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Archive for May, 2007

Tennessee commission rebate ban signed into law

From the the Nashville Tennessean:

Gov. Phil Bredesen has signed a bill reinstating a ban on cash rebates for home sales and other real estate transactions, despite opposition from consumer advocates and federal antitrust officials.

The bill signed late Wednesday reverses a decision made earlier this month by state regulators to repeal the ban under pressure from the U.S. Department of Justice.

Many flat-fee and discount real estate brokerages use rebates to reduce their commissions, which are set by home sellers. Justice Department lawyers have challenged cash rebate bans in several states, saying the bans hinder competition among agents.

But the Tennessee Association of Realtors urged lawmakers to reinstate the ban. They said the ban protects consumers from backroom deals between agents and outside parties, such as referral services and mortgage lenders.

The association also said discount brokerages can reduce their commissions by offering non-cash incentives, such as gift cards and services, or by renegotiating commission rates with sellers and their agents.

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  • 3 comments

    Trulian overdue improvement: Zillow.com makes Home Q&A searchable by location

    From the Zillow Blog:

    One request we received over and over again (including impassioned pleas from our own president, Lloyd Frink) was to let people see a list of Home Q&A in their city or ZIP code. Agents and other real estate professionals want to see what questions are being asked in their area and to help answer those questions. Homeowners want to see what people are saying about homes in their specific neighborhood.

    Well, as of Tuesday night, your requests have been answered. On the Zillow home page, just below the two sample Home Q&A’s, is a new link that says “See Home Q&A in your area.” Click on it, and you’ll be taken to a page where you can type in any city and state or ZIP code and see the most recent questions and answers being asked about homes in that area.

    This is an important catch-up to Trulia.com’s recent upgrades.

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  • Comments are off for this post

    OC Register’s Matt Padilla talks mortgages, blogging, and the main-stream media

    On my home blog, Blown Mortgage, I have the honor of talking with some of the best people in our industry about their take on the current market and the forces that are shaping each of our lives in this profession. I’ve interviewed housing bears, loan originators, marketers and more. The level of ability and professionalism in our industry amazes me each time I have the opportunity to talk with someone new.

    This week I had an opportunity to speak with Matthew Padilla. Matt is the Real Estate and Mortgage reporter for the Orange County Register. I was looking forward to this interview because it marked the first time I had a chance to speak with a member of the main-stream media about the mortgage and real estate markets. I was interested in hearing him talk to what he has heard from his investigative reporting (since he does get to spend all day chasing down the stories).

    While his insight on the market is, in my opinion, spot on and valuable; the reason I wanted to share it here with you is that Matt provides interesting insight in to how blogging has impacted his reporting and coverage. Speaking with him it became very apparent that what we do as bloggers has caused a paradigm shift in how the main-stream media thinks about, generates, and disseminates news. Matt talked at length about how and why he uses a blog, how he designates pieces for the blog versus the paper, how other blogs drive his research, and a wide range of other topics about the interface between the new and old mediums.

    I think that all of us that blog each and every day should always remain aware that what we are doing is of extreme importance and consequence. Each blog post, each insight, each story and personal experience shared by experts such as those I have the privilege of writing with here at Bloodhound is shaping the news that is told tomorrow. If you ever wonder if anyone is listening and you wonder if it is worth blogging; remember the comments from this interview and remember the power and responsibility we have in this forum.

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  • 2 comments

    Steve Jobs at All Things Digital: What people want is the real internet on their phone

    Stay with it to the end. The last line is a killer.

    More: Steve Jobs and Bill Gates together on the same stage.

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  • 3 comments

    Teri Lussier: There are no do-overs in weblogging

    Derek Sterling Burress has an in-depth interview with Teri Lussier, owner of TheBrickRanch.com real estate weblog, Project Blogger contestant, and BloodhoundBlog contributor:

    Derek Sterling Burress: Since you are fairly new to the world of blogging, what has been some of the most difficult things you have had to learn as a blogger?

