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Archive for October, 2006

Losing your Zest for life? Maybe you need to give yourself a frank eppraisal . . .

The folks behind the RealtyThoughts weblog today launch eppraisal.com, a Zillow-like Automated Valuation Method promising results for 70,000,000 homes. The site is wicked clean, but it wasn’t wicked fast — but I’m willing to cut ‘em a break on the assumption that they’re seeing a lot of first-day traffic.

Differences from Zillow:

  • Runs on Safari
  • No ads
  • Looks like the business model will be lead generation
  • Produces a range of values instead of a dubious Dr. Science Zestimate
  • Likes my house better than Zillow does

The eppraisalites (sounds biblical, don’t it?) will be in New Orleans signing up Realtors for the lead generation part of the product.

Give it a try. Same elaborate promises, but without the troublesome lawsuits…

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  • 11 comments

    The Zillow.com shake-down: Preparing for the denouement . . .

    Via Matrix, The New York Times:

    Zillow.com, the Web site that provides free home valuations, has been accused by a coalition of community activist groups of undervaluing the homes in black and Latino neighborhoods.

    The headline of the story: “A Home Valuation Web Site Is Accused of Discrimination.” I said the headline would be “Computerized Redlining,” but this is The New York Times, the dignified hand-maiden of the left. In any case, the charges of racism will get more hysterical until Zillow.com either pays up or shuts this shake-down down.

    But why is this article in the Times today, when this “news” broke last week? To soften Zillow.com up, to let them know what they’re in for if they resist.

    If you want something to be frightened about on Halloween, here it is…

    Our story so far:

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  • 3 comments

    Wanna see something scary? The Suns’ run for the trophy starts tonight . . .

    It happens this way every year at Halloween. The Suns have their season opening game, and I’m left home alone to parcel out the candy to the neighborhood children. I hope I’m not being churlish, but the Suns can score 15 points in the time it takes to hand out five KitKat bars. Phoenix will be ready to play and Kobe Bryant and the Four Dysfunctional Minions will not, and the exhbition of run-and-gun pyrotechnics will be awe-inspiring. What I get to see of it, that is…

    Further notice: Arrrgh!! They played eight minutes of amazing basketball… in a 48 minute game…

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    Business Journal: “Housing market could bottom out in six months”

    From The Business Journal of Phoenix:

    The housing market could bottom out during the next six months, according to Metrostudy’s latest report on local real estate markets.

    “Cutbacks in new production, aggressive incentives by sellers, the exit of the majority of investors and the fundamental demographic support for housing demand are positive indicators for a housing turnaround by mid-2007,” said Mike Inselmann, president of the Richmond, Texas, company. “The Federal Reserve has ended its series of rate increases, and mortgage rates have dropped notably in the last few months,” he added.

    Phoenix continues to have one of the nation’s strongest economies, said Ben Sage, director of Metrostudy’s Arizona division. Even though job growth declined from a peak of more than 100,000 new jobs for the 12 months ending Sept. 30, 2005, the 91,900 jobs posted at the end of September 2006 puts the state at the top of the nation, he said.

    It will take a few days for the errors to shake out of the MLS, but October’s Market Basket looks pretty weak: Sales down, prices down — but inventories continue their downward trend. Given that we’re headed into the holidays, it’s reasonable to expect the rest of the year to be slow.

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  • 4 comments

    The Halloween Carnival of Scary Real Estate Stories is up . . .

    at The Real Estate TomatoPumpkin. The stories are fun, and host Jim Cronin, the most graphically ambitious of the real estate webloggers, throws a gorgeous party. Dig into the goodies, but remember to pace yourself…

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    The Zillow.com shake-down: BloodhoundBlog’s take so far — and a chance to win a BloodhoundRealty.com Tee Shirt . . .

    If Inman Blog sent you here, here is our side of the story so far:

    A question might arise in a thoughtful mind: Why am I defending Zillow.com from this outrage?

    First, because they have the right to run their business however they choose. If I can persuade them to add a disclaimer to their front page, that’s great. If not, it’s still their business, their private property.

    Second, and of much greater importance, if Zillow.com caves in to extortion, that will open the net up for raids by every flavor of “non-profit” piracy. It is very rare that anyone can make any difference at all in the way things are done. This is one of those times, a transition point, and what Zillow.com does may have decisive impact on future events. Will the net become another corporate cash-box for “non-profit” groups who will — for a fee — “protect” you from legislation they got passed? Or will the net remain the exception to the way business is done in America?

