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Author: Greg Swann (page 168 of 209)

Suburban Phoenix Real Estate Broker

December 29, 2006

Information comes with experience

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

Information comes with experience

Continuing from last week, let’s work together as Realtors and round out the purchase offer for our buyers.

What’s the best closing date? The buyers have never thought about it, but it’s our job to know. They’re in a lease until the end of January, and obviously they would want to limit the number of days they pay for two homes.

But mortgage interest is paid in arrears. If the buyers close very late in the month, they will pay a small amount for those few days of interest, and then their next payment will not come until March 1 — a nice breather.

Closing too late in the month is bad because things can spill over to the start of the month — which means almost a full month of interest payments in advance. Ideally, we want a Tuesday, seven to 10 days from the end of the month.

But wait: The buyers are taking 3 percent in closing costs. Who cares about pre-paid interest? The buyers might not know to care, but we get paid to care. Our costs are so low that we might be able to apply a big chunk of that 3 percent to buying down the interest rates, leaving the buyers with extra money in their pockets with every monthly payment.

How much in earnest? A thousand dollars, right now. It’s a buyer’s market.

Now this is not a hugely aggressive offer. Buyers are rarely willing to push things as hard as they might. But, the aggression in this offer was put there by us, not by the buyers. Most of the very subtle ideas the buyers will have known nothing about until we explained them.

That’s representation — real, not perceived. Truly, the buyers had no idea how to construct an offer for their home.

Every home is unique, and every real estate transaction is unique. There is no way that unrepresented buyers and sellers can do as well for themselves as they could with professional representation. The information that matters doesn’t come from the MLS, it comes from the Read more

December 26, 2006

Santa brought us a new contributor: Introducing Brian Brady . . .

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We’re adding a tenth contributor today, Mortgage Broker Brian Brady:

Brian Brady is a San Diego-based mortgage broker. Working with his wife, Debra, Brian deploys six years of experience on Wall Street to make sure the loans he underwrites fit his clients’ overall financial plans.

You may know Brian’s work from his own weblog or from his participation on ActiveRain. Brian promises that he is “America’s most opinionated mortgage broker,” so we should be disabused of even vestigial errors in short order.

Take note that we are always on the lookout for talented writers. If you think your work belongs here, say so.

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December 25, 2006

Christmas story: A canticle for Kathleen Sullivan

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A canticle for Kathleen Sullivan

A Ramblin’ Gamblin’ Willie story

I got to the hospital after visiting hours, but the nurse led me to the room anyway. “There hasn’t been anyone,” she confided.

I pursed my lips in grim acknowledgement. “That’s why I’m here.”

Inside the room the patient looked like purple death. It was a critical-care room, bright and white and cheerfully clinical. The bed was surrounded by apparatus, with lines and leads and probes and IV tubes running to him. The only unbruised part of him that I could see were his eyes, and his eyes were more deeply wounded than anything.

I’ll tell you his story, but I won’t tell you his name. His name is yours. His name is mine. His name is legion…

I pulled up a chair and got as close to the bed as I could. I wanted to see his eyes. I wanted him to see mine. His jaw was wired and he was breathing though a plastic tube mounted in his throat, which makes for a fairly one-sided conversation.

“I just came from the funeral,” I said. “Biggest one I’ve ever seen. The procession must have been two miles long. Kathleen Sullivan, mother of six, grandmother of two, with two more on the way, loving wife of Brian Sullivan — in the newspaper it’s just something that’s there, like the basketball scores or the stock tables. People die every day. People are born every day. It doesn’t seem to matter very much.”

I shrugged. “I think it does. I’ll tell you a story: About six months ago there was a woman driving down Endicott Avenue. Driving very safely, five miles an hour below the speed limit, doing everything just exactly right. There were some schoolboys riding their bikes on the sidewalk beside her, and, all at once, one of the boys decided to dart out into the street, right in front of her car. She stood on the brake pedal, but it was already too late. Screech, crunch, tragedy. The boy was killed instantly.

