There’s always something to howl about.

Month: January 2008 (page 1 of 6)

Who benefits from occupational licensing laws? The licensees, to be sure — to the detriment of the consumer

Via Coyote Blog and Radley Balko, the Philadelphia Inquirer brings us a nice illustration of why occupational licensing laws really exist: Not to protect the consumer, but to protect the licensees from free-market competition:

Mary Jo Pletz was really, really good at eBay. But now the former stay-at-home mother and gonzo Internet retailer fears a maximum $10 million fine for selling 10,000 toys, antiques, videos, sports memorabilia, books, tools and infant clothes on eBay without an auctioneer’s license.

An official from the Department of State knocked on Pletz’s white-brick ranch here north of Allentown in late December 2006 and said her Internet business, D&J Virtual Consignment, was being investigated for violating state laws.

“I was dumbfounded,” said Pletz, who led the dark-suited investigator to a side patio area, where he grilled her. “I told him I would just shut down,” she said.

Mary Jo’s violation? Auctioneering without a license. Sound familiar? It should. It parallels the dumb stunt the Sate of Arizona tried to pull on Zillow.com, which was accused of doing real estate appraisals without a license.

But there are consumers who need protecting, right? Oh, you bet:

D&J Virtual Consignment had 11,000 feedback comments on eBay and 14 were negative, Pletz said, giving her a 99.9 percent satisfaction rating.

Ebay is not just perfect Capitalism, it is Capitalism Perfected — everything that has always been implicit in free-market commercial transactions made utterly transparent by means of database management. If you are looking for the complete and irrefutable refutation of Das Kapital, you’ll find it not on but in the form of Ebay.com.

So where’s the beef?

Amoros, the state spokeswoman, said investigations were a “complaint-driven” process but those complaints are confidential.

Uh huh.

It is only possible to for you to defend occupational licensing laws by ignoring the palpable harm they do to actual consumers — higher prices for lower quality goods and services. But even then, don’t get downwind of yourself. This stuff stinks.

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Big News: Ignore all that fine print, tear through all that red tape — Redfin.com supports Safari at last!

Oh, wait, that’s not the big news from Redfin.com. In fact, I reported the really big news last night:

Redfin will either make money or it won’t, and, in the long run, if it endures into a long run, it will become more like traditional real estate even as traditional real estate becomes more like Redfin.

So here’s what’s changed, as of 12:01 am EST: Redfin agents are going to squire buyers around for free four times as much as they have in the past. No news on who’s buying lunch.

Online real estate broker Redfin Corporation today rolled out a 75-day trial of a new home-tours policy that allows visitors to its site to arrange four Redfin-hosted home tours without paying any money up-front or making any commitment to Redfin. The first two tours would be free, and the third and fourth tours would cost $250 at closing, with any subsequent tours costing $250 in advance.

Sounds complicated, doesn’t it? My experience is that home-buyers are not the most assiduous readers of fine print.

There’s more:

The new tours last two hours, and require the buyer to provide a mortgage pre-approval letter documenting her ability to buy the homes she is scheduled to visit. Redfin deducts the $250 charges for the third and fourth tours from the commission refund, which has averaged roughly $10,000 at closing. Customers who do not complete a purchase with Redfin do not pay for their third and fourth tours. Previously, Redfin only provided one free three-hour home tour, charging $250 in advance for each additional tour.

I’m thinking there can be too much red tape even for the INTx gnomes who find Redfin appealing. What is clear is that pay-as-you-go has a less-than-ideal gnome appeal.