    The Future of Real Estate Marketing has more today, as does Realty Thoughts. For my own part, I believe the crux of the issue is racial politics and Fair Housing legislation, rather than the plights of starving appraisers or disgruntled Realtors. These groups may have their own axes to grind, but every NCRC shake-down I have been able to uncover has been related to Fair Housing law or the Community Reinvestment Act.

    These are the three instances I have found, having invested less then ten minutes’ research time:

    1. NCRC routinely shakes-down banks.
    2. NCRC shakes-down lender for red-lining. Note that the article reads like the lender was fined, but the payment actually went to NCRC.
    3. NRT hires NCRC to teach its Fair Housing classes. In this instance, NCRC was the white-hat protector called in to fend off the black-hat protectors.

    My belief is that fleas don’t come in threes: If every story I found about NCRC resulted in NCRC getting paid off, my bet is that there are plenty more stories with essentially the same plot line. If you can dig one up, let me know by email and I’ll send you a BloodhoundRealty.com Tee Shirt. All the Tee Shirt Contest ideas we got were great, but this is my kind of game…

    Our story so far:

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  • 9 comments

    The Carnival of Real Estate . . .

    …is up already at Jim Duncan’s Real Central VA. The pingback in my mailbox said 4:27 am. Arizona doesn’t change time zones, so I have no idea what time it is anywhere today, but clearly someone was burning the midnight oil in his pumpkin.

    Jim Cronin from The Real Estate Tomato takes first place, just as he is about to host his own Halloween Carnival.

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    A radically different way of thinking about real estate: What if Las Vegas Boulevard were private property . . . ?

    For Galen Ward from Rain City Guide, here is a weblog post I wrote in 2003 on the idea of mass transit and private property in Las Vegas. The Las Vegas Monorail was then still in construction, and I was busily demonstrating why it must fail — which it has, as the ultimate slow-motion train wreck. Much has changed since I wrote this (and the links are not warranted to work): The Mandalay Resort Group has been swallowed by MGM/Mirage, the Boardwalk is in redevelopment and the Stardust is about to be. There are semi-residential towers being built on The Strip — although there still will be no commuters living there. Most importantly, the PediCabs, the bicycle-rickshaws, have been banned. Public pretext: Safety issues. Real reason: Too effective at competing with taxicabs.

    Anyway, using Las Vegas Boulevard as an example, here is a completely different way of thinking about real estate:

    BetterVegas: No-train-ware…

    Harkening back to this, deconstructing boneheadedness is simply a matter of determining how and why the solution deployed did nothing — or less than enough, at least — to satisfy the original objective. It is boneheaded not to connect the resort with the casino that is its reason for being. It is boneheaded to turn an entertainment venue into a regimented drill, then move the patrons though an inane non-exit. It is boneheaded to build a trolley system in Phoenix that will not empty a single car, but which will cause those cars to move slower and pollute more.

    It is boneheaded to build a transit system for The Las Vegas Strip that is not on The Strip. But what’s worse, it would be boneheaded to build a rapid transit system even on The Strip.

    Why is that so?

    The answer comes in the form of two more questions: What is the product? And who is the client?

    The Strip runs on Las Vegas Boulevard from Sahara Avenue to the north to Russell Road to the south. When we think of mass transit systems, we think of commuters. In this we are being thoughtless, because on that four-plus mile stretch of road there are zero commuters. No residential housing. No full-time residents. No one rushing off to the office in the morning. No one racing home to dinner in the evening. No commuters, period.

    The Strip needs a transit system because four miles is a long, long way to walk in the desert heat, particularly after you’ve walked a few gargantuan casino floors. But The Strip does not need a rapid transit system. Rather more the opposite, since visitors come to gawk at all the spectacles. What The Strip needs is a way to get where you want to go without walking, when you choose. That’s all. Not maglevs or monorails or trolleys or subways from Back East or the Far East. Those bicycle-rickshaws would be more than adequate, if there were enough of them, and if there were space enough for them to operate. I want a good deal more than that, but the essential thing to understand is that a big, fast, capital-intensive, fixed-station rapid transit system — while it might be a tax-dollar-devouring convenience for commuters — is a thoughtless mistake for Las Vegas Boulevard. It’s boneheaded, even on the right route, because it delivers the wrong product to a client base that does not even exist on The Strip.

