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Archive for June, 2009

Is It Time For You To Put Up Or Shut Up?

Though there are a buncha things I read on this blog with which I disagree, there’s one thing for sure — there’s no shortage of reliable information. Also, expertise is freely shared by most of the contributors on what seems an almost infinite array of subjects. What this blog does best, from where I stand, is show the way to fellow pros to a more effective business.

Brian Brady, Sean Purcell, Chris Johnson and I seem to be the ones who at times address the other side of that coin — taking the ‘How To’ to the ‘Wow! This Stuff Really Does Work’ stage. Possibly the best nugget I’ve taken from BHB is Greg’s 20-something bullet point list for selling his listings. Talk about goin’ from the ‘How To’ to ‘Wow’ stage.

Brian’s a practitioner of what I call ‘Old Skool’ marketing. He’ll toss his latest marketing salad ’till it either produces or bombs. But even his bombs usually end up pointing him in the direction of enhanced success. He keeps doin’ what works, while never resting on his laurels.

Sean shows us where we may have unknowingly run outa bounds. He gently guides us back to the field of play, which is, after all, the only place any of us can ever score. He seems to have that sixth sense. You know the one — the ability to see what and why something will be effective. Or, better yet, how it can be made more so — like he did a few days ago.

Chris? Chris reminds me of Dad so much it’s freakin’ scary. If I believed in channeling I’d swear that’s what he’s been doing lately. If you read anything he writes and come away unsure about what he really thinks, you’re probably beyond hope. 🙂 He says things other people are thinkin’, but don’t dare openly express. Chris is like the guy in the locker room listening to all the guys brag about their romantic conquests. Know why he’s quiet? Those that do more than talk are rarely loud about it. They just, well, do. Chris understands the #1 rule of sales: See/Talk to the people. Rule #2? Never violate Rule #1.

I’m not sure how to categorize myself, so I won’t. Suffice to say at times I endeavor to inspire, gently scold, encourage, or just plain call things as I see ’em. Today’s thoughts are probably a mix of all those, but more a reality check than anything else.

Thought: I realize preparation and process have their place, but at some point shut your pie hole and actually do something which will end up with you in front of somebody who can either tell ya to go to hell, or do business with ya.

Thought: Stop frettin’ about how Steve the geek gets so many online leads. If he lists a couple properties monthly from his endless leads, and you list two monthly from your 1958 methodology, ask yourself — who made more money? (Don’t answer, it’s a rhetorical question, Einstein.)

Thought: Ever wonder how a mortgage guy like Brian keeps doing business when everything around him has changed umpteen times? Don’t bother him, I’ll tell ya. He changes what he’s doing when what he’s doing stops working. Guess that merits him a Nobel Prize, right? 🙂 He can change vehicles faster than you can watch him do it — while gaining speed.

Thought: If you haven’t figured out by now that sales is about skinnin’ cats, you need to either change your thought process or put your job app into Von’s today. Nobody cares a whit about why you’re not pilin’ up new skins. They’re far more interested in how the guy down the hall skinned those three just last week.

Thought: You already know whatever it is you need to do to add more feline fur to your wall. You’ve done just about everything possible to avoid actually doing it. Seriously ask yourself why — give yourself an equally honest answer — than start doing it.

Thought: Those who’re still makin’ bank are the ones still doin’ whatever it takes to talk to strangers who just might tell ’em to go to hell. Every time one decides you may actually have the solution to their need, perform like a champion, and act like you’ve been there before.

Suggestion: The ‘how’ is your job, but whatever you do to find new clients, do it every day without ceasing ’till you schedule at least one solid appointment with a serious minded prospect. Do this six days a week for 90 days. Care to predict the potential results? I care to. 🙂

There are 13 weeks X 6 days which = 78 appointments with serious people. Let’s invoke the 80/20 rule plus the concept of Life Happens and say those 90 days produced 62 belly to belly encounters.

If you show up to these meetings wearing Levi’s and a tank top, you should still trip over six cat skins. If you dress, act, and speak like a pro you should do WAY better than that. But even if you only do twice at well as a tank top wearin’ dufus, that’s a dozen deals in 90 days. If the average sales price is say, $150,000, and you make 3% on each of ’em — that’s about o $54,000 — more than what I think is the median income for the average full time agent.

Question: Forgetting why you haven’t done this in the past, why wouldn’t you immediately put this strategy into play?

Why?

8 comments

Just because the real estate market is being trumpeted by bull horns, that doesn’t mean it’s time to retract your bear claws

I’m the leading bear in an article in Saturday’s Toronto Globe and Mail. I wasn’t as dour as the overall slant of the article, but it remains that the Phoenix real estate market is overbuilt. We have more kitchens than cooks, and, as long as that is so, a robust and enduring recovery is not possible.

One thing I didn’t say, but I wish were true: “Mr. Swann said he has clients from Canada, California, Oregon and elsewhere snapping up dozens of houses at a time.” I have dozens of investor clients, most of whom are buying nothing right now, since it’s stupid to compete for the privilege of over-paying for a rental home. I have one client who plans to buy dozens of homes, but who has not started yet.

The interesting thing is, it really is a great time to buy a house in Phoenix — except at the very low end. Sellers with equity are finally waking up and smelling the coffee, so the move-up market — at least below $500,000 or so, jumboland — is really starting to move. First-time home-buyers, enriched by the $8,000 tax credit, are butting heads with out-of-state investors for all the homes priced $100,000 and under. But for people with buying power, things are looking very rosy right now.

Even so, the Globe and Mail article is good reading. The authors explore a lot of systemic factors that could make our current mini-boom a fondly-remembered oasis in a desert of on-going bad news.

