November 21, 1997

Boeing, CB-Bain sign affinity marketing deal

By TOM KELLY
The Real Estate Advisor

The partnering of huge corporations with real estate companies continues to pick up steam. Bill Riss, the president of Bellevue-based Coldwell Banker Bain recently signed an exclusive affinity market ing agreement with The Boeing Co., giving his 12-office company an exclusive marketing presence with the Puget Sound region's biggest employer. In return, Coldwell Banker Bain will reduce its sales commissions to Boeing employees which could amount to a 30 percent discount.

Riss was reluctant to state exactly what the discounts could be. He did say that not all real estate-related services were the same, referring to the controversial Costco relationship with John L. Scott which calls for a 35 percent rebate on sales commissions to the consumer.

"What does the consumer perceive?" Riss asked. "If the consumer perceives that all real estate services are the same, then the only thing left to negotiate is price. We believe the services we bring have value.

"In fact, we are putting our money where our mouth is and guaranteeing home sellers satisfaction. If they are not satisfied with the services we give them, we will refund them their money."

The Boeing-Coldwell Banker Bain affiliation gives Riss' company the right to explain and detail its services on Boeing's Internet Homepage. The agreement does not extend to other Coldwell Banker franchises nor does it replace Boeing's relocation contracts with other real estate firms.

Recent records indicate that Boeing employes 157,384 people -- a six-year high -- and the aerospace giant continues to hire at a brisk pace. Not only would these people qualify for the Coldwell Banker Bain deal but so would the thousands of retired Boeing workers. Membership in the Boeing Employee Credit Union does not necessarily meet the guidelines for discounts in real estate services.

"The qualified retired people still have an employee number," Riss said. "You must have an employee number to participate in the new program we have set up."

In an earlier column, I addressed how John L. Scott had entered into an exclusive referral agreement with Costco, the international wholesale warehouse chain based in Issaquah. The intent was to save consumers cash at closing while providing real estate agents with numerous new potential customers.

In return, Scott agents take a reduced commission -- of approximately 35 percent -- for the exclusive right to service the huge Costco customer base. There are 15 million Costco customers nationwide -- 1.2 million in this state alone.

"Affinity" marketing is the grouping of companies to present products at one time. I have often used an example of the postcard you receive from a real estate agent explaining services. It usually contains the logo of another industry service -- perhaps a title company and an escrow firm. Thus, the three have formed an "affinity" group to market and secure business.

Riss, who owned and operated William A. Bain & Associates before taking on the Coldwell Banker label in 1993, now has 450 agents doing approximately $1.3 billion in sales, ranking the company in the top five for Puget Sound area real estate companies.

Some of that $1.3 billion comes from Coldwell Banker Bain agents, like Elinor Smith, who specializes in the resale of Street of Dreams homes, who have capitalized on the West Bellevue-Mercer Island market where the median closing price of a house last month topped $400,000.

And, with the number of Boeing, Microsoft and other corporate managers relocating to the area, don't look for that median figure to go down any time soon. In fact, the demand for higher-end new homes is so strong that the 1998 Street of Dreams near Fall City has been canceled because builders are simply too busy serving their custom customers.

As builders scurry -- sometimes even relocate -- to tap in to new-home customers, real estate agents and brokers also have been seeking new ways to capture business. For example, last week at the National Association of Realtors annual convention in New Orleans, Alex Perriello, chief executive officer of Coldwell Banker, announced the company would cut from six weeks to two the time it takes to close a home sale.

"We've been doing that for some time," Riss said. "In many cases, we can get loan approval in 20 minutes. The most time it would take would be 24 hours. There's really no reason why it should take months to buy a home."

Several real estate companies have been capable -- and efficient -- at doing quick closings via electronic documentation and the partnering of mortgage, title and escrow services to expedite the home sale process. John L. Scott and Windermere have definitely streamlined the process so that customers can move in as soon as possible. The key component for Coldwell Banker has been PHH Mortgage, the big national lender under the huge umbrella of HFS, the conglomerate that now governs not only Coldwell Banker but also Century 21 and ERA.

"Being able to call PHH Mortgage and get a commitment has made a huge difference for us," Riss said. "It is one of the major reasons we are doing four times the business we did before we signed on.

"The real estate business is changing. I'm not sure everyone quite gets that yet."

Previous columns:

• Home-equity: Should you bet the roof?, 11-07-1997
• Builder sweetens Costco dealer for agents, 10-31-1997
• Should you increase your title insurance coverage?, 10-24-1997
• As interest rates dip, refinancing options abound, 10-10-1997
• Feds clean up Fair Credit Reporting Act, 10-03-1997
• JLS being 'proactive' with Costco deal, 09-26-1997
• Home businesses are changing our homes, 09-19-1997
• Area housing market: how hot is it?, 09-12-1997