    We are thoughtless, as a species, just about all of the time. We hear ‘transit system’ and we automatically think of structures and vehicles and stations and tickets and cops, all the things that a municipal rapid transit system must have. And if we decide to connect two buildings, we envision a corridor, a vast, empty squared-off tube interrupted occasionally by grim little windows. One of the lessons Las Vegas is teaching us, not as quickly as it might, is that a corridor connecting two buildings can look and feel — and generate profits — like a shopping mall, if you build it right. Right now, the Mandalay Resort Group is in the process of replacing the first type of corridor, connecting Mandalay Bay with the Luxor, with the second type. This is the thoughtful approach to the problem. The transportation problem, yes, point A to point B. But the profitability problem, too, and Mandalay has proved itself to be inspired when it comes to solving the profitability problem.

    So, if we resolve to be thoughtful, we can ask ourselves this question: What is Las Vegas Boulevard? Remember to think outside the corridor! Streets and roads have been government monopolies since before the Boston Post Road, since before the King’s Peace of bloody Prince John, since before the cobbled roads trod by the Roman Legionnaires. In all that time a road like Las Vegas Boulevard has been a flat surface at or near the grade of the Earth set aside for feet, hooves and wheeled vehicles. In recent times, roads have served as rights-of-way for water, sewer, power and communication lines, but this is the extent of their flexibility. Ultimately, for now, roads are for cars, with pedestrians suffered grudgingly.

    This is thoughtless. A road is real estate, with the dichotomy between ‘street’ and ‘structure’ being entirely imaginary and entirely unnecessary. We make this distinction because we stupidly gave the government the power to build roads, and because the government has built roads stupidly ever since. This was a profoundly boneheaded thing to have done, but even if we all resolved, unanimously and permanently, never to be this thoughtless again, it would still take a long, long, time to undo the consequences of failing to understand that roads are real estate, that a corridor can be more than a tube.

    I have three distinct ideas for solving the transportation problem on Las Vegas Boulevard, but before I detail them, I want to take a moment to talk about constituencies. In an actual free market, which the United States is not, there are only two parties to a real estate transaction, either the seller and the buyer or the landlord and the tenant. But because Clark County, Nevada, is a government, resolving disputes by force instead of reason, there are two sets of technically uninvolved hitchhikers to any proposed transaction: The government itself, and other parties who can sway the government to use its coercive powers to promote or prevent that transaction. In the case of The Strip, the Other Parties, primarily, are the casino properties, and it is their perceived self-interest that will tip the balance for or against anything I or anyone else might propose.

    That’s important, because any particular casino doesn’t actually want for you to have a convenient way to get from its property to another. This is why it’s so hard to find the doors. On the other hand, once you have escaped from one casino, each of the others wants for it to be as easy as possible for you to wander into their facility, with luck never to emerge. The Nowhere Train is boneheaded, but there is a logic to its boneheadedness: It buttresses the competitive appeal of the Las Vegas Convention Center and the Sands Expo Convention Center, at the expense of the Mandalay Bay Convention Center; it delivers conventioneers from the north end of The Strip to hotels further south; and, as pure gravy, it drives every potential passenger all the way through the casino floor at either end of the trip.

    From Clark County’s point of view — from the point of view of the tax collector and also of The Las Vegas Convention and Visitors Authority — the most valuable real estate in Nevada is not the land fronting on Las Vegas Boulevard, but The Strip itself. At present it doesn’t generate any tax revenue in se, but it is the sine qua non of all the tax dollars produced by Strip properties. But the street itself is eminently exploitable as taxable real-estate, lacking only vision and capital to make it even more profitable, per square foot of grade-level dirt, than the Bellagio or the MGM Grand.

    I’m talking about privatizing The Strip, of course, and developing it as taxable real estate — turning it into more than a corridor. The three proposals I’m offering here can be ranked according to capital cost, construction intrusiveness, profit potential and, ultimately, political inviability. I’ll start with the best and least likely.

    I. The Meadows

    If the ‘public’ part of Las Vegas Boulevard is 75 feet wide, on average, then the four mile length of The Strip is over 1.5 million square feet of dirt at grade level. This is not a lot of land by Strip standards, but we’re going to build edge-to-edge, where Strip properties, to date, have been very wasteful of their acreage. Moreover, the government’s tax-coerced ‘free’ roads induce us, thoughtlessly, to think horizontally, when all the real money in real estate comes from thinking vertically. The project I call The Meadows (the words ‘las vegas’ in English and the name of the very first Las Vegas casino resort hotel) is designed to be extremely vertical. In passing, this idea is not contingent on the sale of Las Vegas Boulevard; there are several prime pieces of property on The Strip where it would work. We’re putting it on The Strip for the sake of discussion.

