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The Economist asks “Why is it so expensive to buy or sell a house in America?”

This is in an article titled “The great realtor rip-off”.

The comparison to estate agents in the UK is especially interesting. They make half the commission and close 3 to 4x transactions.

The article mentions NAR by name and only refers to MLS in passing as ex-cartels:

The business used to operate like a series of local cartels. In a typical area, a handful of brokers controlled a shared database of available homes, and limited their cheaper rivals’ access to those listings. In 2008 in the United States and 2010 in Canada, regulators struck deals with realtors to open up these databases. Yet since then the average commission has actually risen, from 5.0% in 2005 to 5.4% in 2011, according to REAL Trends, a research firm.

“Used to”, huh?

Its a great read as it sums up the state of the industry succinctly and in no uncertain terms, but it could have done a better job of laying the blame at the feet of the MLS concept itself. If there were no MLS/NAR creating $8bn of “economic waste”, it seems to me Bloodhounds would be the brokers and agents left standing, as is apparently the case in UK.
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    Boston Globe story on Social Media and Real Estate

    With Jeff’s post below still fresh in my mind, I read a story in the  Boston Globe Real Estate section over the weekend that attempted to sort of let buyers and sellers know that brokers and agents are adapting to social media:

    Although it’s hard for Bourgeois to quantify just how many sales have come through social media, he believes that anecdotally it’s working.

    If you can’t measure it, you can’t manage it. Anecdotal ROI is worth about as much as having Mickey Mouse and Bugs Bunny create an account to use your IDX search.

    “If everyone is hanging out at the donut shop, that’s where you would go to get business. That’s where people would meet in the old days,’’ said Haley Brooks.

    This would be a typical real estate section non-article if it weren’t for Brook’s observation about the donut shop. She is right: Facebook, or a blog via Google, is where people who already know you or about you go to find you these days as opposed to the Lion’s Club,  a little league game or, yes, the donut shop.

    This is born out by  NAR’s 2010 Survey of Buyers and Sellers (click on the image to make it big enough to read):

    48% of the people who bought in 2010 found their agent via a personal referral. “Internet Web sites” (as opposed to what other kind? Print Web sites?) is a distant 2nd with 10%, and I’m guessing that refers to traditional listing syndication and broker sites, not blogs or Facebook.

    Still, 10% is 10%. Clearly, you want to make sure that whatever you are doing on the Web to cement 50% of the leads from referrals works for the 10% who find you by accident or design. The bigger the operation, the more important picking off that 10% becomes, so the broker or the franchise should focus on what it takes to compete for people who are shopping without an agent in mind, and agents should be working to make sure they are the agent that people have in mind no matter what site they happen to use.

    As is often the case with these NAR reports, they tease you with generalities but don’t reveal specifics that would actually tell us something. In this case, that whopping 48% begs two questions:

    1. How did buyers contact agents who were referred by a friend, neighbor, or relative?
    2. Did buyers research agents referred by a friend, neighbor or relative before contacting them? If so, how?

    As Donald Rumsfeld so succinctly put it, we don’t know what we don’t know, but what I suspect is that the highest and best use of real estate blogs and a social media is to create a good first impression that cements a lead that was originally generated by a referral.

    Of course, that is not how the social media carnival barkers sell it. The emphasis is  on using social media to generate *new business*, which is the virtual equivalent of going to the donut shop to randomly hand out business cards to people who have never heard of you, and probably about as effective.

    The skills and the amount of hard work it takes to build up a repuation that generates real estate leads haven’t changed in 50 years. The difference is that today’s agents can take advantage of Internet publishing to start putting their best foot forward before they meet a prospective buyer or seller in person. That’s it. WordPress and Facebook are not panaceas or silver bullets, they are tools that, in skilled hands, extend an agent’s ability to sell themselves as opposed to creating it.

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    Google Thinks Your IDX Site Sucks

    There are plenty of places to go if this is your first time hearing about “Panda”, but the general idea is that Google has set out to target what it considers to be “low quality” content of the sort generally propagated by link farms, scrapers, and the eHows of the Web.

    Any time Google makes a major change to their algorithm there are winners and losers, and you can count on the losers to raise a fuss about Google goring their ox. This time, Google has come back and said, in effect, “If you don’t publish crap you have nothing to worry about”.

    The problem for those of us who currently rely on IDX to power listing search on broker and agent Web sites is that IDX content is, by Google’s definition, crap — and the crap has come home to roost: Some of our sites are down 30% since Panda hit.