I can do four houses an hour with normal buyers. I normally do 12 houses in three hours, then make the buyers stop. After 12 houses, their eyes glaze over. If we limited ourselves to two hours, that would be eight houses. Four two-hour tours would be 32 houses. This is nothing at all like the original Redfin game plan — shoving the expense of showing homes onto Read more

A Mastermind of Hucksters

High Body Count

1+1=3…A Mastermind Alliance. I first learned of this concept over 20 years ago during one of many telemarketing seminars I attended as a tenderfoot insurance salesman. I can’t recall which one exactly, but I’m certain the motivational speaker cashed my post-dated check—a sign up now and pay later gimmick included in the 2 week Increased Performance Guarantee.  My office buddy and Mastermind phoning partner Sam, however, bounced his post-dated check and eventually got sent to a collection agency before escaping  the business for good without ever making a nickle, or for that matter, an appointment as an insurance man.

This was all back in a time when I truly wanted to believe that ‘No‘ meant ‘K.N.O.W; the ‘Client’ (person on a list) really needed to know more to make the ultimate buying decision; and a shoeshine and a handshake?….well shucks, “I just want to earn your business, Mr Fencestraddler.”  Somehow, even though I tried to fancy myself a believer, all the sales talk never sounded quite right coming out of my own mouth.  And even though I had long since left the business at the time, I publicly applauded the Do Not Call legislation of 2003 and all the crappy jobs and unrealized frustration it eliminated from people’s lives.

My Sales Manager, a guy named Charlie who initially recruited me into the business, called me in for a chat one morning after three months on the job. He had a picture window above his cherry wood credenza that overlooked a dense forest preserve behind the office. His three remaining walls were plastered with ceremonial photographs, sales award plaques, and framed certificates, all about him. He had an electric shoe buffer next to his cherry wood desk and a full length mirror behind his door with a sign above that read: Would You Hire This Person?

A few months earlier he convinced me to give the insurance business a try.  He and one of his trainees sold me a rinky dink burial policy one snowy night–a ritual in itself that lasted three solid hours and culminated with my signature and a check for the first month’s premium just as Letterman was coming on the tube and my dinner withered to ash in the oven. My ‘belief in the product,’  he said, was ‘the Read more

Obeo, Baby, where have you been all my life? Why should buyers stop at virtually moving in their furniture when they can virtually redecorate — inside and outside — as well?

We are too much misled, surely. Too much miscounseled, misdirected, misinformed. Too many of the people we turn to for advice on selling homes don’t actually sell homes themselves — never have — and, in consequence, too often, they are too much mistaken.

Consider that 2006 was to have been the Year of the Real Estate Video — except it wasn’t. Nor was 2007. And nor, neither, will be 2008. Video is useful for telling stories and for communicating personality. In expert hands it can be an incomparable tool for conveying arcane or abstract ideas. As a real estate marketing tool, it is at best a role-player — and most often — owing to crappy production values and even crappier pre-planning — it serves more as a detriment than a benefit to the marketing of a home.

Good photography, by contrast, is the real estate marketing tool of the millennium. Houses sit still, and what buyers want, more than anything, are scads of detail-rich images that also sit still — so they can examine, repeatedly, every last one of those details.

We will sometimes do video in a role-playing way for our listings, but the second most popular feature on our web sites, after the photographs, is the interactive floorplan. Buyers love to see exactly how their furniture is going to fit into the home — and the more they commit their minds to the home, the more committed they are to buying it. The scientific name for this intricate process is: Salesmanship.

For years now, we have dreamed of an even more fun, more engaging, more interactive tool to put on our sites: Virtual redecorating. Change the paint. Change the flooring. Change the cabinets and countertops. “You almost love this home, folks, and you haven’t even liked anything else. What can you do to make this place your own?” The name for this again? Oh, yes. Salesmanship.

And guess what? It’s here. Obeo, about whom I knew nothing until this morning, has solved the virtual tour problem in a way I not only don’t hate, but actually like. And they have given me virtual redecorating, Read more

In The Business Of Personal Relationships, Database Marketing Is More Effective Than SEO Marketing

Two years ago, NAR told us that 74% of people begin their home search online.  What they didn’t tell us, however, what percentage of those people write paper with the agent on whose site they began said search.

