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Author: Greg Swann (page 182 of 209)

Suburban Phoenix Real Estate Broker

October 2, 2006

Appraiser reverse-engineers Zillow.com’s “secret sauce”: Can you guess the main ingredient . . . ?

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Suburban Phoenix Real Estate Broker

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Lee Ovington, a real estate appraiser who works and blogs in Elgin, IL has successfully reverse-engineered Zillow.com’s Automated Valuation Method:

The above examples give us some indication of how Zillow arrives at its value estimates (or Zestimate). Quite simply, the Zestimate relies on a calculated relationship of assessed value to sale price. Zillow merely takes selected transactions and calculates the relationship between the Assessed Values and the Sales Prices. It then applies that ratio to the subject’s assessed value (plus or minus some adjustments) and “whala”, you have Zestimate!

The above examples show that even when Zillow has a large margin of error in its Zestimate of 10-15%, the Zestimate is still highly correlated with the Assessor’s Values. We can conclude from this analysis, that the Zestimate is a derivative of the Assessor’s Values. Zillow may be slightly modifying the data by some weighting or factor like time or distance. That “tweaking” of the data could be the “secret” part of its formula; but clearly, the Zestimate is based on the underlying Assessor’s Values as indicated by the high correlation coefficient.

This is not surprising, by itself. It’s how AVMs work, after all. But by deconstructing Zillow’s results, Ovington demonstrates how little sauce there is in the vaunted “secret sauce”…

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October 2, 2006

Fast full-service buyer’s brokerage at a flat fee: That smells like a big win to me . . .

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Suburban Phoenix Real Estate Broker

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This is from a comment by Jeff Brown, responding to an earlier post. I’m only showing a snippet here, but Jeff’s ideas are worth apprehending in full and pondering at length.

Once and for all, the money paid for representing a buyer OR a seller is based upon only one factor: The ultimate value perceived by the client. Is the client better off being represented by you than not represented period? Is he better off with you vs. another agent?

Here’s the thing: The market will bear what it knows about. This is the purpose of marketing, to educate your own buyer.

So think of it this way:

I personally can sell about a house a week. More than that, and I can’t juggle all the eggs. But even assuming I have enough ready, willing and able buyers to sell a house a week, the effort involved for some transactions can exceed the time I can afford to spend on it. Because we don’t relate costs to compensation, sometimes we make good money, and sometimes we take it in the shorts. No other personal services/consultation business works this way — except for contingency-fee attorneys.

So: In ideal circumstances, I can sell a house a week at $250,000 each, on average, earning $7,500 each, on average, for a gross income of $375,000. Not bad. My marketing costs and other expenses are huge, and, practically speaking, some of those transactions were under-performing: Either the deal didn’t close at all or my costs exceeded my return. And, of course, I don’t always have a buyer to work with every week. Unused Realtor capacity is a hidden cost in this business, one that would be accounted for in the books for in any other business. But still, after everything: Nothing to sneeze at.

But suppose I can structure my business a different way. What if I were to charge a flat fee to represent a buyer in exchange for a non-refundable retainer. My marketing costs just plummeted, especially for the high-end clients whose homes we want to list — now and also when they move again. My exposure for under-performance just Read more

October 1, 2006

Beautiful and functional: New BlueRoof.com map searching interface sets bar higher . . .

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Suburban Phoenix Real Estate Broker

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BlueRoof.com has a new map searching interface, combining a number of good ideas from other interfaces with the company’s great design sense.

The interface features the slider controls seen in ShackYack.com‘s search tool. Unlike that system, though, BlueRoof.com does not get bogged down trying to display more listings than its underlying software can handle. If your search results in too many results, you are invited to narrow it.

The search area is defined by the visible portion of the map, however, which implies that, if you don’t already know where you want to be, you can’t use a relatively unfocused search to seek out neighborhoods in your price range. We’re sweltering under heat maps just now, and that would be a simple solution here.

The BlueRoof.com interface uses three different kinds of house icons to indicate active listings: A green roof is MLS-listed, a blue roof is a FSBO, and a blue roof with an avatar out front is a FSBO with broker participation. This is an idea we had talked about when first we saw the ShackYack interface — adding to it ShackYack’s idea of using color intensity as a one-glance method of comparing relative prices.

Things I don’t like:

I want more search tools, even if they come in a pop-down tab to make things simple for the punters.