    This, finally, should force some brokers to address the issue of content quality and strategy, because the alternative is to pay through the nose for inquiries that Google would send, for free, if brokers understood what Google wants.

    Here are some of the questions Google suggests site owners ask themselves about their content. I’ve picked a few that speak directly to real estate listings and IDX (the whole list is here). Every place that Google had the words “article”, “content”, or “page” I’ve inserted the real estate specific terminology {in brackets}:

    • Does the {listing detail page} provide original content or information, original reporting, original research, or original analysis?
      Google is focused on sending its users to the creators of original content, because that is generally the best user experience. Since the listing agent is the only one who actually knows anything about the listing, that is doubly true for real estate.The irony is that all listing content — the text, the pictures, the video — is original content right up until the moment it goes into IDX and listing syndication. As soon as that happens, Google cannot distinguish the listing creator’s domain from the rest, and you have just given up the value of being the creator, which is basically to guarantee yourself #1 position in a Google search for your listing.
    • Does the {listing detail page} provide substantial value when compared to other {listing detail pages} in search results?
      Nope, everyone is using the exact same content.
    • How much quality control is done on {the listing} content?
      To paraphrase a former president, that depends on what your definition of “quality control” is.
    • Was the {the listing} edited well, or does it appear sloppy or hastily produced?
      90% of the time, there is no editing, no attempt to follow basic rules of grammar, and correct spelling is optional, especially if an abbreviation or acronym (that no homebuyer would search for) can be used instead of a real word.
    • Are the {listing detail pages} produced with great care and attention to detail vs. less attention to detail?
      As it might be put by an agent according to the rule of thumb above, ROTFLMAO.
    • Does this {listing} provide a complete or comprehensive description of the {property}?
      How many IDX listings for a $250,000 home have you seen that have more content than the product page for a $25 book on Amazon?
    • Does this {listing} contain insightful analysis or interesting information that is beyond obvious?
      You mean beyond filling out the MLS form? God forbid.
    • Would you expect to see this {listing} in a printed magazine, encyclopedia or book?
      Yes, The Darwin Awards.
    • Are the {listings} short, unsubstantial, or otherwise lacking in helpful specifics?
      I would argue that listing pages loaded with facts like “Garage Y/N=Y” but lacking any context fit this description.
    • Are the {listings} mass-produced…or spread across a large network of sites, so that individual pages or sites don’t get as much attention or care?
      Yup.

    Let’s put this in perspective: Most people move locally. The median distance people move is 12 miles after living in the same place for a median term of 9 years (sellers of single family, detached homes in 2010 according to NAR). Therefore, most people know what streets, neighborhoods, developments, and very often, which specific house they are interested in.

    That means real estate is, and always will be, fundamentally a search-driven business.

    Most users naturally know the keywords that describe the properties they might want to see and have little patience for search forms that want them to pick towns out of a drop down list, what property type they want, and how many bathrooms.

    The easiest, most direct way to get the listing information they want is to use the same search engine they use for everything else, so that is what they do.

    Google controls somewhere between 65 and 70% of what comScore calls “explicit core searches”, ergo, most real estate searches start on Google.

    When those homebuyers google a listing, Google (or Yahoo, or Bing) returns a list of domains that often does not include the listing broker, but they have the listing broker’s content and are most likely associating it with another broker’s agent unless they are getting paid not to.

    The solution is simple in theory and I’ve advocated it before: Send basic, low-quality content to IDX and syndication and create rich, high quality content that you reserve for your own domain or a domain that is specific to the listing.

    The problem is getting agents to execute that theory: I’ve lost a lot of them with the “create rich, high quality content” part because that sounds like work (because it is).

    But maybe now that Google is systematically pushing the last of the local broker domains off of Page 1 while national domains like Realtor.com and Century21.com move up, brokers will finally wake up and either demand quality content or pay someone to create it.

    Or they can just give up and pay to get the same inquires that Google would send them, for free, from the sites that have the heft (which now seems to mean branding) that enables them to use the same old low quality crap listing content to beat them in Google — and keep those MLS, syndicator and franchise bills coming.

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    Nice going, unnamed Idaho agent

    “Sessions said they trusted their real estate agent, who, she claimed, told them the snake problem was “made up” by the previous owners so that they could leave their mortgage behind. He assured them that every precaution was made to keep the snakes away, she said.