    Teri Lussier: The hardest thing is that what you write is potentially there forever. Once it’s there, you don’t really get a do-over, as someone could copy and paste it elsewhere. That’s intimidating in some respects, but it makes you think about what you are saying and choose words very carefully.

    It’s a nice long interview, a lot of fun to read. Go see for yourself.

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  • 2 comments

    Soul Searching (R-E-S-P-E-C-T)

    When did people stop being genuine? In our uber-competitive world, it seems every gesture is intended or at least construed as self-serving. Professionally, we have all become salesmen; we sell our products, our services, and ourselves. We have become increasingly skeptical and cynical, our actions are premeditated and our lives are scripted. We have a script for our acquaintances, for the telemarketers, and for our customers and clients. “I’m fine, how are you?” (I’ve had a sucky day to end all sucky days); “Thank you, but we are happy with our long-distance service” (I have no idea who my long-distance service provider is, but I am currently watching Forest Gump for the eighth time); and, “It is important to list with an agent who cares about your family and your equity, wouldn’t you agree?” (I have said this so many times that it has lost all meaning and sincerity).

    New agents and even the multitudes wanting to take their business to the “next level” are constantly being coached to learn and rehearse The Script until the objections can be overcome in their sleep. Knowing what you might say in a given circumstance is one thing, but spewing forth a rehearsed scene with the passion of a high school science teacher is another.

    In all things marketing, I continue to believe that we should think like the consumers we in fact are. How would this ad impress you? Would that brochure inspire you to purchase the home or consider employing this agent in the future? Is the quality, content and overall flavor of the piece consistent with the image you really want to convey?

    Our words are no less important. How do you react to a too-practiced sales pitch? Do you enjoy being pitched at all?

    The reality is that we are all ego-driven, and being primarily motivated by self-satisfaction and personal fulfillment is not a character flaw, it is the human condition. Even the kindest, most generous among us practice magnanimity as much for the way it makes us feel good about ourselves as how it might serve another. The bottom line is that we appreciate feeling respected. When we encounter those who patronize or otherwise fail to show us respect, we instinctively dislike or distrust our perpetrator. We feel bad about ourselves, and we transfer this emotion.

    What this has to do with real estate is this – Your potential clients do not want to feel preached to, lectured to, or minimized, and they don’t want to feel like members of the audience of a show that has run too long. If you ever saw the movie Ground Hog Day, you will remember Bill Murray reliving the same day over and over again. With each dawn, and knowing exactly what was coming, his days were lived increasingly by rote, and with each successful hit of the rewind button, a little more passion and sincerity was lost.

    Knowing what to expect in our industry, the potential questions, concerns and objections, is a good thing – It’s called experience. Losing the desire to truly connect with your clients, to listen, and to converse versus talk is another – It is called disrespect.

    I received a call last week. It came from the loan officer for the buyer of one of our listings, made under the auspices of confirming the appraiser’s point of contact. Keep in mind that escrow had already opened and service providers had been selected.

    Lender Person: I see you will be using (name of Title Company). That’s great. How would you feel if I told you that you could save your client 10% on their Title policy?
    Me: What’s your point?
    Lender Person: I’m sure you have a Title Rep you like to use, but I know a fabulous rep (gives name) who would give you a 10% discount. Wouldn’t you like that?
    Me: Thank you, but I have an established relationship with a Title Rep who provides excellent services and competitive fees.
    Lender Person: So, you don’t want to save your clients 10%?
    Me: We’re set, but thank y-
    Lender Person: So, I assume your Rep will offer you the same 10% discount?

    Eeew. Can you say “RESPA”? I immediately felt the urge to shower.

    I hate being patronized, I loathe being belittled, and I despise being “sold”. I suspect I am not alone. If I am ever guilty of intentionally treating another, personally or in business, in this single-purpose, transparently self-serving and disrespectful manner, demand my resignation. If we can’t say it with soul, we have nothing to say.

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  • 11 comments

    Ask the Blogger: How much is eleven months in dog years?

    This came in by email:

    I find myself commenting on more and more of your blogs, because of my respect for some of your writers.

