You, Too, Can Get in on One-Stop Shopping
You, Too, Can Get in on One-Stop Shopping
With so many companies weighing in with products and alliances to create one-stop shopping, where does that leave you?
First, remember that real estate is still a local business, conducted by local companies, for the most part within a 20-square-mile area. Therein lies the opportunity for small to midsize brokers to capitalize on one-stop shopping and strategic business alliances.
Some local companies are already getting in on the act. For instance, Century 21--Hartman Realty, Douglassville, Pa., has put together an alliance licensed under the name One Stop Home Shop that includes mortgage, title, attorney, insurance, certified appraisal, computer, and pest control services.
Why should you care about one-stop shopping? It can increase consumer allegiance to your company, you may be able to earn residual income or commissions on the sale of products or services, and in some cases, alliances with other vendors may create cost savings for your operations.
From the Top: What's One-Stop Shopping?
In its simplest form, one-stop shopping means that consumers can benefit from an alliance you have with vendors and service providers who are either necessary to the sales transaction or whom consumers may need after the purchase or sale. For consumers to use one-stop shopping, they need to perceive it as saving them money, being more convenient, or being of better quality than outside services.
Most of the alliances being formed today are on a national or regional scale, with large mortgage and title, communications, automobile, home improvement, moving, insurance, home warranty, and home inspection companies leading the way. Either the consumer receives a direct referral to an alliance partner or the consumer's name is entered into an electronic database and a lead is generated to be followed up on by the partners.
If today's alliances become a mainstay in real estate, how will you deal with it? You can consider setting up business alliances or one-stop shopping yourself. Here are a few guidelines:
- Develop a strategy. Determine why you want to offer one-stop shopping and what results you expect. Is your goal lead generation or lead incubation, cost savings to your company, new revenue streams, the positioning of yourself as a leader with an eye to influencing consumer allegiance, or the positioning of your company as progressive with an eye to recruiting and retaining salespeople? Decide also what benefit the consumer will receive. Will it be better service, discounts, convenience, or added value?
- Track national and regional trends. Pay attention to the marketing and advertising of national companies. Use your marketing and advertising to portray your company as a leader with local alliances and one-stop shopping.
- Make a list of local merchants who depend on home sales as a source of business. Mortgage, title, insurance, home inspection, home warranty, moving, telephone, carpet, legal, accounting, financial planning, painting, landscaping, and furniture services-and even pizza on the day of the move--come to mind.
- Bring merchants together for a meeting, or hire a consultant to facilitate a meeting. Explain your reason for the meeting, citing articles, national and local advertising, inside industry trends, and your company strategy. You may even want to include other local brokers who share your vision.
- Decide how to set up your one-stop shop. Consider forming a separate company to provide the services, creating an alliance, or simply sharing marketing and advertising costs for economies of scale.
- Be ready for the costs. If you start a separate company to create a program, expect to invest from $1,000 to $20,000 depending on such factors as size, facility, number of employees, and operating costs.
- Start the process now. Don't wait until it overtakes you, and you must scramble to recover.
The Finer (Legal) Points of One-Stop Shopping
If you pursue one-stop shopping, follow these guidelines:
- Make it legal. If you form an alliance, consult an attorney to determine how to structure it legally. For instance, under the Real Estate Settlement Procedures Act, brokers must fully disclose to consumers their relationship with any vendor and can't receive any cash or other benefit for a referral. RESPA also imposes other requirements relating to relationships with service providers. Also consult an attorney to deal with antitrust issues and to determine how each broker or service provider will be paid.
- Choose the right vendors. Be sure companies you set up alliances with are reliable and ethical. To be safe, you may want to make it a practice to also give consumers information on nonaffiliated companies and let them choose the service provider.
- Comply with state and local laws. For instance, some states have noninducement laws, which prohibit offering certain things of value to induce consumers to do business with you. In addition, some states require that anybody working as a mortgage broker be licensed as such. And finally, some states say that even if brokers are licensed as a mortgage broker and a real estate broker, they can't act as both in the same transaction. Be sure your venture complies with all the applicable laws.
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