BloodhoundBlog

There’s always something to howl about.

Author: Greg Swann (page 128 of 209)

Suburban Phoenix Real Estate Broker

October 1, 2007

Budgeting Redfin: Making the numbers work in a corporate brokerage

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Suburban Phoenix Real Estate Broker

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Last week Peter Coy at BusinessWeek made a point of asking Redfin’s Glenn Kelman a real estate question. Kelman’s answer wasn’t awful, but it wasn’t great. (The negotiation advantage for unsold spec home occurs once a quarter, not just once a fiscal year.) But it was funny to me, because of this: Why would anyone expect Kelman to know about real estate in the trenches? He’s not like RE/Max’s Dave Liniger, an ex-grunt with a corner office. He’s a corporate guy, a veteran of securitized start-ups.

And that is a completely different world. Kelman provides a pretty candid peek into that world today at Guy Kawasaki’s weblog, a run-down on Redfin’s budgeting process and how things worked out in real life. There is a more corporate take on similar material at Redfin’s blog. Joel Burslem remarked briefly on these posts, and Sandy Kaduce provides a thoughtful analysis at the Seattle Post-Intelligencer‘s real estate weblog.

BloodhoundRealty.com runs out of a 300sf room in our home, and, especially, the passenger cabins of our cars. Glenn Kelman lives in a world I know nothing about. I find the idea of salaried agents interesting — by which I mean exotic — and I could see a benefit to a coordinated, centralized back-office operation, although this might introduce licensing problems across state lines (another good reason to do away with licensing). In any case, I am grateful to everyone who fingered these posts by email, but I don’t think I have anything to add to the discussion.

In comments here yesterday, Kelman said, “At Redfin, we would prefer it if both buyers’ agents and sellers’ agents each charged a fee.” That would be much easier to effect if the commissions were divorced, a topic I definitely am interested in taking up again — and again.

In the meantime, give a look to Kelman’s post at Guy Kawasaki’s blog. It’s a fascinating glimpse into a side of real estate most of us don’t have to think about.

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October 1, 2007

The Odysseus Medal: Growing your business while controlling your own destiny

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Suburban Phoenix Real Estate Broker

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BloodhoundBlog is addressed to real estate professionals. We won’t reject anyone who wants to come and play, but we made a conscious decision very early on that we would be talking to Realtors, lenders, investors and other professionals, with a special emphasis on real estate webloggers. In that respect, we’re probably a pretty bad example for real estate webloggers to follow. We write about things that are of interest to you, but they aren’t likely to be interesting to ordinary people.

We’re leading into a discussion of last week’s ActiveRain fiasco, so here are two items that I think are very important to real estate webloggers — meaning webloggers who are not writing for the benefit of real estate professionals.

First, the MyBlogLog recent readers widget is not your friend. It visually convinces you that you are writing for the amusement of your real estate weblogging buddies, when in fact you should be writing for your target market, the people who can put money in your pocket.

Second, Search Engine Optimization (SEO) should not be your primary traffic-building strategy. Search engines will bring you unique visitors, which can be useful for advertising monetization business models. But search engine traffic comes with a truly gargantuan bounce rate: They land, they see that what they hit wasn’t what they wanted and they’re gone. Search engines can bring you visitors who will come and stay, some of whom might do business with you. But other traffic generating strategies — better targeted and much more viral — will make you a lot more money in the long run. I know I’m shouting down a well because everyone wants to believe SEO is a magic bullet, but facts are facts.

What does this have to do with ActiveRain? The sweet folks at ActiveRain have managed to convince themselves that talking about inside baseball to their good-time buddies will result in SEO traffic that will turn into money for them. This might actually be true, but it seems certain to me that, erg for erg, their energies could have been much better spent. ActiveRain argues that its search results prove it Read more

September 30, 2007

The Odysseus Medal competition — Voting for the People’s Choice Award is open

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Suburban Phoenix Real Estate Broker

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This was a great week. It wasn’t easy getting to a short list of twenty nominees, and I think it’s going to be particularly tough to pick an ultimate winner. I can’t imagine it will be any easier for you to vote for the People’s Choice Award.