“She saw it, of course. His little schoolfriends saw it. Half a block away was the crossing Read more

December 24, 2006

Not just any fools: Heavy on the light rail propaganda, please . . .

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Almost three years ago, The Goldwater Institute, a free-market think tank in Phoenix, published a devastating accounting of the light rail system now being built in Metropolitan Phoenix:

[The Maricopa Association of Governments]’s public transit plans deserve close scrutiny. Use of urban public transportation systems has been in decline since the end of World War II, when public transit provided 50 percent of urban travel. Last year, only three percent of urban travel in America was provided by public transit. This decline has occurred despite prodigious government efforts to prevent it. Governments now spend 30 to 40 times as much on public transit as for roadways. But evidence suggests that transit is not the most effective use of public transportation dollars.

Of all the options in the public transit mix, light rail deserves the most scrutiny. Because it requires its own special track, it lacks the flexibility of buses, which use existing city streets. And because tracks would be constructed on existing city streets, light rail in the Phoenix region is actually projected to increase traffic congestion. Furthermore, in no city in America does light rail transit account for much more than one percent of urban person-miles of travel. The Phoenix light rail system is projected to account for only two-tenths of one percent of travel in the region.

The average cost of light rail per passenger-mile is around $1.50, almost double the cost of bus transit, and five times the cost of automobile transportation per vehicle-mile. On average, taxpayers pay nearly 90 percent of the cost of light rail passenger travel, considerably more than for all other transit modes. Worst of all, light rail would do almost nothing to relieve traffic congestion. Because 80 percent of new light rail passengers in Maricopa County would be former bus passengers, light rail would remove less than one car in 1,000 from traffic.

To my knowledge, no one has ever challenged the numbers in this report — perhaps because it is based entirely on Valley Metro’s own projections. The Arizona Republic dismissed it with high-handed hand-waving, insisting — I kid you not — that people say that Read more

December 23, 2006

Wikipedia founder proposes Google alternative . . .

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Suburban Phoenix Real Estate Broker

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From The Times of London (via TechMeme):

[Wikipedia founder Jimbo] Wales believes that Google’s computer-based algorithmic search program is no match for the editorial judgment of humans.

Google searches are conducted using an algorithm that calculates how many other websites are linked to a certain site, which in turn gives the material found by the search a ranking. Therefore, the first result in any Google search is the website that has the most links pointing to it.

Wikipedia is an encyclopaedia written by thousands of contributors from around the world, known as “Wikipedians”, using free open-source software.

Mr Wales aims to exploit the same network of followers and the same type of free software to create his search engine.

“Essentially, if you consider one of the basic tasks of a search engine, it is to make a decision: ‘this page is good, this page sucks’,” Mr Wales said. “Computers are notoriously bad at making such judgments, so algorithmic search has to go about it in a roundabout way.

“But we have a really great method for doing that ourselves,” he added. “We just look at the page. It usually only takes a second to figure out if the page is good, so the key here is building a community of trust that can do that.”

Mr Wales believes that the reputation already fostered by his Wikipedia community and the transparency of his technology will build sufficient trust in his search engine to bring in advertising revenue and make the Wikiasari venture profitable.

I like the idea in principle, but I can see two gaping holes: One is simply that pages that are highly worthy but hugely unknown will not be ranked. And, more obviously, the kind of bogus rank-spamming evident at sites like Digg is a real risk.

A mash-up using Google for raw results filtered through Wikiasari’s vetting might be a great short-answer search engine, though…

A further thought: Jimmy Wales already has access to a fine database of social site rankings: Wikipedia itself. Starting there and making ranking easy through the search-engine UI, he might have a product…

Pat Kitano has more.

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December 22, 2006

Cutting out middle man in a sale might cost you

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

 
Cutting out middle man in a sale might cost you

I’ve talked about disintermediation before, and surely it will come up again. Disintermediation in real estate is the idea that buyers and sellers can eliminate the middle man — in this case the Realtors — and deal with each other directly.