This omission is an important one.  Just because a person starts online doesn’t mean he finishes there.  If you’ve researched a product at multiple Web sites before making the actual purchase, you understand what I mean.

Every store except the last one was just a borrowed encyclopedia.

Click-throughs from a search engines are not “leads” and that’s why the NAR statistic is misleading.  Until a reader engages the author personally, the click-through is only that.

A Web site visitor that registers for free search, free reports, or free seminars is not your client.  He is a window-shopper taking home free samples.  He’s a client when he signs, and never before.

Today, the Federal Reserve will do something to the Fed Funds Rate and if history is an indicator, my Web site traffic will quadruple.  It happens every time.  It’s because I’m so high on Google for the term “fed funds rate mortgage“. 

Of the traffic from Google, not a single person will reach out to me for a “personal question” about their mortgage.  Again, history is my indicator.  I am the source of information of for a lot of people and that suits me fine.

Knowing that my clients would care about the same information, I have a planned email to my database that will do three things:

  1. Explain that the cut in Fed Funds Rate will likely cause mortgage rates to rise
  2. Introduce them to the concept of “why the Fed is taking a shower”
  3. Point them back to my Web site for a full explanation of the “shower” analogy

This email to my database will generate new business.  Once more, history is my indicator. 

The last time I saw this was when I sent my “stick people in houses” video on the same day the Fed dropped rates 0.750% out of nowhere.  The email generated much more business for my team than did placing high on Google’s page rank.

When you’re in the business of personal relationships, effective database Read more

I hear rumors all the time

But I rarely blog about them.

This builder’s going out of business. This one’s filing bankruptcy. This one has plenty of cash on hand. This broker’s dipping into their equity line. This lender’s leaving the business. This agent has a second job.

It’s a real estate blogger’s responsibility – ethically (at least per NAR and common sense), and one assumes legally, to present the best, most accurate information possible. I do this for two reasons –

1) I want readers, potential clients, the general public and my peers to respect my opinion and my credibility.
2) I don’t want to get sued.
3) I really, really don’t want to get sued.

Builders and companies frequently sometimes do file bankruptcy, having sheltered and protected their assets appropriately, and then re-open under a different name. It’s a fact of doing business.

I trade on my credibility – with my clients and potential clients, my fellow Realtors, builders, developers, the public and the media. Damaging that credibility – even by an infinitesimal amount – is not an option.

When on a panel at Inman Connect about blogging, someone asked how I handle writing about local builders and developments, whether I criticize them (in comparison to Jonathan Butler’s excellent Brooklyn blog, which is all about neighborhood and property reviews – and much, much more).

The dilemma is this – step into the world of investigative blogging that might impede one’s ability to do business locally, or write a great piece that might make news and generate conversation – yet alienate those with whom one does business?

I choose to maintain the delicate balance that exists between being a Realtor – a buyer’s agent advocating for my clients’ best interests, a listing agent representing sellers – and the blogger/journalist whose foray into biting investigative journalism/expose could terminate my real estate career. Getting sued could turn out to be the least of my worries if I were to become persona non grata to the community in which I have strived to excel.

Sellsius have the legal primer, summed up with this (all bloggers should read this post):

Bloggers should be careful to couch all writing as Read more

HELOCs Frozen: Preserving American Homeownership

Preserving the American Dream is a position paper authored by John Dugan, Comptroller of the Currency. “Preserving American Home Ownership” is the “initiative” rumored to be pondered by Countrywide Home Loans, IndyMac Bank, and Washington Mutual.

N.B.: The following is rumor; something that was “heard on the street”.

Jeffrey Smith reported, two weeks ago, that Countrywide is freezing some home equity lines of credit. The wholesale lending reps and escrow officers, in my own little network, were buzzing about the possibility of such an action from Countrywide, WaMu, and IndyMac.