What gets a weblog entry onto this list? Good writing, serious content — and especially both. There’s always room for something light-hearted if it’s very well written, but if you’re taking on a matter of true moment, I’m pretty forgiving about the niceties. My admitted bias is toward a deeper understanding of this thing we’re doing, real estate in the twenty-first century.

Vote for the People’s Choice Award here. You can use the voting interface to see each nominated post, so comparison is easy.

Voting runs through to 12 Noon PDT/MST Monday. I’ll announce the winners of this week’s awards soon thereafter.

Here is this week’s short-list of Odysseus Medal nominees:

< ?PHP $entries = array ( "Dan Melson -- Sellers pays commissions Why the Real Estate Buyers Agent’s Commission is Paid by the Seller”,
“Brian Brady — Advertising to Ashley Advertising to Ashley“,
“Jonathan Dalton — Real estate 2.0 Real Estate 2.0 and the Phoenix Real Estate Consumer“,
“Dustin Luther — Make an impact 7 Ways to Make an Impact“,
“Jay Thompson — Aaron Anglin Tragedy Begets Triumph: Why I Love this Community“,
“Jay Thompson — Refrigerator service How to Save $94 on Refrigerator Service“,
“Joel Burslem — ActiveRain/Move Move.com Tried to Buy ActiveRain“,
“Michael Wurzer — Standards and monopolies Good Standards Break Monopolies, Not Make Them“,
“Daniel Rothamel — Facebook Why Your Answer to, “Are You on Facebook?” Will Determine the Fate of Your Business in 10 Years or Sooner“,
“Jim Watkins — Down market? Down Sales Market? Think Outside the Box“,
“Bill Leider — Opportunity costs Internet Marketing And Opportunity Cost – Connecting The Dots“,
“Steve Leung — Hidden factors Hidden Factors When Calculating a Home’s Value“,
“Jillayne Schlicke — Deceptive advertising Deceptive Radio Advertising in Mortgage Lending“,
“Patrick Kapowich — Realtor licensing Inside the Santa Clara County Association of Realtors’ Convention. Buyer beware? No. It’s Licensees Beware.“,
“Jeff Brown — Double-edged sword Double-Edged Sword — OR — Planning & Discipline — What Does Your Retirement Look Like?“,
“Dan Green — Data is granular Why Real Estate Data Is Read more

September 30, 2007

The Odysseus Medal competition — The long list

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Suburban Phoenix Real Estate Broker

Author website

We had a lot of news this week, some tragic, some comical. All of it and then some is represented here. This is “the long list” — the total list of nominees that made the cut to be considered for the short list, the nominees available for voting for The People’s Choice Award.

What gets cut from this list? Posts that are too short, too stoopid, too much local or too much other people’s work. Even so, making this list of entries is an achievement, as you’ll see as you read them. There are some very serious minds out there, and it’s a delight to be able to showcase them.

For Aaron Anglin, may he rest in peace, the Ave Maria:

Ave Maria, gratia plena,
Dominus tecum,
benedicta tu in mulieribus,
et benedictus fructus ventris tui Iesus.
Sancta Maria mater Dei,
ora pro nobis peccatoribus, nunc, et in hora mortis nostrae.
Amen

And for all the ActiveRainers who may yet find themselves left out in the cold, here is a link to Roger Miller singing The Ballad of Waterhole #3 (The Code of the West).