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“For every one that doeth evil hateth the light…”

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The Problem With Agents: They’re Not Selfish Enough

I talk to a lot of real estate agents and if there is one universal problem I see, it’s this: you are not selfish enough – not nearly selfish enough.  I’ll explain that in a minute.  First, let me ask:  how many reading this took auto-shop in high school?  I’m guessing maybe half.  Of those that took auto-shop, how many actually work on their own cars?  Right.  You don’t take it so you can grow up and work on your car.  You take it so when your car breaks down you have a clue what might be wrong with it.  You want to know if the repair shop is taking care of you or just taking you for a ride.  The importance of wide-ranging knowledge is even greater for agents.  The real estate business is a difficult one in the best of times and it’s always time consuming.  It encompasses so many different areas, you may not need auto-shop (although I recommend it),  but you do need Mortgage-shop, Title-shop, Escrow-shop, Sign-shop, Web Site-shop, Appraisal-shop, Home Inspection-shop, Staging-shop and on and on.  Obviously you can’t be an expert in all these areas, but just like auto class, you should know enough to make sure you – and your clients – are being taken care of rather than just taken for a ride.  Beyond that the most important thing you can do is surround yourself with a team that excels in these areas.  Herein lies the problem for which I titled this post:  real estate agents are not nearly selfish enough… with their time.

I’m going to share one perspective on how big an impact this can have on your bottom line.  Last Wednesday I was involved with three different events affecting over $1.7 million of real estate transactions.  For the math challenged, that’s $51,000 in real estate commissions.  I’m writing this from a lender perspective because that’s what I am, but it’s all about the agents.

  • Early on Wednesday we funded a VA purchase loan for a little over $700,000.   Not remarkable in and of itself;  what stands out is that this borrower and his loan had already been declined… twice.  Fortunately, the agent knew enough about VA loans to know this one was doable.  No different than auto-shop:  you don’t have to know how to fund a VA loan, you just have to know if it’s fundable.  This agent did, so he went looking for a VA expert and found Brian Brady and myself.   His client now owns their dream home and he’s cashing a $21,000 commission check – all because he knew enough to go find the right team.  Do you think his client was pleased?  “I have more business for you” pleased?  How about “I can’t wait to refer my friend to you” pleased?
  • Later that same day we went to an appointment with a top producing agent.  She had a purchase client who was about to pull $100,000 from a qualified account and pay over $10,000 in penalties because that’s what the client’s lender told her to do.  This agent knew enough to know that didn’t sound right and she called us.  Again, no different than auto-shop:  you don’t have to know how to fund a loan from a financial planning stand point, you just have to know that such a thing exists.  How excited do you think the client was when this agent  called and said “her team” was going to save the client close to $10,000 in penalties?  “I’ll give you more business” excited?  “Here’s a referral” excited?
  • As it turned out, we were late for the meeting I just mentioned.  We were late because early Wednesday afternoon the mortgage back securities (MBS) market reversed itself.  For the past few days we had been floating all of our clients and they were enjoying better rates and fees because of it.  But things changed rather suddenly on Wednesday.  Since Brian and I are both a couple of old traders, we watch the MBS market…  and enjoy it (insert “get a life” joke here).  There is often less that a 45 minute window between the MBS market reversing and the lenders freezing their lock desks for repricing.  We jumped on the phones, locked the loans and called the agents.  We saved those clients close to $3000 each in extra closing costs.  (Or, worse yet, they may have been forced to take a higher rate, costing them tens of thousands over the life of the loan.)  Either way, how happy do you think the clients will feel when their agents called them and say:  “My team is looking out for you.  We just saved you a few thousand dollars in extra closing costs?”  Will they be “Here’s more business” happy?  “May I give you a referral” happy?

Because these three events occurred so close together, it hit me what was really happening.  These transactions were getting done, money was being saved and commissions were being earned because the agents knew enough to surround themselves with people who added to their business.  They were, in other words:  SELFISH with their time.   It reminded of a description I once read of Lance Armstrong.  The biographer had said that when it comes to people trying to enter Armstrong’s inner circle (“the world of Lance,” I believe he called it), there were  no gray areas.  Either Armstrong saw you as someone who contributed to his goals with little or no distraction, or he just plain didn’t see you.  His time was much too valuable to waste with someone who was not adding to the equation. Black and white.  Here’s the thing to remember:  Lance Armstrong’s time is not any more valuable then yours or mine, he’s just more aware of it’s value than most of us.

As I said, I wrote this from a lender’s perspective because that’s what I do.  But it’s true with your title rep, your escrow agent, your attorney, your home inspector, your home warranty rep, your stager, your assistant, your coordinator and everyone else in your circle.  You absolutely must be incredibly selfish with your time.  Take a look at all the people who make up your “team.”  I mean really evaluate them.  Make sure they are contributing to your business with little or no distraction.  Make sure you’re not actually spending more time on transactions due to all their “help.”  If you don’t know enough, take a loan class or an escrow class… or an auto class.  As I wrote last week:  time is the most important (if not only) product you stock on your shelf.   It is your most precious asset and it is absolutely non-renewable.

By choice or by inertia:  you surround yourself with professional relationships.  Make sure those relationships enhance your profession.

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To celebrate BloodhoundBlog’s third birthday, let’s celebrate all of the insanely great ideas we have come up with…

Last week I was working, late at night, plugging street addresses into encartus, in preparation for building a bunch of new engenu pages for a new web site we’re building, an exposition of truly-distinguished homes in Paradise Valley, Arizona. While I was working, I got pinged by an incoming email, a moderated comment to Brian Brady’s first post on the idea of disclosing all real estate purchase offers.