    My concern is who are your readers?

    How large is your audience?

    Are we dealing with real estate professionals or the general public?

    BloodhoundBlog is eleven months’ old today. We’re whipping up the batter for a first-birthday cake that — I assure you — Odysseus will be more than happy to eat.

    Who are our readers?: Real estate professionals, by an overwhelming margin.

    Weekdays are strong, weekends are weaker, but we average around 1,200 unique visitors a day. Those are click-through visitors, people who are actually landing on one or more of our pages. The overwhelming majority of them come from sites we know, mainly other real estate weblogs. A significant portion come from search engines, this because we tend to score very high on certain industry-related searches.

    In addition, we have a very strong RSS subscriber base. How strong, precisely, I do not know, this because I don’t like routing traffic through third-party vendors. On top of that, we add new email-based subscriptions every day. For these latter, I see actual email addresses, so I know for sure we are appealing to real estate professionals.

    There’s more I could say. For example, Google Analytics tells me that our readership is extremely “sticky”: Thousands of people have visited BloodhoundBlog hundreds of times. Since last August, when I installed Google Analytics, more than 42,000 individuals have visited us 9 or more times. Over 20,000 people have come here 51 or more times. Again, this ignores RSS subscribers. We are talking to a large, growing and very loyal audience.

    Why does it work so well? I don’t suffer the curse of modesty, so I’ll tell the bald truth: We are as popular as we are because we deserve to be. We write wisely, wittily and well about things that matter to real estate professionals. We don’t divide our attentions trying to serve two divergent audiences, and we are so far-flung as to be completely location-independent. We are philosophically and temperamentally diverse, and yet we are able to engage in intramural debate without rancor. Here’s the kicker, the sine qua non, the ne plus ultra: We write very, very well.

    I’m very grateful to share credit fifteen ways and then some, but I have no objection to taking any blame entirely upon myself. I’m getting a reputation for being able to scout out great writers, but, in truth, I recruit people I enjoy reading. I think writing together here makes us all stronger, a synergistic side-effect.

    What we have are contemplative, communicative people who have something to say and have a large and growing podium from which to say it. We are fiercely independent, and we are very proudly beholden to no one. We don’t take advertising. We don’t traffic in leads. We don’t get in bed with vendors. We don’t kiss ass. We don’t necessarily absolutely always suffer fools badly, but we call everything by its true name.

    That dog at the top of this post is not a pet or an illustration or a symbol. It’s an ikon, an imagic concept encapsulating in a single glance an entire philosophy — not just of commerce but of life. Odysseus cannot think, but neither can he betray himself. We are better Bloodhounds because we have better minds, but we are better, too, because we can consciously live up to a Bloodhound’s integrity.

    Here’s what you can do as an expression of that Bloodhound spirit: Tell your friends. We can’t talk to every real estate professional, but we can talk to everyone who is wired. A secondary consequence of the work we’re doing at BloodhoundBlog is helping Realtors, lenders, investors and other industry pros become more net.savvy, more transparent, more responsive to wired consumers. If you will tell your friends and colleagues to get their butts over here, we’ll all be that much closer to taking over the real estate industry.

    In the meantime: Not bad for eleven months. There are plenty of worlds left to conquer, but well-begun is half-done. We could not possibly be more delighted to have all of you here with us. But: You ain’t seen nothin’ yet.

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  • 19 comments

    The Carnival of Real Estate . . .

    …is up at the North Fulton County Real Estate Blog

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  • 8 comments

    401(k)’s IRA’s & Urban Myths

    In a recent post, Retirement — A New Class Being Created, I predicted a new class of retiree living a life tied to their free and clear home, with little monthly income. It inspired some interesting comments, and a question that is the inspiration for this post. One reader, Eric, was surprised to hear his 401(k) would be taxed when he retired and began taking distributions. So he asked the following question.

    Help a young man out here – what tax bite do you speak of? Early withdrawal? I was under the impression that so long as a 401k built up to a certain age (65?) that it was relatively tax free?