With that, the long list:

< ?PHP $AltEntries = array ( "Dan Melson -- Sellers pays commissions Why the Real Estate Buyers Agent’s Commission is Paid by the Seller”,
“Brian Brady — Debunking Guttentag Debunking Guttentag“,
“Dan Green — Fed Funds Rate How Setting The Fed Funds Rate Is Like Shooting Free Throws With Your Eyes Closed“,
“Kelly Roark — Agent 2.0 Agent 2.0: not-so-clever play on ‘Web 2.0’ or the future of real estate marketing?“,
“Brian Wilson — Redfin [Redfin] “I coulda been a contender…”“,
“Erik Hersman — RealUmbrella Creating the Ultimate Real Estate Disintermediator“,
“Jillayne Schlicke — Deceptive advertising Deceptive Radio Advertising in Mortgage Lending“,
“Ron Ares — Rent vs buy Addressing the Rent vs. Buy Conundrum“,
“Patrick Kapowich — Realtor licensing Inside the Santa Clara County Association of Realtors’ Convention. Buyer beware? No. It’s Licensees Beware.“,
“Jeff Brown — Double-edged sword Double-Edged Sword — OR — Planning & Discipline — What Does Your Retirement Look Like?“,
“Dan Green — Visa credit scoring How Visa USA Tried To Scare Us All Into Using Its Credit Scoring Web Site“,
“Morgan Brown — Housing glut Housing Glut, Lennar Revenue off 44%, Other Goodies“,
“Dustin Luther — Make an Read more

September 30, 2007

Get your Odysseus Medal nominations in now for change is nigh

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Suburban Phoenix Real Estate Broker

Author website

Jay Thompson fingered this comment from someone named Brandon writing at TechCrunch:

If “the good guys” succeed in “fixing the most screwed up industry in America”, their business model will collapse. Redfin’s success depends SOLELY on the real estate industry STAYING the most screwed up industry in America.

Without a co-broker fee of 2-3% to the buyer broker, Redfin will not have anything to refund to their buyers. Using the example on the Redfin home page, if the home is for sale by owner or listed with Redfin for $3000-$4000 flat fee, they have no way to refund the buyer the $10,000 they’re using in their “typical” example.

Go lookup Bloodhound Blog if you want really insightful info on the real estate industry (including how screwed up parts of it really are) and how Redfin’s model falls down. An no, I am not affiliated with Bloodhound in any way – just a loyal reader.

Ah, well, we have a lot of interesting ideas for changes in the real estate industry, but I can’t imagine that any of them will be implemented in the next couple of days. Even so, get your Odysseus Medal nominations in now. Deadline is today at 12 Noon PDT/MST. If you know of something worthy of recognition, your own work or someone else’s, nominate it now while it’s on your mind — and before the entire universe is upended.

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September 29, 2007

You can view or download mirrored copies of ActiveRain’s complaint and Move, Inc.’s response at BloodhoundBlog

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Suburban Phoenix Real Estate Broker

Author website

The PDF files of ActiveRain’s complaint against Move, Inc., and Move’s response, both attested to be linked from ActiveRain, are no longer there. (See comment below from Jonathan Washburn; the disappearance was apparently inadvertent.)

I am fairly reliably paranoid about crap like this, so I took copies of the two files while they were still available.

Here is ActiveRain’s petition of complaint.

And here is Move, Inc.’s response to that petition.

As someone pointed out the other day, these documents are public records in the State of California, available for inspection by anyone in the jurisdiction where they were filed.

On the other hand, these particular scanned PDF representations of those documents are presumably the work product of ActiveRain.

Whether the added labor of scanning the documents and rendering them as PDF files grants ActiveRain (or anyone) copyright protection is a colorable argument.

However: I will happily remove them upon receipt of a Cease and Desist Order from either party’s attorneys, replacing the documents with a scanned copy of that Cease and Desist Order.

Welcome to the wide-open world of weblogging…
< ?PHP include("ActiveRainMoveSaga.php"); ?>

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September 29, 2007

The voices of bitter experience: ActiveRain’s petition against Move, Inc., is a heart-breaking sob story with no legal merit

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Suburban Phoenix Real Estate Broker

Author website

I’ve read ActiveRain’s lawsuit against Move, Inc., twice now. I had thought that I might parse the document, to show its fundamental weaknesses, but this isn’t necessary. It’s so weak that we can knock the whole thing down in a few paragraphs.

