I have to be very careful when writing this article. My last, not necessarily flattering, comments on McMakler were not particularly appreciated by the company's CEO and his "General Council" in January 2019, instead we received a request to delete the article. That was how it came about: The newsletter was already published in April 2018 and was already on the net for a quarter of a year before a reaction took place. Unfortunately, McMakler had changed its business model in the meantime, so that had changed a lot on the facts. We have therefore taken the article off the net without comment, because who wants to deal with a company in court, that this year almost 50 has collected millions of investment funds.
Hybrid brokers
McMakler calls itself - like its biggest competitor Homeday - a so-called hybrid broker. What is a Hybrid Broker? The CEO of McMakler describes it as follows: “As a hybrid broker, we bring the best of different worlds together - we work as personally as a traditional broker, but with state-of-the-art technology and more efficient processes. This combination enables us to offer high quality brokerage services as an all-round service from a single source ”(press portal, 23.05.2017). “Efficiency”, “processes”, “ultra-modern”, that sounds good, as we as stationary brokers work a bit old-fashioned. When we sell a property, we have an artist at our side, we write exposés on good old Gabriele, customer data is on index cards, we send out exposés by post and we have been doing advertising in the General-Anzeiger for a hundred years. Seriously. What is being trumpeted by representatives of the hybrid brokerage guild has long been standard, at least among well-established brokerage companies. But there are also certain differences. A building contractor recently asked us that there was no information about the building potential of the area in a property advertisement from Homeday, an absurdity! When asked by e-mail, he received the message “Unfortunately we are currently unable to respond individually to all inquiries. Our detailed real estate exposé often already answers the majority of the questions ”. But it didn't because it was identical to the ad text. Three telephone attempts to get more information ended in endless queues in a call center. He has not received the information until today.
And McMakler even has a "Head of Exposé", this lady seems to control hosts of Exposé-Schreiber, but of course their information from second hand, namely by information from the brokers on site. And here comes the "traditional broker" into play. A search by homeday "brokers" revealed that most of them have no relevant training. How such a person, for example, evaluate existing damage and defects of a property or to classify information from a construction file, is hard to understand.
If Homeday works with freelance brokers, McMakler's men and women are now permanently employed. By, according to own data, three hundred brokers and two hundred further coworkers, there comes together a pretty small amount of personnel costs, but we come to that later. In addition to the Wischiwaschi from "process-controlled and traditional" interested above all the business model of hybrid brokers.
Dumping as a business model
In NRW and other federal states - and thus in 75% of the nationwide market - the commission sharing applies between seller and buyer. The net commission of 3% in each case is not regulated by law, but is referred to as "local". The lack of a legal regulation is the gateway for hybrid brokers by foregoing the seller's commission. But not only they, also stationary brokers, usually lone fighters, try to get sales orders in this way. The hybrid startups, however, are getting the message across with marketing campaigns worth millions. With the recently collected 50 million euros at McMakler and around 20 million euros at Homeday, a lot can be set up in terms of advertising. At prime time, when the slightly graying target group is sitting in front of the TV, people rant about the best brokers and about commission pains at the seller that Homeday and McMakler are supposed to be able to alleviate. These campaigns run into the millions and of course that cannot work according to traditional business management principles, so it does not help McMakler that in tense markets like here in Bonn, buyers are asked to pay one percent more commission. It is therefore not surprising that the shortfall at Homeday at the end of 2018 was 5,8 million euros and at McMaler 11,6 million euros. But as a hip startup, such numbers are of only rudimentary interest, as investors foot the bill. At some point they want to see their share of the investment risk turned into silver, because the value of a company - as we see for example with Uber and Tesla - does not depend on the balance sheet profit, but on the forecast company value. Nothing can go wrong.
As soon as the last words have been written, something went wrong. The federal cabinet decided on an orderer principle and thus a nationwide commission sharing for property sales, which is expected to apply from summer 2020. In practice this means that if the seller does not pay a commission, the buyer does not have to pay either. That would be really stupid for the hybrid broker, since it would collapse his core advertising message and with it his entire business model.
Whether it really comes to that, is not yet to say with certainty at the present time. Maybe the coalition will break, maybe next spring we'll have a Red-Red-Green government (in which case both hybrid and stationary brokers can lock their doors). I think I read that the "founders" of McMakler had a plan B in their pocket for the worst case. Whether this, whatever it may be, can keep investors in line until next summer, remains to be seen.
Bernd Viebach