A Broker’s Manifesto: The struggle is REAL!!!
The industry is plagued by a few massive problems:
There are $50B in untracked commissions. This is agent to agent and service vendor referrals.
There are 1M non-Realtors part time real estate professionals who are occasionally conduct real estate transactions and are compliance liabilities to their sponsoring brokers.
500,000 agents will be leaving the real estate industry over the next five years.
The part-time agent pays $41,800 to operate as a licensed professional vs earning $13,000 as a referral only agent with zero operating costs.
There are a lot of changes coming to the real estate industry like lower compensation to buyers agents.
Why do we care about referral only agents?
These referral only agents are still incredibly valuation to the real estate ecosystem because they have deep and meaningful relationships with buyers and sellers.
How to work with referral only agents?
These referral only agents need brokers to perform referral only agent activities.
Anchor brokers are need in each state and later to be the broker of record for Limited Function Referral Only Agents to receive commission for real estate referrals.
Any broker can join and utilize the Real Estate Consortia platform to track referrals from referral only agents to top performing sales agents.
Why is Real Estate Consortia everyone’s best friend in real estate?
Real Estate Consortia tracks the referral start to close.
REC pumps leads from the referral only agents to brokers and feeds top-selling agents.
REC provides commission advances for referrals and legal services to collect from bad actors.
REC does all the dirty work for brokers and agents, making us your best friend in real estate.
Real Estate Consortia tracks the worlds relationships starting with real estate referrals using blockchain technology.
REC has standardized national and global referral forms into one single online form.
REC created a single click contract for brokers and agents to release each other of liabilities.
REC has created a digital ledger for all referrals so all parties can see the current status of every single referral in real-time.
How did REC do it?
Real Estate Consortia created a patent pending REC Title Token for every piece of property in the United States. The REC Title Token is a digital representation of each property using a blockchain distributed title ledger (DTL). The ledger tracks all events and relationships tied to a property.
Why did we do it?
Tracking referrals increases professionalism, efficiency, and integrity in the real estate referral business. A great Real Estate Practitioner (REP) should be earning between 12-30% of their business from referral commissions. Right now, there is no technology that tracks this process from referral inception to close with settlement for the payment of referrals.
All types of real estate firms suffer from untracked real estate referrals. Franchise and independent brokerages, real estate referral companies, commission advance financiers, and Multiple Listing Services lack the technology to track referrals between real estate professionals. The only way referrals are currently tracked is through a manual process of calling agents and asking them if they have closed the referral. This system relies on the honor system, which is unreliable due to human nature. Agents are disincentivized to accurately report closed referrals because the referral could have represented a single one-time transaction and not an ongoing referral-based relationship.
Tracking down referral checks is also a problem. If referral checks are actually paid to referring firms, brokers and agents, there is no system for tracking the agent to whom the money is due, the address of the transaction or the client who was referred. Surprisingly, this is a problem for small independent firms, large brokerages, and referral firms. In one test firm with over 400 agents, a shotgun email goes out to the entire firm asking all agents if they are missing a referral check to come to the front desk to figure out if the referral check belongs to them. This broken, inefficient process results in lost productivity by managing brokers, accounting and agents.
How the referral process works
Real Estate Consortia solves the referral process by creating a single portal for agents to enter their referral, send to the recipient agent, notify the broker, track the referral and receive settlement.
How the smart contract referral is created
- In 30 seconds the agent signs up for an account with REC.
- The agent enters her broker information.
- The agent enters in the referral recipient agent’s information.
- The agent enters the referral information into the system including the client details and information about the transaction.
- The smart contract creates the blockchain record of the referral.
- All approvals by brokers and agents create new, immutable records in the blockchain.
- The referral contract is shown on each user’s dashboard, allowing for instant visibility.
The life of a referral is tracked from the time it was agreed between the parties until the time the referral fee is paid.
- REC sends out a text message to the recipient agent asking the status of the referral.
- The agent responds with a numerical response corresponding to the status of the referral.
- Once the referral is reported as closed, an email notification goes out to all parties.
- The email directs all parties to the REC web portal where the referring and recipient agents report if the referral has been paid.
- If the referral has not yet been paid, the recipient broker is directed to the REC settlement page to remit referral payment.
- The referring broker then receives notification of the payment and can pay the referring agent on the REC settlement platform.
