FORWARD
Below is a short string of experiments inspired by curiosity. In 1966, at 21 years of age, with a new license to sell real estate and having a broker with integrity, drive, and a trusting personality, it was a super-exciting launch to what I now look back on and reflect was a long and exciting career. My broker became my mentor and was an ardent supporter of the National Association of Realtors (NAR), so it was only natural for the enthusiasm for NAR to be imbued in my beliefs. Over the decades, as I learned and observed through experience, that enthusiasm gradually faded into reservations and, over time, into a skeptical or contrarian point of view. Curious, I performed relatively simple tests, or experiments, to validate or discard my observations. This page comprises short stories describing some of the tests. The most recent post is on the top of the page. Please scroll down to read stories posted earlier.
Ahead of Its Time: A 12-Year Experiment in Real Estate Innovation
In 1989, I authored a paper analyzing the residential real estate industry’s structural flaws and resistance to change. This analysis wasn’t merely academic – it became the foundation for a 12-year experiment that would challenge conventional wisdom about real estate brokerage.
The analysis highlighted several critical issues: the industry’s archaic structure, its reliance on personal relationships over professional expertise, and, most importantly, its inability to adapt to changing consumer needs. The statistics were compelling – nearly $20 billion in annual commission income nationally as the median value of a U.S. home in 1990 was $95,500. Yet, operating practices had remained essentially unchanged for a century.
We launched our venture with a clear mission: create a more efficient, professional, and consumer-focused real estate service model. By addressing the structural issues identified in the analysis, we could fundamentally improve the real estate transaction process for all parties involved.
The results were paradoxical. Financially, we failed—the venture lost money. However, our operational success was remarkable. With thousands of transactions, we received only one customer complaint. In the traditional model there were hundreds of complaints. The lack of customer complaints wasn’t just good luck; it validated our service model’s effectiveness. We had proven that a different approach could deliver superior customer satisfaction.
The key to our operational success was our commitment to professionalism and structured processes. Unlike traditional brokerages, which relied heavily on individual agent relationships, we developed systematic approaches to every aspect of the transaction. This methodology ensured consistency and reliability, something the traditional model struggled to deliver.
What we learned was invaluable. First, the industry’s resistance to change was far more entrenched than we anticipated. The MLS system and established broker relationships created formidable barriers to innovation. Second, consumer behavior was more complex than we expected. While our clients loved our transparency and results and appreciated our professional approach, many still felt more comfortable with traditional relationship-based services.
Our most significant realization was about timing. The market wasn’t ready for such a dramatic shift. While our operational model was sound, the industry’s ecosystem—from regulations to referral networks—was built on how the traditional brokerage model worked. With a $95,500 median value, 6% commissions didn’t see the consumer resistance they see with today’s $400,000 plus median price.
Looking back, our experiment was neither a complete success nor a total failure. We proved that a more professional, systematic approach to real estate services was possible and could deliver superior results for consumers. The financial losses, while disappointing, don’t negate the validity of our core insights.
Today, many of our innovations have been recognized by others, independent of any knowledge of our experiment. The rise of technology-enabled real estate services and increasing emphasis on professional standards are reflected in many of our original ideas. While we came along too early, we believe our vision of a more efficient, professional, and cost-effective model will resonate with a far greater number of consumers for a variety of reasons.
Our experience offers a crucial lesson: in attempting to transform an industry, being operationally correct isn’t enough. Timing, market readiness, innovation not available in 1990, and the insights we gained in the experiment should elevate our chance for success in a new venture.
When Three Inspectors Look at One House: An Eye-Opening Experiment
In the competitive world of home inspections, every inspector strives to be seen as “the best.” This drive for differentiation often leads to varying interpretations of industry standards—and sometimes questionable practices. Add to this the unrealistic expectations of buyers wanting used homes in new condition, and you have a recipe for inconsistency.
The home inspection industry itself emerged from a troubling reality: some real estate agents and sellers would deliberately conceal material defects that could impact a property’s value. This practice led to buyer complaints and eventually sparked disclosure legislation across all states. But how consistent were these inspections?
In the mid-1990s, when Green Bay had about a dozen home inspectors, I decided to find out firsthand. Rather than rely on others’ written opinions about how inspectors worked, I designed an experiment using a neglected property in our inventory.
With the owner’s permission and our company covering the costs, we scheduled three separate inspections for the same day—early morning, midday, and late afternoon. Crucially, none of the inspectors knew about the others’ involvement. As the customer, I ordered and received all three reports directly.
The results were fascinating:
The inspection fees were nearly identical across all three services. All inspectors identified the one primary defect in the property—an actual defect is difficult to miss. However, their additional observations varied significantly:
· Between the three reports, there were 25-30 noted items in total
· Only about eight items appeared in all three reports
· Each inspector highlighted approximately eight to ten unique items not mentioned by the others
Most tellingly, while the secondary observations differed, none of these variations met the formal definition of a “defect”—conditions that could:
· Significantly impact future occupants’ health or safety
· Substantially affect the property’s value
· Significantly reduce the property’s expected lifespan and value if left unrepaired
The experiment confirmed that trained home inspectors were reliable regarding defects that meet the definition of a defect. However, their subjective observations—the small details often worry buyers unnecessarily—could vary dramatically. This insight highlighted the importance of focusing on genuine defects rather than minor variations in inspector observations.