    So, level by level, from the excavation straight to the top: First the street, the right of way for all those cars now clogging Las Vegas Boulevard, stuck way below grade level. We can’t get the cars off The Strip, since the hotels are all essentially motels, but we can get them out of the way. To do this we’re going to have to rip up everything, which will be hugely intrusive, but the upside is that everything now below the street surface will be replaced with new hardware, all of it accessible without future intrusions. Above the street, still below grade level, comes parking, lots of it.

    Above that, at grade level, is a huge park, a true boulevard, a four-mile walkway enclosed in glass and air-conditioned, with the ceiling so high that the fenestration is virtually unimpaired. Here we can put the bicycle-rickshaws or perhaps very slow slidewalks running down the middle. Borrowing a page from The Fremont Street Experience, street vendors can create a safe and sanitary pretend-Mardi Gras, this in contrast to Fremont Street.

    This park, this better-boulevard, provides street-level access to all the casino properties on both sides of Las Vegas Boulevard, but above that is the real money: A casino within the property, as much as the traffic can bear, up to the full length of the property or interspersed by retail like The Fashion Outlet Mall at the Primm Valley Resort and Casino. The fact is, the casino can take up more than one level, in time, if business warrants that. And above that is retail, four miles of it. This can be multi-level, too, of course, and it can link by walkway to existing Strip shopping centers.

    And above all that is another park, this one outdoors. What we might think of as the roof level serves as building pads for skyscrapers: Hotels, office buildings, residential towers, time-shares, vertical strip-malls even. Pools and tennis courts, and, at the edges, an incomparable view of The Strip.

    The business of The Meadows is businesses — other people’s businesses. Everything but the street and the connecting common spaces can be owned and run by other companies. This is not a new idea. It is Charles Keating’s Master-Planned Community concept expressed vertically. So we have parking concessions, as many as make sense, grade-level vendors and rickshaw-jockeys, casinos, as many as make sense, massive quantities of retail stores, and, above all that, real estate development in the large. The Meadows Incorporated is in the business of creating and selling or leasing real estate market opportunities.

    This would solve the transportation problem, and a whole lot of other dilemmas. It would be hugely profitable and hugely beneficial to the taxing authorities. It is also extremely unlikely to be built in this form, since all of the casino properties fronting on The Strip would oppose it. Frankly, an idea like this would be much more viable on an immense piece of privately-held land, like the Stardust, the Boardwalk or the golf course at Wynn Las Vegas.

    II. Mardi Gras (curribus vale, farewell to cars)

    This is a much simpler approach, but it would have to be subsidized by casino resort hotel properties, since there is not enough profit-potential here to justify a separate business. What we do is rip up Las Vegas Boulevard as above and submerge the automobile traffic. At grade level is the park and walkway described above. I would like for it to be enclosed in glass and air-conditioned, but we are now at the cheap-it-out level of investment, so that may be asking for too much. As above, we can have a continuous pretend-Mardi Gras, dancing in the street. To take the sting off the intrusiveness of ripping up all of Las Vegas Boulevard, the participating resorts will get all new infrastructure hardware, designed, one would hope, in such a way that repairs are fast, easy and cheap. The enduring curse of government ownership of the roads is that legislators and their contractor brothers-in-law have no incentive to install subsurface improvements in a maintenance-friendly fashion.

    III. Up On The Roof

    This is the cheapest solution of all. It consists of a pedestrian deck built over the grade-level automobile traffic, sidewalk-to-sidewalk, four miles long. Again, the park, the walkway — one would hope enclosed in glass and air-conditioned. Setback properties, like Bally’s, could build connecting ramps or slidewalks. Others, like New York-New York, could use second-floor walkways, just as they do now with the elevated sidewalks.

    Conclusion

    All of these proposals separate the pedestrians from the automobiles, and that’s no accident — no pun intended. Las Vegas Boulevard is walkable in principal, weather permitting, but vehicular and foot traffic don’t mix happily. The mass transportation problem on The Strip, to the extent there is one, can be solved easily — and cheaply — if the space available to entrepreneurs like the bicycle-rickshaw vendors is increased. Surely it would be possible to build a slidewalk system, but that’s a big investment with a fairly lousy mean-time-between-failures. In any case, putting the cars and the pedestrians on different levels will solve most of the problem while creating market opportunities from tiny to immense.

