…is up at hotpads.com. The winning posts are sorted by category, which is a nice touch.
Technorati Tags: blogging, real estate marketing
Category: Blogging (page 67 of 84)
This is me in a comment at Mike’s Corner. Mike Price is looking for nominations for the most influential mavericks in the real estate industry, individuals and companies. Share your thoughts with him.
I’ve been thinking about this quite a bit lately, although the words I use in my own mind are closer to “renegade” or “heretic.” And the context is immense, at least to my way of thinking: The story of The West, in capitals, as against The East, is the story of Socrates, the man who chose to die rather than bend to the will of the mob. The Nazarene was the key popularizer of the tale, but if you look for it, you will find it reflected in every enduring story of The West.
Most fundamentally, The West is the heretic, the renegade, the maverick, the man or woman who stands — “not high it may be but alone” — for new truth, standing down all of received wisdom. This is why The West is so outrageously dynamic, where The East, broadly defined, celebrates and venerates that which is traditional and unchanging.
So who would I pick as the maverick individual and company bringing the most change to the real estate industry right now?
Glenn Kelman and Redfin.com.
My experience of the man has been overwhelmingly negative, and I don’t care for the way the company operates: It foists its agency responsibilities onto listing agents, then publicly vilifies them if they object to this cowbird-like behavior.
But someone at Redfin.com — or possibly some unknown maverick — figured out that the contradiction of the listing agent compensating the buyer’s agent could be exploited to market advantage, and this one innovation, in due course, will — at a minimum — divorce the two commissions from one another, resulting in a true buyer’s agency at last. It may also serve to eliminate the proprietarian idea of the MLS, a serendipitous side-effect.
I don’t think Redfin.com can survive as a business, at least not in its present form. Its head-count is huge for the volume it is doing. The proportional rebate system makes it impossible for the company Read more
Cathy is out with a crew today, canvassing a neighborhood with invitations to an Open House she is holding tomorrow. They are wearing our new Tee-Shirts:
We had these made because we are sponsoring contestants in a walk-a-thon, but we made a bunch, so they could be used for things like this, as well.
It occurred to me that we should give away a Tee-Shirt in a contest, but I really don’t have the gift for contests. The one weblog contest idea I’ve had so far is the CheezWhiz Olympics, an award for the new real estate technology that is simultaneously the coolest-sounding and stoopidest idea of the week. Unfortunately, that could easily lead to the entire globe being coated with a thin layer of CheezWhiz.
Anyway, the idea I had was to sponsor a contest to decide what contest to sponsor. In other words, you come up with the contest idea. If we pick your idea, the winner of the contest you suggest will win a BloodhoundRealty.com Tee-Shirt — and so will you.
Hanes Beefy-Tee, top-quality silk screening — a lasting trophy of your peculiar genius…
So what do you have to lose — except for your time, dignity and good name? After all, we’ll pay the postage! Tell us what contest to sponsor and WIN!
Technorati Tags: arizona, arizona real estate, blogging, phoenix, phoenix real estate, real estate marketing
UrbanDigs.com offers some great practical advice on timing low-ball offers. TrueGotham offers further thoughts. Both of these posts are Manhattansized, so you’ll need to scale accordingly for your local market.
Bonnie Erickson at Real Estate Snippets has excellent advice on the subject of your Realtor’s excellent advice. We’re not being pushy, honest! We’re helping you quarry your home’s inner greatness.
From Jeff Brown at Behind the Curtain: What do you want from the news, truth or accuracy?
PressReal.com (blogrolled — sorry, should have done this a while ago) asks Who pays the commission?, a question near and dear to Bloodhound hearts.
On the subject of “discounting” generally, Greg Tracy at BlueRoof.com composes a symphony:
But the best part about our new company is all the support we get from our clients. The consumers like what we’re doing because we are a new business model and most consumers really don’t like the traditional real estate models.
It’s funny if you think about the whole criticism of “discount broker”. Some people from my previous brokerage say that I’m selling out because now I’m a “Discount Broker”. Well, what does that mean?
That means that I’m doing the same thing for less…
And that’s the criticism? Even funnier is when the large companies take out ads that put down “discount brokers”. It’s like Albertson’s taking out an ad that says don’t buy from Safeway because they sell things for less. That’s what these agents are saying. And it’s really funny because most of them discount their commissions too, they just don’t admit it. We don’t discount our service or cut corners, in fact we have higher minimum standards for marketing our listings than most of the industry.