While I was reading all the other great comments to that post, I got pinged again, this time a private email asking me what I thought about the nominees for Inman’s most-innovative blog award.

To misquote a line many Bloodhounds love: I don’t think about them. I will stop in at The Phoenix Real Estate Guy once or twice a month, and I know I’ve been to MyTechOpinon and the Clean Slate Blog. But I don’t associate any of those sites with innovation. They’re just weblogs, that’s all.

This is not sour grapes. I don’t give a rat’s ass about beauty contests, and I’ve deliberately painted Inman “News” into a corner: By consistently ignoring what is obviously the most innovative weblog in the RE.net, they come off looking like petulant crybabies even as they despoil their reputation as a “news” source. And does this malign neglect hurt us? Uniquely among RE.net weblogs, we’re a PR6, as is the Inman “News” web site. With no capital investment and nothing but part-time, amateur writers, we’ve pulled even with the life’s work of a big-baby billionaire. One would think the idea of gamesmanship was invented yesterday.

And please don’t post treacly little comments about how you get good ideas everywhere. I have no objection whatever to the Special Olympics, so long as you don’t insist on calling the contestants Olympians. The three innovations cited in the first paragraph of this post, three among hundreds, are more than enough to split BloodhoundBlog away from the herd.

But that’s the point. BloodhoundBlog is ten days away from being three years old. In those three years, we’ve pioneered a vast host of jaw-dropping ideas. If we stopped writing on June 29th, our anniversary, we would still be the most innovative real estate weblog in history, forever.

Why? Because the ideas that drive BloodhoundBlog are the ideas that will drive the real estate industry in the twenty-first century. The dinosaurs who insist that we can’t supplant the NAR are twice absurd: In every way that matters, we already have. Like Inman and all the wannabe social media gurus, the grand poohbahs of the NAR come to us, lurking in cowardice. We don’t go to them. We drive the debate, not them. We’re the big dog, and we have been for a long time. They’re just fleas — temporary hitchhikers.

But, all that notwithstanding, I thought we might have a little contest of our own: Most Innovative BloodhoundBlog Post. Anyone can nominate a post (or more than one, if you like), and there are a lot to choose from. In the days before our anniversary, I’ll post a voting tool, and we’ll let the audience pick a winner. But it is probably obvious that I am no fan of raw democracy, so if individual contributors want to write posts about the BHB entry (or entries) they see as being most innovative, I think that’s a fine idea.

Nominate posts in the comments or by email. Let’s see what we think about what we have thought about over the past three years.

37 comments

Freeing The Real Estate Market From The Real Estate Industry

AREBOT.com, which stands for the American Real Estate Board of Trade,  is the name of the company that intends to open up the demand-side statistics, by voluntary submission of properties, to an online NASDAQ-like market.

DISCLOSURE:  From this point forward, my opinion may be considered biased.  I have a verbal agreement to receive site advertising in exchange for publicity.

The intention of my post about the “big idea” was to “smoke AREBOT out”.  I knew they were getting ready for a site launch and wanted to have it revealed to the Bloodhound Blog community first.  C. Aaron Bruce, the founder, was happy to explain the site and encouraged me to explain it to you ahead of the official press releases.  This “exclusive”, if you will, is available to all, Wednesday June 24, 2009 at 1PM (PDT), on a conference call.  If you’re interested in the call, raise your hand below and I’ll email you the details.

AREBOT.com is not intended to be an “auction”.  It is an open, transparent, real-time market.  Each zip code will have a live “ticker” moving across the screen, displaying actual offers on homes.  Each listed property will display a time-dated offer history.  Entries are voluntary and cost nothing to the sellers of the home.  The “price”, if you will, is that they offer the property on this  transparent market.

Buyers offer on the properties by entering the terms .  The bid is then considered to be “unverified”, signified by it’s yellow color, until verified and submitted by a licensed real estate agent.  Licensed real estate agents may offer their buyer brokerage services, at no cost, on the site.  Listing agents are protected by their listing agreements and may voluntarily display listings on the site, at no cost to them or the seller.  Verified offers turn green and stay that way for 24 hours (or longer if both agents are negotiating); offers are still accepted until the property is withdrawn from the system.  Rejected offers turn red and are displayed with the property, in perpetuity.  Final terms are not disclosed as most states publicly disclose sales information.  I have no idea how AREBOT.com intends to handle the five non-disclosure states, at this point.

AREBOT.com believes sellers benefit because they will see all offers on their properties without interference or redirection.  Sellers are not “forced” to accept any offers like an auction.

AREBOT.com believes that buyers will benefit because they’ll see history of legitimate demand for that subject property.  Buyers can  make offers on properties not available on AREBOT.com; the Company will send the seller an invitation to respond.

The Company intends to monetize the site through advertising and possibly the sale of the granular property data to secondary loan market participants.

The site launch is scheduled for Independence Day, July 4th, 2009.  Press releases go out next week.

PS:  Future potential of conflicts of interest preclude me from future posts about AREBOT on Bloodhound Blog.  The news is so compelling that I want to release it to the Bloodhound community, exclusively.

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Hectoring Rian from the iPhone 3G 3.0

Yesterday I upgraded my iPhone to version 3.0 of the operating system software. So far, a pretty big yawn. Typing is plausibly easier, though still not easy. Cut and paste were not on my list of must-haves. Zillow upgraded its app to allow push notification, so your phone can tell you if one of your saved searches has popped up a new candidate. Okay…

I wasn’t unhappy with the iPhone before — quite the contrary! — but I don’t think I have any new reasons to be happier from this upgrade. Safari 4, by contrast, is totally killer, and I could not be more pleased with suddenly-faster-everything on my iMac.