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    Tab-surfing: Cataloging my collection of good posts…

    It really is a matter of browser tabs. I live in Safari for the Mac, and if I see something in Vienna, my RSS feed reader, that I want to explore, I’ll open the window, then slide the tab over to another open window that is already full of tabs. I end up with a sort of codex of open browser windows, each one stuffed with elemental goodness. Every once in a while, I catalog my collections of tabs. At that point, the marginal cost of doing so publicly is nil, and there’s a good chance I can share with you something important you might have missed. Now you know my secret method…

    It’s a six-month-a-versary at The San Diego Home Blog. It turns out all the great RE.net raconteurs are in San Diego. Kris Berg has some thoughts on MLS fragmentation, as well.

    Jeff Brown, the other great San Diego spinner of yarns, wants you to think about the relative merits of stocks versus real estate.

    Bonnie Erickson has thoughts on the call for underperforming Minnesota Realtors to have a glass of Kool-Ade, as does Daniel Rothamel.

    Dustin Luther at Rain City Guide has four posts (so far) on the Seattle Blog Business Summit. My skeptometer may need re-calibration, but I’m wondering if there is a difference between being well-known and being well-thought-out. Austin Bay got to interview Donald Rumsfeld this week, you tell me why. Robert Scoble, who praises Zillow.com because it’s always wrong in his experience, advises webloggers to “write well.” Ya think?

    Here’s real news, in any case: WordPress 2.0.5 has been released.

    John L. Wake at the Arizona Real Estate Notebook has found someone with the perfect solution to high land costs in San Francisco and Manhattan…

    BloodhoundBlog is four months old tomorrow. Technorati says we’re linked by 180 weblogs so far. RSS Pieces has advice on how to boost traffic 40% in one hour per day. Here’s my advice, an elaboration on the philosophy of the inestimable Robert Scoble: Write well, write wisely, write often — and don’t please anyone more than you please yourself. Quantity matters a whole lot less than quality — in the work you do and in the readers that work might attract.

    Four months’ work for two cents’ worth of wisdom? This job pays almost as good as real estate…

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    The Zillow.com shake-down: How the other shoe will drop . . .

    Lloyd Frink at Zillow.com is playing CYOA games, and Joseph Ferrera at Sellsius&176; is looking for truth from a horse that’s all ass, but here is how the other shoe will drop, in the Zillow.com shake-down, when it does:

    Watch for a joint announcement of something that Zillow.com and NCRC will do together. There will be a window-dressing “solution” to the manufactured dispute, perhaps a more robust disclaimer. This, whatever it is, will be nothing but a show horse. The pay-off will be in the joint program, whatever form it takes.

    Clint Bollick or someone like that might file a suit solely in pursuit of a policy change. The NCRC will expect to get money or power or both. They’re playing straight out of the Jesse Jackson playbook, and they will not stop maligning Zillow.com until they get what they want or until their tactics are fully exposed.

    It would not surprise me if the payoff came from the personal fortunes of Rich Barton and Lloyd Frink, to keep the VCs and the SEC out of it.

    When you see a press release like the one I cited yesterday from NRT, you’ll know the deal is done. Read that press release carefully and you should be able to figure out what the payoff is. Learn to read everything that carefully and you will discover how America works.

    There is an alternative: They could stand firm. The web has fairly successfully held itself aloof from the way America works for the rest of corporate America. To my knowledge, this is the first time a purely web-based company has been shaken down in this manner. Because of this — because the web has been exempt from this kind of officious thievery so far — it is a matter of particular moment whether Zillow.com is able to hold the line.

    I would love it if they did, but I honestly don’t expect it. Except for people like Steve Jobs and Mark Kuban, corporations are run by cowards. Most likely, they’ll try to save face with a seven-figure bribe, then set up a fund to buy off future pirates, who will swarm not just Zillow.com but every set of deep pockets on the net.

    All of this should be completely sickening to you, but it is not entirely without benefit: If you should learn to read between the headlines when these kinds of stunts are pulled — dozens of times a year — at least you will know what’s going on around you. Much good may it do you to try to change it, but at least the scales will have fallen from your eyes.

    Godspeed, Zillow. Godspeed, Barton and Frink. If you will fight this, I’ll put my shoulder beside yours to the bitter end. This technology we celebrate has made it next to impossible for ordinary thugs to steal anything. Let’s find a way to deploy it against the thugs in the Brooks Brothers suits…

     
    Our story so far:

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  • 13 comments

    Zillow.com shake-down: Creeping disclaimerism as a subject-changing gambit . . .