The belief is that the Internet will provide information formerly “hoarded” by Realtors so that real estate transactions will become as simple as buying stocks or airline tickets online.

The information that is supposed to make this happen is the Multiple Listing Service, and that’s something we can talk about another day. For now it is sufficient to make plain that MLS listings are very far from being the most important information in the sale of a home. The simple fact is that, because I do this job every day, I can do a much better job than an unrepresented buyer or seller, much as you can do your job better than I could.

Want proof? Let’s go buy a house.

We’re out showing homes with our party and they settle on one they like. Because it’s a buyer’s market, and because the buyers aren’t very well prepared, we don’t write a contract right away.

What’s the best day to write an offer? Tuesday, in principle, but the absolute best day is the first Tuesday after the first of the month. The buyers have never given this a second thought, but it’s our job to know.

We’ll send the buyers to a lender we know and trust. Why? Because, although they have good credit and good incomes, they have no cash. Our lender can write a fast 80/20 loan with very low closing costs. Say what? That’s an 80 percent first mortgage, a 20 percent second mortgage with no private mortgage insurance — all without costly junk fees.

When we finally write the offer, we’ll recommend a structure like this: List price, less 5 percent, with an additional 3 percent coming back to the buyers as closing costs.

Are we done yet? Not even close, but we’re done for now. Come Read more

December 21, 2006

Ooh, baby, baby it’s a wired world — but what is going to change in residential real estate in the next 12 months? Almost nothing . . .

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One of my clients gave me a wake-up call late this year. She has a computer, but she’s never unpacked it in her current home. I don’t know if the computer is robust enough for broadband, but it really doesn’t matter, does it? I’ve been ferrying listings to her by car — printed on paper, stuffed in envelopes and parked under her doormat. Just lately she acquired a fax machine, which is convenient. We have a house under contract and there is a lot of paper flowing back and forth. Certain oil-rich sheikdoms might weep, but everyone else can breathe freely — and from a cleaner air supply.

This is a weird world for a wired Realtor, but guess what? It’s the real world. My own sweet mother is such a Luddite that we’re buying her the dumbest dumb terminal I have ever seen for Christmas. We started out saying, “When all you have is a hammer, everything looks like a nail.” By this point, we act as though we believe that everything is a nail.

This is incorrect.

For one thing, buyers and sellers of residential real estate are not on-line in concentrations greater than other demographics. How could they be? Young people, yes. Technophiles, yes. Everyone else…? Not so much.

Moreover, whether or not buyers and sellers are poking around on-line, for the most part they are not making life-altering financial decisions in untouched-by-human-hands on-line real estate transactions. There might be a news story about a crazy young couple taking the plunge, but you need to stop for a moment to recall that that exact page of the newspaper only just last week was devoted to a young man who has never cut his toenails. What makes news? The exception, not the rule.

We are too much misled. The exception is interesting, but it’s interesting because it’s rare. We ignore the commonplace because… well, it’s commonplace. In the last year, we saw the launches of dozens of new Realty.bots, each one devised to provide easier access to information that was, for the most part, already available. What changed in actual, on-the-ground residential real estate Read more

December 19, 2006

A richness of embarrassments: My soup-bowl runneth over with Top Ramen . . .

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Suburban Phoenix Real Estate Broker

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I keep thinking that I’m going to have free time for blue sky projects at Christmas, and I just keep getting busier. I accidentally sold another house today — 166,800 packages of Top Ramen to me, but it’s a new build that won’t close until around July of 2008. As the Phoenix market recovers, we could end up with a lot of Top Ramen in the pipeline.

I should be linking more, but I think Christmas has got everyone, one way or another. The much-promoted Yankee Blog Swap was today. I credit Mary McKnight with an impressive amount of preparation, but only three bits of news jumped out at me:

First, Kris Berg is a rare wit wherever she goes.

Second, Dan Green thinks mortgage weblogs are boring. So much he knows.

And third, Glenn Kelman is much more tolerable at his increased dosage.

