Major retail chains are entering real estate brokerage. One national retail chain which has been in the real estate business for two years has completed its market testing in six areas.

These are the results:

1. The return on an equity invested by the company was the most profitable of all its marketing divisions, over 80% yield.

2. Selling costs to buyers were reduced to 2% or less, including sales commissions. Selling price to buyers was below real estate brokers' prices.

3. The homeowners could dispose of their property for 'equity in' within two to three hours. The computer on comparables established values within 1/4 of I % of appraisal.

4. The seller received his value in equity in the form of a pass book, similar to a savings account book and could use this credit to buy another home within the next 90 to 120 days. If the company had not disposed of the owner's home in that time, the sellers account would be adjusted as to interest and amortization costs and the equity balance paid the seller. Less than 10% of all homes purchased failed to sell in the 90 day cycle.

5. The company learned:

a. Most homes, when upgraded and repaired, would sell within 30 to 60 days.

b. Buyers would spend up to $3,000 in home furnishings from them after buying a home.

c. The retailer's instant financing through its insurance division made closing to new buyers easy and simple.

6. The usual costs of credit report, survey, title search and examination, title insurance, attorney fees, organization fees, application fees, preparation of documentation, closing fees, recording fees, transfer of taxes, escrow fees, etc. could all be reduced to one simple low cost transaction. The salesmen were paid salaries and incentive fees. The total cost of buying and selling was reduced to less than 2 % of the fair market value.

What were the returns to the marketing firm: Inventory, 90 days or more, no cash invested. Improvements or upgrading costs, $1,500 to $3,000 a house, of which only 40% of this amount in cash was required, as all material was purchased on a 90 day anticipation discount. Labor was the only immediate outlay. Average selling equity in a home was $2,500 to $3,000. Only 10% of all homes purchased were held over 90 days. The usual company markup was about 10 % above costs of which 2% went for closing and selling costs; profit on upgrading materials was 20%; plus the some profit margins on household efforts purchased by the buyer. The company subsidiaries got the insurance and mortgage and hod a happy customer living in a new upgraded home. The customers were bound to the company through monthly mortgage payments and credit for 20 years. The company's return on cash equity invested for a transaction was 80% or better, including all overhead prorated costs.

The story is so good, other large chains are looking into it. Look for mass market of homes by the chains. It is here; it is a proven success. It will be everywhere by 1973.