    Rain on my parade, I’m wearing my parka. :)

    It’s not Eric’s fault (at least mostly) he thinks his withdrawals would be ‘relatively’ tax free. I’ve had many people in my office tell me what they know on the subject, most of it based on what some expert at work told them. But alas, it is taxed just like you’re being taxed now Eric. And if you’re not taking out what Big Brother thinks you should be by the time you’re in your early 70′s, they’ll make you take out more, or penalize your butt.

    That’s when Chuchundra came in to soften things up for poor Eric. Chuchundra then offered some advice to Eric using the number one urban myth out there on the subject. In his comment, Brian Brady recognized this advise for what it was — pure urban myth. Chuchundra said:

    If you have a standard, pre-tax 401K or IRA, you pay tax on your distributions. It’s considered regular income. You didn’t pay tax on the money you put in or on the capital gains that money made over the years, so you pay when you take it out. The idea being that you’ll be in a lower tax bracket when you’re retired, so the tax bite will be smaller.

    Now that might very well be true for those who followed the Grandpa Economics school of How To Retire With A Free & Clear Home While Learning To Live On Coupons, but I don’t think that’s the end game Eric is shooting for. Here’s another way to put it. If your tax rate is less at retirement than while you were working, there are very few reasons why. For most, it’s simply because the actual income amount generated by your savings isn’t high enough to merit a higher income tax rate. Besides following in Grandpa’s footsteps, it could also be because you knew someone who does what I do. You’re not taxed much because the bulk of your retirement income is made up of either tax sheltered income, or tax free income. Of course, even when the shelter runs out, and it will, the amount of income is so much, you won’t care.

    I’m going to resist the temptation to go all complex and sophisticated here, because it’s not justified. I’ll just invite Captain Obvious to this party instead. Here’s what he has to say: If Eric’s income tax rate is less at retirement than while he was working, it means his retirement income is about the same as when he first entered the job market — if not less. In other words Eric — this means your retiring on the salary of a well trained 23 year old bank teller — before tax.

    What kinda plan produced that stellar result, eh Eric? If you work hard for 40 years, and retire at 65 at a tax rate less than you’ve been paying, something went awry somewhere down the line. Eric later added this comment:

    If you were looking to put a couple hundred a month aside for a 401k or company offered retirement plan, can you address in the article what you would prefer to see it spent on? Tossed in a liquid savings account (which still offers 4-5%) until there’s enough for a small investment?

    If you contribute just under $325 monthly for 40 years into your 401(k), and it’s compounded annually at 8%, you’ll end up, more or less, with about a million bucks. Using that same 8% yield you’ll be retired with an $80,000 annual income. Oops, wait a minute. Forgot just one thing.

    Since you’ve bought into the whole free & clear home mantra, you now have an $80,000 income with no interest deductions, and your children are of course long gone (no deductions there). You’re retired, so there’s no tax deductions for work related travel, car expenses, classes, tools, etc. In my world we have a term for that — tax wise, you’re running around town in your boxers. Counting state and federal taxes you’ll be lucky to get away with a net of over $55,000. The tax bite is larger when you add your generous Social Security check to the mix. :)

    Eric, here’s the alternative I promised you the other day.

    First, immediately stop contributing to your 401(k) — it’s a scam. Government planners knew they’d collect more taxes from your generation this way. Think about the small amount of income taxes you saved over the years putting a paltry $325 a month into your plan. Now think about paying $25-30,000 a year in taxes for say, 20 years of retirement. (This means I’ve knocked you off at 85 — sorry.) You’ve paid a minimum of HALF A MILLION BUCKS in income taxes over that 20 year period! Do you think you might do better than that?

    Ya think? :)

    Now, since it’s Memorial Day as I write this, my normal tools aren’t available. However, I’ve done enough of these to come pretty close with the numbers.

    First let’s name the vehicle I’ll be recommending to you Eric. You’ll be putting your monthly savings into Investment Grade Insurance. And no, you’re not buying insurance as you understand it. You’ll be investing into a policy that will be indexed to the S & P. The S & P has produced an average yield of, give or take, 8% a year for the last 55 years or so. You’ll no doubt agree, that’s a pretty nice track record. I’ll use my daughter as an example.