The gist of the document is an extended sob story of how ActiveRain wuz done wrong. This might seem meaningful in a newspaper story or a dinner party anecdote, but it don’t mean squat to a judge. In a courtroom, every story is a sob story. Everyone, it turns out, is ‘left in a maimed and disadvantaged position’ — doomed to a grubby, grungy, loveless life in a wheelchair, begging for quarters down at the bus station.

Here’s a summary of the thing. People so much want to judge issues of fact by their emotions, but this is a fair — if comical — run down of the actual facts, take them for what you will.

Notable omissions

AR petitioned for a jury trial, but their best possible outcome would be either a bench ruling or a directed verdict. Legal pleadings are written for judges, not casual readers, newspaper reporters or dinner party conversants. In fact, many lawsuit petitions take this form, just enough to get to court with the case to come later. But if AR really had a slam dunk case against Move, I would expect to see some evidence of it. The attorneys do, however, try to hold Move accountable for violations of a Washington State statute in paragraphs 67 through 74. I think the actual purpose of this is well-poisoning, to make a number of smarmy assertions about the behavior of past Move, Inc., executives.*

The complaint itself

This is the essence of the complaint:

  • Upon verbal overtures from Move, ActiveRain agreed to sell all its assets to Move
  • Move and ActiveRain executed a Non-Disclosure Agreement, in consideration for which AR revealed confidential business information so that Move could do its due diligence on the acquisition
  • Subsequently, Move provided AR with a Letter of Intent to purchase the company, specifying the price and detailing other terms and conditions
  • The NDA and the Letter of Intent Read more
September 28, 2007

If you don’t want to get trampled . . .

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Suburban Phoenix Real Estate Broker

Author website

…do not come between the NAR and Hillary Clinton’s scheme to give every newborn child a $5,000 savings account:

Democratic presidential candidate Hillary Rodham Clinton said Friday that every child born in the United States should get a $5,000 “baby bond” from the government to help pay for future costs of college or buying a home.

Clinton, her party’s front-runner in the 2008 race, made the suggestion during a forum hosted by the Congressional Black Caucus.

“I like the idea of giving every baby born in America a $5,000 account that will grow over time, so that when that young person turns 18 if they have finished high school they will be able to access it to go to college or maybe they will be able to make that downpayment on their first home,” she said.

The magic words are “downpayment on their first home.” There is no liberty the NAR won’t trample to juice the housing market. The obvious fact that the people taxed to provide these “baby bonds” will buy fewer and smaller homes — and will have substantially smaller portfolios to invest in commercial real estate — will not dawn on the dolts.

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September 28, 2007

Looking for a bargain-priced home? If you don’t Flinch!, the seller will

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Suburban Phoenix Real Estate Broker

Author website

This is my column this week from the Arizona Republic (permanent link):

 
Looking for a bargain-priced home? If you don’t Flinch!, the seller will

Let’s talk a little bit about buying strategies. Last week’s rate adjustments by the Federal Reserve Bank may have scared up a few buyers. I’m taking a lot of calls from Canada, and investors seem to be trying to time the bottom of the market.

Here’s a simple idea: If you were to buy a newer three bedroom, two bath stucco-and-tile suburban tract home for $160,000, putting 20% down, it would be cash-flow positive at $850 a month rent. That includes everything, mortgage, HOA, taxes, maintenance, vacancy — everything. The positive cash-flow would net out to about $5 a month after taxes, but the point is that the Phoenix real estate market is back to the point where a rental home is self-amortizing. If home values go up in the future, so much the better, but the home will pay for itself either way.

Here’s a better idea, one that has been making me crazy for more than a year. The name of this game is Flinch!