The significant value of this experiment is that it demonstrates that when a pre-sale home inspection is conducted by the seller, a home buyer can be confident that there are no other defects in a property. The caveat is that the seller is not acquainted with the home inspector to avoid any suspicion of collusion. As stated in the first paragraph, questionable practices occur.
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The Gamble That Changed Green Bay Real Estate: How Home Inspections Came to Town
In 1985, when home inspections were still viewed with skepticism by most real estate agents, I saw an opportunity that others missed. As a broker in Green Bay, Wisconsin, I had spent years climbing through attics, investigating basements, and pushing through shrubbery to address customer complaints about home conditions. One lesson stood out above all others: water was every home’s worst enemy.
While a few larger cities had already embraced professional home inspection services, Green Bay was late to the game. When Neal Ewing, an engineer-turned-entrepreneur, opened the city’s first home inspection company, he faced an uphill battle. Real estate agents across the nation, including those in our conservative Wisconsin market, viewed inspections as “deal killers” and unnecessary complications.
Business was slow for Ewing’s new venture.
But where others saw obstacles, Neal and I saw potential. Our real estate company was always exploring new ways to stand out in the market—some ideas our agents embraced, others they rejected outright. This time, I had a radical proposal: what if we offered pre-inspections on every new listing, with no upfront cost to the seller?
I invited Neal Ewing to our office to discuss the concept. His engineering background and professional demeanor impressed me, and we struck an innovative deal: his company would inspect each home as soon as it was listed but would only collect payment from the seller when the property sold. If a home didn’t sell, the inspection would be free.
We presented the program to our agents with four key selling points for homeowners:
- Their property would stand out in the market.
- The home would likely sell for more money – added value for the buyer.
- Buyers, typically cautious about condition issues, might make decisions faster.
- If any defects went undetected, the responsibility would fall on the inspector, not the seller, who passed the responsibility along to a trained expert.
Initially, only a few agents tried the program. But as success stories began to circulate, more joined in. Our market share grew, and Ewing’s business flourished. Within six months, a second inspection company opened in Green Bay—the ultimate validation of our experiment.
The strategy had transformed a service that agents once resisted into a powerful competitive advantage. What began as a creative solution to agents’ reluctance became a win for everyone involved: sellers gained confidence, buyers received transparency, our agents won more listings, and our company increased its market share. Sometimes, the best way to overcome resistance isn’t to fight it—it’s to remove the risk entirely.
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The $75,000 Question: A Tale of Three Appraisers
What happens when three professional appraisers evaluate the same house on the same day? As a real estate agent in the early 1970s, I discovered the answer could be surprisingly complex—and expensive.
I was tasked with selling a unique property owned by a prominent local physician. The house was a challenge from the start: a large, contemporary two-story home where eight children had been raised. While well-loved, it was also well-worn, complete with original, threadbare carpeting throughout. The property sat on a short street of high-end homes in a neighborhood where most houses were notably less valuable.
The home presented a perfect storm of pricing challenges. In our conservative Midwest community, contemporary design was already a tough sell. Add to that a property that was both overbuilt for its neighborhood and in poor condition, and I faced a genuine pricing puzzle. In my years of real estate experience, I’d encountered properties with one of these issues—but never all three at once.
Having previously studied appraisal techniques under James A. Graaskamp, chairman of the University of Wisconsin’s real estate department, I understood the importance of applying logic to property valuation. But this house defied conventional analysis. There were no comparable sales to reference, and I needed a solid foundation for discussions with both the seller and potential buyers.
That’s when I had an unusual idea. I knew from my training that an appraisal is only valid for the specific day it’s performed—after all, a house could burn down overnight or be affected by other value-changing events. So why not schedule three separate appraisers to evaluate the property on the same day? I arranged for early morning, mid-day, and late afternoon appointments, being careful not to inform the appraisers about each other to prevent any potential influence on their assessments.
The results were staggering. Three well-respected appraisers from our real estate and lending communities came back with vastly different valuations: $100,000, $150,000, and $175,000. The $75,000 spread between the highest and lowest appraisals was shocking, though perhaps understandable given the property’s unique characteristics and the lack of comparable sales. In the end, the home sold for approximately $130,000—almost exactly the average of the three appraisals.
The thorough approach impressed the homeowners and provided valuable insights for negotiations. More importantly, it taught me an unforgettable lesson about the complexities and subjectivity inherent in real estate valuation, even among seasoned professionals.
This same experiment would produce the same results if it were replicated today. The reason it hasn’t changed is because the rules that appraisers follow today were established decades ago. If we started to create rules today from scratch, the scientific theory would remain the centerpiece with specific modifications.
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