Terrace 24 Realty was founded in 2013 by Mike Minihan who, after spending more than 10 years in the traditional real estate business, was so fed up with the way the industry worked that he began putting plans in motion to leave the business all together to explore other opportunities. There was just one problem. He could not stop asking himself one question…”What if I could offer a real alternative to the way this business works?” As it turns out, that question was too powerful for Mike to let it go unanswered. Terrace 24 became his answer to the question.
What’s so wrong with the Real Estate Business?
Mike was constantly surprised at the lack of professionalism that was tolerated among residential real estate agents. There are countless reasons as to why this exists, starting with embarrassingly low barriers of entry to the business, but even more troubling to Mike was how many intelligent and successful consumers were trusting their family’s most important financial investment to such incompetent people. There are plenty of exceptional and professional agents out there, the problem is that the ratio of incompetents to professionals is crazy.
Lack of Transparency: The model is designed to confuse consumers.
For decades, Agents have been convincing Sellers that selling a house is some sort of magical process. They could “explain to you how they would sell your house, but its too complicated and you don’t need to know how, you just pay for results.” Entire industries have developed around how to sell this proposition successfully to consumers over the years. Mike sold it for years, but the writing is on the wall. People today demand transparency from the people they pay thousands of dollars to. They want to understand what they are getting for their money and they are constantly weighing what they can do themselves versus what they need to pay someone else to do. The commission model does not offer choices for consumers and does not break down exactly what the agent is agreeing to do, and how much the customer is being charged for that service. There is good reason for this…it is because it doesn’t answer a fundamental question: “What do you do differently to sell my house that you don’t do to sell a house half the price of mine?” The answer is nothing, but you will pay double for the exact same services.
Pricing and Value are Disconnected
It’s easy to sell a service that you believe in and that you would buy yourself. Likewise, its hard to sell something you wouldn’t buy yourself. After a decade in the industry and knowing exactly what it takes to sell a house, Mike knew what the difference was between the “fluff” and what it really takes to sell a house. Mike could not justify his customer’s paying full commission like this. After all if he were their shoes he wouldn’t pay full commission. The bottom line is that an agent selling a house worth $200,000 does the exact same thing to sell a house that is worth $800,000. Yet, for some reason, they make four times as much for the latter. It doesn’t make sense.
Consumers don’t seem to care
Mike just couldn’t see how this type of pricing that was not connected to the actual value of the service itself was acceptable to an increasingly educated and intelligent consumer. The reason of course is not that consumers don’t care about their money, it’s that there really aren’t any other good alternatives. Sure, there are straight discount models that will put your listing in the MLS for a small flat fee, but they are notorious for disappearing right when seller’s need good advice and help to get their home sold. Because the reality is; a consumer still needs help on certain pieces of the real estate deal. They need expert advice on valuation and contract negotiation to closing. Terrace 24 offers this “middle ground” and gives consumers exactly the solution they need.
The goal of Terrace 24 is simple:
- Simplify the selling process for consumers by creating total transparency into how the business works and how much they are being charged for their services.
- Give the consumer options and include them in the process: Once they know what each available service is and get the honest scoop on how effective it is, the consumer gets to decide which services are for them, and which they can do without.
- Value Pricing: Each service has its own flat price. The listing agent does not charge a commission so they are not paid based on the value of a house, just for the value of the service itself.
- Professionalism: In short, this means every customer has a team of specialists working for them, not just one generalist agent. These are salaried, full time employees of Terrace 24 so they are not incentivized to push customers into deals that aren’t in their best interest.
Timing is everything with a new business. The world has changed a lot in the last 100 years. Major innovations have taken place in practically every industry in that time, yet the real estate business has not seen an innovation in all this time. That coupled with the fact that US real estate is just now emerging from the most devastating real estate crisis the business has ever seen makes it seem like there is no better time for some fundamental changes in how the real estate business works. Big changes are never popular, especially in businesses where the people working in it are still making lots of money doing it the old way, but Terrace 24’s hypothesis is that if they can get enough consumers asking questions about business as usual, and show how value can be directly attached to price, that the consumer will drive that change and find a place for the model that Terrace 24 has developed.