I want to be able to get a feel of the whole housing market, even if I can’t see houses without narrowing down by area.

I have a huge screen, but I still get a small map. I think the page is being built to conform to BlueRoof.com’s toolbar (which is gorgeous), rather than growing to the available screen real estate.

I could not get to the detail page on any house. (Mac OSX 10.4.7, Safari 2.0.4)

Overall: Very pretty. I think this is the new high bar for map search interfaces. Considering the money in play at the Goliath-like realty.bot sites, BlueRoof.com is David triumphant today…

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October 1, 2006

The things most worth talking about are the ones no one ever wants to talk about: Confronting the buyer’s agent’s commission amidst a glacial glut of real estate licensees . . .

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Suburban Phoenix Real Estate Broker

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I wrote this as a comment at Rain City Guide (which thread is very worth visiting), but I’m echoing it here:

> Who pays the commission is all semantics, really.

I would disagree with that. Buyers have been persistently misled about who pays the commissions, which skews their behavior.

> The buyer will not pay LESS for the house if there’s no buyers agent involved

Let’s put the buyer’s agent’s compensation under the buyer’s control and see what happens. A buyer who hires me to help execute a transaction he or she has already decided to undertake should pay less for my representation than a buyer commencing a completely unfocused home search. Do you disagree?

Ours is the only sort of business where compensation is completely uncoupled from effort and costs. That’s absurd, particularly as home prices surge upward. Doubly absurd when you consider that there is a glacial glut of real estate licensees.

> I don’t see the point for all the discussion here.

How about because the things most worth talking about are the ones no one ever wants to talk about? 😉

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September 30, 2006

Blogoff retrospective: Picking through everything and picking out the ones I like . . .

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Suburban Phoenix Real Estate Broker

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I finally made time today to read all of my posts in the Sellsius 101 Blogoff Challenge, correcting any errors I spotted and commenting where I had something to add to the conversation.

Jim Cronin of The Real Estate Tomato had asked me which posts I thought were my best and worst. I didn’t think any were horrible. There were plenty that I would not have done were it not for the contest, and others I might have done at greater length in different circumstances. I was gratified to show off many of my columns from the Arizona Republic, because they present a very hands-on approach to real estate.

Here are a few that I think stand out:

Blogoff Post #1: Cry, ‘Havoc!’ and let slip the war of blogs: “So, although there may be a lot of blog entries posted in this contest, I don’t think there will be any wasted entries. Your attention will be repaid with knowledge, insight, wisdom and, one hopes, grace.”

Blogoff Post #39: Work for passion, not money: “An admirable poverty is only admired from the outside. From the inside, eventually, it can come to be a tailor-made hell.”

Blogoff Post #45: Real estate weblogging? Yo, Shlomo! Cut back on the promo: “The bottom line is, if you start to look like spam to me, I’ll start to treat you like spam. How is that to your advantage…?”

Blogoff Post #50: Real estate weblogging? Write about blogging: “We become a forum, an agora — blog to blog, within a blog and within our own minds, solitarily engaged in the most blaringly public of debates.”

Blogoff Post #90: Stupid mistakes of the newly self-employed: “The only benefit I can think of to having a job is that there’s always someone to tell you to get busy. Not so for the self-employed. If you don’t learn to monitor and manage the hours of your days, you’ll be back on the clock in no time.”

Truly, time will tell: I link back to earlier posts all the time. We’ll know how these hold up by how I reference them in the future.

Thanks to everyone for being Read more

September 30, 2006

Ed Robson — Master Builder . . .

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Suburban Phoenix Real Estate Broker

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Because of my long-time affiliation with Tom Horton, I got to write the inside-front-cover copy for Outrageous Good Fortune, Tom’s biography of Ed Robson, founder and owner of Robson Communities, which builds active-adult communities all through the Sothwest.


From left to right, author and publisher Tom Horton, Nobel Prize-winning economist Milton Friedman, Mark Robson (now a real estate devloper in Southern California) and Master Builder Ed Robson.

Here is the copy I wrote for the Robson biography:

Here’s a trek for the intrepid: Take the I-10 Freeway south from Phoenix, Arizona, and get off on the Riggs Road exit.

