to find ways to capture the revenues that are available in
the market place. Those that are attempting to do so are pursuing one or more of three different
but interrelated models for real estate brokerage in the new economy.
Model 1: Extension of Services
The brokerage attempts to reclaim the money left on the table at closing by extending the
aftercare services it provides to consumers. The broker attempts to position the company as the
first point of contact for consumers whenever they need any product or service to fill their
homeownership needs. The company¶s revenues come from brokering these services to
households. Various large independent brokerages and national franchises have their own
version of this model, while others may use a third party vendor such as Home-Link.
Model 2: Direct-to-Consumer
In this model, the brokerage recruits and services customers directly rather than relying on the
real estate agent. Services may be offered in a package (as is standard in the industry) or on a
fee-for-service, menu-based system. The companies using this model tend to be new in the
business and rely heavily on technology to develop and deliver service. They also tend to use
salaried agents (who may or may not be employees) rather than a fully commission-based sales
force. Revenues are derived from capturing as much of the transaction for the company as
possible and increasing profitability by using technology to reduce cost.
Model 3: Servicing the Agent
19. Most traditional brokerage companies see the real estate agent as its primary customer and seek
to create a business ³cocoon´ that allows the agent to be as successful as possible. Usually, these
models create systems that allow the agent to execute as many functions of his/her business (and
in some cases personal life) as possible. These range from the traditional information and
transactions management functions to extended business services like commission tracking,
office supply orders and even travel arrangements. Revenues in this model come from the
payment of monthly fees by agents to use the system.
4.3 Giving the Consumers What They Want
The above alternatives are of course not mutually exclusive, and some companies combine them,
usually integrating the extension of services model with one of the other two. More significantly,
larger companies may use a range of models within a single entity. But the introduction of any of
these new models of real estate brokerage hinges on a structural change in the current business
model.
Right now, the agent ³owns´ the customer. The agent recruits the customer, cultivates the
customer, brings the customer to market and ultimately guides the closing of the transaction. The
broker usually only enters the picture at the point of contract. Theoretically, up to that point, the
broker has had no need to know of the existence of the customer. Only after that point are the
records of the transaction and the information available on the consumer available to the
company.
Clearly, the implementation of these new models require that brokers be more connected to the
consumer both at an earlier stage of the process and in a much more intensive way. In the direct-
to-consumer model, the path to this relationship is obvious; in fact, the need for the broker to
have greater access to the consumer for the offering of ancillary services is the prime motivation
for moving to this model. But for the others, an agreement might be required with your agents. In
return for access to the consumer earlier and more frequently, the broker could include the agent
as a partner, creating the process of selling ancillary services to the customer and sharing in the
revenues generated from these sales.
It is undeniable that the Internet has brought a world of options within everyone¶s grasp and has
forever changed consumer-buying habits. New Internet empowered consumers are now more
savvy, more sophisticated and more demanding than ever before. They now require the best
price, greater efficiency in their transactions, and in some cases instant gratification. Retail has
created a ³24 x 7´ mentality, intertwined with a one-stop approach and enhanced customer
service. In most major cities individual grocery and liquor stores, butcher shops and more
recently even drugstores have gradually been incorporated into the mega retail chains.
When that philosophy is transferred to real estate it becomes important to describe what it is that
the home buying consumer might expect to be offered as the ³total home solution.´ Does it
encompass all off and online services that integrate sales and settlement services to facilitate the
entire home purchase transaction? Does it include everything that manages the process before,
20. during and after the closing, while extending to include a ³lifestyle concierge´ service for the
entire home ownership period?
The one indispensable element that remains is personalized service. Real estate companies have
to maintain a strong component of their existing brick and mortar operations but must add, and
continue to add, increased ancillary and online transactional capabilities. By doing this they have
a high probability of remaining the primary gatekeepers of the home purchase transaction.
However, the shift will have to be from gatekeepers of the information to gatekeepers of the
process. If real estate brokers don¶t make this transition they may find their role, as we know it
today, decreasing and maybe even disappearing.
4.4 The Decisions: A Guide to Remargining
The correct decision for you hinges on a smorgasbord of interrelated issues. The first step is to
think through and answer the following questions and to then prepare a detailed implementation
plan. The successful introduction of a new ancillary service or technology almost always
depends on which combination of choices you make and how well you see the rollout through.
The decision to enter any ancillary business requires on a fundamental decision of whether you
are going to build a new business from scratch, buy an existing business, or align with a strategic
partner.
The WHAT Question
In order to consider what makes sense, it¶s necessary to understand what you want to
accomplish. Are you interested in maximizing market share? Do you want to focus on
profitability? Does real estate brokerage constitute your primary identity? Going forward in a
new economy setting absolutely requires that you have a business plan that charts your course
over the next several years. If you do not have a plan, then it is impossible to evaluate options for
developing ancillary income.
Then, ask yourself whether the services that you will be adding to your existing portfolio is a
³must´ (Category A - Important) to remain competitive or to keep the customer, or are the
services only a ³value-added´ (Category B - Optional) to have, but not critical to customer
retention and basic service. Services frequently considered important include mortgage, title,
escrow and insurance. Services usually placed lower on the list and therefore considered more or
less optional would include those that play a smaller role in the home buying transaction or have
less probability of interfering with your relationship with the customer. Such services might
include pest inspection, appraisal services, repairs, and so forth.