Normally, when buyers are looking for a home, they’re looking for that one unrepeatable masterpiece, the only home they could even consider buying.

What if, instead of looking for one ideal home, they resolved to look for three — or five — that might fill the bill? Now they’ve got bargaining power.

The game works like this: Make multiple low-ball offers on all the houses that might work for you, with all of those offers being subject to your final approval. Make it plain to all of your sellers that the first one to salute goes under contract, and the others go home empty handed.

This is exactly what sellers were doing to buyers two years ago, with multiple counter offers. By now there are at least eleven homes for sale for every qualified buyer. It’s time buyers exercised their incredible negotiating power.

What happens if it doesn’t work? Try again in a different neighborhood. Or try same neighborhood six weeks from now. Here’s the trick to winning at Read more

September 28, 2007

An open letter to the owners of ActiveRain: Show us the contracts

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Suburban Phoenix Real Estate Broker

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Messrs. Heaton and Washburn, owners of ActiveRain,

My take on your having released your lawsuit against Move, Inc., and their response is that you know with a high degree of confidence that you cannot prevail in court. I read your original lawsuit as an attempt to extract something from Move, Inc., even though there is no chance they will proceed with the planned acquisition of ActiveRain. When that initial foray failed, my thinking is that you released your petition and their response because you hope to pressure Move, Inc., in the court of public opinion.

All that’s as may be. Those two documents don’t interest me nearly as much as whatever acquisition agreements were executed between ActiveRain and Move, Inc. Those documents will detail specifically what information you had agreed to disclose, and what Move, Inc., had pledged to do — and not do — in its turn.

Attorney’s briefs are full of bluster and bravado, but, in fact, it is these acquisition agreements that will be dispositive in any formal hearing of your allegations.

Ergo, I ask that you release those documents for public scrutiny. When we have had an opportunity to determine what was actually agreed to, in writing, we can better judge the validity of your complaints.

I know that your knee jerk response will be to insist that those documents are too vital to your court case to be disclosed. But, if that were true, the corollary proposition would be that the documents you have made public — your initial petition and Move, Inc.’s response — are not vital to your court case — are not actually of any importance at all. This I am completely prepared to believe.

In fact, it’s one or the other. Keeping one’s private business to oneself is everyone’s right, but partial transparency is necessarily deception. If your goal is to proclaim to the world that you have been badly used, you must show us the violated terms of the contracts by which you were so cruelly violated.

If you will not do this, I will regard your having released your petition and Move, Inc.’s response as nothing but Read more

September 27, 2007

ActiveRain discovers that the Code of Web 2.0 is the Code of the West: Do unto others before them others do it unto you

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Suburban Phoenix Real Estate Broker

Author website

The Code of the West ain’t some words on a page
You just naturally know it when you come of age
You eat when you’re hungry, you drink when you’re dry
You look every man in the eye

In the nineteenth century, rogue investors like Jay Gould and Big Jim Fisk would buy up parcels of land parallel to a successful railroad. They would lay some track and invite reporters in, regaling them with tales of the new railroad they planned to build in direct competition with the going concern. The owners of the competing railroad would panic, racing to put together a buy-out package that would get the rogues to sell out — at many multiples of their initial outlay. Did they ever intend to build anything? No one ever put them to the test.

It’s the Code of the West when the boys talk of women
The Code of the West what you know you don’t tell
The Code of the West a man soaps his own saddle
Brands his own cattle and some of his neighbor’s as well

A century later on Wall Street, greenmailers like T. Boone Pickens would put together minor stakes in bloated corporations, then announce with great fanfare their intention to incite a proxy battle, thus to sell the company off piecemeal. The bloated boards of directors of the bloated corporations would race off to find a white knight investor, who would buy out the rogue investors at a handsome profit.