- The details of the referral contract, the referral amount, the status of the referral and payment are all stored on the blockchain event ledger.
How does everyone get paid?
REC collects the net commission from escrow.
REC earns 5% of the net for
- Referral CRM and lead management
- Legal and compliance (match and append, and going after non-payors)
- Settlement (processing the commissions)
REC disburses the net commissions to the referring and recipient brokers and agents through our online payment system (powered by Stripe). The payment system is bank to bank, thereby reducing fraud and risk to all parties. We also make it super easy for brokers to disburse commissions!
The nerdy tech stuff: RESO standards, property registry, & blockchain standards
The distributed nature of the REC Title Token and the database of properties lends itself to the creation of a registry for escrow lookups of referral payments due to procuring parties. The longer-term goal is to have the REC registry referral lookup become native in the escrow settlement process.
The Real Estate Standards Organization (RESO) spent seven years creating the registry lookup system during which time REC was concurrently creating its own registry and blockchain lookup system. The registry system will adopt the RESO registry system and marry this lookup registry with the REC indexing format. REC will share this lookup system with capital markets and create the same type of registry for international markets. The REC registry lookup portal will allow escrow and title plants to lookup information about property provenance and relationships.
REC implements the RESO blockchain standard for event ledger tracking. The blockchain standard tracks all events that are tied to a property. The information that REC tracks are:
- Referral date
- Referral status
- Referral closing
- Referral payment
What about retiring agents?
REC builds succession planning!
Currently in real estate, a methodology for a retiring agent to transaction a book of business to an up-and-coming agent does not exist. Using the REC referral platform, the retiring REP can enter their client information and track the referral process with the recipient agent.
What’s the long term plan for the REC Title Token?
The REC Title Token will track all relationships and events tied to a parcel of property. This relationship tracking goes far beyond the referral and settlement process. The second phase of the REC Title Token deployment is the consumer facing portal where access to the REC Title Token is granted by the REP to the property owner. The REC Title Token records relationships tied to the status of the property, liens and encumbrances on the property, sales data, property valuation, mortgage rates and nearby refinance rates, revenue potential from Airbnb and other rental metadata. All these property updates will be branded and stewarded by the REP. The branded touch points will provide a meaningful conversation for the REP and the property owner.
The REC Title Token and Dodd Frank
Dodd Frank requires that banks keep asset information in a ledger format. One of the largest bank assets is real estate backed mortgages. The distributed ledger REC Title Token dataset will help facilitate the sharing of property information in compliance with the Dodd Frank Act. The REC Title Token will also incorporate the borrower credit, mortgage payment, property valuation, and tax payment history. REC will share REC Title Token data with capital markets underwriting to evaluate the asset and borrower quality when notes are exchanged in secondary markets.
Use cases for the REC Title Token include moving distressed assets quickly through the REC network of REP. Fiduciaries may be able to move paper more quickly from bank balance sheets to secondary markets and move inventory from distressed owners to new buyers seeking real estate inventory.
How does REC work with international markets?
REC will apply the best practices of indexing and tracking referrals in the US real estate to international markets to facilitate global referrals between real estate professionals. REC will share and leverage these best practices for indexing property records and relationships internationally.
National Association of REALTORS®
REC is part of the NAR Second Century Ventures REACH® class of 2019.
Real Estate Consortia is super honored that REACH is the first investor and a major investor in Real Estate Consortia.
REACH® is the #1 Accelerator in Real Estate. REACH® accelerates promising new technology companies within the real estate industry.
Who’s on the REC team?
REC was formed by REALTORS for REALTORS.
Teresa Grobecker, CEO, is a practicing real estate broker who founded the first online real estate broker in San Francisco. This is her third real estate property technology company. She’s also an equity partner of an investment bank, so she is intimately knowledgeable of capital markets.
Claudio Ceballos Paz, CTO, is a developer who has successful exits to Google. Claudio is blazing the trail in real estate property technology and blockchain and manages teams of developers for his multiple companies.
Real Estate Consortia is comprised of about 20 awesome people who are champions of industry in their respective fields including real estate, lending and technology. We really enjoy working with each other, but moreover, celebrating you, our real estate heroes!
Connect with us!
We always want to know what you love and how we can be better because we are building this for you, so write us at email@example.com.