If you drive west into the Gila River Indian Reservation, you will see some of the extent of Ed Robson’s legacy. In the reservation, the land is dead flat nothing for miles in every direction. Not beautiful, mountainous desert. Just desert, the kind that kills unprepared wanderers every day.

Now turn your car around and drive east into Robson’s Sun Lakes. You’ll find rolling hills, man-made lakes, golf courses, clean-lined stores and churches and compact, elegant homes — a model suburb.

But we’re not finished yet. Because when Ed Robson first set foot on the land that became Sun Lakes, the land he stood on and the entire southeast quadrant of the Valley of the Sun looked just like the reservation.

It was Ed Robson’s Sun Lakes that led the way as the southern corridor of Maricopa County was transformed from scraggly desert and struggling agriculture to very beautiful, very prosperous suburbs.

And Sun Lakes was just the beginning. Ed Robson spread his ideas about building master-planned active-adult communities throughout Arizona and into other states. As the Baby Boomers march en masse toward retirement, it will be Ed Robson who builds their homes — homes sturdy in construction and rich in luxuries, with the kinds of activities and amenities that make retirement an adventure.

Did Ed Robson get rich doing all this? Oh, you bet! But he has enriched us all along the way. Not just the people who live or work in his communities, but also the people who live and work in the surrounding communities, communities that would not Read more

September 30, 2006

Want to know where real estate corruption comes from? Whatever you do, don’t look in the newspaper . . .

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Suburban Phoenix Real Estate Broker

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I have a bunch of Phoenix-area real estate news piling up in browser tabs, so I want to reference it now, before it blows away in the autumnal desert breezes.

First, more fake good news downtown: “Phoenix is putting in place the final building block in its plan to construct a new downtown.” How? What are you, new? Massive tax-payer subsidies, of course. How else? But, not to worry. This will be the piece that completes the puzzle for a true downtown in Downtown Phoenix. Pay no attention to all those other, past, failed pieces that were to complete the puzzle. This is the real deal, you betcha. If you say otherwise you’re a counter-revolutionary running-dog imperialist wrecker. Oops! Wrong propagandists…

But don’t get the idea that Pravda — er, the Arizona Republic can’t issue a discouraging word: It turns out that trolley riders, if there are any, may have trouble finding shaded parking. If they can find any shaded parking now, in this benighted pre-trolley epoch, they should move to Vegas. They’re beyond lucky…

But at the same time, don’t conclude that the Republic can’t strain at gnats over a good press release: Active-adult housing is popular in the Southwest Valley — even though there almost isn’t any. The article justifies its spin by stretching as far as Sun City Festival — which is in the Northwest Valley. (Disclosure: I am a long-time friend and confederate of Tom Horton, who wrote the biography of Ed Robson, founder and owner of Robson Communities, which in turn owns PebbleCreek, the principle focus of this article.)

Did I say something about the Northwest Valley? Here comes the Northern Parkway, to relieve all the traffic out there where nobody lives — yet. The City of Glendale, which used to end at 67th Avenue, is going to extend itself miles and miles further west so that its tax-payers can delight in subsidizing thousands of new homes along the incipient SR-303 Freeway.

All of this serves as a nice way of distinguishing capitalism from mixed-economy socialism. None of this would be happening if our real estate economy were governed by capitalist Read more

September 29, 2006

BloohoundBlog is three months’ old — and we’re taking the rest of the week off to celebrate . . .

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Suburban Phoenix Real Estate Broker

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There are still over 400 unanswered emails in my inbox. Plus I have a bunch of Arizona real estate news I want to talk about. Plus I have tabs and tabs of real estate weblog posts I want to link to.

But… BloodhoundBlog is three months’ old today. A three-month-old Bloodhound can move your furniture and mow through a pair of shoes in three minutes flat. A three-month-old BloodhoundBlog is but barely aborning — well begun, but half-baked, at best. Four-hundred-twenty-five posts, but they add up if you do a few dozen in a single day…

But part of working hard is knowing when to stop. There is a bottle of Old Bushmills in the cabinet over the refrigerator that demands at least three fingers of my attention this night. Irish Whiskey is an acquired taste, particularly if you’ve scorched your tongue with Scotch. But — for tongue-scorching — Cathy has laid in the stuff for me to make a Hatch chile salsa, and last night a client gave us chile rellenos and some other muy caliente delectables. Mere liquor is nothing compared to the endorphin rush that comes from eating really hot food.