If you’re buildin’ fences then I ain’t for hire
You get me for nothin’ and I’ll bring the wire
You patch up my windows, I’ll plumb up your doors
If you scratch my back I’ll scratch yours

In the world of Web 2.0, we have a similar scam, only by now the entrenched interest has the game figured out.

Let’s say you and two college buddies have built a Web 2.0 “platform” — which is to say something stoopid, goofy and — at least temporarily — viral and sticky.

Why did you do this? To build a business? To set an example? To leave a legacy in the world of hi-tech commerce?

No.

You built it to sell it to Google Read more

September 27, 2007

Updated information on the Anglin children

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Suburban Phoenix Real Estate Broker

Author website

Jay Thompson has an update on the state of the Anglin children, along with a link to Aaron Anglin’s obituary in the Austin American-Statesman. Jay has set up a guest book so that you can express your condolences to the family.

The obituary includes this important information:

A trust fund has been set up for the children:
Guaranty Bank, Acct# 3805908914
Checks payable to James Johnson (grandfather)
ITF Eleanor & Mackenzie Anglin

We each of us are doing what we can, and I expect we’ve gone a long way toward covering Aaron’s burial expenses and the children’s hospital costs. But: That’s a band-aid. The real costs of raising children are huge and ever-accelerating.

I know there are big-money vendors reading this site. Your tax advisors can instruct you on what you need to do to expense a donation to a trust fund — or an annuity — as good will or whatever.

If we can put the arm on a few hundred people for a few hundred dollars each, that’s a good thing. But if someone can step up to put a few hundred dollars a month in the kitty for the next 18 or 20 years, that would be quite a bit better.

The fact is, these children are going to grow up without a father. I wish that were a rare circumstance, but it’s not. But here is a case we know about of children losing their patrimony, and a particularly brutal loss of patrimony at that.

We’re all doing what we can, but if you can do more than the rest of us, that would be a wonderful thing.

 
PS: Don’t be shy about emailing this post or a letter of your own to vendors with whom you have a working relationship. The secret to getting money is to ask for it.

September 25, 2007

The purpose of civilization . . .

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Suburban Phoenix Real Estate Broker

Author website

I make my living as a hard-headed, practical man, but I live in a very abstract world. Because of the Anglin children, I’ve been thinking about the idea of fatherlessness, a topic I’ve written about in the past:

I was doing that fatherstuff, to the extent I understand it, which amounts to teaching boys how to be men, and, in other circumstances, teaching girls how to relate to men. You can’t pick up a magazine without discovering what poor specimens of humanity men are. “Men make lousy women!” a woman’s magazine will reveal. “Husbands are not the best wives!” discloses a journal for married women. “Fathers are inadequate mothers!” a mother’s magazine proclaims. And the rejoinder to all those with a deathgrip on the obvious is: “Well, duh!”

A father is the provider, his most important job. If he neglects it in order to preen as an ersatz mommy, the children suffer. A father is the moral leader, obliged to take it on the chin again and again; that’s how children learn how to take it on the chin. A father is the defender, the one who confronts the burglar when mom and the kids are hiding under the bed. Fathers are everything we claim to admire when we use the word “manly” and everything we affect to despise when we use the word “male”, but, at bottom, fathers are not mothers. We need mothers to do what mothers do, and we need fathers to do what fathers do, and when children are denied one or the other, they suffer. You won’t read this in a women’s magazine, and you won’t read it in a men’s magazine unless it’s tattooed into a well-tanned navel. But it’s the truth.

But the main job of being a father is simply being around. I’m not congratulating myself for what I did with Xavier, because I knew it was temporary. He didn’t have a father all of a sudden, he just had a weak little prosthetic, and that only for a while. But I taught him what little I could of the manly art of manliness, what little Read more

September 24, 2007

Lani Anglin’s brother’s children lost their father yesterday. Here’s what you can do to help…

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Suburban Phoenix Real Estate Broker

Author website

Lani Anglin lost a brother yesterday, and his children lost their father. April Groves has the details at Lani’s site.