One thing I played with right away on the iPhone was the new voice recording app. Not that impressive. It records losslessly at 44khz, which means the saved files are huge. They can be transferred only by email or hard-wired sync — no BlueTooth, no WiFi — and almost everything is too big to move by email. This is the kind of dumb, useless software I expect from Microsoft, not Apple, so one may hope it will get better in future versions.

Anyway, as a test, this morning I made a short little audio greeting card for Rian Lussier, who is about to undergo surgery. The file is a monstrous 25 megabytes, and it took over an hour to sync to my iMac (no hope of emailing a file that large).

Even so, the recording quality is not awful (there’s a buzz in places from me speaking too loudly), and the sentiments are what they are.

Godspeed you well, Rian.

6 comments

Data Discrimination, A Class Action Lawsuit in the Making

Anyone a member of the Texas Bar Association looking for Pro Bono work?  I think you may be able to rassle up a class action lawsuit in big “D”, little “a”, double “L” a, s (Dallas folks 😉 )

Texas is one of five states that do not require disclosure of sale prices, however, I believe the local MLS board in Dallas may be violating their fiduciary responsibility to their buyers and sellers.  I strongly suggest you read the following article.

Actual home sale prices are not being entered into the MLS.

Does this not blatantly fly in the face of transparency.  Moreover, how can the local board stand for this?  Without accurate data shared at least to local members, the guidance and counsel for properly pricing a property places sellers, but more clearly buyers, in a very bad position.  The article suggests that lower priced properties which have sold may be intentional left out in order to provide a perception that property values are higher.

Not only is this a direct violation of an agent’s fiduciary responsibility to his/her client, it is borderline fraud.

Real estate is local, consult a local REALTOR and find out how much your home is worth – or NOT.

Is it any reason why data aggregators are winning?

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To Catch a Theme: The NAR can’t evolve, but that shouldn’t stop you

I’ve had reason to be contemplative for the past few weeks and it’s given some small inklings an opportunity to germinate and link together into bigger ideas. Given the nature of BloodhoundBlog, I’m hoping a couple of bigger brains who read and write here, will help me get a better grasp on what is still a bit foggy in my mind- help me fill in the gaps.

My brain has made a leap of sorts, into the future of the business, and I think we are getting it wrong. That is, what we think about, if we think about the future of the real estate business at all, may not be quite right.

First, the real estate industry is a bit behind, no offense, but I’m thinking that we bluster and bellow about stuff that really isn’t relevant, or, by the time we grasp the idea, another idea has pushed that idea into the past. What am I talking about? I’m talking about information and how it’s driving us to change the way we do business. Here’s what I’m thinking: We are not in control of information, I believe information is in control of us. That is, we are becoming conduits for information- I don’t know how else to describe what I see happening, but maybe a few examples.

Remember transparency? Transparency has nothing to do with pulling down your boxers. It’s simply about information. But not information about you. See, it’s not about you. And it’s not personal, so don’t panic, and it doesn’t matter if you like it, don’t like it, wanna share, don’t wanna share. Nope, none of that matters, because what is happening is that with or without you, information about how we do business, everything about how we do business, is about to be shared. Again- it’s not about you, it’s just information, but it’s all about information, and we are not in control of information. We are conduits, pathways, carriers of informational memes. That’s all, and it’s not about you personally.

Except. It is about how valuable you are at sharing information. How expert you are at giving away information. How transparent you are at sharing everything you know. That’s the only thing that’s going to make you valuable in the future, because what is happening, indeed what has happened and we don’t realize it, is that our value will only lie in how quickly and openly we can disclose valuable information to those who are looking for it, and when they are looking for it.

Does that make sense? I’m never sure if everyone gets this stuff before I do, or if I’m the crazy person hollering about stuff that no one else sees. In this case, I know a few people see this, have seen it for quite awhile, but do you really see it?

Do you see why blogs, social networks, twitter, are so vital? So important? But here’s the thing: It’s not connecting with people that make it so important, contrary to popular belief, it’s because of the ability to share information rapidly- the back and forth, the conversations, the 140 characters, that makes networking so valuable. It’s not about social, in the way we have traditionally thought about social, because, remember, it’s not personal, and it’s not about us, it’s only about how vital we are at sharing information, spreading memes. You think you get this, but I’m not sure you grasp the enormity of this.

Everything we, as people, are beginning to hold valuable, is only for the purpose of sharing information. Don’t believe me? What’s the greatest thing about rebc? Meeting people? Yeah. So we think it’s the physical hug? Nope. It’s that we can blast a whole lotta info back and forth much more quickly in real life. We can share ideas, information, themes, memes in a heart beat, and that is so fulfilling to us, isn’t it? It’s like great sex. Wow. Information satisfaction. I looked that person in the eyes, and we talked. I saw their facial expressions and watched them laugh and frown, but all the while we were giving valuable information back and forth in rapid fire pace, and that’s where the satisfaction comes from.

But that’s great, and you can say, “See Teri? It is about IRL.” Not quite. You still have to connect. We want information satisfaction, don’t we? Have you ever met someone IRL, that you’ve known online, and there still is no connection? Why? Why no connection? Because you are not sharing information that either of you cares about. Your memes are not connecting. You are in each other’s twitter stream. You’re BfbFF (think about it) but you don’t really talk, do you? Your memes, your themes, your value as informational conduits are not meaningful to each other. Now you see where I’m going?

