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The Nation's Housing

Total Package Marketing Hits Home


WASHINGTON — One of the most powerful trends underway in the home real estate market nationwide--intricate "cross-selling" tie-ins among brokerage, mortgage, insurance and other service providers--has moved to a new level. Call it the total package approach.

A major issuer of Visa and MasterCard credit cards has just put together a one-stop shopping network of cooperating companies across the country that claims to save consumers hard cash at every phase of the home purchase or sale process. The approach includes:

* Six-month advance loan commitments of up to $1 million that enable home shoppers to negotiate with sellers or builders as "cash buyers." Closings can take place in 15 or fewer days after signing purchase contracts. If the settlement occurs later than the promised date, you get one-eighth percent off your mortgage rate.

* Rebates off your real estate brokerage fees of up to $1,200, provided you use recommended realty agents who are part of the cross-selling network.

* Discounts off products and services offered by participating moving van companies, hardware stores, home cleaning companies, appliance manufacturers, household insurers, storage companies, truck rental firms and home decorators.

* Free relocation services, like data on neighborhood school quality, if you're moving to a new area.

The new total package concept was put together by First USA Inc., a Texas-based credit card issuer with 16.3 million Visa and MasterCard customers across the country.

First USA plans to market it to its existing credit card customer base as well as to millions of consumers with no relationship with the firm.

To participate in the program, consumers will be asked to apply for "home purchase cards." For applicants who qualify after a 24-hour credit check, the plastic card will function as a guaranteed loan pre-approval for a maximum mortgage amount, good for six months. Holders of the card automatically qualify for all other tie-in services and discounts.

No card holder will be required to use any service or company that they don't want, according to a First USA spokesman.

Although many real estate brokerage and mortgage companies already offer their customers tie-in services from affiliated companies, none has attempted to assemble what is essentially a national cross-selling alliance operational in every state.

Among the participants in the network, according to First USA, are True Value hardware, Black & Decker, GE, Merry Maids, Century 21 real estate and several large national moving van companies.

Key to the First USA program is its mortgage partner, PHH Mortgage Services Inc., based in Mount Laurel, N.J. Ranked 13th nationally in loan origination volume in 1996, according to the newsletter Inside Mortgage Finance, PHH has long been one of the dominant mortgage providers in the corporate relocation field.

Even more significant, PHH has just been acquired by franchise mega-investor HFS Inc., whichalso owns three of the largest realty brokerage franchises: Century 21, Coldwell Banker and ERA. HFS also owns the Avis rental car company and has major stakes in Days Inn, Ramada, Super 8 and Knights Inn hotel franchises.

A spokesman for PHH Mortgage Services, Robert Andwood, confirmed that local agents from the three HFS-owned realty brokerage companies "will be significant referral points" in the First USA network.

Independent brokers who have worked with PHH's relocation services in the past may also get referrals.

The pressure to direct customers to brokers who are part of the HFS corporate family is inevitable, Andwood conceded.

"We will take advantage of all the cross-selling opportunities that we can," he said.

The First USA plan is especially significant because it illustrates dramatically where the home real estate industry is headed in marketing, along with potential benefits--and problems--for consumers.

Cross-selling networks and one-stop shopping have the potential to save home buyers money by lowering the marketing costs for companies participating in a network.

But do they pass along those savings to the consumer?

Do they deliver better quality services than consumers could get by evaluating nonaffiliated service providers?

And do they subtly undermine the consumer protection and full disclosure thrusts of federal statutes such as the Real Estate Settlement Procedures Act, which bans referral fees in home mortgage settlements?

PHH's Andwood insists the First USA network "fully complies" with all federal laws but declined to discuss the fee arrangements between his company and First USA.

First USA spokesman David Webster said the savings to the home buyer in his firm's plan "are listed for anybody to see." Moreover, the program is voluntary at every stage, he said.

But the fact remains: You won't get a rebate from your realty agent unless you use one recommended by the network. And, without shopping on your own, you have no assurance that you couldn't negotiate a lower commission, or get better service, by using an independent agent with no cross-selling connection.


Distributed by the Washington Post Writers Group.

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