When I meet with people and show them our model and how we can help them they get excited about our model. We’ve had people tell us they were going to name rooms in the home after us and they send us incredible testimonials and they refer all their friends to us, which is the greatest endorsement they can give.
(Gentlemen: If you have a lingering problem from the photo in Greg Tracy’s post, The Phoenix Real Read more
I’ve been trading email this week with a client whose house I listed and sold last week. She’s been under the weather, and I’ve been checking up on her via email and text messaging.
Katie was 19 years old, just barely old enough to sign a contract when she asked Greg to help her find a home two summers ago. I wasn’t a Realtor yet, but remembered her from the stories Greg would tell about how impressed he was with the financial finesse for one so young. He helped her find her house, a charming condo in Scottsdale. He helped her write the offer, so that she was able to buy that house with nothing down and even walk away from the closing with a few hundred dollars left over from her earnest deposit. And after she owned her new home, he accompanied her to meet the head of the self-governed HOA at a meeting they called to greet their newest member and to make sure she understood the “rules.” One of those rules, believe it or not, was that she not get pregnant! Greg introduced the HOA to the Fair Housing Act, so they backed off, but I think the whole experience tarnished Katie’s first home ownership experience.
She never came to feel a part of her community. But inside her own horizontal airspace, Katie made a lovely home for herself and her beautiful new kitten, Bob.
Bob was just about two years old this past summer, when Greg heard from Katie, asking for help selling her house. She had waited patiently as she saw the amazing housing market of last summer, then watched the prices flatten out and even go down a little from what houses were getting last summer, before she was able to sell her house without paying taxes on the capital gain. She had one figure in mind that she thought she could sell her house for and be happy with the profit. But Greg and I encouraged her to ask for more, and about a month later she accepted an offer for that higher amount plus $100 :).
Katie Read more
Okay, carrying on from the idea of the Divorced Commission — a condition whereby, by some means, the buyer’s broker’s compensation has been divorced from the listing agreement — what are the implications for the Multiple Listings Service model of propagating real estate listings?
As we are seeing, divorcing the buyer’s agent’s compensation from the listings agent’s compensation has salutary consequences with respect to the agency relationships of both sellers and buyers and with the cooperation of agents. By getting rid of the doctrine of procuring cause, we eliminate the need for high secrecy among agents.
The practice the NAR calls “cooperation” is actually a metaphor for a graduated hostility. Because there are two “sides” built into the listing commission, the short-term pecuniary self-interest of the listing broker is to keep both “sides” to himself. The idea of procuring cause is a way of inducing “cooperation” by delimiting and circumscribing what we might describe as the leonine avarice of the listing broker.
But in a condition of Divorced Commissions, the listing agent never has access to more than one side of the transaction (except in a disclosed dual agency). The buyer chooses his own representation, and compensates his agent from his own side of the ledger. The issue of procuring cause has become moot.
Moreover, an unrepresented seller has no need to worry about compensating the agent of a represented buyer. In the same way, an unrepresented buyer isn’t compelled to compensate the listing agent for advice and counsel he does not receive.
These benefits carry over to the MLS as well.
Consider this excellent harangue by Jay Thompson:
Pardon my rant…ARMLS (Arizona Regional Multiple Listing Service) drives me insane! There are “rules and policies” that every ARMLS member must follow. Failure to do so can (and should) result in a fine for each infraction. Here’s the thing that just drives me batty:
Real estate agent contact info in the public remarks section. It SHOULD be a flagrant violation. Why? Because I share a consumer version of the MLS listing with buyer clients and prospects. So I send a client/prospect an MLS listing, and right there plain as day Read more
I think you’re twice a fool. We’re coming after our competitors on price because we already have them beat on service — and you know it. The farriers made your argument a century ago — with the same result.
Technorati Tags: arizona, arizona real estate, blogging, compensation for buyer representation, disintermediation, phoenix, phoenix real estate, real estate marketing
I just spent a very informative hour on the phone with Jeff Brown, and I want to summarize what I took away from our conversation.
First, Jeff has a very different understanding of the term “co-broke” compared to the way it is used in Arizona. When we went to essentially 100% buyer-brokerage for residential real estate, we kept the term “co-broke” to mean the compensation that would be paid to the buyer’s broker — even though the buyer’s broker is never a sub-agent of the listing broker or the seller and represents only the buyer.