I have houses closing all week, along with our own refi. It’s cold here, something I almost never get to say. But I caught the wind in a sinus, and I have that half-stupid feeling that precedes a cold. Wonderful. I should probably have some chicken soup, but we have all this damnable Top Ramen to dispose of…

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December 18, 2006

Five by four: Twenty things you didn’t know, with five more to come . . .

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The four victims I tagged for the “Five things you didn’t know about me” have come forward with their deepest darkest secrets:

Kris Berg is a very smart person with a quick wit (who didn’t know this?) and a perilous driver.

Doug Quance has led a life of Steinbeck-like diversity in a vast host of locations.

Jeff Brown takes you on a grand tour of his life, from his grandfather to his wife. Along the way he explains the origins of the appellation “Bawldguy.”

And Dan Green is gracious enough to show us the everyday life of the hard-charging over-achiever. I say we enter the man in a pie-eating marathon!

My duty is discharged, and I am deeply honored to be working with such amazing people.

But there is a lingering detail…

Russell: Did you notice that Jeff called you out…?

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December 18, 2006

The Carnival of Real Estate . . .

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…is up at Seattle Real Estate Professionals. Moderator Marlow Harris presents awards in three categories.

BloodhoundBlog is a Carnival unto its own. Here are eleven entries from the last week that I thought were exemplary:

Russell Shaw: Thank You, Mr. Barton, May I Have Another?
Kris Berg: When It Clicks
Cathleen Collins: Punch and Pie At This Week’s Carnival of Real Estate
Dan Green: Why The Fed Matters to Real Estate
Greg Swann: Who needs Realtors . . . ?
Russell Shaw: Making Predictions, Cowards & Lies
Kris Berg: Between Rock and a Hard Place
Greg Swann: Everybody loves Ramen . . .
Russell Shaw: Anonymous Posters Who Hate Lereah
Jeff Brown: How Much Is An Excellent Assistant Worth? Are You Kidding?
Richard Riccelli: There’s no business like show business, like no business I know

Dan Green’s Why The Fed Matters to Real Estate was our entry in the Carnival of Real Estate, the Carnival of Real Estate Investing, the Carnival of Business and the Carnival of Marketing.

Cathleen Collins is the judge of our Carnival entries, but her Punch and Pie At This Week’s Carnival of Real Estate got the most votes from our contributors, so it is my honor to declare her the winner of the Bloodhound Carnival.

Marlow Harris hosts the Carnival of Real Estate at her own 360 Digest on January 15, 2007 — a week after Elvis Presley’s birthday. She threatens to have a category devoted to Elvis posts, which should be fun…

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December 17, 2006

See “The Pursuit of Happyness” — because there are worse fates than straight commission sales . . .

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We see everything through the lens of real estate, including films and television programs. It’s baked in the cake. Houses, always, and rooms and neighborhoods, and god help us if there’s a real estate transaction in a movie or TV show. When we were leaving The Pursuit of Happyness last night, Cathy said, “That makes starting out in a split shop look easy.”

(For non-Realtors, a split shop is one where you have to split your commissions with your broker. New agents often have to give the broker 50% of their earnings, and they may have to pay a mandatory mentor 50% of the remainder. The attested quid pro quo is training, but most new licensees starve and quit before they see much training. They often leave a ton of money behind in other people’s pockets, though, so almost everyone is happy.)

Anyway, the travails Chris Gordon undergoes in “The Pursuit of Happyness” make everything associated with mere straight commission sales look downright easy. Yes, I know successful salespeople go through a lot to get to a place where money problems seem remote, but few of us take the path through Dante’s torments followed by Gordon.

Despite a dogged persistence he is dogged by persistent failure. His wife leaves him, and he voluntarily undertakes the burden of single parenthood. All of his capital is invested in portable medical devices that street people keep stealing. He is evicted from his apartment. His limited savings are confiscated by the IRS. He and his son end up homeless, vying and sometimes failing to get space in homeless shelters. Through all of this, he is working as hard as he can in an internship at a stock brokerage, competing against nineteen other applicants for the one available paying position.

