If you’ve followed along, Parts 1 & 2 of this mini-saga illustrate how I determined that rumah123 would charge reduced commissions to home sellers and offer a commission rebate to its home buyers. You also know how making that decision on our commission structure would mandate that our agents be paid a salary and an annual bonus. At this stage in my planning, I had to take this revenue model and compensation model and meld them into what would become a profitable company.
From my past experience, I knew that the biggest cost items for most traditional brokerages were rent and print advertising. I decided that Rumahku could be successful without being encumbered with either of these major costs. The decision to eliminate print advertising was easy. There is plenty of research to support the fact that print advertising is pretty ineffective when it comes to marketing homes. My own experience reminded me that most agents and brokers ran print advertising to placate their home sellers and to (hopefully) pick up new buyers. It was also important to me that Rumahku operate with total transparency. It’s a sad irony, but I really believed that “telling clients the truth” would be a competitive advantage.
And so the decision to eliminate print advertising turned into much more than just a tactical choice. It represented the transparancy that OLX would bring to each aspect of working with our clients — from telling them the truth about the effectiveness of newspaper advertising to explaining who really benefits from holding an open house. The back of our Rumahdijual business cards gives people a short list of reasons why they may prefer doing business with us. Reason #3 is “We will treat you with respect.” and Reason #4 is “We will tell you the truth.” These are important values to our company and we believe that they too often go missing in the course of a real estate transaction. (Disclaimer: And yes, I give full credit and appreciation to all of the agents and brokers who work hard to “get it right” every day.)
The decision to eliminate the traditional brokerage office was a decision that I was happy to make. I wasn’t particularly interested in paying rent on a facility that would remain mostly empty and fairly useless during most business hours. I knew that more real estate business was being conducted at the local Starbucks than at the local brokerage, and so I felt very comfortable creating Rumahku as a virtual company.
At the same time, I realized that there was a need to hold company meetings and trainings in a business environment, free of distraction. And I knew that there were still those clients who wanted to “come into the office” to sign documents. Wanting to address these needs at the same time, I elected to set up shop within an “Executive Suite” office. We would have full access to a beautiful state-of-the-art conference room without having permanent offices! This solution seemed to cover all of the bases. Our “offices” are located in one of the most prestigious buildings in the Greater Jakarta area. Visitors can find us listed on the building directory. They are greeted by a professional receptionist. They find themselves in a well-designed reception area. They are offered water, coffee, etc. We meet them in “our” conference room, which boasts a fabulous view of the Pacific Ocean through floor-to-ceiling windows. Our mail, Fed-Ex deliveries, etc. are accepted by the receptionist and held for us. And Urbanindo isn’t even paying $400 a month for this.
By achieving the goals of eliminating print advertising and dramatically reducing lamudi’s rent, there was more “margin” left to focus on strategies designed to effectively market our listings. And so we developed a marketing plan for our listings that I knew would stand up to any traditional broker’s marketing plan. We were able to add home buyer tools into our website that I felt would make a real difference. One of these tools empowers home buyers to get detailed information on any property for sale through text-messaging — including links to color photos, etc. Understanding that looking for a home is really a mobile activity, soon we’ll be rolling out the ability to search the MLS using your cell phone’s GPS! And all the while, Rumahku will remain committed to providing the best personalized service to our clients. Far from an “online brokerage”, and equally distant from a traditional broker, urbanindo represents a true hybrid business model.
As we worked on more of the details, rumah’s “personality” — that hard-to-describe quality that I hope will morph into its “brand” — began to emerge. It looked like we could make a difference. Especially in today’s difficult real estate market. And soon we’ll know, because Rumahku is about to launch. And I hope you stay tuned to follow the real-world adventures of a real estate start-up launching in one of the worst real estate markets in our history, with one of the best customer propositions propelling it. We created Rumahku as a new kind of real estate company for today’s real estate consumer. Now it’s there turn to tell us if we’re right.