So take the NAR, please (ba dum ching). Tom sat down with some of the people who we might consider the best and brightest informational conduits at the NAR. He made a connection. They shared their memes. And now we know that the NAR has meme issues- “messues” we might call them- on a large scale. Why? Because people do not gain value from the NAR, and it’s not a perception issue. That is, it’s not that the NAR is perceived to be something it isn’t, it’s that we understand the NAR, and they are not truly open to transparency. It doesn’t share well with others. And it is going to die, because, by protecting information in the name of benefiting members only, much of its most vital information is locked away behind a veil. Here’s where it gets interesting: We, as conduits of information, as consumers of information, find this idea repellent. We, even as protected members, do not want to conduct our lives this way- it’s anathema to us as theme/meme messengers. We can’t get no informational satisfaction. A consumer friendly NAR site? We might consider that an informational tease.

Have I got this figured out? Almost? Kinda?

What if the real estate industry didn’t control the real estate market? Let’s stop with this “if” nonsense, because your value as an agent will be in your ability to share information- give consumers good informational satisfaction not “if”, but “when” the industry doesn’t control real estate. And it’s not personal, and it’s not about you, or blog, or your social media prowess, except in your ability to connect with memes. Tom understands that evolution is happening- but the NAR cannot participate is this evolution revolution. You, on the other hand, can evolve as quickly as the rest of the world, and that’s exciting.

Okay. That’s all I got. Am I on the right track?

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Darwin and the Notorious NAR

One of the most powerful outcomes of attending an REBarcamp isn’t necessarily attending the many great discussions during the day, but the great conversations and discussions which take place over a beer after the meeting is over.  I also believe that REBC – now after experiencing yesterday’s REBCCHI – is the real personification of a virtual tool – a living and breathing example of how Twitter converts 140 characters into 140+ face to face meetings and discussions.  Followers carry more weight when they transform from the virtual world to the real world.

For me, the most meaningful discussion took place at the end of the day.  Todd Carpenter, NAR’s Social Media Guru, invited the CEO of NAR, Dale Stinton, to share his thoughts and address questions posed by the group.  His initial stance was somewhat defensive, however, during his discussion I gained a somewhat different perspective regarding the challenges that NAR is seeking to address and overcome.

NAR’s largest challenges is to address the needs and the ranks of the young professional.   Attempts by NAR to try to level the playing field may be difficult because of entitlement issues with older members.  Of the 1,500 boards throughout the country, 200 or so wield the most power.  Many of the larger, more influential boards may not embrace attempts to level the playing field for younger, more independent brokers.  Hence, Dale encouraged everyone to get involved in the boards to influence change.

I think NAR is evolving.

Come the end of 2009, NAR is rolling out two intiatives that have been more than a few years in development:

  1. RPR – Real Property Repository – to all NAR members, a database consisting of the property attributes including tax records etc. for 70 million properties in the US, allowing members to provide comments and additional information to the unique property description.
  2. A consumer focused website, equivalent to Realtor.org.  It is NAR’s response to providing everything a consumer needs to know about real estate.  Again, consumer focused versus member focused.

Timeline again for both is slated for fourth quarter, 2009.

Okay – so now RPR appears to be an almost national MLS, provides data like aggregators and looks like a potential leverage play against Realtor.com.

But why all the fuss about a consumer-faced website?

Well, here was the greatest value of the day for me – a discussion at the bar with @Ericstegemann and the notorious @robhahn taking a step back and taking a look at the big picture.   During Dale’s discussion with the group, he mentioned that the REALTOR brand is a Fortune 50 brand worth $4B.  But in the big picture, is $4B really impressive considering the size of its membership population of roughly 1.15M?

Do consumers really value the REALTOR brand?   Do REALTORs really value the REALTOR brand?

Apparently not.  Dale chastised the group for not actively participating and supporting in NAR’s Call for Action.  In fact of the 1.15M members, only 7% to 8% actually make the calls to their Congressmen.  From Dale’s perspective, NAR is only a 100,000 members strong, not 1.15M.

During the beer infused debate with Rob and Eric, the value of the REALTOR brand is essentially providing bully pulpit status to the average REALTOR, nothing more.

Maybe the biggest issue facing NAR isn’t the growth of the young professional, but the future value of the organization itself.  How does NAR increase the value of the REALTOR brand?

This may be the impetus to reaching out to the Consumer directly.  By providing a consumer focused website of all things real estate, NAR reaches potentially 70 million homeowners.  If the site reaches even 5% of the its intended audience, NAR’s voice reachs 3.5 million people, roughly three times the number of NAR members.

What if 7% of NAR members and 7% of the 3.5 million consumers reach out to Congress?  The message is 3.5 fold louder.  This begs the question.  In the future, how important will the licensed agent be to NAR?

NAR is evolving to survive.

  • Building a repository that could possibly compete with a powerful board’s MLS .  Could this be a path to leveling the playing field for independents by usurping the power of entitled boards?
  • Playing catch-up to technology rivals with a plethora of data – if you can’t beat ’em, change the market dynamics.
  • A direct link to the consumer – does this change the mission of NAR to be consumer focused or allow NAR to influence consumers to bring its entitled dinosaurs into the 21st century?

Are these strategies the missing link?

32 comments

The Case For Twitter, Really Fast

House Hunting? in Ohio?

or maybe

LandLord Problems In Pittsburgh?

What if your:

“Rate Went Up”

maybe you want to

“Look At Another House

Whatever you do, don’t be a “Stupid Realtor

These people are BEGGING for some help.  They are SCREAMING for it. And you can fish though and find some phrases in your area that will get you houses this week.  And you gotta fish a little bit, but seriously?   What the hell else are you doing?