    The Sessions’ signed paperwork acknowledging the stories about snakes when they bought the house, based upon the assurances the stories were false, The Associated Press reported.”

    http://abcnews.go.com/US/snake-house-family-home-idaho-turns-satans-lair/story?id=13851600&fb_ref=abc-fb-recs

     

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    Dispatch from the NAR IDX Rule committee Meeting

    I’m sitting in the room @ NAR Mid-Year listening to the IDX Rules Committee trying to get its collective head around the use of IDX data on franchisor web sites, social media, and whether or not price change and days on market can be shown on IDX sites.

    Its kinda like watching fleas on a dog debating whether not the dog should go swimming as if they had a say in the matter. Don’t these people ever learn? It was precisely by trying to control listings on the Web that they created an environment that was conducive to the growth of Trulia and Zillow and thus realized what they ostensibly fear — loss of control over the distribution of listings on Web sites and and the creation of an incentive for consumers to look for information they want on third party sites.

    The Internet was designed to route around obstacles much bigger than a rules committee — like the nuclear obliteration of a network hub. Take away the ability to use IDX to sling listings to Facebook or the ability of brokers to say how long a listing has been on the market and what the price changes were and another channel will open up to provide that very information. It is the nature of the network.

    For the record, the committee decided not to decide anything w/r/t social media, unanimously voted to keep a rule that prevents DOM and price changes from appearing on IDX sites, and — saving the most interesting for last — voted to suspend the rule they adopted last fall that enabled franchisors to use IDX on franchise domains.

    Now these recommendations go before the Directors for a vote on Saturday which, as we learned in the “scraping” controversy, does not necessarily mean they will be followed. It will be interesting to see if the Directors decide to listen to their own subject matter “experts” (and I use that term very, very loosely) or choose to carry the franchisors water on their own.

    On a side note, it was a lot of fun to sit here and re-read Greg’s recent posts about NAR while sitting in a NAR committee forum…

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    Has anyone else noticed…?

    …a certain theme in Century 21′s latest attempt to make consumers care about a real estate brand?

    Considering that the average age of a real estate agent is like 73, the women in these ads should look like this:

    Blanche is even wearing a gold jacket!

    Memo to Bev Thorne, CMO of C21: If you are going to cougar route, go full cougar. Why beat around the bush? :

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    Real estate is a crazy buffet

    As the only member of the blogroll who regularly attends conferences like NAR and Inman Connect — or perhaps as the only one who is willing to admit it — it is my special privilege to glean some nugget from these events that I think will be of interest to the BHB readership.

    As I was pondering the take away from this year’s Inman Connect in NYC — was it something the excellent David Carr said, or was it watching the 5 Realogy CEO’s get up on stage to talk for half an hour while saying precisely nothing?  — it turns out I got scooped by Bill Geist from CBS Sunday Morning.

    Geist, unlike myself, got tickets to the Top 100 dinner…

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    The first one is free

    Hi John,
    I am a realtor in El Paso TX.   i need a slogan that is new to our area for an inside cover of a local journal.  got any ideas? It will accompany my photo and the Coldwell banker logo.   I read that you are a contributor to Real estate slogan and marketing.   Please advise.  thank you, <name redacted>

    Hi <name redacted>,

    How about: “Your home lasso in El Paso”?

    your Welcome,

    John

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    Real Estate Agent Drives around So Cal with Corpse for 10 months

    From the Daily Beast:

    For 10 months, (a real estate agent) drove around with a corpse in her car. She never contacted police or tried to find the dead person’s relatives. Instead, as the body began to decompose, she spread baking soda on the floorboards to mask the smell.

    Leaving aside for a second the pain this must be causing the dead woman’s family, as well as the real estate agent’s likely clinical insanity, there is something about this that strikes me as instructive.

    It’s the bit about spreading baking soda to mask the smell.

    It pains me to admit it, but I can identify with that impulse and recognize it in some of the organizations I’ve worked with: When faced with a big stinky problem, we don’t necessarily ignore it, we just sprinkle baking soda on it, and that allows us to keep going at least for a little while.

    So, what have you been sprinkling baking soda on?  Maybe today is a good day to do something about it before the problem gets so bad someone else has to call for backup.

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    Lorena Bobbit: Part Time Hairdresser and Real Estate Agent

    I am at the Council of MLS’s meeting in Chicago on behalf of a client, and it is surreal. How is it possible, in the age of Craigslist, that it takes this many people to manage a relatively straightforward database?

    I just watched Stefan Swanepoel tell the MLS people, to his credit, that it is in their best interest to advocate raising the bar of professionalism in real estate, a subject that has been prevalent on this blog for as long as I’ve been reading it.

