Author: Jeff Kempe (page 2 of 2)

Realtor, Associate Broker

July 14, 2007

The Imperative of Divorced Commissions, Part 2: The Inherent Value of Free

by Jeff Kempe

Realtor, Associate Broker

By far the most entertaining marketing presentation I’ve ever suffered was in the mid-eighties. I was representing a small shoe manufacturer in Worcester, MA. It was early in the comfort revolution, and the company owner had come up with a way to put a donut in the insole for the heel to rest. He’d asked a local ad agency — his brother-in-law, actually — to come up with a bottom to top marketing plan: name, packaging, hook, advertising.

Cleverly focusing in on the donut, thinking waaaaaaaaay outside the box, this is what was unveiled:

Manistee presents: ZER0&174;s!!
with
ZER0&174; Styling!
ZER0&174; Affordability!
and
ZER0&174; COMFORT!!

We never made it to the packaging.

=====

Here’s Kendra Hogue, editor for the real estate section of the Sunday Oregonian, a couple months ago:

For those of you who haven’t purchased a home before, “hiring” a Realtor to help locate a house costs you nothing.

Well.

No matter how we try to twist statutes or the code of ethics, no matter how much we argue among ourselves as to who actually pays the buyer’s agent, the fact is the debit remains on the seller’s HUD-1 and the perception is that buyers’ agents come free. And the value of ‘free’?

Zero.

No? How many Buyer Presentations have you been on in the last year? Why is it buyers are much more willing to work with the first person they meet — or with Aunt Rose’s pedicurist’s live in girlfriend’s little brother — than a seller might? Why do they often drift, as if one warm body is the equivalent of another?

No matter how much we plead that buyer’s agents are as important to buyers as listing agents are to sellers — and they are — the market price tells buyers a different story, and the argument falls largely unheard. And note importantly that the price isn’t set by the market — the customer — but artificially by the industry. Price-by-fiat is almost always disastrous [Google ‘Nixon price controls’].

The consequences are both obvious and counter intuitive. The fact that buyers don’t scrutinize their hires is a boon to the inexperienced and inept. That keeps the people Kris just Read more

June 22, 2007

The Imperative of Divorced Commissions, Part 1: Fundamentals of Narcissism.

by Jeff Kempe

Realtor, Associate Broker

I was running in a local park a few days ago. The road into the park is about a half mile long and barely wide enough for two cars to pass in opposite directions, thus there are “NO PARKING AT ANY TIME” signs on both sides the entire length. As I drove in two mini-vans were parked next to a field, and I waited as two other cars coming the other direction passed. Three women were in the field chatting and setting up cones, perhaps for a relay.

As I ran out ten minutes later, the vans were still there, but now there were five cars stopped in one direction while three others drove by in the other. The women were oblivious, corpulent Paris Hiltons. When I suggested they move their vans to a parking area fifty feet away, one said “Oh, get real. It’s not as if this is a major thoroughfare.” Solipsism at its summary best. Rules are fine unless they’re inconvenient.

…

696.810 Real estate licensee as buyer’s agent; obligations….
(3) A buyer’s agent owes the buyer involved in a real estate transaction the following affirmative duties: …
(c) To be loyal to the buyer by not taking action that is adverse or detrimental to the buyer’s interest in a transaction;
(d) To disclose in a timely manner to the buyer any conflict of interest, existing or contemplated;

Whenever the charge of venality is brought against the real estate profession, out comes the Code of Ethics, here codified into Oregon statute. It’s our Wizard’s Curtain; while most agents I work with — and I suspect most people here — take it very seriously, too many don’t.

The reason high BACs and agent bonuses are used so often as marketing ploys is because they work. I was told recently by one agent who incorporates both in many of his older listings that not only does he immediately get more showings, once under contract the buyer’s agent is much more eager to cooperate to get Read more

June 15, 2007

Niggling Peeves: The NAR and How NOT to Conduct PR

by Jeff Kempe

Realtor, Associate Broker

It’s been a wonderfully grumpy week. Please indulge me:

When the NY Times came out with its piece on the Madison, WI FSBO market, the NAR typically over-reacted and sent out another set of talking points. Last time they did that — Sixty Minutes — they received some well deserved ridicule; I’m apparently not alone in finding talking points condescending and wholly counter productive. So this time they added: Please do NOT circulate this document.

Yep. That should help.