Search.Twitter.com and a little elbow grease and a friggin’ phone call is the way to go.  Betcha you can get tweetdeck loaded on a computer, run about 10 searches near your area and throw 65,000 in GCI.  And I’ll betcha you can do this without having to talk to any idiots.

These are people with their hands up.  And the first person that clicks through and responds on their website or not JUST on twitter…they are the differentiators.  They are the ones that get to date the prom queen.

So…loads of people are needing a deal.  A connection.

Make that, and get real paid.

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Getting a $15,000 tax credit when you purchase your next home could be as easy as stealing candy from a baby…

This from my Arizona Republic real estate column (permanent link):

So we started with a $7,500 tax deduction for first-time home-buyers.

But that didn’t juice the real estate market enough, so we bumped the number up to $8,000 and made it a full-blown tax credit. If you owe $8,000 in taxes next April, your slate is wiped clean.

But even that didn’t juice the the real estate market enough, so this week Republicans — the alleged party of fiscal responsibility — proposed bumping the tax credit up to $15,000 and making it available to everyone — including billionaires.

How cool is that? You buy a $150,000 house, you get 10% back when you file your taxes. And you can file an early return to get the money now. And you can even finance the tax credit now and pay it back when you file your return.

You can’t — quite — use the tax credit as your down payment, but that “reform” can’t be more than inches and hours away. And a $15,000 down payment on an FHA loan buys you a $428,500 house.

Unfortunately, that’s more than the FHA limit for metropolitan Phoenix, so that limit will need to be “reformed” as well.

Paying people to buy houses would be insane if we actually had the money to back up our promises. But, since we don’t, these “reforms” are the mark of true statesmanship.

I’m helping an ambitious young couple buy their first home right now. We’re late to close, a common enough situation.

They just had their second child, an event mere bureaucracy cannot delay. Their baby boy — his name is James — is sweet and beautiful, healthy and smart, a perfect specimen of incipient humanity.

They’re taking the $8,000 tax credit, of course, as they should. The government doesn’t become less insane if you shoot yourself in the foot.

But it is sweet little Baby James who will pay for that tax credit, and for millions of others, and possibly for millions more at $15,000 a pop. Our economy runs on theft — and we’re running out of people to steal from.

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This Post Has Nothing To Do With Real Estate

Not long ago I listened to an inspirational speaker discuss ways to make our lives less stressful and more enjoyable.  At one point he told this story:

In the wild, a big lion sprints toward an antelope who’s quietly feeding.  After a short chase – if the antelope hasn’t been caught – the lion slows down and eventually stops to rest.  Interestingly enough, the antelope often stops only a short distance away and begins to feed again.  The lion doesn’t bore his friends with excuses or puff his chest out and tell the antelope to “wait till next time;”  nor does the antelope, flush with righteous indignation, cry out: “What’s your problem, you (censored)!”  They both live in the present and by doing so find great peace.

I get the “message” in the story and maybe it’s just me; but I’ve never felt all that comfortable with animal metaphors.  Here’s another story; this one’s about stress and enjoyment too, but without the potential of being eaten:

Last Saturday I attended two Little League play-off games on the same day: one for each of my sons.  During the first game, I watched my older son’s team from the stands.  The other team was employing a delaying tactic and one of the fathers from our side made a condescending remark.  A coach from the other team heard the remark and replied in a less than congenial way.  The dad followed that up with an unmistakable insult to the opposing coach and before long we had ‘tough guy’ looks going back and forth.  (I swear, you can’t make this stuff up!)  The dad in our stands (mis)spent the next two hours of the game talking about what he was going to say next and what he should have said already and telling anyone who would listen what he thought of this coach.  He simply could not let go.

Later that same day I’m coaching my younger son’s team.  When you’re in the dugout with the boys you get a chance to listen in on their conversations and they can be quite mean.  It’s not uncommon to hear a group of seven and eight year olds arguing, calling each other names and pointing out each others’ most sensitive weaknesses.  Stuff like: “You’re a terrible player – we wish you weren’t even on this team.”  “Oh no, here comes our third out.”  “I’d give you all my sunflower seeds if you could just get one hit this game.”  Some pretty rough stuff.  Anyway, when it gets too loud one of us coaches will turn and yell: “Knock it off!  Sit down on the bench,”  which they do… right next to each other.  Without a hint of animosity.  They simply let go of whatever they were arguing about and go back to the game in front of them.

In the title I said this post had nothing to do with real estate and technically, it doesn’t.  But after my experiences Saturday, I spent quite a bit of time Sunday thinking about the people around me: my customers, my colleagues, my family and my friends.  Were they more like the people I encountered in the first game or the second?  I’ve got a customer right now that won’t let go of the past; constantly telling me how they’ve gotten plenty of loans and never once been inconvenienced by such trivial matters as tax returns.   I have a colleague that complains nonstop about where the market is heading and how he can’t get a deal done.  Can you make a list of people like that?  If you can, I have some advice: FIRE THEM!  Do not pass GO, do not collect $200 – just get rid of them now.  Might lose a deal?  Might lose a friend?  Might lose a family member?  Good.

As a real estate business owner, the most important item you stock on your shelf (and quite possibly the only item) is your time.  With whom are you sharing this precious, one-of-a-kind asset?  The clients, colleagues and even “friends” who always complain about the past and worry about the future?  Or the people who know how to  “Knock it off!  Sit down on the bench,” and enjoy the splendorous game going on, in the present, all around us? Your peace and your happiness depend a lot on the environment you choose.  You don’t have to hang out with lions and antelopes, but for goodness’ sake avoid the asses.