When I was a young kid working in New York, I had a boss who would stroll through the office at about 4:50 on Friday afternoons. “Why don’t you take the rest of the week off?” he would say. He never got tired of that joke. And I never have, either.

So here’s a toast to you all, as we take the rest of the week off. Thanks for being here with us!

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September 29, 2006

Butterflies might be free, but home-buyers pay for real estate advice — whether they know it or not . . .

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Suburban Phoenix Real Estate Broker

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Ardell raises some questions at Rain City Guide about my column in this morning’s paper on negotiating the buyer’s agent’s commission. I’m going to address some of her remarks here, but my fullest statement on the topic is quite a bit more comprehensive. In the newspaper, I get 350 words a week, with the result that I am splitting this one topic over 5 (or possibly more) weeks. I’m thinking, too, that we should create a category for these weblog posts, because both Cathy and I are writing quite a bit on the subject.

And thus to Ardell’s points:

“I find that most consumers would like we in the industry, to lead the revolution and win that battle for them, rather than being involved in the process of that change in the industry.”

I’m sure that would be nice, but I don’t expect it to happen that way. One of the reasons agents are so close with the co-broke information is that they’re giving up so much on the listing side. Buyers are the last sheep to be shorn — even though buyer representation is getting easier, not harder, and even though the prices of homes have risen dramatically over the years.

I don’t see any way for this to change across the board without buyers becoming educated and putting their education to work. One market segment who could help a lot are the For Sale By Owner sellers. They could implement my idea of conceding funds directly to the buyer, to be used at the buyer’s discretion for representation or other costs, with none of the risks a listing agent might face.

“Has anyone seen the Buyer Agent fee show on the Buyer’s Closing Statement when the transaction closes?”

This is the only way a HUD-1 is produced in Arizona. If it’s not being done that way in Washington — one HUD-1 for everyone — I can’t imagine why. In any case, the buyer can negotiate for full disclosure of all funds.

“Seller pays his agent and buyer pays his agent, is the only rational answer…”

But it’s not actually true. For a represented home, the seller sets Read more

September 29, 2006

My Friday treat: The telephonic equivalent of midnight vandalism . . .

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Suburban Phoenix Real Estate Broker

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So here comes the call, at 9:27 am. Blocked Caller ID. I don’t normally take line-blocked calls, because they’re almost always spam. But I was waiting for an important piece of information, so I took the call anyway.

An irate Realtor, of course, angry about this morning’s Arizona Republic column. I should have been expecting it. Anonymous phone calls from Realtors and brokers — pissy but pusillanimous — are a regular Friday treat around here.

And here is where I respect doubly the people who send email to gripe at me: They put their names behind their words, and they have to devise an actual argument to justify an email.

So I’ve got the call, like it or don’t, and the cranky Realtor on the other end says, “I’m a Realtor and I want you to know that I don’t agree with your columns saying that we get paid too much.”

And this is an instant when I am thinking too fast to stand in awe of how fast the human mind can think:

line-blocked call — hiding identity — no name offered — calling strictly to gripe — to penalize me for inciting her ire — wasting my time with no argument to make — nothing I say can possibly make any difference — moreover a phone call is no venue for intellectual debate — I need my phone back — I don’t get paid for this — I don’t have time for it now in any case

All that was about one-third-of-a-second.

Just like that, I said, “That’s your perfect right. Thanks for calling. Buh-bye.”

If you want to stand up for something you believe in, standing behind it by putting your own true name out in the open, then I’ll give you my time. I just might learn something, and that’s a treasure I’ll make an effort to earn. If you’re calling me to commit the telephonic equivalent of midnight vandalism — get lost. You tell me everything I need to know about you by concealing your identity…

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September 29, 2006

Repeat after me: Mr. Realtor, what do you charge?

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Suburban Phoenix Real Estate Broker

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This is my real estate column from today’s Arizona Republic (permanent link). Today should be a fun day. My editor told me that, in respose to last week’s column, a Realtor called him, threatening to turn me in to the Arizona Department of Real Estate. I can’t imagine what the violation might be, but the hearing would be a hoot.

 
Repeat after me: Mr. Realtor, what do you charge?

Want to foment a revolution in residential real estate? It’s easy to do. Just learn these five simple words: “How much do you charge?”

