There’s always something to howl about.

Author: Greg Swann (page 174 of 209)

Suburban Phoenix Real Estate Broker

Writing better descriptive real estate copy as a path to building character . . .

I read some copy for a real estate listing, and I thought, “Wow, this is game and lame at the same time.” Game because the Realtor was really trying to stretch beyond typically insipid real estate copy. Lame because, well, even so — the copy was lame. It led with a cliche, then jumped immediately into EduSpeak, the unreadable argot of academia. Within a scant few seconds, we were right back in Realtorville, an unending list of features without a benefit — nor a beneficiary — in sight. In the end, it was game-by-intent, an attempt to attempt to do something different — without actually doing anything differently.

Here’s my take on the same theme:

What you notice first is the quiet — but you don’t even actually notice it. The air is so still and the silence so complete that you don’t truly hear the quiet until it is interrupted.

What was that?! That scampering sound. You peer into the underbrush and there it is — a Whiptail lizard twenty yards away — and you were actually able to hear its tiny footfalls.

You don’t feel the breeze as much as you see it in the lazy skirling of the Redtail hawks overhead. The sun is omnipresent, but you feel it best in the tingling on your skin. You breathe deep, relishing the crisp, clean scent of creosote slowly baking in the heat of the afternoon…

This is the desert — the desert you came here to find but lost somewhere in a vast, overpacked parking lot.

This is the desert — untamed and illimitable, alive and thriving against all odds.

This is the desert — not a day trip, not a camping trip, not a now-and-then excursion.

This is home. Your home, from now on…

That’s an introduction. I’m not selling a house. I’m selling a life. In this case, a life with some negatives — the commute to Phoenix is at least 45 minutes, and the buyer is going to find snakes and scorpions in the home several times a year. But what I want to sell about this property is the unique life that this home Read more

Excessive buyer’s agent’s commissions at new builds: “Killer deals often come with payoff . . . “

This is my column from today’s Arizona Republic (permanent link). I don’t write the headlines, and I don’t think this one is terribly representative of the article, but it is what it is. I asked the paper to change the attribution to use BloodhoundBlog’s web address rather than my phone number, so maybe the poisonous phone calls will turn into poison-pen letters instead.

 
Killer deals often come with payoff

I have clients who are closing escrow on a new-built home soon. They’re moving from a house of about 1,725 square feet to a home of about 2,100 square feet.

Because it’s a new build and because of when they’re buying it and, most especially, because it’s a spec home — a home specified by and started for another buyer who has since canceled the purchase — they’re getting a smoking deal.

The builder is trying to close on absolutely every spec home, so it’s making great deals. It’s giving my buyers a $75,000 upgrade package, plus throwing 6 percent of the purchase price toward their down payment.

If the Valley’s real estate market gets back to normal soon, they’ll have a ton of equity fairly quickly. And even if not, this home is an incredible bargain — an unrepeatable opportunity.

Here’s the kicker: The builder’s sales rep told me in private that the buyer’s agent’s commission is 8 percent. Unbelievable!

I strive to be a vigorous champion for my buyers, but builders leave precious little room for a Realtor to effect any meaningful buyer’s representation.

In effect, taking a party to a new-home subdivision is a referral. That could explain why so many builders and Realtors treat it that way.

For my part, I’m doing everything I can to defend and protect my clients’ interests, and that still won’t be very much.

So how much should I get paid for doing not very much work as capably and professionally as I can?

Surely not 8 percent. I won’t even take 3 percent on new construction.

Here’s what I did for this home: I conceded 6 percent to my clients, keeping 2 percent for the brokerage.

They didn’t have to ask for this, nor should Read more

I’m really not hungry, so can I get a rebate on that order of crow . . . ?

I have another column in the newspaper tomorrow beating up on buyer’s agent’s commissions, so this seems an appropriate moment to make a confession:

I don’t think it makes a damn bit of difference.

This is the fifth column in this series, running every other week because the editor hated all the complaint calls from Realtors and brokers. I get quite a few calls, too, almost always line-blocked and anonymous. What’s interesting is that I have never had a call from an ordinary reader on this topic — not even when I’ve talked about huge commissions at new home subdivisions.