    Turning 23 this July, she’ll be putting $500 a month for the next 20 years into an investment grade policy. When she’s 43 she’ll stop. If she then waits 10 more years, letting it simmer, she’ll be able to retire with an annual income of roughly $100,000 a year — for life — tax free. That’s the rough equivalent of $150,000 a year before state and federal taxes.

    Do the same as my daughter. Start out with an after tax figure, based on the $325 a month used earlier. We’ll say that’s about $250. When you can afford more, increase the monthly investment. Though, like my girl, you’ll also probably have an investment real estate basket, there’s nothing like an extra $100K a year — for life — tax free — to sweeten up your retirement. :)

    A note here: Another monster cool benefit this vehicle affords you Eric, is that upon your death, the built up cash value and/or death benefit isn’t even part of your estate — and therefore not taxable. Your 401(k) will be part of your estate, and, well, you know the rest. And one more cool difference — you can borrow from this policy without paying it back, and there won’t be a penalty. It just keeps getting better and better, doesn’t it?

    My guess is, the urban myth about retirement income being taxed at lower rates than when folks were working, started because most folks bought into the whole Grandpa Economics myth. And as we all know — two wrongs myths don’t make a right. (sorry)

    Will my daughter own investment real estate? Captain Obvious says it’s a safe bet. When she’s in her 40′s she’ll have who knows how much tax sheltered cash flow generated by real estate. By the time she’s 53 she’ll have the additional $100,000 a year tax free for life. And I’ll be Grandpa to her kids, visiting them on my dime, wherever they live.

    For young men and women out there like Eric, I invite you to contact me. I’ll put you in touch with the financial planner on my team. He’ll hook you up big time. Disclosure: BawldGuy makes a total of $0 every time he refers someone to his financial planner. I don’t want his money, I want my clients to have more money in retirement.

    And that’s the answer to your question Eric.

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  • 34 comments

    Elaborating the video slideshow beyond all reason: Bert and Ernie BlogTourUSA, the movie

    I got Final Cut Express HD for the Macintosh on Friday. Call it semi-pro video editing software, appropriate to folks like me with significant commercial needs but with neither the time nor the talent to make use of a higher-priced spread.

    What you get with Final Cut Express is multi-track video and sound editing with cable-channel-like titling and a blue million sound effects. It doesn’t do green-screen superimposition (I don’t think), but the fanatical home-movie mechanic has everything he needs to alienate an entire family reunion in one elaborate film.

    What I want, for now at least, it to insert slide-show images over live video, and I spent a bunch of time playing with those toys over the weekend. Today I built what I think will be my final statement on the video slide show: No full-motion video, but loads of fun with transitions.

    I have loads to learn, but I think this hangs together pretty well. Give it a look. It’s fun.

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  • 7 comments

    Separating the Buyer Agent Commission From the Listing Commission is a REALLY stupid idea

    This is a continuation of Jeff Kempe’s thoughtful post below. At first, I was going to reply to his post via a comment. But as I thought about it I realized there was way more I wanted to say.

    First things first: Welcome Jeff, Lani & Morgan! I’m delighted to have you here.

    __

    It is common for a person to have a completely false idea of why something is good or bad and for them to still be correct that it is good or bad. This can come about when the person looks to see why something is the way it is and not knowing the correct answer (real reason why) they then make up or invent an answer. This new datum is then used to explain away some situation or circumstance they observe. This is so common that you can see examples of it in almost every profession, industry and government. Failure to correctly observe the real “right why” is THE WHY for every failure any individual, organization or government ever had. A real WHY opens the door to handling.

    Man too often finds that his “solutions” become his new problems. Most of the difficulties one faces on a regular basis (problems) are, in fact, themselves solutions to earlier problems.