Jeff writes explicit contract language to make pellucid his exclusive buyer’s agency and is also taking his compensation from the buyer. What the listing agent chooses to do about the portion of the sales commission set aside for any cooperating broker is between the listing agent and the seller.
I would describe that as an instance of what I want to call Divorced Commissions. The lingering idea of subordination — seller oversees listing broker who oversees cooperating broker — is completely eliminated, at least from the buyer’s side of the ledger. The buyer contracts for and compensates his own representative.
Similarly, writing the listing agreement to concede any shared sales commission directly to the buyer effects the same sort of divorce. We are doing this with one listing right now, and I gather that Ardell has just done something similar.
This again is a form of Divorced Commissions. Even though in this instance any buyer’s agent’s commission is originating in the listing agreement, neither the lister nor the seller are attempting to use these funds to advance the seller’s interests at the expense of the buyer’s.
Nota bene: The original purpose of encapsulating the cooperating broker’s commission within the listing broker’s commission was to align everyone’s interests with the seller’s interests and against the buyer’s interests. The cooperating broker working with the buyer was compensated for introducing the buyer to the seller and for actively working against the buyer’s interests in the seller’s behalf.
You might argue that, at least in Arizona, where sub-agency is no longer practiced for residential real estate, the Read more
Nominate me Ikonoklastes, for I am come to raze this temple of half-baked ideas. I want to come back to the MLS later in the week, and I have a deep need to expose the motivations of brokers, as these are distinguished from the motivations of lesser licensees. But for now I want to take on the idea of market value.
Jeff Brown, whom I admire without limit, asks of me:
I’m still wondering though about the apparent premise underlying your argument that says the buyer pays everything.
That premise is this: That somehow the market value of the home is controlled by something other than supply/demand, and the other factors of which we’re all aware. Would you please clear this up for me?
There are actually two different issues on the surface there, and there is still a third issue buried in the underlying premises.
First things first: In every economic transaction, unless the seller is taking a loss — or unless the seller pays for something outside of the transaction — the buyer pays for everything. This is true of anything that can be bought, and it is why — in every business except real estate — the buyer is given the red-carpet treatment. The seller (of anything) brings the value to be sold, but the buyer brings every dollar of the money, and every dollar that is disbursed to the seller and to any other involved parties is disbursed from the buyer’s pile of dollars.
In real estate, we make believe that the money is first transferred to the seller and then instantaneously distributed to the other parties, but this is a sleight of hand we effect in order to get the sales commissions past the lender. It might once, historically, have described a sequence of events, but even then the activity was a pantomime.
The seller does not cause the sale by claiming to pay for it. The buyer causes the sale, and no uncoerced sale ever happened until the buyer caused it.
Moreover, nothing in the laws of god or man ever prevented a seller from paying sales commissions out-of-pocket, in advance, instead of Read more
Taking on Mark Nadel’s white paper on real estate commissions, Kevin Boer at Three Oceans Real Estate points out that there is more at stake than any one particular negotiation:
Successful agents, however, know that a solid business is built on long-term relationships with satisfied clients. If a past client indeed thought his Realtor had left $10,000 on the table, that would be the end of that relationship. No more future deals, and no more future referrals.
For agents who think long-term, however, the math goes something like this:
20 extra hours of work =
75% greater chance of doing another transaction with that same client in 5 years
+
75% greater chance of getting 1 referral a year for the next 10 years from that client.
No matter how you slice that one, that’s a lot of money the Realtor is leaving on the table by being shortsighted.
This is a reasonable argument, and a one-off transactional analysis is common in economics, where entrepreneurs succeed by taking account of The Big Picture.
To be fair to Nadel, he suggests short-term incentives to offset what he views as short-term disincentives. His suggestion comes pretty close to a net listing, though, a type of listing contract that is frowned on by regulators in Arizona.
Here’s why: I convince Mrs. Newlywidowed that her long-time family home, now an empty nest, is only worth $90,000. I offer to sell it “for free” unless I can get more than $90,000, in which case I will take $.50 on the dollar for every dollar over $90,000. I sell the home for $300,000, taking $105,000 in commission, leaving $195,000 for Mrs. Newlywidowed, where she could have netted $282,000 or more.
That notwithstanding, Kevin has a fun take on this idea.