    Its hard to see the MLS and RE Assoc. people taking that message to heart, considering that raising the bar = fewer dues paying members, but if you are going to tilt and windmills, you might as well go for it and speak truthiness to power, I guess.

    Still, the problem of standards is no joke — except that it is.

    Good Morning America was on over breakfast at the hotel today, and they started a new “Where are they now?” segment with Lorena Bobbit — remember her?

    At about 2:49 in the story, the reporter tells us that Lorena makes her living now “..as a part time hairdresser — and real estate agent.”

    As John Bobbit once surely said — “Ouch.”

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    So you thought your listing Search Function sucked yesterday?

    Say hello to Google Instant, launched overnight.

    Go to Google. Type the letter “R” and Realtor.com appears in the search result list.No button click required. Keep typing and the search results change on the fly.

    My first impression as a user is positive.  It is just neat.  As a geek, I marvel at the engineering and infrastructure required to pull this off for millions of simultaneous users. As a guy who helps real estate companies with SEO and SEM — I’m still figuring it out.

    What is clear is that Google has fundamentally changed search, and quite possibly has raised the bar for search user experience — unless the novelty wears off and it becomes annoying.

    What is far less clear is what this means for SEO and SEM.

    TechCrunch has one of the more level and least speculative write ups on that….

    SearchEngineLand, on the other hand, seem to be trying  not to wet its pants…

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    UVEX missses the Cluetrain

    “… learning to speak in a human voice is not some trick, nor will corporations convince us they are human with lip service about “listening to customers.” They will only sound human when they empower real human beings to speak on their behalf.”The Cluetrain Manifesto, Chapter 1

    Until I resigned yesterday, I was a Web marketing consultant for the US distributors of UVEX products for 7 years.

    Last week, after the IOC demanded that we remove anything Lindsey Vonn related from the US web site,  I posted a limerick to UVEXsports.com congratulating Lindsey for her downhill win without using her name while simultaneously exposing the IOC’s shameful tactics.

    (This is an organization that goes out of its way to menace local pizza joints that use the word “Olympics” in their names. )

    By Friday, my rejoinder had been picked up by SlashDot and from there, landed on BigPicture.com (Barry Ritholtz’s blog), which was picked up by USA Today, and just this morning the NY Post ran a blurb (which noted that the post was now gone without explanation).

    This, of course, was exactly the reaction I was hoping for and the commercial justification for the post. Easily half of the comments were a variation on “Good for you. Screw the IOC. I never heard of UVEX before, now I will buy your stuff.”

    The IOC, apparently, was not pleased.

    The saddest part of the reaction from UVEX’s German management (knuckle under and kill the blog) is that it reinforces to the IOC that its strong-arm tactics work.

    At the same time, UVEX  rejected an opportunity to  grow their brand by empowering a human being to speak on their behalf in a human voice, which — as Doc Searls and company pointed out in the Cluetrain over a decade ago –  is a powerful way for brands to leverage the Web.

    People reacted to that post because we are sick and tired of big business using lawyers to get their way whether or not what they want is legally, morally, or ethically justified. We all know that it doesn’t matter who is right, what matters is who can pay the most lawyers the longest and that is rarely the little guy.

    The “Streisand Effect” is a way to fight back, and in this battle, “the little guy” can include brands that learn to find their human voice. When that happens, when  people realize that there are real people behind a logo who agree with them and respect their views, and they are entertained in the process, brands are rewarded with new, loyal customers.

    Too bad that UVEX lacked the bälle to keep the conversation going.

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    Stupid poem lands me on SlashDot

    I occasionally blog on UVEXsports.com.

    Most of my posts were links to stories about Lindsey Vonn, who uses UVEX stuff. We hope famously.

    The IOC called and told UVEX to stop using any mention of Mrs Vonn on UVEXsports.com and that included my posts.

    Then she won the gold, I congratulated her in thinly disguised verse, SlashDot picked it up and now other blogs are linking to it.

    This is known as the Streisand Effect,  and it is one of the coolest things about these here Interwebs. If you love the players but hate the corporate game the Olympics have become, please check it out, leave a comment and send a message to the IOC.

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    Google’s Challenge to China’s Communist Party

    Google’s 2006 decision to enter the Chinese market on the Chinese government’s terms, which include censorship, is often held up as the symbolic moment when its mantra of “Don’t be evil” conflicted  with a hard business reality. In the end, pragmatic capitalism won out over principle, and Google.CN was launched.