More on this rumor as it develops. Today, it’s just a rumor. I think it’s comical the Countrywide won’t do anything without a PR/Marketing twist to it (as a marketer, I love it). It is rumored that the CFC initiative will be “Preserving American Home Ownership”

UPDATE:  While I haven’t confirmed the rumor with Countrywide, there is one disenfranchised Countrywide borrower, getting pummeled by the bubbleheads on a Yahoo message board.

Want to learn how to sniff out bias in the mainstream media? Follow your nose — all the way to Yosemite

John Cook fingered this mash note to Redfin.com in Forbes Magazine. More of the same four-legs-good, two-legs-bad crap we expect from the mainstream media, but it’s short enough that the bias is almost too obvious.

Consider the attributions for quotes:

  • “says Kelman, 37”
  • “Kelman says.”
  • “one Redfin representative wrote recently”
  • “read another posting”
  • “says Steven Del Bianco”

These are all people of whom the writer approves.

But you can’t write a morality play without a villain, so take note of this item, quoted in full:

“In our area the consumer is savvy enough to know that they want value and a high-quality agent,” sniffs Gary Bulanti, a Realtor with Alain Pinel Realtors in Menlo Park, Calif.

Did you sniff out that “sniffs”? Kelman says, then says again. Redfin’s minions write and post. Even investors in past failed discount brokerages get to have their “say,” as it were. But if you are anti-Redfin in even the smallest way, you sniff — you bloated, soul-sucking, counter-revolutionary pig!

It’s all one, really. Redfin will either make money or it won’t, and, in the long run, if it endures into a long run, it will become more like traditional real estate even as traditional real estate becomes more like Redfin.

But just stop for a moment to take account of this:

In a national forest near Yosemite National Park someone affixed fake Redfin bumper stickers to signs, trees and rocks to make the company look like a shameless promoter and defiler of the environment. After Redfin staffers removed the stickers, which they have never used to pitch the Seattle company, the trickster started tossing the signs, attached to weights, into branches of sequoias.

First we have some some kind of demented, Edward Abbee-like monkey-wrenching counter-revolutionary pig of a Realtor, who traipses off from densely-populated Seattle to a national frolicking forest to smear Redfin. And then we have a yellow school-bus full of happy, happy Redfinions — red caps, blue kerchiefs, khaki tunics and cargo shorts — racing off to that same forest to repair this horrendous damage to the natural world, praying all the while to Gaia to heal the deeper wound. On the way home they sing Read more

Joe and Marge

In a classic Bawld Guy moment, Jeff Brown reminded us recently that hard work, not a magic formula nor even an ability to predict five out of six Power Ball numbers, is what makes a successful real estate career. All of the motivational seminars in the free world can not replace the experience of one real-life transaction. The fanciest widgets and the sexiest web site flash intros will never replace feet on the ground. Technological applications augment a solid business plan built on fundamentals; they do not replace it. We work in real estate, and there is a reason it is called “work.”

Jeff mentioned that he started his career converting For Sale By Owners (FSBOs). I always suspected we were twins. Just for fun, I thought I would share the story of my first transaction. We all remember our first – with a lot of fondness and more than a little humility. This is just a little walk down memory lane self-indulgence on my part but, if a few more people follow suit and share their “firsts,” we might start to connect the dots for the newer agents. I suspect we will see a common thread of tenacity and drive, stuff that can’t really be taught or learned.

Make no mistake. For the new agent wanting to jump-start a real estate career, this is a difficult market. But then, they all are. The first thing that will strike you is that your new career laughs in the face of the supply and demand laws of nature. There are more real estate agents than there are left-over casseroles needing a shave in my refrigerator right now, and certainly more agents than there are potential customers. This is survival of the fittest, and in the virtual Plinko game that is your office, within seconds of your arrival, every single one of your fellow agents will be plotting to throw you under a bus.