Technorati Tags: blogging, compensation for buyer representation, disintermediation, real estate marketing
Todd Tarson from MOCO Real Estate News stopped by the house last night for beer and chips before rushing off to a WARDEX dinner, this in advance of an AAR conference.
I’d like to tell you that we cut through every knotty problem facing the real estate industry, but that would be an exaggeration. However, we did sap all resistance from a twelve-pack of Corona…
Technorati Tags: blogging, real estate marketing
Northern Virginia Real Estate Guide has further thoughts on tailoring real estate commissions to fit the task.
Technorati Tags: blogging, compensation for buyer representation, disintermediation, real estate marketing
Here’s what I mean. This is a search I’m doing right now for a client:
Active listings only
MLS grids l32, k32 and j32 only (3 x 9 miles)
Minimum of 3, maximum of 4 bedrooms
Single-family detached homes only
Minimum of $350,000, maximum of $450,000 list price
Single-level homes only
3- or 4-car garage only
Only homes with formal dining rooms
Only homes with all tile roofs
Only neighborhoods with homeowner’s associations
Only homes where the land is owned in fee simple
There are two desired criteria that I’m omitting because they’re not reliably entered into the MLS system:
North/south exposure only
Only homes with pantries
But even with all those highly exclusive criteria, I’m still getting 25 possible candidates, way too many to work with. Probably we’ll end up isolating by particular subdivisions.
There is nothing in any computer system other than the Arizona Regional Multiple Listings Service that can search at this level of detail. But this is the only appropriate level of detail for a true home search. We campaign constantly for more power.
If you have visions of replacing MLS systems, please enlarge you vision to at least this size…
Technorati Tags: arizona, arizona real estate, blogging, compensation for buyer representation, disintermediation, phoenix, phoenix real estate, real estate marketing
Tyler Sookochoff ask these questions in a comment to another post, but my reply is long enough that I think it warrants a post of its own.
Marketing of homes aside, do you rely solely on your local MLS to do CMAs and price homes you’re hired to sell? Or could you survive/thrive without the MLS?
Too many questions conflated as one. There are actually three justifications for the MLS: Advertising, the co-broke — and protection of the earned commissions of “procuring” agents. The latter is what is literally meant by “cooperation” — all member agents agree in advance to respect each other’s client relationships, with a dispute-resolution procedure if they don’t.
If the MLS were opened up or replaced, would sellers still want maximum exposure for their properties? Yes, certainly.
Would this entail an offer of broker cooperation/compensation? That depends on whether the buyer’s agent’s compensation continues to come through the seller/listing agent, or whether the RESPA/HUD-1 procedure can be interpreted or revised to permit buyers to finance the buyer’s agent’s compensation as part of the home loan. (This is what is happening now, it’s just being done by sleight of hand through the seller and listing agent.)
Will brokers use whatever price information they have at hand to prepare CMAs? You bet — but not exclusively. Their own on-the-ground knowledge of neighborhoods and the comp listings, plus a first-hand inspection of the subject property are at least as important as any information derived from a database.
So the question is not, will I be stuck working without an MLS (commercial brokers often do, as do land and business brokers)? The question is, what form might a future MLS take?
For what it’s worth, I’m a skeptic on MLS-replacement for now. First, it takes an incredible amount of data to make an MLS listing worthwhile — more work than FSBO sellers might be willing to do, in many cases entailing knowledge they do not have. Second, significant details vary from one locale to another.
Witness: My friend and colleague Richard Riccelli is selling a triplex right now. What’s a triplex? In Boston and New York City, it’s a Read more
Inman Blog, this week’s host of the Carnival of Real Estate, sets the bar even higher than we did last week, cutting the list of entries down to a solid ten. Astoundingly enough, we took first place.
Why astounding? For one thing, we had come to fear that our urbanity was eclipsed by an overarching arcanity: We thought we might be too hard to read. Plus which, we cut all four of Inman Blog’s entries last week because we thought they were too short. We never for a moment thought they would be so petty as to exact revenge — but it would be hard to blame them if they did.
Todd Tarson is in town tomorrow for an AAR event, so we’ll save the celebratory drink until he stops by to say hello. In the mean time, we’re off to read all the other great entrants, and we commend you thither. (Who is hard to read?)
Technorati Tags: arizona, arizona real estate, blogging, compensation for buyer representation, disintermediation, phoenix, phoenix real estate, real estate marketing