We can count the beads later, but now is the time for practical action.

Aaron Anglin is survived by a wife and two very young daughters. The way I’m reading things, he died without life insurance, which puts those three ladies on a very hard road.

If you can spare something for them, put it in the form of negotiable funds — cash, cashier’s check or money order — and overnight it to:

      Aleisha Anglin
      c/o Lani Anglin
      2719 Costa Azul Cove
      Leander, TX
      78641

April is working on setting up a donation account with Bank of America, and I’ll amend this post when that account becomes available. In the meantime, Jay Thompson has set up a donation system using PayPal.

But: I will promise you that there are people who will want to be paid now, and this young family will have immediate and ongoing needs. There was a time in your life when fate could have hit you this hard. Now is your chance to redeem that good fortune.

More: At GeekEstate Blog, Michael Price is auctioning a tricked-out 30GB iPod, with the proceeds going to the Anglin family.

Benn Rosales reflects on these tragic events, finding grounds for hope despite everything.

Jay Thompson has a rundown of today’s activity on the RE.net, including links to many other posts. I am always very proud when I have the privilege of setting my shoulder beside his to get something done. Jay is honor made manifest, and I am honored to know him.

Here is trust fund information:

A trust fund has been set up for the children:
Guaranty Bank, Acct# 3805908914
Checks payable to James Johnson (grandfather)
ITF Eleanor & Mackenzie Anglin

And: if you have the ability to donate a big chunk of money, here is a discussion of how you might make a huge and enduring difference in the lives of these children.

Here are a couple of buttons, large and small, that you can use on your own weblog/web site. These incorporate Jay’s PayPal donation interface, so your readers can make donations online by credit card. Copy Read more

September 24, 2007

The Odysseus Medal: Getting ARMs back up on their own two feet

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Suburban Phoenix Real Estate Broker

Author website

If you didn’t look at this week’s nominees for The Odysseus Medal, you should. We had 20 posts on the short-list, but 24 more that were also very good.

Here are this week’s winners:

This week’s Odysseus Medal goes to Peter Coy at BusinessWeek for Believe it or not, the ‘optimal’ mortgage is an option ARM:

If you had to name the most toxic, dangerous, foolhardy kind of mortgage loan that exists, you’d very likely pick a pay-option ARM, which lets borrowers get deeper into debt by paying less than the minimum interest they owe each month and adding the unpaid interest to the loan principal. Worse yet, you might say, would be a pay-option ARM with a very high penalty for prepayment so borrowers can’t get out of it easily once they’re in it. There’s a move afoot to ban these worst-of-the-worst loans.

Guess what? The worst is actually the best.

Yes, according to a new study by professors from Columbia and New York universities, the “optimal” mortgage in a perfect world is precisely that kind of loan—an adjustable-rate mortgage with an option for negative amortization and a ban (or at least severe restriction) on prepayment.

Crazy? Not as crazy as you might think. The key, according to professors Tomasz Piskorski of Columbia Business School and Alexei Tchistyi of New York University’s Stern School of Business, is that this kind of mortgage is optimal only in a perfect world—namely, one in which borrowers are fully rational and always do what’s in their own best interest.

ARMs are like the miracle drug that can’t get over its tabloid reputation. This post won’t rehabilitate them, either, but it’s a start.

The Black Pearl Award become the Snow Pea Award this week. The winner is another testament to the epicentricity of the epicenter of real estate weblogging, Tucson’s Dave Smith, who graces us with Growing Peas in a Day! Here’s the Black Pearl:

Stop ripping your blog apart.

  • Pick a good theme
  • Activate good plug-ins
  • Use productive functional widgets
  • Add content regularly
  • Weed out the Spam and Eye Candy
    Now give it time to grow. It takes time to grow and be found and produce fruit.

You can’t be Read more

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Inventing Real Estate 2.0

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