    I do not intend to be disrespectful here towards your friend and mentor, Jeff – but several of the things he has informed you about are completely incorrect. The thinkingcapidea that a Realtor not sharing a commission was passed into law in state after state after state, across the country, to “protect Realtors” or to somehow impede discounters is just flat wrong. I can’t say that any of those laws were the best possible solutions but they had nothing to do with “protecting Realtors”. In every state where a real estate license is required to legally earn and collect a commission (all 50 in the United States, last time I checked) there is some sort of rule or regulation that states commissions can not be paid to an unlicensed individual. In most every state there is a special exception to this rule for lawyers – a lawyer can charge and collect a commission for handling the sale of a property and not run afoul of state licensing laws. The original idea behind these laws was to prevent someone from doing an end run around the real estate commissioner and his or her rules. Now, I don’t really disagree with Greg that in most cases having a real estate license does little to actually protect the public. But if we are going to totally do away with not sharing a commission with an unlicensed person we would be heading down a path of getting rid of real estate licenses in general. The other one – which I really never fully understood, was not offering money or “prizes” to a buyer, as it would be an “inducement to buy” and that was illegal. That type of rule has been “softened” quite a bit over the years in most states. The original purpose of those rules wasn’t to protect agents but the public. The various government officials (just like the FTC, DOJ, and FDA) feel it it their purpose to protect consumers from being scammed. For example the laws regarding inducements were originally intended to prevent an unscrupulous salesman from taking advantage of a returning veteran who just came back from fighting a war and could get a 100% loan under the G.I. Bill.

    I am assuming this statement is from your friend, as well, “Twenty years ago, before the internet, we didn’t have that reputation. Now 80% of transactions don’t even really need a buyer’s agent.” Twenty years ago the average Realtor was thought of by the public pretty much like they are today – right down there with car salesman, lawyers and politicians. The public perception of a Realtor is actually slightly better today than it was twenty years ago. Just slightly. And the internet has changed precisely nothing with regard to the public “needing a Realtor”. I fully understand that many people think otherwise. They are wrong. What is different today because of the internet is potential buyers can see most of the listings online. They can also get just about any medical information, previously available only to a doctor. Same with dentists, I can get all of the information about teeth online now too. For those who become upset with me comparing “real professions” to real estate (I secretly do it just to aggravate you because I know it will) use plumbing or electric wiring as an example. Pretty much any and all information known by plumbers or electricians is also available online. This has not put even a dent in the incomes or amount of business that plumbers and electricians have and it isn’t going to either. Reason? The evaluation of a datum is more important than the datum. We pay professional people to evaluate data for us and to guide us to the optimum decision and for them to “take care of it”. The internet can’t and won’t change that. Ever.

    What did customers want 20 – 25 years ago? To be treated like they were important, to be dealt with honestly, to have the person guiding them put the customers interests above their own, and to receive excellent service. Go back 100 years and you will find that is what customers wanted then too. Go forward 1,000 years and that is what customers will still want then. Anyone who thinks those things will ever become “obsolete” simply can’t think at all and has their head in a place where they can’t see anything either.

    With regard to him hoping he is out of the business before the buyer agent commission is separated from the listing commission – I’m betting he can stay a long time. He has nothing to worry about. Even though it is the title of this post I am not going to spend a lot of time on it. I don’t have to – it is just that stupid an idea. Agents working with a buyer seeing (validly) that the seller or seller’s agent paying them a commission can be a conflict for them with regard to agency. And if only the lenders would see how awful this is and allow the buyer to finance the commission why the buyer agent and the buyer would really be independent of the listing agent. Blah blah blah blah. OK, each and every agency issue you can raise is “true”. Let me just concede they are all correct and you are 100% right. Unless your actual goal (as a buyer agent) is to literally route yourself completely out of the real estate business – stop working on this issue.