    Google’s rationalization that censored access to Google was better for the Chinese than no access to Google has always rung hollow to me. “Don’t be evil unless it is going to give competitors an edge in the world’s biggest market” still has “Don’t be evil” in it, but slippery slopes are paved with caveats. With that decision, Google merged off of the high road, joining the rest of the multinationals on the highway to the Chinese market.

    Now, the Chinese government has turned its significant cyber warfare skills, honed by years of attacking US government and military networks, on Google in order to track dissidents and critics.

    Google has,  surprisingly and righteously, reacted like Ralphie towards the end of A Christmas Story. The company wheeled around on the bully Chinese government and boldly defended itself by publicly stating that the Chinese governement is a hacker, and that censorship is wrong. It looks like they may well take the Google-logo colored exercise balls strewn across their Chinese operation and go home.

    Cynics have pointed out that Chinese Internet users don’t engage in a lot of eCommerce so Google may be taking the opportunity to abandon a drain on its resources while repairing some of the PR damage its decision to go into China caused in the first place.

    I doubt it. The lure of the sheer size of that market is still very strong. Last year Chinese consumers bought more cars than American consumers, and you don’t hear Microsoft (whose decision to grant the Chinese government access to Windows source code is the genesis of the Chinese cyber warfare program) talking about pulling out.

    Chinese consumers are following the American consumer’s trajectory but with the huge booster of digital technology and our map:  Today, they are hooked on the freedom of the automobile the way we were in the 1950′s, but it won’t take 60 years before they are hooked on plugging their credit cards into Rue La La.

    It is my hope that Google’s motivation is not cynical but principled, that its management was never comfortable with its relationship with the Chinese government and, like Ralphie, has reached the point where they just aren’t going to take it anymore.

    Pulling out of China would show the Chinese people that while their government may be able to keep our government’s mouth shut by holding our massive debt, our government cannot in turn put a muzzle on a private US company run by private US citizens, because despite whatever other issues we may have, we really do have a Constitution that protects Freedom of Speech.

    That is a very powerful message that I hope Google chooses to send.

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    The end of the MLS as we know it? (Part: 546)

    A few of the comments on my last post about the moves Google seems to be making in the direction of a more robust National Real Estate search have focused on what this means for MLS.

    The consensus (hope?) is that Google’s move in that direction, as well as RPR, are bad news for MLS.

    Maybe. Probably. But not necessarily so: There is a case to be made for the value of the local MLS in terms of Quality Assurance.

    Google wants to index information, not create or validate it (think automation vs manual processes), but if Google Real Estate were riddled with inaccurate listing data, if users were consistently finding listings that are no longer for sale or that have the wrong price, that would degrade the user experience, and that is probably more important to Google than anything else, which may explain why they haven’t, and might not, leverage their position as the conduit through which most real estate traffic flows by creating a Google MLS.

    The way it works now, Google’s RE data, accurate or not, leads to sites where changes entered into MLS are quickly reflected. MLS also ensures that only its members contribute listings, so there is some vetting there, as well. As a source of QA that Google does not have to set up and manage itself, the local MLS serves a purpose.

    The problem is that lots of MLSs are not going to be happy with going back to their original, limited role of organizing a local market among brokers. They will be loathe to give up on the idea of “adding value” (IOW justifying fees) with things like public-facing Web sites. They also, in many cases, see themselves as a bulwark against change that they don’t like, hence their role as the enforcers of rules meant to “protect” the traditional industry — to the detriment of consumers.

    (Exhibit A: MIBOR’s attempt to use NAR IDX rules to label Google a “scraper”.)

    As long as that is the case, we are stuck with the balkanized, inefficient and anti-consumer “system” we have now, and that is what makes it ripe for Google to dis-intermediate it.

    MLSs could save themselves by working with Google (and RPR for that matter) as the guardians of the upload, but if history is any guide, they won’t. Instead, they will assume that the status quo is unassailable, that they “own” the upload and the data it brings, will use that position to obstruct the free flow of information as long as they can, and then will wonder why their membership abandons them (the way advertisers abandoned newspapers) when Google (and perhaps RPR) open a FREE upload channel around them like the one I sketched out in my last post.

    It is literally the nature of the network to route around obstacles, as the music and newspaper industries (although Rupert Murdoch still doesn’t get it as he is trying to stuff the denture cream back into the tube) have discovered, but my bet is that the MLSs, dominated by people in Murdoch’s demographic, will make the same mistake.

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