You know, maybe this does have a little something to do with real estate after all…

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What If The Real Estate INDUSTRY Didn’t Control The Real Estate Market?

I have the heart of a trader.  If you read Mortgage Rates Report, you know that I’m fascinated with the forces that make markets move up, down or not at all.  One of the things I’ve noticed, since I started writing on Bloodhound Blog, is that the real estate industry is:

That lopsided opacity was the real reason for the eventual implosion of the real estate market. We hid market information from the buyers while the Baby Boomers moved through the home ownership life cycle.   A huge generation, yearning for “The American Dream of Homeownership”, assured strong demand for houses in the post-World War Two housing boom.  Banks were all too happy to hand out money, even when forced to lend by the Government.  Lew Ranieri saw a 25-year boom ahead and found a way to create a shadow banking system that could “bury bad loans”.  Any agent dealing with a short sale understands the problem of buried loans because she’s heard:

“Well, we aren’t quite sure WHO owns this loan”

Kind of sounds like the forensic audit of Bernie Madoff’s books, doesn’t it?  That’s what you hear when the jig is up on a Ponzi scheme:  confusion, wagon-circling, and practiced deflection.  It eventually catches up with the schemers.  I’m firmly in the camp that no matter how many incentives we offer to stave off the inevitable forced sales, or to provide a middle-class tax cut, or to bribe the next generation of buyers, the simple fact remains that we have more houses than we need in this country…and the people just ain’t buying like they used to.

It’s partly the National Association of REALTORs fault.  They’ve hoarded supply data and intentionally suppressed demand data since inception.  Suppressing the demand data resulted in a valuation system that relied on false positives (comparable sales) as a standard that contributed to the Ponzi-like atmosphere in the real estate market.   Think about it.  When we ask agents about rising demand, they point to dwindling supply as a measure of it.  That deflects the question.

It’s party the appraisers fault, too.  They allowed themselves to be the lap-dogs of the NAR without ever addressing the demand-side of the equation.  Ask an appraiser about demand, he’ll point to the “absorption rate” which, as I’ve said, is a measure of available supply.

Let me give you an example of the unholy alliance between NAR and independent fee appraisers:

Have you ever been to the Port of Long Beach, CA?  This is what it looked like last Fall. The linked article shows that there are literally thousands of Mercedes and Toyotas, waiting to be warehoused rather than shipped to dealerships.  Can you imagine if the Kelley Blue Book guy came out to “appraise” the new Mercedes, to set the market?

C’mon boys!  Let’s get these vehicles into the sheds!  We can’t let the Kelley guy see the results of the poor demand.  Floyd?  Can you get those last three bills-of sale for the Kelley guy?  He needs to set a value for this model.

That’s how appraisers valued property until last year; they ignored current listings and went off historical data.  Nobody cared because we were in the middle of a long-term market paradigm where demand was greater than supply.  Remember, that chunk of people just turned 65 so they’re pretty much out of the market.  That paradigm is shifting- ask Gary Keller.

Oh, lenders weren’t innocent either.  Lenders (and their counterparts on Wall Street) were so willfully absorbed with the next quarter’s profits (produced by the shadow banking system) that they grew a cabal so powerful that its failure is defined now as “systemic risk”.  The days of what Greg Swann refers to as “flinty-eyed bankers” gave way to the crap-shooting S&L cowboys and gun-slinging investment bankers.

In the end, we had to  sell the former Second-World countries on the compunction of Joe the American so we could keep the taps running.  Joe the American turned out to be a bad bet and the Second-World sovereigns are pushing back.

We ignored the demand-side of the trade.  Now, when Mao and Ivan tell us to mark those mortgage bonds to the market, we have no reliable pricing service because we can’t see what the demand, property by property, is.  We can’t build a pricing model worth trusting because we have no idea about the true demand for the collateral behind the loans. This mortgage-backed securities market collapse goes deeper than the Fed’s unexpected flight from support.  It started when a bond fund manager suggested that our nation’s collateral, and confidence, was in jeopardy of being downgraded.  This rise in mortgage rates is as much a fear of  systemic failure as it is of inflation…

…and it ain’t over yet.

I met a guy last month who thinks he has a solution. It’s so simple it’s silly; an open market, like the NASDAQ, for real estate.  Watch offers for houses, in real-time, be accepted or declined.  NASDAQ Level Two Quotes go beyond the bid and ask; they show the “size” of the market for those prices. The implementation of that transparency greatly reduced the previous NASDAQ market manipulation, that stymied the individual investor to favor institutions.  It isn’t perfect but exposure to that data makes the market operate more efficiently.  Apply that model to real estate and you will quickly determine what the “real” market is for a property.

Prudential California tried a similar approach with its range-pricing model. The range pricing model reflected a bid and ask price but withheld any “size” of those numbers…so the numbers were useless.  Range Pricing then, is a marketing gimmick, not real market transparency vis-a-vis the demand side of the trade.

How then, can we solve this problem so that confidence is restored in property valuation?  I gotta tell you that The Second-World Nation investors don’t trust our Government.  Our Government doesn’t trust Wall Street.  Wall Street doesn’t trust the banks.  Banks don’t trust real estate agents and the public doesn’t trust anyone right now.  Money flows where trust goes so restore trust in the valuations and the money will start flowing again.

Prominently display the terms and dates of the rejected offers, verified by participating market professionals, in the MLS system, and you solve the demand side of the equation because you identify the “size of the market”.  Share that information with the banks and they’ll start trusting you.  Show it to the prospective buyers and they’ll throw their arms around you in joy.  The sellers will “get real” about the market, also.