    If you “succeed” and all buyers are then free to pay you a commission via their loan, you will collect very few commissions and the ones you do manage to get will be quite meager. There is never going to be any rule or law that forces a FSBO to have “representation” and any buyer who wants to buy a house from a For Sale By Owner directly will always be free to do so – without government interference. And how much do you really think any buyer is going to want to pay you to go around and register him with half a dozen homebuilders? But none of that is the Big Reason. If you are in the position of asking a buyer to pay you for something they don’t believe they ever needed to pay – unless you are planning on a hell of lot more “federal government help” than I can even imagine – all that would need to occur for your buyer business to go away COMPLETELY is listing agents to start promoting, “Buy Direct from the listing broker – PAY NO COMMISSION”.

    What branch of the government or what governing body is going to stop that so that the buyer has agency representation? My answer is none. The very thing, the very reason it was important to separate the buyer agent commission from the listing commission would wind up being the very thing that ultimately caused the buyer to receive NO representation at all. (see the fourth paragraph from the top)

     
    The divorced real estate commission file: This is an organic compendium of weblog posts and internet-based articles arguing for and against the idea of divorcing the residential real estate commission — eliminating the co-brokerage compensation from the listing agreement, with buyers contracting for and arranging compensation for their own representation. One way this might be effected: Lenders could permit buyers to expense representation on the HUD-1 form as sellers do now. The entries collected here represent the full gamut of opinions on what may be the most important issue facing Realtors today. To submit additional posts or articles for inclusion on this list, fill out the form at this link.

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    Tennessee, Oregon, and the State of Real Estate

    This started as a reply to Greg’s post on the Tennessee legislature, which apparently insists going backward is the new going forward. But then I had The Conversation, and it’s developed into a post of its own.

    Involved is someone I respect, a friend, a mentor, perhaps the one person more responsible for getting me into real estate than anyone. In the business over twenty years, he knows RE law better than most principal brokers, and has helped me enormously in the first three years I’ve been around.

    Oregon is one of the eleven states that has a “Thou shalt not share commission!” law, passed at least fifteen years ago, notwithstanding Glenn Kelman’s Sixty Minutes inference that it was all about him. I wanted to know why it was passed in the first place: Assuming consumer protection against graft or corruption, I couldn’t figure out how that worked. The answer dumbfounded me:

    “That protects us, our commissions. I’m glad it’s there.”

    Oh, dear. Thank you for the candor. Elaborate?

    “Look, I know you’re a free market kind of guy, but there’s nothing wrong with laws protecting us from consumers. People try to hack away at my commission every day on the listing side. This prevents the same kind of hacking on the buying side.”

    Wait. Aren’t you worth the commission you charge? “Of course. That’s my point.” Then when someone asks you to cut your commission, what’s wrong with: No. Why do you need a law, especially a law that reinforces the public perception that we’re all self absorbed troglodytes?

    “Twenty years ago, before the internet, we didn’t have that reputation. Now 80% of transactions don’t even really need a buyer’s agent.”

    Say what?

    It went on, defensively and testily. The internet’s the problem, we’re the victims. When I brought up separating buyer commission from listing commission, he said he hoped he was well out of the business before that happened.

    It’s occurred to me: his opinion isn’t an anomaly; as I said here the biggest problem we face as an industry is our industry. I can’t begin to get my mind around treating clients as adversaries, but the “Buyers are liars!” meme is constant. (I’ve run into it only once in three years, when I gently suggested she find new representation.) A seriously uncomfortable percentage of our peers think doing it the same way it’s always been done is the only way, that it’s us vs them, that suggesting anything else is heresy. By definition, according to my friend, I’m a pariah.

    I only know this: it’s not twenty years ago. And it never will be again.

     
    The divorced real estate commission file: This is an organic compendium of weblog posts and internet-based articles arguing for and against the idea of divorcing the residential real estate commission — eliminating the co-brokerage compensation from the listing agreement, with buyers contracting for and arranging compensation for their own representation. One way this might be effected: Lenders could permit buyers to expense representation on the HUD-1 form as sellers do now. The entries collected here represent the full gamut of opinions on what may be the most important issue facing Realtors today. To submit additional posts or articles for inclusion on this list, fill out the form at this link.

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  • 2 comments

    MySpace Should Buy Trulia, Zillow and Active Rain

    MySpace, Active Rain, Trulia, and Zillow. The perfect merger.