We’ve been advertising the idea of rebates on buyer’s agent’s commissions in various ways for weeks now. I can measure every inbound click generated by these ads. Net consequence: Crickets chirping. Realtor.com hasn’t been totally underwhelming, but one of the two magazine ads has drawn not one single click-through. The second best performer is the button on our web site. The uncontested champion: The button on BloodhoundBlog. Even so, total interest, scattered and mild, has not resulted in one closed client. We’ve closed on buyers, but not on anyone who showed up to find out more about rebated commissions.

People can be excited by the idea once it is explained to them, but it has to be explained in detail, and even then some don’t get it. Either the idea that buyer representation is “free” is nearly ineradicable or people really don’t mind financing all those extra thousands of dollars.

Jeff Brown foresaw all of this, but I’m from Missouri. Even now it is astounding to me that people would not be more rational about huge sums of money.

Sellers pay attention, and the promotion we do to sellers makes tracks. Talking to buyers in a way that would make sense to a seller has done nothing for us. I don’t claim that this idea cannot work, nor that the way we implemented it was without fault. I’d be interested to hear from anyone playing with similar ideas. My take, for now, is that offering a hard-headed — as against soft-hearted — benefit to buyers is a Read more

Phoenix-area single-family homes down one percent from October 2005?

ASU’s Dr. Jay Butler’s housing numbers for October 2006 have been released:

The Valley’s single-family home-resale market clicked higher in October though sales are well off from last year’s frenzy.

There were 4,985 sales in October, up slightly from 4,875 the previous month but down nearly 41 percent from October of last year, according to the Arizona Real Estate Center at Arizona State University Polytechnic.

The median price stayed essentially flat. The new median of $257,000 is marginally higher than $256,900 in September.

Here’s the juicy news, though:

The new median is a little more than 1 percent lower than in October of last year.

Butler has median values down 3.78% from the peak in Jun 2006.

Almost this sounds like a houseful of bad new stuffed into a baby bootie, but it is actually a nice illustration of the uselessness of Butler’s methods. He strikes a median among all sales, Valleywide. If houses are selling well at the high end of the price spectrum and poorly at the low end, this will tend to make the market as a whole look healthier than it is.

John L. Wake at Arizona Real Estate Notebook has a better set of median values, charting October’s numbers city-by-city.

We work from a completely different set of numbers in our Market Basket of Homes, and I realize the curse of these analyses is that they’re all based on different assumptions. But we’re interested in the houses we actually sell and that the people in the middle of the Bell Curve actually buy. Moreover, by working with a representative subset of that market, we can read every listing, one-by-one, to try to determine what really happened.

How did those houses do in October? Down 4.07% from September, down 7.97% year-over-year, and down 9.88% from the December 2005 high. This is not the disaster it might be portrayed in the newspaper. After all, two-year appreciation on an average Market Basket home is 38.21%. Three-year appreciation is 63.15%. But this news is in stark contrast to the news reported by Dr. Butler.

MLS inventories are down, and some people want to argue that this means the market has turned. Read more

What’s the big idea? The good, the true and the beautiful in real estate weblogging . . .

I really, really like ideas, and I sometimes feel like I should talk about them in a larger, more comprehensive way. Events intrude, always. Plus which, I think extended rumination is what god made retirement for. For now, we gallop on horseback through the museum of my mind, since this is what I have time for.

I love having Russell Shaw with us, because he is serious, rigorous and thorough-going. But he sees the world from where he stands, and very few of us command similar heights. Russell says, in essence, “I charge more because I’m worth more.” This argument has unassailable particular merit, as do the similar arguments made by Our Lady Ardell and the avuncular Jeff Brown.

But the argument does not invert, as many wish it could: “I’m worth more because I charge more” is the fallacy non sequitur. How much commission should a Realtor charge? In fact — in actual, demonstrable, undeniable fact — some large fraction of the NAR membership is earning nothing.

Surplus capacity argues either for lower prices, for liquidation of some of that capacity, or both. Ardell argues with some cogency that nothing will be done from the inside about prices — although she might be surprised at what can be done from the outside. Even so, the quantity of real estate transactions will not go up with a marginal reduction in transaction costs. We still sleep one pillow per capita. In any case, the problem of excess capacity can easily be solved by eliminating the real estate broker’s safe harbor from tax withholding laws.

Brokers really don’t even have much reason to oppose this, if we presume that the quantity of real estate transactions is inelastic. In other words, if a broker can anticipate 1,000 transactions a year whether he has 1,000 agents or 100 agents, then the only real difference to his business is the marginal cost of tax-withholding itself — which that broker will surely find a way to socialize to the agents anyway.