This is a Hollywood movie based on the real-life Chris Gordon’s autobiography, so you know how it’s going to end. It’s the getting there that makes this film worth seeing. To say it is inspirational is a massive understatement.

I’d tell you to go see it, but I can’t imagine that anyone who cares about human achievement would not see this Read more

December 15, 2006

I’m it — and I don’t want to be . . .

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I first heard of the idea of memes in 1986 or so. Analogized to a gene, a meme is a transmissible idea. We’re apt to think of things like “Dood!” or “Dyn-o-mite!” when we think of memes — linguistic fads — but the idea can run much deeper than that. For example, the principle that it is better to die for your principles than to renounce them did not originate with Socrates, but because Plato made the death of Socrates famous, he essentially transmitted the idea that defines Western Culture. That’s a big deal.

On the flip side of the coin, the analogy to genes is troublesome, insofar as it implies unavoidable transmission and relative immutability. The United States was founded on the meme “rights,” but there was no one among the founders who would have thought in terms of a “right” to subsidized food or to a subsidized crop. The meme persists, but the original meaning is vastly diluted.

That much is me, a sort of mild taste/distaste relationship with the idea of memes. I’ll get over it.

This much is the RE.net: I have been tagged by Jim Cronin of The Real Estate Tomato in what he says is a meme game. I don’t get why it is, but I don’t have to. I will play along because I like Jim, even though I detest party games, chain letters, etc.

My challenge: To tell you five things you did not know about me. My life is outrageously public, but — all appearances to the contrary — I don’t do very much to publicize it. If I tell you something about my life, it’s because I think it’s important to the point I’m making. Anything I don’t mention — I’d rather not mention.

So, here goes nothing. Five things you didn’t know about me:

  1. I’ve spent my entire adult life thinking about and writing about political philosophy at a very arcane level. The school I work in is called Agorism or Market Anarchism or Anarcho-Capitalism, depending on who you talk to. My own philosophy is called “Janioism” (a meme!) after a character in the book Read more
December 15, 2006

Almost famous: BusinessWeek on excessive buyer’s agent’s commissions . . .

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Eagle-eyed Kevin Boer of Three Oceans Real Estate was the first to catch it: BusinessWeek.com quoted me in an article on “supersized commissions”:

There’s nothing wrong with incentives, even sizable ones, if they’re disclosed and buyers fully understand what’s motivating the agents who are showing them around. But in many states disclosure is poor or inconsistent. In Arizona, for example, brokers who show houses are encouraged to sign agreements specifying how they’re compensated. But the agreements aren’t required.

THE SKY’S THE LIMIT

Also, they can be signed after someone has already fallen in love with a home and isn’t looking at the fine print. And the compensation can be explained as generally as, “3% and up,” meaning the sky’s the limit. Add it all up, and, “I don’t have to disclose to you how much I’m getting paid,” says Realtor Greg Swann, the designated broker of BloodhoundRealty.com in Phoenix, who says he voluntarily imposes stricter rules on his own agents. By offering extra-high commissions without informing customers, he says, “the builders are trying to bribe me to sell their houses.”

That whole section of the articles relies on BloodhoundBlog contributions: Contributor Doug Quance and frequent commenter Dave Barnes both kicked in examples that were used in the article, but, alas, they were not mentioned by name.

BusinessWeek Economics Editor Peter Coy first called me about last week’s Zillow.com news, and we talked in very broad terms about Realty.bots, disintermediation, the valued-added services a good Realtor brings to the table and commission structures in general. We’ve covered a lot of that here, so I sent him quite a few posts from our archives.

The implication of the article is that buyer’s agent’s incentives are the rule rather than the exception, but, even so, I don’t think it is a bad idea to caution buyers about the risks:

Advice to consumers: Start with the assumption that the nice person showing you around is not your ally. Ask up front how much the person would be compensated if you bought a place. If possible, sign a buyer-broker agreement before you start looking at houses. This guarantees that the agent is working Read more

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