    Active Rain: The best place for B2B sales in the real estate industry. Mortgage originators, title reps, and escrow officers who aren’t playing in the “Rain” are missing out on an incredible opportunity. I’m not going to expand on that anymore in the interest of greed. Realtors can juice their SEO on Active Rain, trade war stories, and learn the art of weblogging but they really aren’t having enough conversations with a consumer to warrant the time investment to have a presence there.

    Zillow: The consumers I’ve “met” from Zillow tend to be “over-educated”. They are the “know everything” engineer-types who value real estate professionals only as a functionary. Contrary to tech culture belief, a business can not be built on commodity shopping; there is no incentive for participation from the real estate professional community. Zillow’s automated valuation model, however, may very well be the best use of technology for real estate. Consumers LOVE it regardless of it’s inaccuracies.

    Trulia: Perhaps the best opportunity for a real estate professional to establish a credible web presence is in the Trulia Voices section. Just two weeks old, Trulia Voices is attracting consumers and providing a forum for professionals to answer questions. Buyers flock to Trulia because of the listings. Control the listings and you control the game.

    MySpace: Last summer, Myspace just registered it’s 100 millionth user. Critics claim that MySpace is for teenagers and is not to be taken seriously. That is incorrect. Over half of the visitors on Myspace are over 35 years old as the site starts to mirror the population. Any MySpace user can tell you about the cultural shift these “graying users’ have brought to the site these past two years.

    Why would I propose this “merger” of RE.net media?
    Zillow offers tools for the seller (or homeowner looking to refinance), Trulia owns the listings platform with the participation of the professionals. Active Rain has tech-savvy real estate professionals dying to interact with consumers over the web.

    MySpace has the consumers. That is who we’re missing.

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    MLS ‘ad’ crackdown a waste of time, expert says

    This is me in today’s Arizona Republic (permanent link):

    MLS ‘ad’ crackdown a waste of time, expert says

    Here’s an interesting conundrum: MLS rules forbid one broker from advertising another’s listings without permission. The question is this: What is advertising?

    At first blush, you might say that advertising is paid space or time in a publication or on a broadcasting outlet and that the rule is devised to prevent Broker Paul from advertising Broker Peter’s listings as if they were his own.

    Surely it would be sleazy of Broker Paul to do that, but the rule itself is not without stain. Why wouldn’t Broker Peter want free advertising for his listings?

    Because he wants to maximize his chances for representing both the seller and the buyer, taking commissions from both.

    With the advent of the Internet, though, things are getting more complicated. Zillow.com, the Seattle-based real estate portal, will permit anyone, including Realtors, to announce that a particular home is for sale. Is this advertising another broker’s listings?

    Seattle’s Redfin.com, a discount brokerage, built weblogs devoted to reviews of listed homes. The Northwest Multiple Listing Service has ordered the company to shut these sites down, assessing a $50,000 fine, claiming that the property reviews are advertising.

    Two points to consider: First, nothing prevents ordinary people from saying whatever they choose, subject to libel laws, about a property. The only people to be restrained from speaking are MLS members, who presumably have the most information to share.

    Secondly, these conversations will go on.

    The Internet massively reduces the cost of sharing and acquiring information. The natural course of events for net-savvy consumers is to obtain as much information as possible before buying or selling anything.

    Truly, resistance to this indefatigable quest for information is futile. So, smart vendors embrace it.

    When you shop for a book on Amazon.com, at the bottom of the page you will find reviews by ordinary people, some positive, some negative — and the reviews themselves are rated by other users.

    If Realtors, through the MLS, elect to exclude themselves from Net-based conversations about particular properties for sale, they will hurt no one but themselves.

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    Could anything be sleazier than Redfin CEO Glenn Kelman? How about the Tennessee Association of Realtors?

    The Tennessee State Legislature is trying to outlaw real estate commission rebates — guess at whose behest? Little Pink Houses has the dirt. Jonathan Dalton has the dudgeon.

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