Privately, our own billionaire brain trust — god help us if they ever dun us! — has been reflecting on the Read more

Run faster: There’s a new minimum wage in Arizona . . .

The voters of Arizona passed a number of those pernicious ballot initiatives Cameron argued against Monday night.

Probably the most consequential is a coercive increase in the minimum wage. Warm-hearted people like to think of poor people making more money, but the net consequence of minimum wage laws is to get marginal employees — such as teenagers, the handicapped and people recovering from really bad decisions — fired, while lowering the marginal costs of alternatives to local human labor.

In other words, when you raise the marginal cost of employing goofy neighborhood kids, you essentially lower the marginal cost of adding labor-saving equipment or sending that labor off-shore. This is pure Bastiat, the seen and the unseen. What is seen are the shiny, happy people working at Taco Bell — already a capital-intensive response to high labor costs — for much more money. What is not seen are the many more people who had been working there, but who were fired because they were unprofitable at the coerced higher wage.

The good news is, if you own, say, a real estate brokerage, the cost of independent-contractor labor just went down, and the quality of the labor pool soared.

Remember, avoiding slavery is easy. Just keep running faster and faster…

Here’s are some faster-paced idea to speed the race:

Google Blogoscoped and TechCrunch both have news on like.com, a visual search engine. Like images.google.com or whatever, you can do keyword searches for images. But the cooler feature set is to use an image to search for other, similar images. Picture yourself standing outside a house, looking at all the junk mounted around the electrical panel, and the client says, “What’s that?” Wouldn’t it be sweet to whip out your digital camera and reply, “Let’s find out.”

The XBroker nails a manifesto to the door of the Treasury.

Christine Forgione at NY Houses 4 Sale has a stout defense of why you need a Realtor. (Am I the only person who sees this site as one giant link? Real Estate Snippets look like this to me, too, like everything is encapsulated within one giant link.)

Kris Berg from The San Diego Home Read more

Administrivia: Captcha added to commenting . . .

This is something I had really wanted to avoid, but, as we are by now getting hundreds of spam comments every day, I have added a captcha function to the comments panel. In addition to quarrying your mind for every gem of brilliance, you will have to type in a six-digit number prior to previewing or posting a comment. In principle, I could just trash all the spam comments, but Akismet, our spam catcher, snags a few true comments in error. It wasn’t the quantity of spam comments that was proving to be a problem, but going through them several times a day to make sure no genuine comments got dumped. Anyway, as much as I hate doing this, we’re stuck with it for now…

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It’s the big blue one, third spot in from the middle . . .

Oh, good grief. Having returned from an extended drive-time radio stunt, Sellsius blog spreads a trail of Zillow crumbs. I don’t have time to bother with it, but this came in with a trackback:

We say: You can’t shakedown the innocent. If you pay-off, you’re guilty.

So a large gentleman shows up at your retail store. He’s tossing a baseball as he talks to you about the benefit of supplemental plate-glass insurance. It is by preying on the innocent that many, many large gentlemen in New York City — where Sellsius is located, incidentally — make their living.

Who can’t figure out why Zillow.com would pay not to be smeared as being racist…?

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A horrifying thought experiment: Elaborating on a brokerage business model that could completely disintermediate buyer’s agents . . .

I wrote this this morning, and it’s been bugging me all day:

Here’s a thought: The $99 divorce. It only works where the split is unclouded by children or property. But imagine a $999 FSBO package: The usual MLS-only marketing package with a buy-back guarantee for the buyer. Quoting me:

“From the buyer’s point of view, the buyer’s agent’s compensation can be thought of as a risk premium. An important benefit the agent brings to the transaction is a reduction in the risks the buyer takes on in purchasing a home. There is certainly a value to this, but that value cannot possibly be infinite — nor even terribly elastic.”

If, by using something akin to insurance, a Realty.bot can drive the risk of limited service buyer’s agency to something approaching zero — then what?

This is a business model. I’m not saying anyone will — or should — do it, but it is a workable answer to marketing objections.

Consider: Nu-Way Realty is a low-ball lister in the Phoenix market. They’re very big on promoting their listings — big newspaper ads and flyers distributed door-to-door. Taking account that MLS search is ubiquitous by now, they have that as promotion of their listings, too.

Do you see why this matters? Buyer’s agents don’t control what houses their buyers know about. As long as buyers can log onto an IDX system, they can say, “What about this one?”