    Whatever. Just don’t pay them off. The issue is a lot bigger than Zillow.com, and Net Exceptionalism is too important an idea to be squandered.

    Even if you don’t know who your friends are, I will hang with you if you will hang tough…

    Our story so far:

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  • 4 comments

    Should you trust the numbers you read? Dig deeper . . .

    The Republic is all atwitter today because “Prices of new homes slip by largest amount in nearly 36 years”. What’s the real news: Nationwide (a non-existent real estate market), year-over-year median prices for new homes were down 9.7%. Not great, not awful, and not really news at all. We need to know which houses, where, and why to know anything. The news hook — “36 years” — just means that the non-news have been very, very good for more than a generation. Without context there is no knowledge.

    Witness: “County wages up 10.5% in a year”. That sounds like good news, although the Republic tries to spin it negative. I have never believed the complaints about low wages in the Phoenix-area, and our perpetually low unemployment rate is hard to dismiss. What this actually means in the long run is for you to decide. I would be much more impressed to hear about how Phoenicians are improving their job skills. Human capital is all the capital there is, ultimately, and people who take the trouble to learn something useful make good money.

    Here’s my favorite fake number story of the day: “Light rail subsidies calculated”:

    Overall, Metro estimates its total operating, maintenance and administration costs at $28.2 million in the first year and plans to recoup a quarter of that money from fares. That leaves Phoenix, Tempe and Mesa to come up with a little over $21 million among them.

    So that means the subsidy will be $3 from the taxpayers for every $1 paid by the rider, right?

    Wrong.

    What is missing from the calculations? The cost of building the ding-dong trolley system, billions of dollars before we’re done.

    The actual subsidy will be at least $13 from the taxpayers for every $1 put in the fare box — and possibly a whole lot more.

    Best “news” of all: You will never ever know how much you are paying in subsidies. Whatever number you are told, you will know with an icy certainty that you are being lied to.

    Now a thoughtful person might think to say, “Anything worth doing is worth doing for profit.”

    But the BoosterDogglers and the Shiny People have a ready retort: “You don’t know anything about Downtown Phoenix!”

    And this must be the truth, for no matter how deeply you dig into the numbers relating to the the vampire-like “revitalization” of Downtown Phoenix, you will never once dig up a profit-making enterprise…

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  • 5 comments

    The Cosmopolitan among the Rustics . . .

    Behind the Curtain:

    House on the river in Boise – $3-500K.

    Drinks on the patio watching the sun set over the water – $10

    Getting rid of that pesky Aspen tree in your backyard courtesy of the beavers- priceless.

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    Global video real estate map mash-up . . .

    How many buzz-words do you need? viewr.com is live.

    Color me skeptical about video listings. First, I like big, detail-rich photos, and second, I don’t like small, shaky, mpegged-to-lego-sized-blocks videos. But at last we know why god created lite jazz…

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    Learning to negotiate the buyer’s agent’s commission . . .

    From my column in today’s Arizona Republic, a familiar theme. The permanently linked version uses a somewhat longer version of the text.

     
    Negotiate agent commission

    In past weeks, we talked about using the simple question “How much do you charge?” to negotiate a more reasonable buyer’s agent commission. Buyers traditionally have not known to ask this question, but here’s the really cute part: “Your” agent is not required by law to disclose the amount of the sales commission. You are entitled to know an infinite number of facts about the property and the transaction, but you are not entitled to know how much you are paying for representation.

    The buyer’s agent commission is set by the listing agent, generally in consultation with the seller. The listing agent does not have to offer any commission for the buyer’s representative. This is the essential component of an “exclusive” listing – only the listing agent will be compensated upon the sale of the property.

    But if the listing agent wants to advertise the home in the Multiple Listings Service (the MLS), an offer of compensation, a “co-broke” commission, must be included with the solicitation of cooperation. This coupling of cooperation with compensation is what makes the MLS work so well as a tool for marketing real estate.

    How much will the co-broke commission be? For a resale home, it will usually be 3 percent of the purchase price of the home. For a $100,000 condo, that’s $3,000. For a $1 million mansion, that’s $30,000.

    Does it take 10 times more effort to sell a mansion than it does a condo? Ten times more expense? This pricing structure is completely absurd, mostly because, until lately, no one thought to change it.

    In fact, the listing agent might be getting 2 percent or less. Why? Because the seller asked the magic question: “How much do you charge?”

    Buyers need to learn that they, too, have the power to negotiate the fees paid for their representation.

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