We all know that ain’t gonna happen because “The Man” doesn’t want to release his clutch on the market.

That’s the real problem.  We don’t have a real estate market, we have a real estate industry created market.  Since the real estate industry isn’t going to restore confidence in the real estate market, I suppose we’ll have to look elsewhere…

…like this guy I met.

Expect to hear a lot more from me, about this topic, as I learn more about it.  Now, you’ll have to excuse me while I go pester this guy via e-mail.  Thanks for letting me vent.

59 comments

Green or Beige?

This afternoon, the Federal Reserve released their Beige Book.  What’s a Beige Book?  It’s their report based on observations and comments from people inside the business world on the state of the economy.    I’m going to walk through some “highlights” and “lowlights” of what’s happening.   My comments are in bold and italics……

“Reports from the twelve Federal Reserve District Banks indicate that economic conditions remained weak or deteriorated further during the period from mid-April through May.”

No surprise there, at least not for me.  So, if conditions remain weak or deteriorated, then where are the gree shoots of recovery that people are talking about?

However, five of the Districts noted that the downward trend is showing signs of moderating.”

So, let’s think about that.   5 out of 12, that’s 41% show that the pace of downward trend is slowing down.  Is that a good thing?   Well, let’s look at a couple of other numbers.   According to this, 100% of the districts show that they are slowing down.  59% of them are slowing down at the same or faster paces than they were previously.

Manufacturing declined or remained weak in most Districts.”  

Given the shutdowns in the auto industry and the related industries, this certainly isn’t a surprise.    What’s going to be interesting is what that shows as Chrysler (and hopefully GM) get back to work after their “furloughs.”

“Nonfinancial Services – Districts reporting on nonfinancial services indicated that for the most part activity continued to decline………In contrast, San Francisco reported a substantial pickup in real estate services such as title insurance due to an increase in home refinancing.

Ooohhh, that illustrates the trouble that we’re in.  One of the biggest “improvements” in the non-financial services is the title insurance industry because of mortgage refinancing.   Guess what’s not going to last very long due to rising rates…..

Consumer Spending and Tourism
Consumer spending remained soft as households focused on purchasing less expensive necessities……   Several Districts reported that discounters have seen their sales increase, while purchases of luxury goods continued to weaken. Respondents from Boston, Philadelphia, Cleveland, Atlanta, St. Louis, Kansas City, and Dallas expect soft consumer sales to persist. Purchases of new cars remained depressed across most Districts.

Travel and tourism activity declined, and vacationers are tending to spend less.

The information about consumer spending is all consistent with an ongoing deleveraging.    Consumers are spending what they need to but are not spending extra.   What’s the easiest way to get consumers to spend again?   It’s not to make borrowing easier, because consumers have already shown that they have, in many ways, woken up from the “how much would my payments be?” syndrome.   To get consumers spending more, we need to do one of a couple of things:  1) Create more jobs and better paying jobs or 2) Lower tax rates so that people can keep more of what they earn.    Hmmm, how’s that working so far?

“Real Estate and Construction – Although the residential real estate market remains weak, agents in the New York, Philadelphia, Cleveland, Richmond, Chicago, Kansas City, Dallas, and San Francisco Districts reported an uptick in home sales. The reasons cited include seasonal factors, low interest rates, declining house prices, and tax credits for first-time buyers. Much of the sales increase was found in the lower-priced end of the market……

First – residential real estate – it’s no surprise that declining house prices are improving home sales.   But, if you look at what we talked about in “Is Housing at a Bottom – Part 5”  there’s a very real chance that house prices aren’t, for most areas, at the bottom.

Second – tax credits for first time home buyers expire December 1, 2009.   If you are a first time buyer and haven’t at least started thinking about buying a home or at least talking to a lender about getting preapproved and starting  to look for a house.   December 1 will be here before you know it.

Third – interest rates are cited as one of the factors that encouraged home sales during this period.   What will be a very telling is what effect the bump in interest rates will have to purchases.   My take on it – the first time home buyers won’t be affected nearly as much as the very few “move up” buyers who are looking at moving up and might find it harder to handle if the rates are higher.

Commercial real estate markets continued to weaken across all Districts…… Eight Districts cited difficulty in obtaining financing as one of the primary reasons for delaying or stopping construction of new developments and for limiting sales of existing properties.

Do you think that one of the reasons the banks are “supposedly” doing well is because they aren’t doing new commercial financing?  Just asking the question…..

Banking and Finance – Most Districts reported that overall lending activity was stable or weak, but with mixed results across loan categories………..

Most Districts said that credit conditions remained stringent or tightened further…… The credit quality of loan applicants and existing clients showed deterioration in Philadelphia, Richmond, Cleveland, and Dallas, although Richmond noted that the rate of deterioration has slowed…..  New York and Cleveland said that delinquencies had increased across numerous loan categories, particularly those tied to real estate.”

Lending activity is stable or weak with mixed results but the banks can all give back their TARP money because they are fine?   Hmmm…..

Employment and Wages – Labor market conditions continued to be weak across the country, with wages generally remaining flat or falling.”

“Prices – With few exceptions, the District Banks reported that prices at all stages of production were generally flat or falling……. The notable exception to the downward pressure on input prices was oil. Increases in oil prices were widely reported.

So,  you tell me…..   Are we dealing with green shoots of a recovery?   Or is the economy looking a wonderful shade of beige?  

It’s important as you make decisions for yourself and your clients that you know what’s really going on.

Tom Vanderwell





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