Sellers have known that question forever. It’s often the first thing they say at a listing appointment. They understand that they are hiring a Realtor for representation and marketing, and they want to know how much it’s going to cost them.

Historically, buyers have not understood that they, too, pay for representation. Realtors have always insisted that the seller pays all sales commissions, even though every dollar on the closing table is brought there by the buyer.

Unless the seller is taking a loss, the buyer pays for absolutely everything. That’s true not just for houses, but everything.

When you buy a bottle of Pepsi, the marketing and advertising costs are not paid by PepsiCo. They’re paid by you as a part of the purchase price.

In just about every other line of business, vendors roll out the red carpet for buyers because they know that buyers make the world go around.

Not so in residential real estate. We baby buyers, telling them tender, loving lies: “Buyer representation is free.” “I’m paid by the seller.” “My services cost you nothing.”

All of this is false. The cost for buyer representation is rolled into the purchase price, just as the cost of marketing and advertising is rolled into your bottle of Pepsi.

There is a difference, though. If you would have bought the Pepsi anyway, you can’t ask Pepsi to scale back its marketing costs.

But if you’re hiring a buyer’s agent to help you buy a home you have already decided to purchase, you should practice those five simple words: “How much do you charge?”

If you’re buying a new Read more

September 27, 2006

Digging out: A 102 link real estate weblog post about real estate weblog posts . . .

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Suburban Phoenix Real Estate Broker

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I fully expected Dustin Luther of Rain City Guide to file a post replete with 101 links at midnight last night. I thought it would be a nice commentary on the absurdity of what Ardell and I were doing, and a nice pastiche on his lists-of-10 posts. In fact, he delivered a hugely link-filled post later in the night, most of which still sits on my nightstand, undigested.

I finished my money-work today with nearly 1,000 unread posts and comments in my feed reader (hundreds were me and Ardell, of course) and over 400 unread emails that accumulated through the day yesterday. The emails endure, a glaring accusation, but the feed reader is clean.

Here’s proof in 102 links:

Ardell is back in good form, rocking boats and rattling cages. I think I speak for both of us when I say that there are always plenty enough words to be spoken, to be written, to be weblogged. What is evermore in short supply are ears to hear, minds to wonder, souls to take flight and soar. Welcome to Real Estate 3.0: Ethical, evangelical — all but ethereal…

Marlow Harris at 360 Digest and Kevin Boer at In the Trenches have been zeroing in on the accuracy of Zillow.com’s Zestimates. This has been Kevin’s project from the beginning, and a visit to his weblog is very instructive.

My mind was elsewhere, so I don’t know if Marlow was in the lead with news about Trulia’s nationwide expansion. She’s certainly been all over the story, though, along with Trulia’s own weblog, Ubertor, The Real Estate Marketing Blog, Real Central VA and Marlow herself again. Two days later, she followed up with news that Windermere has gone Google. More from Joel on this move. My take: Okay, but an MLS is a tool wherein I can distinguish a slate roof from a tile roof and a true swimming pool from an above-ground pool. By that standard, we do not have and may never have a national MLS.

And from Galen Ward at Rain City Guide comes a discouraging word on Trulia and the virtue of moral consistency. To give the Read more

September 27, 2006

A Zillow.com dead pool . . . ?

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Suburban Phoenix Real Estate Broker

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real estate 2.x:

If the real estate market continues downward, do you think Zillow’s traffic will go up? I am pretty sure that Zillow’s traffic will be directly related to property prices. Everyone loves to see how much money they are making — it is fun, but most people are not going logon each day to watch their zestimate go down (accurate or not). Personally, I find the site quite boring…one visit seems like enough.

My fourth question would be — if the validity of their purpose has been picked apart, and their revenue model is full of fatal flaws — when do they run out of money?

Maybe we should start a pool?

I’m thinking they probably have a business, if only because Realtors will always throw away money on advertising that is easy but useless. On the other hand, I’m suddenly flush with play money…

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September 27, 2006

Digg? Dig a better foundation for real estate instead . . .

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Suburban Phoenix Real Estate Broker

Author website

Homethinking has a new Digg-like social bookmarking service called RealEstateVoices. Once you register, you can submit real estate news stories or weblog posts that you like, vote for links submitted by other people, or RSS-syndicate the results.

I haven’t had time to play with it (I have to run to Mesa), but the site is clean and understated, as you would expect from Homethinking.

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Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

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