What distinguishes the working agent from the non-working agent is “work.”  A fundamental ingredient of this work is a “client” who wishes to buy or sell a home. Ideally, this “client” is not themselves a licensed real estate Read more

Principles of Flight and Real Estate — Getting Off the Ground

I’ve seen in the real estate business the rough equivalent of what my grandma saw in her lifetime with flight. Born in 1909 she saw in real time the embryonic stage of flight. The first successful flight was only six years before her birth. 60 short years later she watched, on a ‘machine’ not in existence until she’d been married and had four children (three on her front porch), American men land on the moon and come back safely.

Think of where real estate brokerage was 40 years ago. I’d compare it to the planes used in World War I. The MLS existed, but was in book/magazine form delivered by truck, supplemented thrice weekly on paper held together by staples. The establishment of farms for Heaven’s sake, was a huge break through! Knock on the same doors every month? Why would anyone do that on purpose?

There were no teams, not even the biggest thinkers created teams, even in the ’70’s. (at least that I can recall) The team itself was another development thought by most as staggeringly forward thinking. My father didn’t use for sale signs and he was thought of as a maverick. 🙂 We’ve seen the rise of franchises which came like a herd of buffaloes in the ’70’s. Some still exist, most don’t, but the franchise has remained as a significant player.

The first time i heard of an agent being paid a 70% commission split by their broker I thought it was a joke. It was real. It was the beginning of what we see today. 100% commission offices with ‘desk’ fees. In-house service companies — title, lenders, escrow, etc. The shift from the broker/owner being the god of all things to the producing agent should have been predictable. The tail wagging the dog is at least in part why we’re here today. Most high producing agents would fall flat on their faces if they’d been forced to open their own companies. But that’s another post altogether.

Where exactly is here?

It’s business models we’d of laughed at 40 years ago. Marketing not hinted at on TV shows Read more

Write more

Selling your home is a big deal; as many verbose real estate bloggers will attest, people are willing to read a lot to learn abut the process. I hate to kiss up to my new host here at Bloodhound, but I would wager that a good long-scroll “who I am and how I work” sections are much more valuable than three paragraph essays that above average agents have on their websites. Heck, a multi-page “who I am and how I work” about page was the most effective for SEOMoz (seriously – long), an SEO (and stuff) company. And deciding to buy a subscription to SEOmoz is a much smaller than deciding to buy a home.

The Odysseus Medal: “A hopeless attempt to regain what she lost: her sense of trust and self-reliance”

One of the benefits of The Odysseus Medal competition, for me, personally — especially since we started echoing the Long List of nominees — is that I don’t feel as much pressure to weigh in on every last thing. I’ve been writing software in my spare moments for the last two weeks, and, amazingly enough, the world spins on without me. Last week we had Roost.com launch, which I wrote about, but we also had a huge Fed rate cut and the extended coverage of the Ummel lawsuit, and I got to coast on both stories, on the strength of the great work done by other voices in the RE.net.

And, as it works out, this week is an all-Ummel Odysseus Medal Awards post.

We start with Glenn Kelmann, who wins The Odysseus Medal this week for “114 Pounds of Absolute Perserverance”:

Once a buyer’s agent begins making representations about price, it seems possible for him to make negligent representations about price. This doesn’t mean an agent can’t make representations about price, and can’t be wrong when he does. He just can’t be negligently wrong, by withholding material information that a reasonable person would want to see. If the Ummels’ agent did that, he should pay for it.

Of course, since we have no idea from our seat in the peanut gallery what really happened between Ms. Ummel and her agent, the whole debate is academic. The only undeniable fact is that the lawsuit that Ms. Ummel is pursuing, at greater cost than she is likely to recoup, must be like all other forms of revenge, a hopeless attempt to regain what she lost: her sense of trust and self-reliance.

In this respect, the case just illustrates the perils to both parties when a client outsources her brain to a real estate agent, or a stock-broker, or anyone else trying to sell something. It is why we dislike the paternalistic mindset occasionally used to justify brokerage fees, in which talk of “hand holding” is not seen as condescending, fears about “the single biggest purchase in your life” are stoked, and agent attempts to be persuasive during Read more