On a related note, today’s REALTOR&174; Mag email link gives a wonderful illustration on how spin backfires:

Poll: Few Consumers Know What You Do

A new survey by the Washington, D.C.-based Consumer Federation of America reveals that while 84 percent of consumers have a favorable opinion of real estate agents and brokers, many of them lack an understanding of the services that real estate professionals provide.

From which it’s easy to infer that people love us, even though they aren’t aware of all we do in a given day.

But. Here’s the actual survey. [Note I’m not defending the survey itself since it’s so badly conceived it exists primarily to establish its own conclusion.] The takeaway from the press release:

“Taken as a whole, these survey data suggest that consumers value the services provided by agents and brokers, and have usually had good experiences with these agents and brokers, but that their views are positive in part because of their lack of awareness of specific industry practices that could harm their interests,” said Brobeck.

Juuuuuuust a bit outside.

And the 84%? That’s the percentage of A) The 29% in the survey who’d bought or sold within the last five years; and B) who were rating their own agent. The generic number for all surveyed is 68% favorability, which means a third need a little extra convincing, more than would be required, say, by a set of talking points. One third is a serious number for a profession that begins its appellative with a capital and ends it with a circle R.

Speaking of which: You know the guy you meet at the cocktail party, the one who Read more

June 5, 2007

Katy Couric, Redfin, and the Predictability of Markets.

by Jeff Kempe

Realtor, Associate Broker

There was a delightfully obtuse article in yesterday’s Oregonian lamenting the abysmal ratings of Katy Couric and CBS Evening News. The writer’s reasoning was that it’s our fault for not watching, that we’re a country of misogynists not ready for a serious female anchor. Damn us.

The fact is that, like most markets, the ratings were entirely predictable. Not that prediction is easy — obviously some people can’t even predict in hindsight — but those who are best able to infer behavior from given cause are those most likely to succeed in whatever they do.

Some suggestions:

1. Trust your first impression.

It’s the first advice I give to buyers: You’ll know it when you see it; if you have to be talked into it it’s probably not right. Same with ideas: if it sounds nutty on first hearing, chances are it is.

When a network news division with serious credibility problems hires as an anchor someone famous for her teeth and entertainment value — and with credibility problems of her own — it’s nutty.

When a company — Redfin — launches on the supposition that buyers will rush to be represented by someone they’ll never meet in their most important purchase of their lives, it’s nutty.

2. The corollary to (1): Don’t project your own bias.

Manifested in the notion that “If I think it, so must everyone.”

The Oregonian is obsessed with global warming (full disclosure: I am not obsessed with global warming). When our local MLS decided to add a ‘green’ search mechanism, apparently intended to pick up those properties with Energy Star or other ratings, The Oregonian devoted sixty column inches to the news. (See here). I still haven’t ever had a buyer ask me to find a green property, a seller who’s asked how to get a ‘green’ rating, nor have I ever talked to anyone else who has, and I live in the greenest state in the US. As of right now, there are 304 green listings in the MLS; out of 12,741.

Redfin’s (and Sixty Minutes’) bias is “Stick it to the Man!” CBS’s bias is: gender trumps merit.

Caveat: It’s Read more

May 27, 2007

Tennessee, Oregon, and the State of Real Estate

by Jeff Kempe

Realtor, Associate Broker

This started as a reply to Greg’s post on the Tennessee legislature, which apparently insists going backward is the new going forward. But then I had The Conversation, and it’s developed into a post of its own.

Involved is someone I respect, a friend, a mentor, perhaps the one person more responsible for getting me into real estate than anyone. In the business over twenty years, he knows RE law better than most principal brokers, and has helped me enormously in the first three years I’ve been around.

Oregon is one of the eleven states that has a “Thou shalt not share commission!” law, passed at least fifteen years ago, notwithstanding Glenn Kelman’s Sixty Minutes inference that it was all about him. I wanted to know why it was passed in the first place: Assuming consumer protection against graft or corruption, I couldn’t figure out how that worked. The answer dumbfounded me:

“That protects us, our commissions. I’m glad it’s there.”

Oh, dear. Thank you for the candor. Elaborate?

“Look, I know you’re a free market kind of guy, but there’s nothing wrong with laws protecting us from consumers. People try to hack away at my commission every day on the listing side. This prevents the same kind of hacking on the buying side.”

Wait. Aren’t you worth the commission you charge? “Of course. That’s my point.” Then when someone asks you to cut your commission, what’s wrong with: No. Why do you need a law, especially a law that reinforces the public perception that we’re all self absorbed troglodytes?