A brokerage like Nu-Way could leverage all of this.

First, let’s do a limited-service listing — but with stipulations. Part of the listing contract is a full inspection of the property, with the seller agreeing to correct any identified defects prior to the MLS listing.

The listing brokerage now has a listed home in which it has a high degree of confidence. This is why it can offer a Money Back Guarantee — because it will never be in a position where it will have to honor it.

The MLS listing carries a $1 co-broke, which is the ultimate joke on all the NAR posturing about price-fixing. Probably, most buyer’s agents won’t show these homes voluntarily, but there is nothing to prevent buyers from Read more

Overall October real estate market results for MLS listed homes in the Phoenix area — average prices up 1.77%

In the Arizona Regional Multiple Listings Service at large, 5,590 homes sold in October against an inventory of 47,069, an implied absorption rate of 8.42 months. There are 6,059 properties listed as “Sale Pending.” All of these numbers are very close to September’s results.

Number of Homes Sold (with Days on Market)

March 2003   6471    67
          2004   8678    60
          2005   9959    36
          2006   7469    58

April    2003   7429    67
          2004   8889    61
          2005   9567    32
          2006   6725    60

May   2003   7428    67
          2004   8932    56
          2005   9853    27
          2006   7582    63

June   2003     7409    67
          2004    9969    55
          2005   10225    26
          2006    7209    67

July   2003     7643    64
          2004    8974    51
          2005    9326    25
          2006    6101    70

August 2003     7648    63
          2004    8968    47
          2005    9996    25
          2006    6170    76

Sept. 2003      6802    62
          2004    8648    45
          2005    9152    28
          2006    5607    80

Oct.  2003      6501    62
          2004    8127    37
          2005    7970    31
          2006    5590    87

Average prices are up from September, from 324,370 in September to $330,210 in October, a net gain of about 1.77%.

Note that this may not accurately reflect the Phoenix-area real estate market as a whole. All private sales and most new-home builder sales are excluded from MLS statistics.

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Election Day Links: The essence of liberty, now, is out-running those who would enslave us . . .

I know a lot of people who don’t vote. Not because they’re lazy, but because they’re philosophically opposed to the whole business. For my own part, I vote for just about the same reason I go to Mass, and about as often. Since 1848 or so, the main objective of government seems to me to have been universal penury. But as huge a drag as the state has been on wealth creation, it is failing nevertheless. By the quality of our ideas do we “out-run” those who would enslave us. This is hardly ideal — there is no justice to being a slave, and there is no justice to living as a fugitive from slavery. Even so, I could make a Dawkins-like argument that eluding the pandemic wealth-destruction of government is an evolutionary goad“How much intelligence does it take to sneak up on a leaf?” In any case, here is my celebration of some ideas that caught my eye today:

Phil Hoover from Boise Real Estate Blog is one up on all your shaggy-dog stories. Phil (blogrolled) had a great take on “Real Estate’s Broken Business Model” that I had noted but failed to mention when it appeared.

Christine Forgione at NY Houses 4 Sale tells an inspiring story with a $66 million happy ending. (Also blogrolled — boneheaded oversight; I live out of my feed reader.)

Lee Ovington, the Illinois-based appraiser from Valuation 411 tell us what he likes about Eppraisal.com.

Kevin Boer at Three Oceans Real Estate argues that Realtors will never be disintermediated, but Pat Kitano at TransparentRE.com offers some possible caveats. Here’s a thought: The $99 divorce. It only works where the split is unclouded by children or property. But imagine a $999 FSBO package: The usual MLS-only marketing package with a buy-back guarantee for the buyer. Quoting me:

From the buyer’s point of view, the buyer’s agent’s compensation can be thought of as a risk premium. An important benefit the agent brings to the transaction is a reduction in the risks the buyer takes on in purchasing a home. There is certainly a value to this, but that value Read more

Raking for muck in Phoenix . . .

Anthony Barba tips us that the Phoenix real estate market is going to get Drudged tonight. I’ll link to it when it happens…

Further notice: The article is up. The New York Times and it’s full of condescending errors: Hunt Highway is in Queen Creek, 45 minutes south and east of Tempe. A four-bedroom home is not a McMansion. I’ve always read Brewer-Caldwell as a scam operation. You cannot get $1,400 from a responsible tenant in the Phoenix. In any case, like much of Drudge, it more hat than cattle.

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