The WHY Question
Why are you offering the specific service, and how do you wish to have this specific service
positioned in your company? Category A - Income refers to additional service if it is being
introduced as a primary revenue source that will one day become a major source of income.
Category B - Support is when a new service has, as its goal to only support your existing core
21. services and protect your customer base, and you really don¶t mind too much whether the service
is profitable or not.
Certain services, such as mortgage and title insurance, tend to fall very easily into Category A.
These are both core services of the home buying transaction and both have the potential to
generate fairly significant revenue income. On the flip side, the profit margins on services such
as pest inspections and appraisals is fairly small and customer loyalty is generally low. As such,
they would most likely fall into Category B. The importance of determining whether a service is
in Category A or Category B will determine the level of your investment and commitment to
offering that service.
The HOW Question
Now that you know what services you are adding and why you are offering them, you can focus
on how you are going to offer them. If the services falls in both previous A categories (Important
and Income) you will most likely lean towards doing it yourself (Category A - In-house). If the
services again are both in the previous B categories (Optional and Support) you will most likely
lean towards finding an alliance that can help you offer those services (Category B - Partner).
The many other variations such as AB or BA usually can be equally satisfied by either an in-
house or partner solution. Generally your decision to buy or build should be based on your own
competencies and the relative cost of developing it yourself versus buying it from an outside
source.
No business can be entered without a cost attached, but some require more investment than
others. For example, beginning your own mortgage company requires far more in the way of
capital than entering into a joint venture. Long and Foster, one of the largest independent real
estate brokerages in the country, could certainly enter the mortgage business by itself. But it
chose to form a joint venture with Wells Fargo, a tactic that allowed for a smaller investment in
both capital and human resources.
The WHO Question
If you decide to invest in an ancillary business your next step is to determine who your partner
will be. In today¶s real estate industry, state of the art is frequently required and usually also
means that any system necessary to enter an ancillary business and to remargin your brokerage
business, is already available somewhere.
For example, Fidelity National Information Solutions and First American Title are both close to
offering full information and transaction management systems to the real estate industry. Home-
Link already provides full after-sale care. L&G offers a great addition of ancillary services.
LeadMAXX and Katabat offer excellent transaction and lead management systems. And of
course there are a myriad of other software companies that have developed systems that will
enable you to do a variety of things.
22. Clearly this whitepaper does not even begin to contemplate all the alternatives and tools that
exist, and your decisions on the what, why, how and who, should be based on the benefits you
will receive.
4.5 The Implementation
Most new models can only be successfully developed with the cooperation of your agents since
they are in today¶s model and still the primary point of contact with the consumer. In an effective
implementation, a major consideration is the attitude of your real estate agents. Clearly, the more
value they see in the relationship, the easier it will be for you to implement new businesses, the
more customers they will recommend the business to and the longer they will stay with the
company.
So, if you think that the evaluation process was complicated, those who have walked the path
before you, will caution that the execution and implementation is even harder.
In closing we share with you some tips to guide you to a more effective implementation:
y Do your homework well. Make sure you know what, why, how and with whom, before
you begin a new venture.
y Share the vision with your management team, administrative personnel and the sales
force.
y Show everyone that you are committed to the project and that it is an integral and equally
important part of the total company.
y Motivate those you expect to participate in driving the new program on a regular basis;
especially your sales force.
y Remember to cross-sell and cross-pollinate your services everywhere, all the time, in
brochures, on business cards, websites, sales rallies, and so forth.
y Manage the roll out by setting targets, obtaining meaningful and regular statistics,
monitoring progress and correcting inefficiencies.
y Ensure that one person has the primary responsibility of championing this vision and has
real authority to make it happen.
y Give existing managers in other divisions/departments additional incentives to participate
and ensure the project¶s success.
y Always continue to promote change, share and inform your team about the ongoing
changes and trends in the real estate industry while rewarding new ideas that initiate
growth and success.
Conclusion
Real estate has traditionally offered a single price service to the consumer. All the services,
whether required or not, were bundled into one set fee, always quoted as a percentage of the
sales price. With the removal of information barriers, consumers are finding that they can
23. perform some of these bundled tasks themselves, and the traditional model is under desperate
attack.
Simply put, the traditional model is too inflexible. Consumers are seriously questioning the value
of a real estate agent. They frequently feel that many of the traditional tasks undertaken by the
agents are now either no longer required or can be done by the consumer themselves.
So, the most effective way for existing real estate brokers to thrive in this consumer-centric
environment is to re-engineer their existing traditional business; by remaining the first and key
point of contact with the client; and by providing unparalleled customer satisfaction.
Like a chess game, real estate business is strategy as well as tactics.
You know what you have, but you do not know what your competitor is going to do next and
thus you need to think ahead, further than he or she will. You have to plan, plan to make the right
move, as often and consistently as you can. You have to know what your ultimate goal is and
how you intend getting there. You need to play fair, ethically and wherever possible, lead by
example.
Follow these seven steps and you should stay on the winning track:
y Revisit your thinking.
y Re-evaluate all business models.
y Redesign your service offerings.
y Rewrite your business plan.
y Restructure your operations.
y Retool your e-infrastructure.
y Restate and resell your vision to your team.