“Twenty years ago, before the internet, we didn’t have that reputation. Now 80% of transactions don’t even really need a buyer’s agent.”

Say what?

It went on, defensively and testily. The internet’s the problem, we’re the victims. When I brought up separating buyer commission from listing commission, he said he hoped he was well out of the business before that happened.

It’s occurred to me: his opinion isn’t an anomaly; as I said here the biggest problem we face as an industry is our industry. I can’t begin to get my mind around treating clients as adversaries, Read more

May 23, 2007

On the NORDSTROM Analogy

by Jeff Kempe

Realtor, Associate Broker

Apropos of pretty much nothing: my two daughters — for whom I live — drove down from Seattle last weekend and threw me a surprise birthday party. The appropriate aphorism: “A good time was had by all.” I just found two party hats in the freezer.

Which provides a seriously imperfect segue into: Nordstrom. Since the time I spent there informs nearly everything I’ve done in business the last thirty years; because what we do as full service agents has been rightfully compared to the Nordstrom model; and because I’ll reference them often, it might be worthwhile to give some background:

I was there when they were just breaking into the California market, before the Department of Labor made them shut down any employee off clock hours — which means a concerned Nordy personally delivering a prom dress to a hormonally anxious deb is considered illegal — and before any organized gangs began using their return policy as a profit center. The employee manual read in its entirety “Use your own best judgment at all times”, twenty five year old buyers were given multi-million dollar budgets with the single instruction “Buy what the customer wants…”, and every employee was given the imprimatur to say only one thing: “Yes.”

In the early seventies one billboard on I-5 leading out of Seattle read “Will the last person leaving please turn out the lights?”, but leading in to the city was another billboard that read simply “We understand there’s a recession. We’ve elected not to participate.” and signed Bruce Nordstrom. When the same Bruce Nordstrom — “Mr. Bruce” in the vernacular — was asked in a meeting why it was necessary to give money back to people who didn’t seem to deserve it, after an eternal icy silence he said: “That’s my money. You’ll give it back until I tell you differently.”

Everyone has probably heard the (true) anecdote of the radial tires returned for a full refund at the first San Francisco store. What everyone doesn’t know is that, while most department stores at the time funded their advertising at 4% of sales, we budgeted 2%. Read more

May 21, 2007

Like a Virgin

by Jeff Kempe

Realtor, Associate Broker

So I’ve spent the last hour trying to navigate Word Press — I’m going to bet it’s much easier than I’m making it — have written a terribly serious post on the allegorical link between Nordstrom and real estate, and decided that’s a really inelegant way to introduce myself.

Yes, thirteen years with Nordstrom in the late sixties and seventies, the perfect business education. Twenty five years as a manufacturer’s rep, until getting on planes and traveling salesman jokes simply got to be overwhelmingly dull. I got my real estate license nearly three years ago, and immediately wished that I’d done it years before.

Which means most here probably know more about real estate than I do. The reason I came to Bloodhound Blog in the first place was to learn.

What I do know is people. Why they buy, their motivations and reactions. I know that the Arizona Board of Appraisal is thoroughly nuts for thinking it can shut down Zillow, or even trying. I have a pretty good notion Redfin will be out of business in two years. Sixty Minutes is an anachronism.

And I’m certain the real estate business is changing. Much of the status quo is antithetical to anything I learned at Nordstrom: the industry gets much of its incentive from what’s best for the industry, not what’s best for the people we serve. I’ll never understand the first seminar I went to after I was licensed, where the instructor said good agents spend 90% of their time prospecting for new clients. 90%. If I spend that much time selling myself, what, exactly, am I selling?

Phil Knight said: “Nike is a marketing company, but our product is our number one marketing tool.” What I do for buyers and sellers is my product, and my interest is in being as good at that as I can be.

That’s why I’m here; I really, really look forward to it.

Thanks, Greg; I’m honored!

Author: Jeff Kempe (page 2 of 2)

The Imperative of Divorced Commissions, Part 2: The Inherent Value of Free

by Jeff Kempe

The Imperative of Divorced Commissions, Part 1: Fundamentals of Narcissism.

by Jeff Kempe

Niggling Peeves: The NAR and How NOT to Conduct PR

by Jeff Kempe

Katy Couric, Redfin, and the Predictability of Markets.

by Jeff Kempe

Tennessee, Oregon, and the State of Real Estate

by Jeff Kempe

On the NORDSTROM Analogy

by Jeff Kempe

Like a Virgin

by Jeff Kempe

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